Legacy apps must comply with Apple's App Store subscription rules by June 30 - Page 4

Originally Posted by anonymouse

Actually, it is your post that is irrelevant to the point under discussion.

However, as long as iOS remains the place where there are a large number of consumers able and willing to pay for content (as opposed to alternative platforms like Android, where no one wants to pay for anything) then the content providers will be there. The incentive is that that's where the customers are, and this isn't going to cause them to go anywhere.

Originally Posted by jd_in_sb

Because Jobs said that in-app purchases must offer the "same deal," app developers won't be able to offer small discounts to entice people to make out-app purchases (and avoid paying 30% to Apple).

Originally Posted by battiato1981

What is the percentage that Amazon takes from an outside, independent Amazon Marketplace vendor accessed through their site? Anyone know?

Originally Posted by anonymouse

Overhead? What overhead? There's no overhead, it's a simple revenue sharing system. If your app generates revenue, you agree to share it.

Originally Posted by Menno

30% isn't sharing revenue, that's taking practically all the profit. The number of companies who can get anywhere close to 30% in gross profit from sales (after taking out overhead costs and licensing fees) is next to nil.

Apple's basically saying: You do all the hard work, and we get paid for it.

Originally Posted by Menno

That only holds true if iOS is a PROFITABLE venue for their content, which this change might make impossible. Digital distribution isn't a high-margin industry. Those companies rely on VOLUME to turn the profit, not individual sales. If you take 30% of the revenue for each sale out, that leaves next to no room (if any) for any form of profit, and if a marketplace isn't profitable, companies leave that marketplace.

There is NO way you can spin this as a net gain for customers. The in app purchase option is nice, but people WON'T offer it unless it makes the money. So they either need to raise prices across the board (and punish everyone) or they withdrawl from the iOS store entirely.

We're not talking alternative platforms here. We're talking profitability. Even if Amazon/netflix/hulu+ had NO other mobile platform to go to, they would still pull out of apple's ecosystem if it stopped making them money.

Originally Posted by anonymouse

Actually, it is your post that is irrelevant to the point under discussion.

However, as long as iOS remains the place where there are a large number of consumers able and willing to pay for content (as opposed to alternative platforms like Android, where no one wants to pay for anything) then the content providers will be there. The incentive is that that's where the customers are, and this isn't going to cause them to go anywhere.

Originally Posted by anonymouse

So, basically, you have no argument, nothing left but name calling?

Originally Posted by Menno

30% isn't sharing revenue, that's taking practically all the profit. The number of companies who can get anywhere close to 30% in gross profit from sales (after taking out overhead costs and licensing fees) is next to nil.

Apple's basically saying: You do all the hard work, and we get paid for it.

Originally Posted by anonymouse

It's completely a net gain for customers. Content providers are going to sell content where they can and iOS is the place. Customers don't have to give up personal information and they don't have to remember where to go to change their subscription options. There won't be any downside for customers, and publishers will make money on iOS.

Originally Posted by mstone

No. Sorry that probably didn't come out right. My observation is the vast majority of the people I have met who own iPads are not at all like the people on this forum. They generally have much more modest needs than the geeks around here. They tend to get sucked into the TV commercial mentality, It's Magical. They can't imagine anything more than what is presented. If they can't find math symbols on the keyboard, then they just give up and go reread Winnie the Pooh - that they remember how to do.

Originally Posted by anonymouse

It's completely a net gain for customers. Content providers are going to sell content where they can and iOS is the place. Customers don't have to give up personal information and they don't have to remember where to go to change their subscription options. There won't be any downside for customers, and publishers will make money on iOS.

Originally Posted by Menno

Companies will not offer content in iOS if it doesn't make them money. Netflix doesn't give a crap about the number of subscribers they have, they care about the number of PROFITABLE subscribers they have.

This rule will result in only one of TWO outcomes:

1) Content providers will increase the price across the board to compensate meaning EVERYONE pays more, even those of us without iOS devices.

2) Content providers will drop an now unprofitable platform.

