FTC looking into Apple subscription terms, while first publishers get on board - Page 2

You can laugh all you want. Bottom line is Apple is not doing anything illegal. There is no antitrust issue here. Apple is not telling providers how they should conduct business beyond Apple's own platform. They are making sure that iOS users have an easy one-click method for purchasing content and making sure the users are not getting screwed.

And Jesus was a bitch anyway, of course it wept.

I sure hope not. I want Apple's 30% to be form a huge number, and not a small one. So does Apple.

The real reason is MUCH more brilliant than you might realize: Apple doesn't want its users shopping elsewhere. It doesn't want anybody going to internet storefronts looking for a better deal. Every iPad owner will know that the best price is ALWAYS the iPad app price. Apple will keep its customers down on the farm, and will never let them even have a desire to see New Orleans. That is brilliant.

I expect a big pop when the publishers finally come around.

And what about eBay? They have an app, and they should pay Apple 30% of the gross if they want to access Apple's devices and Apple's customers.

Um, what are you smoking? That's obviously strong stuff!

Apps and content are two separate things. Apple hosts the apps and handles vetting and selling those apps. In fact, they explicitly do not allow iDevices to use any apps which Apple does not host. That's why there's a battle royale between jailbreakers (who want to use apps which Apple will not allow) and Apple.

Content is all hosted by the content seller. Amazon hosts and delivers Kindle books, MP3s, and TV shows/movies that they sell. Up until now, they also handled all payment processing for that content.

iTunes also sells content. Apple hosts and sells music and video sold by their own store.

Game developers (and some other app developers) who make use of Apple's IAP routines still host the content even though Apple is handling the payment processing.

Hulu (obviously) hosts its own content, as does Netflix. Like Amazon, they have exclusively handled processing payments through their own systems; until now, that is.

There are other apps I'm using on my iDevices which were developed by companies who were producing, distributing, and selling all the apps and content via their own systems years before the iDevice ecosystem even started development.

In fact, in another comment thread, someone posted part of Apple's App Store policies which require content providers to host their own content.

In short, you're flat wrong on this assertion.

Apple does not own me. I am not their slave. What makes you think they have a right to claim ownership of a device which belongs to me?

Apples policy has to do with making the consumer happy. I prefer using the Apple iTunes store because they promise to keep my info private. How many times have you bought something online only to have your mailbox full of spam the next day. I don't have to put my credit card number on many different web sites. If Apple were to allow publishers to link to ouside web sites and set different prices the publishers could set the iTunes price artificially high so they would not have to pay Apple. Apple is not making a fortune from the App Store. They have stated they want to break even. Consumers will pay a fair value for content that is worth it. If they need to make money they need to make content available that is worth what the consumer is willing to pay. I have paid for apps that I could have chosen a free version for, but the paid version was worth more to me. Don't spoil the iTunes ecosystem by letting the greedy publishers/developers blame Apple for their inability to market content that is not worth paying for. Apple is looking out for the consumers best interest. If the publishers want their 30% let them use their own ecosystem.

Yeah, right. It means the content seller gets screwed. Or they cover the extra costs (30% of the entire selling price, not mere 30% of the seller's profit, which in some cases IS the seller's entire profit, and then some) by raising the price of their content every place they sell it, thus screwing even non-iDevice users.

Someone gets screwed by this. Once everything shakes out, that's the end customer, in one form or another.

Actually Apple is free to change the terms at any given time, if they so desire. If you were a developer, you would know that already. But I'm guessing you're neither a developer or publisher. iOS is not and never has been an open development platform. Anyone who wants to develop for iOS must get Apple's permission and pay $99 a year for that privilege. This is widely known.

If you think that's bad, try writing an app for the Kindle or Nook. See how far you get. These type of platforms have existed long before iOS and will be around a lot longer.

Why not develop for Android instead? Ask a developer that question... There's almost 150 million iOS users who spent $1.7 billion in dollars last year for apps and content. That's 80% of all revenue made from all mobile platforms. How much did Android bring in? 3%. So, why not develop for Android, you might make money by cramming ads in your apps.

