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

post #121 of 257
Quote:
Originally Posted by anonymouse View Post

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.

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.
post #122 of 257
Quote:
Originally Posted by jd_in_sb View Post

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).

I wonder what the law is for that.
Can Apple make it a contractual agreement that prices must match?
IMO Tit-for-tat -Apple makes them put the purchase 'option' on the app, vendor sets the price.

This article implies a vendor cannot set a different price(if Im reading this correctly)

http://www.freshfields.com/publicati...2006/13899.pdf

Is there a lawyer in the house?
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post #123 of 257
Quote:
Originally Posted by battiato1981 View Post

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

According to amazon website, it's 6-25%.
post #124 of 257
Quote:
Originally Posted by anonymouse View Post

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

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. if it were 30% of the profit they MIGHt have a point, but they are saying 30% of revenue. We're not talking about an indie app developer who sells additional levels in app. That has a cost, but it's all developer overhead.

We're talking about companies like Netflix that have to pay MILLIONS to get the rights to stream certain shows, pay for servers to host the content, pay for the DRM servers to keep the studios happy, pay to have their content delivered to end users. Look at the Netflix income statement. in December they posted a mere 37% gross profit. Now, that sounds like a lot but lets break it down. Hypotetically, let's say that all subscribers of Netflix have an iOS device they have the app on. I know this is not true to real life, but we don't have the real number.
http://finance.yahoo.com/q/is?s=nflx

Apple would take .30 of every dollar netflix brought in. If you look at their December numbers, this would mean that almost 80% of their gross profit would go to Apple. In December they only made a net income of 6.8%. This means that if Every Netflix customer had an iOS device registered with netflix, the company would've made NO money whatsoever.

Yes, I know that not every Netflix customer has an iPhone. That's not the point. The point is that by requiring 30% of revenue, Apple is potentially taking EVERY CENT of profit and then some. That's not revenue sharing, that's highway robbery.

Apple's basically saying: You do all the hard work, and we get paid for it.
post #125 of 257
Quote:
Originally Posted by Menno View Post

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.


the whole idea behind in-app purchases was to reduce the number of lite demo apps so that people would buy one app and buy the extra functionality within the app so the base app could be like a demo. before that free apps had to be free and if you liked an app you had to find the real one. it was actually a good idea

except that with kindle and other book apps they were always free and you had to buy the content outside of the app store
post #126 of 257
Quote:
Originally Posted by Menno View Post

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.

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.
post #127 of 257
[QUOTE=starbird73;1808196]It doesn't? Like another post states, it puts amazon, netflix, etc on the same playing field as Joe's App Shop. Apple manages the transaction, users know that only one place has their credit card, etc. Plus, think of it this way. Users who don't have a credit card can now use iTunes gift cards for these in app purchases. It is streamlining the entire process, which, in the end, will benefit all companies involved.


Such convoluted thinking - Bagdad Bob would be proud.

First, Joe's app shop is selling an app not other content such as the Amazon bookstore, netflix's etc.
Second, its Apple's desire to "manage" transactions - not these vendors. In other words their "management" is solely to collect 30% of the transaction price. Third, "streamlining" the process for an extremely high fee! Guess who ends up paying for the additional cost - you the purchaser. Personally I'm not interested in paying a 30% Apple sales tax. Fourth, companies like Amazon, Netflix and Hulu Plus will likely pull their store from the App Store. Explain how this helps the user! Look, I use a lot of Apple products. But, when they behave like a banana republic I'm certainly not going to apologize for or overlook their actions.
post #128 of 257
Quote:
Originally Posted by anonymouse View Post

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.

If there is no content there to sell, because content providers have moved on, then iOS will no longer be the place.
post #129 of 257
Quote:
Originally Posted by anonymouse View Post

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


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.

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post #130 of 257
Quote:
Originally Posted by Menno View Post

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.

Right, no one is making money through the app store. You've gone over the edge to irrationality and absurdity.
post #131 of 257
Third party apps do not have to use IAP. They can simply use the app as only a reader (for example, Kindle), and use their own website to charge for the content.

The whole point is, you can do the marketing completely on your own, and Apple gets nothing; or if you want the aid from Apple (in this case, IAP within app for the payment), then Apple wants the cut.
post #132 of 257
Quote:
Originally Posted by anonymouse View Post

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.


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.
post #133 of 257
Quote:
Originally Posted by mstone View Post

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.

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?
post #134 of 257
Quote:
Originally Posted by anonymouse View Post

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.