NEITHER option is a net gain for consumers. Do you honestly think that ANY big company can just give up an extra 30% of their revenue? You're assuming that everything will continue the way it has with just the added "benefit" of everything going through itunes. It won't.

Netflix isn't desperate for iOS subscribers. They're desperate for profit. They won't lose money ACROSS THE BOARD to make their user base larger.

Originally Posted by anonymouse

Right, no one is making money through the app store. You've gone over the edge to irrationality and absurdity.

Originally Posted by anonymouse

Companies will make plenty of money or their business models have bigger problems than this.

Originally Posted by xsu

According to amazon website, it's 6-25%.

Originally Posted by tjwal

Once thing to consider is that Amazon is providing a storefront for the smaller booksellers.

Originally Posted by Menno

No, you just don't know how to read.

People are making a profit in the app store. We're not talking about indi developers here. We're talking about content providers like Netflix and hulu.

Those companies WILL NOT make a profit with this revenue sharing model without jacking up prices across the board. A quick glance at their income statements will show you that. They DONT HAVE 30% of leeway to give.

Originally Posted by Xian Zhu Xuande

Is that sarcasm? I wouldn't call customers who are actually willing to buy apps, books, music they like 'sheeple' by any means. Most of us consume this type of media in some manner or another, but not all of us choose to pay for it—and those who do not choose to pay for it are not doing something which we ought to commend unless the media they consume, by nature, is free. I think the main reason why there is less purchasing on a platform like Android, however, is due more to platform structure and presentation rather than individual consumers (at least on the large scale).

Originally Posted by anonymouse

Companies will make plenty of money or their business models have bigger problems than this.

Originally Posted by anonymouse

Perhaps you forgot how to write. But, why don't you provide some of their income statements to back up your assertion.

Originally Posted by Menno

Companies will not offer content in iOS if it doesn't make them money. Netflix doesn't give a crap about the number of subscribers they have, they care about the number of PROFITABLE subscribers they have.

This rule will result in only one of TWO outcomes:

1) Content providers will increase the price across the board to compensate meaning EVERYONE pays more, even those of us without iOS devices.

2) Content providers will drop an now unprofitable platform.

NEITHER option is a net gain for consumers. Do you honestly think that ANY big company can just give up an extra 30% of their revenue? You're assuming that everything will continue the way it has with just the added "benefit" of everything going through itunes. It won't.

Netflix isn't desperate for iOS subscribers. They're desperate for profit. They won't lose money ACROSS THE BOARD to make their user base larger.

Originally Posted by asdasd

This is Apple against the world.

Thats not going to happen. Publishers have to have the same price. The iPad is not that important to Amazon that they will raise their prices by 43% across the board.

They already have done that - the 43% markup applies to Hulu, Kindle and Netflix ( and the company I worked for until they canned a project).

They win until everybody abandons the platform because it has bog all books compared to the Android, and far less choice of content providers. Even if the iPad comes in good this year, it wont last.

This is hardball nonsense from Apple at a time when they need to be more agressive about selling hardware and not give a toss about content providers making them rich by adding value to their platform..

Originally Posted by TxHokie

You have two of the options right.

The third option is that profits are sufficiently rich that the content providers can afford a 30% reduction in revenue. This is the case with the "app developers" that other commenters have pointed to. Its absolutely not true however with respect to Netflix, Hulu, Amazon/Kindle, etc.

A forth "option" is Apple negotiates. For apps that help realize sales of iOS devices, they might cut a sweeter deal. 5% to 10% might be supportable.

But there is no such thing as a free lunch. Apple wants more money. Unless apps are withdrawn, the money has to come from somewhere. It will either come from a third party's profits, or consumers. Those are the only two choices, at least in the short term.

Of course, Apple is probably playing for the long-term. Having succesfully launched the iPad, and gained enormous tablet marketshare, Apple may have decided to cut out the middleman. Instead of leveraging Netflix, Hulu, Amazon to help push device sales, they may prefer to squeeze them out of the app store, thereby increasing consumer demand for Apple-hosted media services (iBooks, and iTunes subscription-based services). Both of those may stink now, but that's at least partially because publishers and media companies have better (or more established) deals through 3rd parties (the aforementioned Hulu, Netflix, Amazon). If the Kindle app is gone, iBooks will probably be able to sign up more publishers. If Hulu/Netflix are gone, media companies may be willing to let Apple sell subscription services.

