IF you think about it, Apple's behavior here isn't that much different than MS telling PC manufacturer's that they must pay for a license to install Windows on every PC they sell, even if the customer only wanted Linux and not Windows on their computer.
Apple still allows purchases outside of iTunes, as long as the iTunes option is also available. That's the only thing keeping them out of hot water...but they are dangerously close to getting the attention of regulators and losing the trust of developers and customers. (In my opinion.)
I am not so sure that this would catch the eye of US regulators (maybe in Europe though) but it may cause some partners to take pause. I don't think it bothers customers at all if the product is the same price and the purchase can be completed more easily in-app.
Nobody has even seen the Sony e-reader. It probably links back to the app - kindle does.
The problem is that 11.2 used to ban people like Sony and Kindle from doing their own in-app purchases in the app UI ( not a huge technical challenge) so companies got around it by linking out to a website, and linking back it when bought.
Now Apple have demanded that Sony ( and others) have a UI which uses Apples In App Purchasing, but have made nothing else clear about how many buttons the UI can have, can the app even link outside to the website via a button, can there be differential pricing.
Its simultaneously amateur and sinister.
It is somewhat amateur but I am not seeing sinister. I expect the details will be revealed when they formerly announce the subscription service as this also entails in-app purchases. Hopefully, Apple will be flexible so that everyone wins.
If Apple were trying to be "fair" (vs just plain greedy), they would create a more flexible pricing structure. A few possibilities:
1. Charge a lower commision (ie, 10%) for in-app content purchases via the iTunes infrastructure than for application sales (30%).
2. No longer allow free commerical applications. You'd need to define "commercial"...such as an application which was meant to generate revenue for the developer via content subscriptions. This would allow Apple to be compensated for distributing the orignal application which is currently free.
3. (Not sure if the current rules already allow for this one) Allow the developer to have different prices for in-app content purchases via iTunes vs. non-iTunes distribution of content. So I could charge $10 for my content if you get if from me, $13 if you get it from Apple. This lets the customer decide if Apple's channel is enough of a convenience to justify Apple getting a 30% cut.
#2 isn't really feasible. #3 creates confusion for the user and would make Apple look bad for being greedy for "taxing" content purchases through their store. #1 seems like the best, most "fair" solution.
If it were MS doing something like this, every single person here would be calling them pure evil for it. To pretend otherwise would be naive Apple fanboy-ism.
Option #1 is clearly the most sensible. Hopefully Apple demonstrates sensibility when they announce the details of their subscription service which should also address other types of in-app purchases.
Apple's cut is not for you downloading the app. It is for giving the app's developer the channel to reach a customer, and customer utilizing that channel to make a purchase. Each time you buy something through the app, it's another instance of that channel facilitating a transaction between the developer and the customer. So Apple asking for a cut of the deal for each transaction is totally within the norm of such business practices. Take a real estate agent for example, you only have to sign with this agent once, but every property you buy through this agent, and no matter how many you buy each time, you have to pay a cut of commission on every single property's price.
Rest of your point on how much Apple should charge is certainly something Apple should do some serious thinking on to arrive at a good equilibrium.
I really agree with this sentiment. Apple, by virtue of its products and placement of the app in the App Store is providing some form of "merchandising". This, along with payment processing, is not worth 30% but it is worth something.
Hopefully, a mutually-beneficial arrangement will be achieved.
Apparently this game of Sony's is a subscription service. Home grown Zunepass without the ten tracks a month or whatever it is. Who knows if that will take off or not
It's interesting that the record labels have refused to let Apple enter the music subscription business. They have allowed others and this seems to be the approach they want to take themselves. As far as I am concerned, they should let Apple have a subscription-based service; I think their revenues would take a significant jump.
I still wonder if Sony might not make a nice department for Apple Inc. The music rights alone would be sweet and think of all those nice HD cameras and professional equipment.
The thought of Apple buying Sony makes my stomach turn. I love my PS3 and I have this nightmare fantasy of the newly acquired Apple-Sony division delivering a firmware update that makes the PS3 just as "full-featured" as the AppleTV:
1) Blu-Ray drive is disabled
2) Video output is downgraded from 1080p to 720p
3) USB ports no longer support external storage and peripherals, only for diagnostic purposes
4) Media card slots disabled.