You are right that Amazon and Apple can set any percentage they like. I don't think any reasonable person has any problems with that. It's absolutely their right to charge what they think is a fair percentage for access to their platform/service.

But I think there is a case to made that the price fixing argument does apply in the case of Apple's rule of "equal or better pricing". Black's Law Dictionary, 7th Edition, defines price fixing as an "artificial setting or maintenance of prices at a certain level contrary to the workings of the free market."

I would argue that the Apple's rule will artificially set the prices of those items in non-Apple outlets, circumventing competition between outlets. If my argument proves to be true, Apple will have ended up screwing the customer, because publishers will artificially add 30% to the price of their products no matter which outlet you buy it from. I do think that is the very definition of anti-competition.

Or another way to look at it - without Apple's "equal or better" rule, prices will be lower in competing outlets.

Thanks for bringing that up. Actually no. The rules state that real world goods and services cannot be sold though Apple's IAP service. Apple is only interested in content, features or services that directly affect an app.

You might own the device, but your right to use it is determined by the license you accepted when you bought it. You do NOT own the code. You agreed that Apple could modify its code.

Try using your iPad without Apple's code. Good luck.

You own a chunk of aluminum, glass and silicon. Apple owns everything else, and allows you to use it if you follow their rules.

I don't think so. If you subscribe using your iPad, you will get the best price. Every time.

That is a win-win for consumers.

If that's worth spending an extra 43% to you (that's how much higher prices have to be for sellers to receive the same amount) then feel free to make that choice for yourself. As for me, I resent having to pay a higher price to sellers who I've been doing business with for years (and who already have my information, by my own choice) because they're forced to raise prices to make sure they don't go broke from people buying stuff through their app.

Put another way, if I'm buying from a vendor I know and have used for years, then they already have my info, and that's not a problem. If it's an unknown vendor, then I may prefer to use a middleman (like Apple) to protect my info, even if the cost is a bit higher. I've been doing that for years too.

It is MY right to choose which cost/value proposition best fits me, not Apple's.

Apple cut maybe "high" but its not screwing up publishers at all. You will tons of mag and newspaper subscription appear soon in the app store.

Its bad for resellers like Amazon, but since Apple is in the reselling business, why would it help other resellers? The solution for resellers is to not implement in-app purchasing and rely on there websites. They can still make a free app for there clients, but clients will need to go to there website for payments.

Nice. I know all of that. Now go back and read what I was arguing.

Someone was stating that Amazon deserved 70% because they hosted all the content.

I was merely saying, that Apple only charges 30% for the same services.

Are you insane? It was done for one reason and one reason only. To make sure other sales channels did not undercut Apple's 30% charge for their service. And WTF are you talking about with unfairly? My state charges a higher tax on gasoline than the state to the South of us. Is it unfair that Sunoco charges me more for gas than they charge customers in the neighboring state? Hell no, their costs are higher here so they pass it on to me. That is perfectly fair.

If I want to buy a physical book I can look at Borders, Barnes and Noble, Amazon and wherever else to find the best VALUE to me as a consumer. At my local B&N I can look over the book before I commit to buying and I can have it right now. Through Amazon, I can get it cheaper if I am willing to wait a couple of days. Both models work and I have a CHOICE, and so do the sellers. Is it unfair that B&N charges the customer more for the book? NO! They have the extra expense of offering a retail location, keeping books in stock etc. but they also offer what many consider to be a better service. Telling them they cannot charge more for their more expensive business model woulf be unfair.

What Apple is saying is we want to raise the cost of selling electronic content on our devices by 30% but since we do not think consumers will value the service we provide, you may not pass that cost on to your customers. You need to sell everything through our retail channel at the same or lower price than any others because if we don't put in anti-competitive provisions we KNOW we will lose sales to cheaper competition. If Apple's iTunes store was actually that much better than any other purchase option, they would not need to do that. The content owners and reseller and anyone else would simply price their products how they want to and the consumer would choose iTunes if they felt the convienience justified the pricing.

