Update2: [April 21st, 2016]. Disclaimer! This information has expired. It’s been published in 2013. Since that time App Store has changed and so does PressPad. We do not offer free plans anymore, however PressPad mobile magazine apps remain affordable for publishers like you.
Update: due to high demand for this pilot program, we have written a FAQ and “lessons learnt” here.
Long story short: We are looking for 10 publishers who will agree to publish their magazine in a new experimental pricing model. The publisher doesn’t pay us anything for the making and maintenance of the application, in exchange, we retain the first 199 dollars it earns every month. From $200 up everything goes to the magazine publisher (no revenue share whatsoever).
Money flow for subscriptions and issues
When a reader of Me Inc. Magazine (our client) John pays for the July issue of the magazine, his money doesn’t simply go to Me Inc. It doesn’t go to PressPad either. It goes to Apple.
Then, Apple charges a commission of 30% of the issue price. There is no possibility of omitting this fee so we might as well accept it.
At the end of the month the sum of earnings (that is, in fact, 70% of the earned sum) goes into the account of… the application publisher. That is, in our case PressPad’s account.
Now we can pay out the earned money to the magazine publisher and therefore the dollars for sold issues finally go from John to Me Inc. The cycle closes.
Payments from PressPad’s point of view
Here we come to our problem. Publishers pay us for publishing their magazines to the App Store $199 per month. Therefore to this whole equation we also introduce a payment in the opposite direction which must be covered by the publishers.
Now you may ask:
“Why do you charge a fee at first, and then you pay the publishers the money which they had earned? Why isn’t this one transaction in plus or minus?”
Good question! And as much as we would like to do this, accountants aren’t fans of this solution. Tax Offices either. This kind of transaction causes an unending avalanche of questions from these both sides.
The application for your magazine for which we will pay you
After this longish introduction (50% of the blog post?), let’s move on to the experiment which we want to carry out. As you can see above, our settlements with clients (publishers) aren’t the simplest ones.
We realize it and we are working on their simplification. That is why we want to offer a joint experiment to a small group of publishers. We will publish their application without charging any fee for it (neither one-time nor monthly ones). In exchange, we will retain all earnings up to an amount of $199 every month, and from the two-hundredth dollar up everything will go to the publisher.
For example:
- If your magazine earns $467, we will transfer $268 (everything over $199) to you at the end of the month.
- If your magazine has a bad month and earns only $85, PressPad will retain this money to itself and will NOT require supplementing amount of the service fee from you.
Why won’t we require supplementing the service fee? Isn’t it a shot in the foot for us? We can see from the stories of our clients that we can take that risk. Most of them earn more from their applications than they pay us for their maintenance. With that knowledge, we calculated that probably we won’t lose on this solution, and we will considerably simplify the settlements.
Pros:
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Are you interested!
If you are interested in the participation in our experiment, please write to me at michael@presspadapp.com. We want to test this model in a small group of magazines before we decide to offer it outside. You can also ask questions here or via email.