Apple pulls Financial Times iPhone, iPad app over subscription disagreement - Page 2

And I find one reason to be slightly less positive about Apple products because I cannot use my FT iPad app anymore (ok, I can still use it but it might not work with future iOS versions, eg, iOS 5).

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So consider this. Apple makes in-app purchases 5%. Then developers who currently sell their apps instead make them free with most features locked until an in-app purchase unlocks the functionality. All of a sudden they just worked around Apple's 30% fee for apps and only pay 5%.

That's the reason why in-app purchases are 30%.

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No, people complain when 80% of the content of a publication is ads. The content of the average publication is so heavily weighted to ads because it supports a ludicrous upside-down business model. The business model is broken and that simple fact is demonstrated by the numbers as reported by the Audit Bureau of Circulation: newspaper circulation declines run 5-10% per year for the last two decades, and the Newspaper Association of America reports declines in ad revenue for the last two decades running from 5-29%. Lose of ad revenue involves the impacts of media conglomerate building at the start of this mess, where media owners took on large amounts of debt to consolidate newspaper, magazine, radio and television properties. The result was to increase ads to increase ad revenue, resulting in less actual content.

On the heels of that was the development of the "internet as source"which provided a wider access to news and entertainment sources with more timely content, Craigslist and eBay eroded classified ad revenues, and other sources undermined content even further.

Thus began the downward spiral of traditional media - ad rates had to be lowered and circulation declined due to increased ads and less content-value compared to internet sources. Increased ads lessen content further and the internet pulled ad dollars and interest in Craigslist and eBay (and the increasing number of other "classified" websites)pulled classified ad dollars away from print. The burden of debt, and the declining value of the media being held by the conglomerates, together with ineffectual strategies to migrate content (and ad revenue) to the internet forced the closing of many newspapers, or consolidation of newspaper operations under a smaller central staff. In the meantime costs to print kept rising - gas costs kept going up, union labor kept demanding higher pay - cost of benefits increased, profitability can't be maintained under such pressures.

Let's remember also that these same publishers were NOT just selling demographics to their ad suppliers, they were selling subscriber information to the highest bidders as well - a very lucrative source for mailer operations, for example. Apple has decided to require certain limitations which run counter to the situation that many publishers find themselves in - their operational overhead (including accrued debt through consolidation) exceeds their ability to accept Apple's charges and restrictions. No publisher HAS to be in the App Store, they may want to be to leverage Apple's popularity to drive higher deadership and more ad revenue, but they are subject to Apple's requirements. If they cannot adjust their operational costs in order to adjust to the demands of a market window (like a surcharge to be on display in a big-box retailer), then they have no reason to be there. But Apple, Amazon or anyone else do not owe it to the publisher to modify their requirements if there is no effective value to do so.

And because they are conglomerates, they aren't nimble enough to make the kind of shift needed to absorb lower internet ad revenue initially in order ot build a strong internet delivery model. Which means they stagger around like dying elephants failing under their own weight until they either fail entirely or are reduced to a small core of contributors (ala Huffington Post for example) and embrace the internet. They are once again forced to be efficient with ad revenues, and their success depends on them making this transtion effectively - most won't.

Once more, with feeling ..... FT does not have to be in the app store .... readers can go to a FT website, if they choose. The problem is that FT wants to be part of the app store for obvious reasons, but they want Apple to change their whole privacy philosophy to suit FT. FT is wrong. Use it, as is, or not ..... your choice.

Sorry, but I think you're wrong. Look at it this way. If I want to buy a shirt I would walk into the retail store of my choice. I would pick up the shirt, made by all of the various manufacturers .... that choose to be on display in that store because of it's popularity .... go to the cash register... and pay, probably by credit card .... take the shirt home and start using it. Just substitute the word shirt with the word app and it becomes clearer.

FT wants you to follow that process to a "T" .... until it's time to pay ... then they want you to leave the "shirt" there ... go to their store and buy the "shirt" ... oh, and btw ... they want Apple to display a sign redirecting you to their store.

Does that sound fair to you?

I agree a web app for FT makes a lot more sense than an app in the app store. However, their explanation makes no sense at all.

If FT's issue is really over demographic data, then they should be fine with removing the in-app links. Apple won't let them do subscriptions through in-app purchase, forcing them to sell subscriptions through other means (web, phone, mail, TV infomercials). Whatever sales channel they use, they are completely free to collect whatever subscriber data they want.

Pulling the FT app is not about either the 30% cut or the demographic data. Selling subscriptions via web is what they are going to instead and that gets around both issues. So why did they really refuse to remove in-app purchasing?

I'm guessing it's more about the broader reach a web app gives them but I don' know why they don't just say that instead of nonsense about demographic data policies.

@punkrocker27ka, Firefly7475 and some others

This is pretty much a non-story, and you really don't seem to get it. I don't mean that in a mean or argumentative way, just that this has been discussed to death here and elsewhere and there are simple facts that explain all the decisions made on both sides that are fair and just.

To save you trawling through past discussion, here are the main points:

1) HTML 5 was the original development model for iOS Apps. It's how Apple original suggested developers built their apps. There was no App store and no 30%. But this meant a lot of re-skilling for developers who already had mobile products and/or Cocoa skills and wanted to bring products to market quickly. The users also wanted Apps quickly too.