The udeniable fact with this policy is that Apple does not want to compete openly. They know that if content costs up to 43% more through Apple because iTunes/App store is a more expensive way to sell, then many sales will be lost to the cheaper competition. You can argue about the definition of the market and whether their anti-competitive behavior violates anti-trust, but there is no rational argument that what they are doing is not anti-competitive and not designed to reduce the ability for alternate sales channels to compete on an even playing field. This IS NOT in the consumers best interest and it is unbelievable how many Apple sheep are cheering and defending a policy designed to screw them over. Good lord people, WAKE UP!

Sad to see AppleInsider pick up this story. Please point to a direct quote generated by the authors of this story that back up their premise. This is simply hackery, not journalism.

You may not like Apple's policies, and regulators may well one day crack down on Apple, but this story doesn't tell me anything other than the people who the WSJ talked to, none of whom are in the government (in others words, publishers), are upset with Apple. Duh, I already knew that.

1) If it is so clear there are no legal issues whay are there multiple regulatory agencies looking into it and why are legal experts saying that there may be a legal issue. It is not nearly as clear cut as you think.

2) No, they are making sure that the users DO get screwed.

"Guaranteed lowest price" is a marketing trick companies use to keep prices up and reduce competition. If Home Depot advertises that they have the guaranteed lowest price on tools, other hardware stores have no incentive to cut their price below HD's because HD will cut further and there will be a price war that will hurt both of them. Instead the guaranteed lowest price takes the incentive away from price competition and lets both companies keep their prices higher and the consumer loses. It is amazing to me how stupid the average consumer is that they have not fiured this out. Shows how our education system has shortchangesd us by not teaching basic finance and economic skills.

This isn't just a theory, this is an undeniable fact. You are correct that what they are doing is the very definition of anti-competitive, and there is no denying that content could be sold cheaper if they did not have to pay the 30%. We already have other retail outlets that operate below this cost structure.

You can argue whether the anti-competitive behavior violates anti-trust laws, or whether what they are doing should or should not be illegal (laws can and do change just like Apples policies), but to say this is pro-consumer or not anti-competitive is factually wrong.

But they don't provide the same services for content. Odd that you would make that claim right after you say that you know Apple doesn't provide those services.

No. I'm not getting it wrong. I completely understand that Amazon is going to lose 30%. But Amazon is a RESELLER of content. They are not making or creator or publishing or producing, they are reselling someone else's content. Not only that, they have their own platform for doing this and are trying to hawk their goods on someone else's platform.

Apple's system works for two groups, content creators and content consumers. Apple doesn't give a crap about resellers who get between creators and consumers.

Again with 30%... Amazon gets up to 70% for distributing digital copies, plus they charge download fees. 30% is not obscene. In fact, Amazon charged everyone 70% before Apple introduced iBooks with its flat 30% fee.

It seems to me that everyone thinks it is fair for Apple to take a different cut of the same content just because someone might not make a profit due to their business model. So Apple needs to start accounting for every different business model and pricing structure?

They don't?

So you're saying that Apple doesn't distribute music, movies and tv shows through iTunes?
They don't distribute ebooks through the iBooks store?

You're right that the device cannot be used without the o/s. Which is why the license includes the right to use that o/s on the device. Without such a right included in the license, the device is useless.

There is also well established law on devices being suitable for the purpose for which they were sold.

Can ANY software license tell me who I can and cannot choose to do business with, and still remain legal? They do not own me simply because I decided to buy a device from them; a device, BTW, which is marketed on the basis of being able to run third party applications and provide access to third party content.

It didn't work out so well when Microsoft tried it. I don't see why Apple should be any different.

These are the issues the FTC is looking at, as they should.

You're arguing on the basis that Apple somehow has some inherent right to control what I can and cannot do on this device simply because Apple built it. Where does this supposed "right" come from?

Ummm

I don't quite know how to respond to this without totally insulting you.

You claimed you understood the facts I pointed out, but you CLEARLY do not. You really need to go back and reread it. How can you honestly expect anyone to take you seriously when you argue this way?