5) Hulu Plus support removed
6) Vudu support removed
7) DLNA support removed
8) Video codec support reduced
9) Audio formats reduced to lossy formats except Apple Lossless
10) Audio/Video/Text messaging ability removed
11) 3D video support removed
12) Web Browser removed
13) Keyboard/Mouse support removed
14) Bluetooth support reduced to remote control only
15) Local storage of content to PS3 hard drive disabled
16) 1080p video/5.1 audio removed from Netflix app
17) Games no longer supported
18) Custom themes and wallpaper support removed
19) Firmware updates with new features are 1-2 years apart instead of 4-6 months apart
The thought of Apple buying Sony makes my stomach turn. I love my PS3 and I have this nightmare fantasy of the newly acquired Apple-Sony division delivering a firmware update that makes the PS3 just as "full-featured" as the AppleTV:
1) Blu-Ray drive is disabled
2) Video output is downgraded from 1080p to 720p
3) USB ports no longer support external storage and peripherals, only for diagnostic purposes
4) Media card slots disabled.
5) Hulu Plus support removed
6) Vudu support removed
7) DLNA support removed
8) Video codec support reduced
9) Audio formats reduced to lossy formats except Apple Lossless
10) Audio/Video/Text messaging ability removed
11) 3D video support removed
12) Web Browser removed
13) Keyboard/Mouse support removed
14) Bluetooth support reduced to remote control only
15) Local storage of content to PS3 hard drive disabled
16) 1080p video/5.1 audio removed from Netflix app
17) Games no longer supported
18) Custom themes and wallpaper support removed
19) Firmware updates with new features are 1-2 years apart instead of 4-6 months apart
Not to worry. That would be just one of the many product lines that Apple would sell off. When you go down the list of Sony's products, you realize that there are very few that would be of interest to Apple - starting with anything that has a spinning plastic disc.
Apple's cut is not for you downloading the app. It is for giving the app's developer the channel to reach a customer, and customer utilizing that channel to make a purchase. Each time you buy something through the app, it's another instance of that channel facilitating a transaction between the developer and the customer. So Apple asking for a cut of the deal for each transaction is totally within the norm of such business practices. Take a real estate agent for example, you only have to sign with this agent once, but every property you buy through this agent, and no matter how many you buy each time, you have to pay a cut of commission on every single property's price.
Rest of your point on how much Apple should charge is certainly something Apple should do some serious thinking on to arrive at a good equilibrium.
Kind of a bad analogy. In your example, you are utilizing the agent's services for each and every sale. So yes, they should get the commission. Imagine if once you've purchased a house through that agent, they then required you to allow them to try and sell you a house each and every time you moved. Even if you had another agent for your next move, you are required to allow the first agent to also have an opportunity to sell you the same house.
But overall, I think we agree. Certainly, Apple should get a commission if they provided the service through which you downloaded the new content. The issue is whether 30% for doing nothing but passing on the data is a fair amount, especially if they are going to require that option to be included in every subscription app.
Hm, something else I just thought of... Will Apple also be policing the content of the downloaded subscription material downloaded via iTunes?
Apple has some strict moral guidelines for what they allow for apps in the App Store. If they are requiring all content to be available via in-app purchases facilitated by the App Store, what happens if that content violates those guidelines? Will they be reviewing and blocking the content they find objectionable? And if they allow it to be downloaded via the iTunes, should they also allow the same content in the applications themselves?
But overall, I think we agree. Certainly, Apple should get a commission if they provided the service through which you downloaded the new content. The issue is whether 30% for doing nothing but passing on the data is a fair amount, especially if they are going to require that option to be included in every subscription app.
Even the staunchest of Apple enthusiasts should see this as unfair. IMO, Apple should get somewhere between 5 and 7 percent for "merchandising" and payment processing. Maybe, 10% tops, but that seems like a lot to me.
Hopefully, Apple will be fair with its partners because they do need partners.
Even the staunchest of Apple enthusiasts should see this as unfair. IMO, Apple should get somewhere between 5 and 7 percent for "merchandising" and payment processing. Maybe, 10% tops, but that seems like a lot to me.
Hopefully, Apple will be fair with its partners because they do need partners.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
Quote:
Originally Posted by penchanted
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
Which I clearly stated in my 2nd paragraph which you conveniently deleted from your reply to my post. Don't selectively quote someone just so you can have an excuse to be argumentative. You've contributed nothing to this conversation.