Prices going up seems like a big downside.
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post #135 of 257
Quote:
Originally Posted by Menno View Post

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.

Companies will make plenty of money or their business models have bigger problems than this.
post #136 of 257
Quote:
Originally Posted by anonymouse View Post

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

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.
post #137 of 257
Quote:
Originally Posted by anonymouse View Post

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

Most successful companies run on a profit margin of well under 30%. In fact, almost every company does. I fail to see how you could believe differently.
post #138 of 257
Quote:
Originally Posted by xsu View Post

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

Once thing to consider is that Amazon is providing a storefront for the smaller booksellers.
post #139 of 257
Quote:
Originally Posted by tjwal View Post

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

And amazon doesn't require that those sites sell products for the same price or cheaper through their storefront.
post #140 of 257
Besides, I wonder if Apple's decision on this is more to head off Amazon's rumored subscription based TV and Movie service (subscription via the Amazon Prime membership)...

Perhaps the rumor of Amazon's offering free Kindles with Amazon Prime Memberships will again resurface... If Amazon pulls the Kindle app and essentially provides a free Kindle, most users won't have jack to complain about....
post #141 of 257
Quote:
Originally Posted by Menno View Post

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.

Perhaps you forgot how to write. But, why don't you provide some of their income statements to back up your assertion.
post #142 of 257
Quote:
Originally Posted by Xian Zhu Xuande View Post

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).

I just take exception with the Apple heavy handed restrictions. In their effort to control the subscription revenue for other large corporate peers, they unintentionally write rules that affect all kinds of other diversified developers. For example I am writing an app that will be used by manufacturers sales representatives. The nature of the program is in violation of Apples regulations because they will be able to order services within the app which are billed to their account and become available within the app.

I'm sure Apple has no interest in what we want to do but in order to prevent larger corporations from leveraging a potential loop hole they kill our little niche as well.

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post #143 of 257
Quote:
Originally Posted by anonymouse View Post

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

Let's look at netflix again, shall we?

http://finance.yahoo.com/q/is?s=nflx (All numbers are reported in thousands)

In December, they made 553,219.

Now, let's assume that 10% of their subscribers also used their iOS application. I don't think this number is that large of a stretch considering how popular iOS is.

So revenue that technically goes through apple's storefront:
55,321

So this means Apple would take an immediate 30% of that.
16,596

In that quarter they only posted a net income of 37,967

Can you really sit there and tell me that Apple deserves nearly 44% of Netflix NET income because they accounted for 10% of their revenue stream?

And yes, the cost would only apply to people who subscribed through the app, and not existing subscribers. Again, the point of this isn't to show real number but to hopefully show you why 30% is COMPLETELY unrealistic when you're talking about companies like this.


EDIT: This means that the MORE enticing iOS is to developers like netflix, the more it will cost them, and thus the less likely they are (in the end) to continue to provide content for it. iOS's popularity is a DETRACTOR here, not a benefit, and that's because of Apple's pricing.
post #144 of 257
Quote:
Originally Posted by anonymouse View Post

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

See above. or the post a few above this one where I gave the same link.

Apple updated their wording so that this implies that it will affect one off purchases (amazon) as well.

This means for every book sold through the app, amazon will LOSE MONEY. There is no way they can offer a service on the platform with those terms.
post #145 of 257
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.


Quote:
Originally Posted by Menno View Post

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.
post #146 of 257
Quote:
Originally Posted by asdasd View Post

This is Apple against the world.

Oh come now. Don't you dare suggest that Apple is somehow being exploited or is the victim here. They generate more in profit than oil companies, and is the largest company in terms of market capital in the world. Apple is *not* hurting for cash, here. Don't kid yourself.

Quote:
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.

The iPad is not important to Amazon? The iPad sold over 7 million iPads last quarter, the same quarter that Amazon posted record eBook sales that outsold paperback books for the first time ever. Are you seriously suggesting iPad users had no part in that gain? Honestly, ask anyone who uses an iPad for reading and tell me how many of them are not using Kindle.


Quote:
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).

Apple doesn't have any sort of subscription service for music or videos. That's why Netflix has gotten so popular - the lack of competition from iTunes has given them a huge start, one that has left Apple in the dust and unable to secure any deals with content providers.

So what's the solution? Either get the deals and open your own subscription service, or scrap off the top some of Netflix's revenue as a "finders fee," as though people needed the iPhone to know what Netflix is.


Quote:
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.

So again, you're implying that Apple is the underdog here? Please...

Quote:
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..