2) In response to this very loud demand, Apple built an App store with a 30% commission based model. For independent developers like me, this was tremendous value. Other publishers could choose whether it suited them or represented value or not, it's a business choice.

3) Some publishers exploited the App Store by publishing free or cheap Apps that were really conduits into their own subscription services, thus bypassing the 30% fee to Apple.

4) Apple closed the loophole by introducing in-App purchasing and insisting any publishers selling through App store apps used this mechanism, thus protecting their investment in the App store and its business model.

5) Publishers then had to choose which model to adopt. Use Apples shop and pay a commission, or use their own shop and do what they like.

6) We have seen through the Lodsys patent dispute that Apple paid patent royalties to provide in-App purchase facilities, and are also playing an active role in defending it's use. So in-app purchase comes at a cost to Apple and it's only fair they cover these and other operating costs (and make a margin), they're a business who need to make a return on their investments, why let Amazon or FT use it for free?

Some users, not the two mentioned, also seem to have got the wrong end of the stick and seem to think these apps can no longer access their content. I can still go to Amazon and buy a kindle book and have it delivered to my kindle app. It's just that if these companies don't want to pay the commission for in-app purchases, their users will now have to make their own way to their shop to make the purchase. FT seems to have decided to abandon the Cocoa App altogether and move to a HTML 5 solution. Amazon chose to fix their Cocoa App while they migrate to (or parallel run) their HTML 5 solution. Zinio chose to take the commission hit because (presumably) they feel they can build a better user experience in Cocoa.

Apple did nothing wrong. Amazon did nothing wrong, Zinio did nothing wrong, Wired did nothing wrong, FT Group did nothing wrong. It's only a story because the name FT. I'd imagine many apps that failed to comply got, or will get, pulled.

-Najinsky

I think these are both interesting analogies that help illuminate the complex (and multiple) issues at play here.

The first analogy makes a lot of sense - if one thinks of an app on an Apple device as comparable to going to to a mall or big-box store. The second analogy makes sense if using an app is (or should be) no different than visiting a comparable website.

My view tends towards the latter. I don't understand why using FT (or Amazon, or Hulu, etc) via an app should be different - in substance or cost - from using the FT, Amazon or Hulu website. When I open the FT app, for instance, I don't think of myself as being in the Apple 'department store' (i.e., the Wal-Mart analogy); I think of myself as using an internet-capable device to see what FT has going on.

Also, consumers can respond to the first analogy by doing research - going on the web, seeing who has the best price. It's a lot harder and more cumbersome to do the same for app-based purchases -- once you're in an app, you're not likely to say "Hmm, I'd like to buy that, but let me back out of the app, open Safari, and see if I can get it cheaper" -- particularly when you're comparing oranges to oranges, i.e., the FT-based price in the app to the FT-based price on the web! That's just incredibly counter-intuitive and not something most consumers will do - hence, I believe, a lot of people's allergic reaction to Apple's rules (and also hence the Achilles heel of the first analogy).

How "important" was this app to Apple. Sure the iPad etc was like 10-20% of the new subscribers for FT. But how many downloads was that compared to other apps that did comply like Kindle, Netflix etc. In the end perhaps not really that much. Which is why Apple really doesn't mind that FT decided not to update their apps any further and let Apple dump the app when they got around to it.



And one of those rules is that it is Apple's party and they can change the rules at any time they want. If you don't like it, you are welcome to leave. Which FT did.

Then don't use an App.

Sheesh, what's so hard about that?

Sure, but it would be very easy for Apple to apply a different percentage for subscriptions (recurring revenue). I don't think most apps would do well if you they required subscriptions.

That I prefer the native app of the FT to their web app.

It's a shame, it was a good app. Though the video streaming was sometimes a bit underpowered.

And you apparently don't understand Apple's (or Wal-Mart's) Business Model.

Here's how it works with Walmart: They BUY products from producers at a bulk discount rate and then Re-Sell the products to consumers at a markup to cover the cost of hosting it in store. (Wal-Mart's Markup is also a LOT less than Apple's). That means the F-T is paid BEFORE a single copy is sold to consumers.

With Apple, they're putting an AD to the content (app store) and a minimal amount of hosting to host the app itself. And then all the content, all the main hosting fees, are shouldered by the manufacturer themselves. Furthermore, the manufacturer DOESN'T get paid until users purchase the content, and then they're responsible for getting it to the user.

A more apt comparison would be if Apple was the owner of something like Mall of America. It's prime real-estate and draws a lot of consumers so companies pay "rent" to put up a storefront. Should Apple get paid something for creating such a desirable location? Yes. Should they get .30 on every dollar for every user (even if that user never comes to the store in the mall again)? No.

EDIT: Some companies decided that it was better to take the hit and accept the IAP options. For smaller developers, this is actually a boon because they don't have to worry about credit processing, refunds, etc. Some (like amazon) complied and removed all references to buying in the store from their app. Both of these are valid options. There's no right or wrong choice when it comes to what the companies want to do with their money, but for large companies with established payment protocols, using IAP didn't make sense. Thankfully Apple also realized this and backed down from their requirement that any content viewed on an iOS device also had to have the option to be purchased through IAP.