My orignal post:
And if I only subsquently purchase 1 issue (or even none) vs if I then purchase 100 issues over the next couple of years, why should Apple be compensated 100x more when the original app was only downloaded once? Apple created the problem buy insisting all app distribution goes through them. That's not necessarily a bad thing, but they also need to recognize the problems it creates. A 30% cut is probably reasonable for applications because of the marketing iTunes provides. But it's unreasonable for content if all Apple is doing is act as a data pipe from the application to the providers content. If I recall, the estimates for music was that Apple got about 10% of the sale price, the rest went to the content owner. Why then 30% for a magazine or book?
If Apple were trying to be "fair" (vs just plain greedy), they would create a more flexible pricing structure. A few possibilities:
1. Charge a lower commision (ie, 10%) for in-app content purchases via the iTunes infrastructure than for application sales (30%).
2. No longer allow free commerical applications. You'd need to define "commercial"...such as an application which was meant to generate revenue for the developer via content subscriptions. This would allow Apple to be compensated for distributing the orignal application which is currently free.
3. (Not sure if the current rules already allow for this one) Allow the developer to have different prices for in-app content purchases via iTunes vs. non-iTunes distribution of content. So I could charge $10 for my content if you get if from me, $13 if you get it from Apple. This lets the customer decide if Apple's channel is enough of a convenience to justify Apple getting a 30% cut.
#2 isn't really feasible. #3 creates confusion for the user and would make Apple look bad for being greedy for "taxing" content purchases through their store. #1 seems like the best, most "fair" solution.
If it were MS doing something like this, every single person here would be calling them pure evil for it. To pretend otherwise would be naive Apple fanboy-ism.
There, I quoted your whole post. Are you happy now?
It still doesn't make it right to compare Apple to Microsoft. The line I quoted is still wrong
There, I quoted your whole post. Are you happy now?
It still doesn't make it right to compare Apple to Microsoft. The line I quoted is still wrong
Sony was once an innovate company - they brought Beta to market, which was superior to VHS. They once stood for the consumer. Working in the broadcast industry, I saw that innovative steam ran out, and rather they relied on marketing - producing products at least twice the price of its nearest competitor Panasonic. Nowadays, their products are junk - I won't even buy any of their made-in-china televisions.
I don't know what they're thinking - their CEO must be Mr. Schizophrenia living in Dementia - how can they think that way??? It is slightly delusional to think that someone would subscribe to a service that would not allow them access to songs from the other 3 of the big four, isn't it??? I only see their tactic as trying to extort Apple, without them their music division would be nothing. Universal tried it with Pressplay, and failed miserably. With Sony - you'd have a major DRM infestation like Blu-Ray - look at the tactics they're using against the PS3 jail breakers - reminiscent of tactics used by the Costra Nostra, N'dranghetta, and Commora organizations (Mafia).
Kudos to Apple. Apple is a great American company that got to where it is by innovation - creating products that its customers want, rather than forcing things down someone's throat.
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
Quote:
Originally Posted by Wiggin
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
No, I'm not ignoring these. The fact Apple is doing something for a lower cost than the traditional retail sector is known as a business advantage. Entirely justifiable, and they are giving the wholesaler a nearly 40% discount on sales services.
What you are ignoring is that the cost of the service isn't the incremental cost of a single transaction. The actual cost includes the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage. At best Apple is clearing a couple percent as profit margin.
Yes that 2-3% percent adds up over the full number of sales, but it isn't a make all the money over the developer proposition. Apple set the aggressive service pricing because there is a clear benefit to the hardware side of the house and support for the vertical market health. The only folks who are complaining about the 30% service cut are the ones who never priced out what it actually costs to sell software as a serious business.
Regardless of the fact that Sony has been losing money, the market cap on Sony is $35 billion. Apple would have to pay a premium to buy it. Japanese regulations probably wouldn't permit a non-Japanese company to buy it anyway. Why would Apple buy it?
In 2009, Sony had 171,000 employees. Apple has about 37,000 employees. Absorbing Sony would be completely overwhelming to Apple. You can't run a company the size of Sony the way that Apple is run (with a very hands-on executive team). Apple has a relatively few number of products and services. Sony has tens of thousands, if not more.
It would never happen and if it did, it would kill Apple. Get real. The only possibility is that Sony decides to get out of the music business, but I doubt U.S. regulators would permit Apple, as the largest distributor of online music, to buy one of the remaining four large music companies. But even if the regulators permitted it, Sony would never sell, if only for face-saving reasons and especially after absorbing most of BMG (RCA).
