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Financial Times leaves Apple, strikes out on own

The Apple logo is pictured outside the Apple store in Santa Monica, California Aug. 24, 2011.

Mario Anzuoni/Reuters/Mario Anzuoni/Reuters

Ever since Apple Inc. unveiled its terms for selling digital subscriptions on its wildly popular mobile devices earlier this year, the tech giant's relationship with newspaper publishers has been complicated, at best.

Now one of those publishers has decided it needs some space.

The Financial Times of London said on Wednesday that it had pulled its applications for the iPhone and iPad from Apple's iTunes store, "after amicable discussions," according to a spokeswoman for the company. The publication will now be readable on Apple devices only through its own Web-based app.

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This way, the FT can circumvent Apple's stringent sales terms. The newspaper's parent company, Pearson PLC , is just one of the publishers that has bristled at rules that allow Apple to keep 30 per cent of subscription sales revenue and also take control over readers' information out of publishers' hands. This last point is particularly important, since media companies depend on knowledge about their readers in order to tell advertisers what types of customers they are reaching.

The FT is one of the few publications that has had success putting up a "pay wall" that restricts free access to its website, and selling digital subscriptions. Digital advertising and subscriptions now account for 27 per cent of total revenues for the Financial Times. But even newspapers with relatively healthy subscription levels depend heavily on advertising revenue, which is why control over consumer data is so important.

"Absolutely, an advertiser is going to want to know the makeup of [their] audience," said Allen Weiner, vice-president of research at Gartner Inc. "If they don't know what it is, how are they going to sell advertising?"

The FT began making plans to circumvent Apple's iTunes system in June, when it launched its Web-based app and became the first large news publisher to work with an app based on HTML5, a wider standard that works on most devices and systems.

There are now more than 550,000 users of the FT's new Web-based app, according to the company, and it had overtaken the Apple-specific app before it was pulled.

"Developing multiple 'native' apps for various products is logistically and financially unmanageable," FT Group's product head of emerging technologies, Steve Pinches, wrote on the paper's website in June, when the Web-based app was launched. "By having one core code base, we can roll the FT app onto multiple platforms at once."

But not all industry observers are so sure publishers have enough leverage to launch a subscription turf war with Apple.

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"If they choose not to use [iTunes] they may regret it. IPads are already north of 10 per cent of the total PC market, and they aren't likely to slow down," said Colin Gillis, an analyst at BGC Financial in New York. With the popularity of Apple devices, new users may be drawn to a media product through an iPad, he added. Those newer users might not seek out a Web-based app sold outside the central storefront.

"If I had to look into the future five years and say, will we see the FT back there, I wouldn't be surprised."

Mobile devices are a growing source of revenue for the FT. According to a spokeswoman, 15 per cent of subscriptions are sold through mobile apps.

In his post in June, Mr. Pinches added that he expects other content producers to begin developing more HTML5-based apps and fewer device-specific or brand-specific apps.

"This whole game is going to change this year," Mr. Weiner said. "… The trend that we're seeing today across all media is cross-platform. The newspapers are moving away from this single-platform approach, and doing things in more formats. Apple will be forced to re-evaluate its position with publishers."

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