Why does Apple need to be aggressive about selling hardware? Android and other tablet sales have yet to sell anywhere near the rate of the iPad, and none worth talking about is able to meet Apple's $499 price point. Unlike phones, they're years ahead of everyone else with little competition in sight.

There is one thing we do agree about - Apple doesn't give a damn about developers or content creators. "Gee, thanks you guys for all your hard work making applications and services that have sold our products for years. We're thrilled that you've standardized a major portion of your business on our platform.... now it's time to pay up."
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post #147 of 257
Quote:
Originally Posted by TxHokie View Post

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.

I'm not arguing that apple shouldn't be able to profit from apps that sell content for their devices. I believe they should. but at 30% that makes businesses like Netflix and hulu unprofitable, not just "no net gain."

and forcing out kindle in favor for ibooks is a net loss for consumers. It means even MORE of the content is locked into a single ecosystem. With Kindle, I can take my book and read it on my kindle, on my android, or my computer, or my ipod touch.
post #148 of 257
Quote:
Originally Posted by TxHokie View Post

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.

Hm, Apple makes a move that either shuts out competition or allows competing services to pay them a large percentage to do business. In doing so, the prices increase across the board, since the same subscription must be in-app as well as outside the app.

Meanwhile, Apple builds its own subscription service, and after driving up the market with their exorbitant fees, they release iTunes subscriptions across all their stores and introduce at a lower rate than the competition, which is simply the same rates that exist today. So, the market responds by lowering their prices to compete with Apple... WHILE STILL PAYING APPLE'S 30% TAX. Those companies become unprofitable, they disappear from the platform, and Apple now has 100% of all the customers on their devices.

Yes, I realize there are so many flaws in my little conspiracy theory, but its not outside the realm of possibilities, yes?
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post #149 of 257
Quote:
Originally Posted by madman74 View Post

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.


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.

And note that these are highly interactive magazines that are optimized for the iPad experience. Finally, I was not required to send ANY personal info to either mag.

This is a winning strategy for Apple, and for the consumer. Period. End of discussion.
post #150 of 257
Quote:
Originally Posted by anonymouse View Post

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?


Yep. My friends and associates are the lowest common denominator. iPad is designed by Apple to be easy to use by the most clueless people imaginable. If you want to do any real work, it shackles you with endless hoops to jump through.

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post #151 of 257
Quote:
Originally Posted by anonymouse View Post

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

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.
post #152 of 257
Quote:
Originally Posted by Menno View Post

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.

Well, it's your claim, support it with actual documents.
post #153 of 257
post #154 of 257
Quote:
Originally Posted by anonymouse View Post

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

See the post DIRECTLY above the one you just quoted. or see fireball's response.

This isn't rocket science we're talking about here. It's simple math.

Cost+Markup=Revenue

You add apple's tax and it's coming directly from your markup which is almost always significantly less than 30%
post #155 of 257
Quote:
Originally Posted by Fireball1244 View Post

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.

Well said ALMOST. There are some flaws here. Apple isn't asking for every penny of someone's revenue. Gross Revenue is Cost+Profit and what you said would only be true if you were talking in terms of gross income or gross profit.
post #156 of 257
Quote:
Originally Posted by Menno View Post

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.

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.
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Video editor, tech enthusiast, developer.

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http://www.studioyuu.com
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post #157 of 257
Quote:
Originally Posted by Sacto Joe View Post

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.

the original announcement for Pop Sci was $4.99/issue. Are you saying the annual subscripton is $16? That is more reasonable.
post #158 of 257
Quote:
Originally Posted by yuusharo View Post

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.

ummm... you're missing the mark entirely. I'm the one who is saying that 30% is far too high. Anonymouse is the one who doesn't understand business.
post #159 of 257
Quote:
Originally Posted by tjwal View Post

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

Yes, the annual subscription is about $16 ($15.xx, don't remember the exact number).
post #160 of 257
Quote:
Originally Posted by Fireball1244 View Post

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.

First of all, Amazon is a RESELLER. In case you hadn't noticed, so is Apple (iBooks). The PUBLISHER can choose to sell the book through Apple's iBook app. Screw Amazon if they can't compete. And yes, screw Apple if THEY can't compete!

Same with Hulu, etcetera.

Besides, Amazon can still put their reader on the iPad. They just can't sell books through it come June unless they're willing to pay Apple's price - which they won't. So?

Flip it around: Can you buy an iBook on the Kindle? No? How about an iBook reader? Hey, at least Apple lets you read a Kindle book on an iPad!

Apple's tired of carrying the water for its competition. Guess what? THEY HAVE THAT RIGHT.
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