My bet is that regardless of their cash hoard, there are no big Apple acquisitions while Steve is still CEO and unhealthy.
No, I'm not ignoring these. The fact Apple is doing something for a lower cost than the traditional retail sector is known as a business advantage. Entirely justifiable, and they are giving the wholesaler a nearly 40% discount on sales services.
What you are ignoring is that the cost of the service isn't the incremental cost of a single transaction. The actual cost includes the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage. At best Apple is clearing a couple percent as profit margin.
Yes that 2-3% percent adds up over the full number of sales, but it isn't a make all the money over the developer proposition. Apple set the aggressive service pricing because there is a clear benefit to the hardware side of the house and support for the vertical market health. The only folks who are complaining about the 30% service cut are the ones who never priced out what it actually costs to sell software as a serious business.
What you are ignoring is that Apple is not doing any of this for Amazon, or Sony. The 30% is for a forced credit card transaction. These companies do all of the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage [sic] themselves. Thats what Kindle does when you re-direct.
Or do you think that Sony or Amazon were storing the e-books on Apple's servers. If you do, then let me put is as simply as fucking possible. They aren't.
The cult continues to defend Dear Leader without any factual evidence.
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
It's unlikely that the payment processing costs less than a penny. Apple probably pays the payment processor about 1.8% (maybe they could get a deal a bit lower but not much) plus they have to pay the transaction fee. Even if Apple negotiated a great deal for the transaction fee, I suspect it would still be 10 cents.
The rest of your comments are right on the money. If Apple does not provide the actual e-delivery, they should be asking for much less than 30%.
Apple could still make extra money in merchandising fees by allowing their supplier to pay the equivalent of shelf fees for premium placement (promotion) within the store - this is the equivalent of someone paying for an end-cap in a B&M. They may already be doing this for all I know.
Comments
IF you think about it, Apple's behavior here isn't that much different than MS telling PC manufacturer's that they must pay for a license to install Windows on every PC they sell, even if the customer only wanted Linux and not Windows on their computer.
Apple still allows purchases outside of iTunes, as long as the iTunes option is also available. That's the only thing keeping them out of hot water...but they are dangerously close to getting the attention of regulators and losing the trust of developers and customers. (In my opinion.)
I am not so sure that this would catch the eye of US regulators (maybe in Europe though) but it may cause some partners to take pause. I don't think it bothers customers at all if the product is the same price and the purchase can be completed more easily in-app.
Nobody has even seen the Sony e-reader. It probably links back to the app - kindle does.
The problem is that 11.2 used to ban people like Sony and Kindle from doing their own in-app purchases in the app UI ( not a huge technical challenge) so companies got around it by linking out to a website, and linking back it when bought.
Now Apple have demanded that Sony ( and others) have a UI which uses Apples In App Purchasing, but have made nothing else clear about how many buttons the UI can have, can the app even link outside to the website via a button, can there be differential pricing.
Its simultaneously amateur and sinister.
It is somewhat amateur but I am not seeing sinister. I expect the details will be revealed when they formerly announce the subscription service as this also entails in-app purchases. Hopefully, Apple will be flexible so that everyone wins.
If Apple were trying to be "fair" (vs just plain greedy), they would create a more flexible pricing structure. A few possibilities:
1. Charge a lower commision (ie, 10%) for in-app content purchases via the iTunes infrastructure than for application sales (30%).
2. No longer allow free commerical applications. You'd need to define "commercial"...such as an application which was meant to generate revenue for the developer via content subscriptions. This would allow Apple to be compensated for distributing the orignal application which is currently free.
3. (Not sure if the current rules already allow for this one) Allow the developer to have different prices for in-app content purchases via iTunes vs. non-iTunes distribution of content. So I could charge $10 for my content if you get if from me, $13 if you get it from Apple. This lets the customer decide if Apple's channel is enough of a convenience to justify Apple getting a 30% cut.
#2 isn't really feasible. #3 creates confusion for the user and would make Apple look bad for being greedy for "taxing" content purchases through their store. #1 seems like the best, most "fair" solution.
If it were MS doing something like this, every single person here would be calling them pure evil for it. To pretend otherwise would be naive Apple fanboy-ism.
Option #1 is clearly the most sensible. Hopefully Apple demonstrates sensibility when they announce the details of their subscription service which should also address other types of in-app purchases.
