Google Undercuts Apple with Subscription Service for Newspapers, Magazines

Google Inc. unveiled a digital- content service that gives publishers a bigger cut of subscription sales than a competing program introduced yesterday by Apple Inc.

Google will keep about 10 percent of the fees charged by publishers, Chief Executive Officer Eric Schmidt said today in Berlin. Apple said it’s keeping 30 percent. Google is also giving access to more information about users, publishers said.

“Of course publishers would like the option where they’re paying 10 percent instead of 30 percent,” said Nina Link, chief executive officer of the Magazine Publishers of America. “It’s a significant difference. And we love the fact that there’s some choice, and we think there will be even more.”

Content providers are working with Google and Apple to make their wares available in more ways, including on mobile devices, as sales of paper magazines and newspapers slump. Google’s concessions on price and user data make it a more alluring partner, said Jaimee Steele, a spokeswoman for Rhapsody International Inc., an online-music provider based in Seattle.

“Google’s proposed 10 percent fee is much closer to something we would find to be sustainable based on the margins that we’re operating under,” Steele said in an interview.

Google, based in Mountain, View, California, rose 7 cents to $624.22 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 5.1 percent this year.

Freedom of Information

Apple also is placing tighter limits on how much consumer data it shares with publishers, publishers said.

“Google is a little more free with the information they release about the consumer,” said Dean Turcol, spokesman for Bonnier AB, which publishes magazines including Popular Science and works with both companies. “We hope that, as the process evolves, we’ll get more and more information about our consumers.” Bonnier is “happy with both agreements,” he said.

Tom Neumayr, a spokesman for Cupertino, California-based Apple, didn’t immediately respond to a request for comment. In a statement yesterday, the company said it would give developers access to user data if the consumer agrees first.

Google’s service, called One Pass, will let publishers, including Axel Springer AG and Media General Inc., set their own terms and prices for digital content, Schmidt said in a speech at Berlin’s Humboldt University. That includes subscriptions, metered access, “freemium” content or single article sales.

“You’ve got a very publisher-friendly approach; we basically don’t make any money on this,” Schmidt said. “The most important thing is to get the money to people who are producing high-quality content.”

Schmidt said Google’s cut will cover the costs of the service which will be available on tablets and smartphones, along with websites.

The service is available for publishers in Canada, France, Germany, Italy, Spain, the U.K. and the U.S., according to a Google blog post. Other publishers who have signed on include Stern.de, Focus Online, NouvelObs and Rust Communications Inc.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net; Naomi Kresge at nkresge@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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