27th April 2017

Amazon to sell digital subscriptions

New programme lets publishers sell subscriptions directly from tech giant's platform.

Amazon has been quietly expanding into ad sales. Now, it’s flexing its muscle in the subscription business. On Monday, the tech giant announced Subscribe with Amazon, a new program that lets publishers and other digital creators sell digital subscriptions directly inside Amazon’s platform. Rather than buying a digital subscription from a publisher’s website, readers can now buy a digital subscription directly from Amazon’s site or apps.

A trial version of the program launched in August with established media publishers including The New Yorker, The Wall Street Journal and the Chicago Tribune, plus digital media purveyors like Sling TV, Creativebug and Headspace. Now any U.S.-based business can apply, provided said publisher is selling digital products, rather than physical goods.

Amazon will take a 30 percent cut of revenue in the first year, then 15 percent of all revenue earned after the first year. Those terms are identical to the ones offered by Apple’s App Store and similar to Google Play’s, which takes 15 percent in the first year and every year afterward. And while most publishers are experiencing their share of platform fear and loathing, the arrival of another subscription seller fills a need that’s been growing as newsstands and bookstores have closed.

“The publishers have been looking for distribution of their subscription offers for quite a while,” said Bruce Benson, a senior managing director in FTI Consulting’s telecoms and media practice. “You worry, with the bigger guys, whether they are going to charge too high a fee for the privilege, but Amazon’s is in line with the rest of the market.”

 This is far from Amazon’s first foray into selling magazine subscriptions. Magazine publishers like Bloomberg Businessweek have been selling print subscriptions through Amazon for years. The New Yorker, one of the trial partners for Subscribe with Amazon, has used Amazon Flash sales to drive subscriptions. And at New York magazine, a spokesperson said that third-party platforms, a group that includes Texture as well, are responsible for a “relatively small but growing” portion of the magazine’s subscriber base.

But Subscribe with Amazon’s arrival makes the e-commerce colossus the third platform giant to let publishers sell digital subscriptions directly to readers. The others, Google and Apple, started doing this years ago, with the apps available in their respective mobile marketplaces. Apple Pay, now accepted by a growing number of publishers, also powers a small but growing number of transactions for publishers including Time Inc. and The New York Times.

Amazon isn’t as big a part of people’s mobile experience as Google and Apple are, but it’s still a big part of digital life. A majority of U.S. internet users — 55 percent, according to e-commerce startup BloomReach — go to Amazon first when looking to purchase something online. Amazon also accounts for around 6 percent of the U.S. tablet market, according to Business Insider Intelligence.

It’s not clear how many people head to Amazon to buy a digital subscription to The Wall Street Journal or Bon Appétit; Amazon wouldn’t comment for this story. But the subscriptions offered through Subscribe with Amazon will immediately begin appearing on Amazon as recommended products. The trial partners contacted for this story declined to participate in this story, so it’s tough to say how much of a lift that drove.

Subscribe with Amazon launches at a moment when more publishers are shifting their attention to driving digital-only subscriptions to augment their digital ad business. Publishers have been enjoying subscriber bumps and others are considering paywalls as reader appetite for premium content keeps growing.

These subscriptions have become such a priority that Facebook and Apple News are now making it easier for publishers to sign people up for them.

And while a 15 percent cut may not be ideal for publishers, the added audience makes up for it. “The people who will subscribe online [through these platforms] tend to be just a different-enough audience,” said Christine Arrington, a principal at media consultancy Quantum Media.

Written by Max Willens, 25 April, 2017, published on digiday.com. Read the full article here

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