Originally Posted by TxHokie

Of course, Apple is probably playing for the long-term. Having succesfully launched the iPad, and gained enormous tablet marketshare, Apple may have decided to cut out the middleman. Instead of leveraging Netflix, Hulu, Amazon to help push device sales, they may prefer to squeeze them out of the app store, thereby increasing consumer demand for Apple-hosted media services (iBooks, and iTunes subscription-based services). Both of those may stink now, but that's at least partially because publishers and media companies have better (or more established) deals through 3rd parties (the aforementioned Hulu, Netflix, Amazon). If the Kindle app is gone, iBooks will probably be able to sign up more publishers. If Hulu/Netflix are gone, media companies may be willing to let Apple sell subscription services.

Originally Posted by madman74

My statement amounts to this. Apple got to those numbers by creating a platform that everyone wanted to be a part of and that consumers had almost limitless choices in regards to software and apps. Sure, Android is open, but it has never been able to make waves on Apple in regards to software and quality....

HOWEVER, this might do it. To think that developers HAVE to comply with Apple's new rules is a misnomer....they don't even have to submit. they can take their app off the iphone all together. With Android's growing market and Windows 7 still a decent developing platform (even though it doesn't have near the foot hold as the other two), I wouldn't be surprised to see netflix, Hulu, Amazon.com give the ol' "screw you" to apple. Now, how much does the value of those 100 of millions of Apple iOs products drop when suddenly the other companies run adds showing that you "can truly get anything and everything you want on our platform".

I just think Apple is making a mistake. I want Hulu. I want Netflix. I like all my Kindle books because iBook selection sucks. Take those away, and there's no need for me to have one of the most popular handsets in the world.
Oh...and my backside...it's sore, but...hey...at least I can read my Kindle books on another device.

Originally Posted by anonymouse

So, your argument seems to be that iOS users are stupid. Pretty much the same as before but worded differently. Not content with bashing Apple, bash their customers too?

Originally Posted by anonymouse

Companies will make plenty of money or their business models have bigger problems than this.

Originally Posted by Menno

I already did. It's also really easy to search for them.

In fact, why don't you provide me with the financial statements of some companies who can easily handle this 30% hit to their revenue.

Originally Posted by anonymouse

Well, it's your claim, support it with actual documents.

Originally Posted by Fireball1244

Stores that sell content that is owned by others -- rightsholders -- have a very established, predictable business model, with gross margins (before taking out the costs on their end) running between 15% for things like streaming video to 50% for things like physical books. Amazon, like every other ebook seller, including Apple, splits revenue based on the list price (which is set by the publisher) in a 70/30 split, with the publisher receiving 70% of the list price.

So let's take Amazon:

I buy a copy of Mac at Work for $19.99, the list price. The rightsholder gets 70% of that transaction, leaving Amazon with $6.00 to cover its costs, including storage of the file, serving the download of the file (many times if I own multiple Kindle-compatible devices), other associated costs, with whatever remains as its profit. Let's say those costs run up to $0.20 per book, leaving Amazon $5.80 in profits. But now, if that book is sold through an in-app purchase, Amazon is paying the rightsholder $13.99, paying Apple $6.00, and also paying its own costs of $0.20, leaving Amazon $0.20 in the hole for every book sold through the in-app system.

So what would you tell Amazon to do? Apple is demanding *every penny* of Amazon's gross revenue. The publishers, not Amazon, set the list price. Apple's rules preclude Amazon from increasing the cost of the in-app book to cover the costs of Apple's fees.

What would you tell Amazon to do?

The problem isn't Amazon's business model. The problem is that Apple's fee is so high that it absorbs the entire gross revenue Amazon structured into its price, to say nothing of the profits.