Apple hosts ONLY the content it sells through iTunes, iBooks and the App Store. It DOES NOT host third party CONTENT such as Kindle books, Hulu and Netflix video, or any other non-Apple In App Purchases.

I think the problem here is that you're trying to equate selling with reselling. Apple charges content producers a flat 30% to sell their content. Apple charges content resellers the same. Apple does not make a distinction between the two. So if a reseller, who owes a royalty to producers, wants to sell stuff to Apple's users, then of course they're going to make less after Apple takes their 30% cut. This is normal in the business world.

A content producer can sell their content at the same price Apple does and make the same amount. And they can set their own price. However, that price cannot be higher than they sell it anywhere else. So if the producer sells the book at Amazon for $10, they have to sell it Apple's users for the same price.

Content producers and content consumers have nothing to lose. It is the resellers that will get screwed, but they have other outlets and their own platforms to sell that content on and make a profit.

No, as a user you can do whatever you want. Throw the damn device against the wall.

Apple can say what a developer can and cannot do.

Let me type this out, so YOU UNDERSTAND CLEARLY...

Apple hosts all the content they sell through their own stores.

All in-app content must be hosted on the developers own servers.

CLEAR?

So what exactly is the problem? Apple doesn't deserve the 30% cut simply because they don't host the content!?

1) Because some people are making a big stink about it. Bottom line is, it's Apple's platform. And no this is not the same as Microsoft. Windows is an open development platform just like OS X. iOS is not and never has been. Apple sets the rules and developers have to get permission to develop for the platform. It's funny that no one brings up the fact that Apple does not allow 3rd party music sales. Yet argue about Apple wanting a cut to allow other media stores and services on their platform.

2) No, only content resellers will get screwed. iOS users and content producers will continue to benefit.

That much is correct. Amazon and each publisher negotiated a contract. Amazon provides certain services to the publisher such as an ebook format with certain features, marketing, hosting for the content, tech support to end users, payment processing and so forth. In return, the publisher agrees to provide Amazon with the content in return for a certain amount of money per sale. If either side doesn't like the terms of the contract, then it doesn't get signed. But the contract is between Amazon and the publisher, not between Apple and publisher. They have no legal right (or moral) right to interpose themselves into that contract.

Unless the publisher agreed to an exclusivity clause, they are free to negotiate a separate contract with Apple to provide the same content via Apple's services. Why can't Apple just do that instead of inserting themselves into the existing reseller/customer relationship?


Apple markets the iDevices as open platforms running third party applications, including specific mention of Kindle. This makes the iOS platform a general purpose platform, like a Mac or Windows (or Linux) computer. Just because Apple claims the right to control what applications can be run on iOS devices does that mean they legitimately have an actual right to do so? I don't think so.

Also, Apple made an explicit decision to promote the availability of content based apps such as Kindle as a selling point because it helped them sell more devices. To then turn around and claim that platform sales driven by content available for that platform causes people to want that content is inconsistent. It's pretty much claiming that "what's mine is mine, and what's yours is mine."


That's apparently true. They do seem to care about pushing themselves into the position of being the reseller.


So what?!? As I pointed out earlier, this is the deal they negotiated with the publisher. (Though I doubt that Amazon actually gets 70% very often. Remember, there are a certain class of books which Amazon agrees to take only 30% without having to be negotiated down.) If the publisher thought the deal was unreasonable, they wouldn't have signed the contract.


Unless they're under some existing contractual obligation, publishers are just as free to sign a contract with Apple as they are with Amazon. That such contracts aren't being signed very often suggests that it's something other than the percentage which is causing publishers to balk.


Remember, the reseller still has the costs of hosting, marketing, app development, etc. to cover out of their own profits in this scenario. The only value Apple is "adding" is handling credit card processing, something these companies are already doing themselves. Why does Apple deserve to be in the middle of that transaction taking 30% when the resellers pay less than 3% for the same service now? Especially since in some cases, 30% is the ENTIRE profit the reseller would receive (which means they would be losing money on every transaction)?


That's what Apple is doing when they attempt to dictate what price the reseller can charge.

That's exactly what I was trying to tell you, but you were arguing with me by asserting that ALL content was hosted by Apple.


No, they don't. Not when the going rate for the only service they are providing in this case (payment processing) is only 3%. And especially not when they're imposing this rate by force.

That's odd. I have more than 4,700 songs on my iPod. Only about 30 of them were purchased from Apple. I guess the other 4,670 don't actually exist. (Yes, they're all legal.)


Okay, it's time to say this flat out: You're an idiot.

If content resellers are getting screwed, they have only two options:

1) Pull out of the platform/go out of business. In this case, users lose access to the content. This is the users getting screwed.

2) Raise prices on their content for EVERYONE they sell to. This is users getting screwed, even non-iOS users.

Again, you're asserting that "right" without supporting that claim. Put up or shut up.

Why do content providers NEED native iphone apps?

I mean the whole base of your points is predicated on the fictitious need to have a native app to view content on an ipad.

This is not the case AFAIK.

How is that remotely correct?

They can still provide content via several methods.

Just not via a native ipad app IF the cost to do so is prohibitive.

deleted

So then price fixing does not apply in this case.

Two basic reasons:

1) Offline access to content. On devices which only have WiFi (such as the iPod Touch and a significant percentage of iPads) this is a MUST.

2) Features which are not possible via web sites. These can include such things as handling extremely large books, advanced searching, note taking, bookmarks, and (especially relevant for publishers' protection) DRM, among others.

The regulators will look into this because they have to, it doesn't mean Apple has done wrong.

I don't really see the problem. Apple isn't saying publishers can't publish content at a different price, they're only saying they can't sell the iOS content at a higher price within the app.

For example, The Wall Street Journal can sell multiple digital editions of their paper, one for iOS, another for Android, and yet another for Kindle, and charge whatever they want for each. If the content isn't completely identical, it would be hard to argue they are selling the same product. Just call the iOS version it the "Wall Street iJournal".

Apple demands the iOS version must have an in app subscription option, for which they will take a 30% cut. If WSJ wants to, they can also sell it outside the app through their own web site, for which WSJ keeps 100% (but incurs additional costs to host and manage), but cannot sell at a lower price than the in app subscription.

The WSJ in this case is free to choose the price (note that Amazon also sets the price in addition to taking their cut and charging a data fee) and is free to choose whether to offer such a service on iOS devices. They're also free to make their content available through a web site (with login), which can also be viewed on iOS devices. I presume the iOS version would be better than what can be offered over the web, not to mention the content would be available off-line.

Apple is all about the user experience. Their restrictions, while the bane of some developers, creates a superior user experience. Those who don't like it don't buy the device (or don't develop for it), but the runaway success of iPhone, iPod, and iPad have demonstrated that a large number of consumers do.

As one poster pointed out, the value for developers has been the frequency with which iOS users purchase content. A lot of this is due to the ease with which this is done. I believe the same will go for digital publishing and the publishers' whining will eventually subside.

To look at it differently, if Apple wasn't so strict, iOS devices may not be as popular as they are and nobody would care if they were strict. As the saying goes, they're damned if they do and damned if they don't!

Why can't a third party have a licence to read different formats and offer it as an ereader with no specific content provider?

Then content providers can sell from thier websites and offer no dedicated amazon or xMagazine reader?

This applies:


Apple requires in app purchases prices be no more than non-app prices in order for an app to be available to iOS users, even though the cost structure of such sales is significantly higher. In other words, they're not permitting the reseller to offer "discounts" through their own sites where the costs are lower. There's nothing in those descriptions about the agreement being entirely voluntary.

As I interpret this, the "agreement" mentioned in all of those bullets is an agreement between competitors, where in the case of apples subscription policy this is not happening.

Apple's App Store, is not a Kindle competitor. iBooks and Sony's ereader are kindles competitor.

And there is simply no agreement for pricing between these competitors that I can see.

Feel free to explain how I may be interpreting this incorrectly, this is just how i've read it.