For video streaming services like Hulu, whose gross margins on subscriptions are significantly less than 30%, you end up with a situation where subscribers added through add more and more red ink to the bottom line -- it will *never* be profitable for Hulu to give Apple 30% of the fees from a subscriber that signs up through an in-app system.

Apple's fee is too high. These other companies can't make any money if on top of all their other costs, which consume more than 70% of the price of the goods they sell, they have to pay Apple 30% of the price as well. The math is *IMPOSSIBLE*.

And as a consumer, that pisses me off, because the value I get from my iPad comes, in no small part, from access to Kindle, Netflix and Hulu content. If an iPad was just a device that let me watch video from iTunes Store or books from the iBooks store, it wouldn't be worth having.

Originally Posted by Menno

I already did. It's also really easy to search for them.

In fact, why don't you provide me with the financial statements of some companies who can easily handle this 30% hit to their revenue.

Originally Posted by Sacto Joe

FYI, I've already subscribed for my wife and myself to two magazines, yearly subscriptions both; Elle (for the wife), and Popular Science (for me). Elle was like $19 and Pop Sci was like $16.

Originally Posted by yuusharo

You say that like it is no big deal. If you made 10 billion dollars in revenue last year, a 3 billion dollars difference is a HUGE deal. You're doing the same amount of work, but only making 70% what you were making before.

And again, we're talking about 30% off PURCHASES, not profit. It's one thing to say Apple gets 30% of whatever profit Amazon makes from the sale of a book, but that's not the case. Say if Amazon sold a $10 book and only made $3 profit from the sale. Well, if you buy through Apple, Apple gets the $3 while Amazon gets $0, and Amazon is still expected to shoulder the servers and bandwidth to deliver that book they made no money on to you.

Why don't you ask Apple if they wouldn't mind giving up 30% of their revenue on the sale of their products and content and see if they don't complain.

Originally Posted by tjwal

the original announcement for Pop Sci was $4.99/issue. Are you saying the annual subscripton is $16? That is more reasonable.

Originally Posted by Fireball1244

Stores that sell content that is owned by others -- rightsholders -- have a very established, predictable business model, with gross margins (before taking out the costs on their end) running between 15% for things like streaming video to 50% for things like physical books. Amazon, like every other ebook seller, including Apple, splits revenue based on the list price (which is set by the publisher) in a 70/30 split, with the publisher receiving 70% of the list price.

So let's take Amazon:

I buy a copy of Mac at Work for $19.99, the list price. The rightsholder gets 70% of that transaction, leaving Amazon with $6.00 to cover its costs, including storage of the file, serving the download of the file (many times if I own multiple Kindle-compatible devices), other associated costs, with whatever remains as its profit. Let's say those costs run up to $0.20 per book, leaving Amazon $5.80 in profits. But now, if that book is sold through an in-app purchase, Amazon is paying the rightsholder $13.99, paying Apple $6.00, and also paying its own costs of $0.20, leaving Amazon $0.20 in the hole for every book sold through the in-app system.

So what would you tell Amazon to do? Apple is demanding *every penny* of Amazon's gross revenue. The publishers, not Amazon, set the list price. Apple's rules preclude Amazon from increasing the cost of the in-app book to cover the costs of Apple's fees.

What would you tell Amazon to do?

The problem isn't Amazon's business model. The problem is that Apple's fee is so high that it absorbs the entire gross revenue Amazon structured into its price, to say nothing of the profits.

For video streaming services like Hulu, whose gross margins on subscriptions are significantly less than 30%, you end up with a situation where subscribers added through add more and more red ink to the bottom line -- it will *never* be profitable for Hulu to give Apple 30% of the fees from a subscriber that signs up through an in-app system.

Apple's fee is too high. These other companies can't make any money if on top of all their other costs, which consume more than 70% of the price of the goods they sell, they have to pay Apple 30% of the price as well. The math is *IMPOSSIBLE*.

And as a consumer, that pisses me off, because the value I get from my iPad comes, in no small part, from access to Kindle, Netflix and Hulu content. If an iPad was just a device that let me watch video from iTunes Store or books from the iBooks store, it wouldn't be worth having.