Apple's cut is not for you downloading the app. It is for giving the app's developer the channel to reach a customer, and customer utilizing that channel to make a purchase. Each time you buy something through the app, it's another instance of that channel facilitating a transaction between the developer and the customer. So Apple asking for a cut of the deal for each transaction is totally within the norm of such business practices. Take a real estate agent for example, you only have to sign with this agent once, but every property you buy through this agent, and no matter how many you buy each time, you have to pay a cut of commission on every single property's price.
Rest of your point on how much Apple should charge is certainly something Apple should do some serious thinking on to arrive at a good equilibrium.
I really agree with this sentiment. Apple, by virtue of its products and placement of the app in the App Store is providing some form of "merchandising". This, along with payment processing, is not worth 30% but it is worth something.
Hopefully, a mutually-beneficial arrangement will be achieved.
Apparently this game of Sony's is a subscription service. Home grown Zunepass without the ten tracks a month or whatever it is. Who knows if that will take off or not
It's interesting that the record labels have refused to let Apple enter the music subscription business. They have allowed others and this seems to be the approach they want to take themselves. As far as I am concerned, they should let Apple have a subscription-based service; I think their revenues would take a significant jump.
I still wonder if Sony might not make a nice department for Apple Inc. The music rights alone would be sweet and think of all those nice HD cameras and professional equipment.
The thought of Apple buying Sony makes my stomach turn. I love my PS3 and I have this nightmare fantasy of the newly acquired Apple-Sony division delivering a firmware update that makes the PS3 just as "full-featured" as the AppleTV:
1) Blu-Ray drive is disabled
2) Video output is downgraded from 1080p to 720p
3) USB ports no longer support external storage and peripherals, only for diagnostic purposes
4) Media card slots disabled.
5) Hulu Plus support removed
6) Vudu support removed
7) DLNA support removed
8) Video codec support reduced
9) Audio formats reduced to lossy formats except Apple Lossless
10) Audio/Video/Text messaging ability removed
11) 3D video support removed
12) Web Browser removed
13) Keyboard/Mouse support removed
14) Bluetooth support reduced to remote control only
15) Local storage of content to PS3 hard drive disabled
16) 1080p video/5.1 audio removed from Netflix app
17) Games no longer supported
18) Custom themes and wallpaper support removed
19) Firmware updates with new features are 1-2 years apart instead of 4-6 months apart
The thought of Apple buying Sony makes my stomach turn. I love my PS3 and I have this nightmare fantasy of the newly acquired Apple-Sony division delivering a firmware update that makes the PS3 just as "full-featured" as the AppleTV:
1) Blu-Ray drive is disabled
2) Video output is downgraded from 1080p to 720p
3) USB ports no longer support external storage and peripherals, only for diagnostic purposes
4) Media card slots disabled.
5) Hulu Plus support removed
6) Vudu support removed
7) DLNA support removed
8) Video codec support reduced
9) Audio formats reduced to lossy formats except Apple Lossless
10) Audio/Video/Text messaging ability removed
11) 3D video support removed
12) Web Browser removed
13) Keyboard/Mouse support removed
14) Bluetooth support reduced to remote control only
15) Local storage of content to PS3 hard drive disabled
16) 1080p video/5.1 audio removed from Netflix app
17) Games no longer supported
18) Custom themes and wallpaper support removed
19) Firmware updates with new features are 1-2 years apart instead of 4-6 months apart
Not to worry. That would be just one of the many product lines that Apple would sell off. When you go down the list of Sony's products, you realize that there are very few that would be of interest to Apple - starting with anything that has a spinning plastic disc.
Apple's cut is not for you downloading the app. It is for giving the app's developer the channel to reach a customer, and customer utilizing that channel to make a purchase. Each time you buy something through the app, it's another instance of that channel facilitating a transaction between the developer and the customer. So Apple asking for a cut of the deal for each transaction is totally within the norm of such business practices. Take a real estate agent for example, you only have to sign with this agent once, but every property you buy through this agent, and no matter how many you buy each time, you have to pay a cut of commission on every single property's price.
Rest of your point on how much Apple should charge is certainly something Apple should do some serious thinking on to arrive at a good equilibrium.
Kind of a bad analogy. In your example, you are utilizing the agent's services for each and every sale. So yes, they should get the commission. Imagine if once you've purchased a house through that agent, they then required you to allow them to try and sell you a house each and every time you moved. Even if you had another agent for your next move, you are required to allow the first agent to also have an opportunity to sell you the same house.
But overall, I think we agree. Certainly, Apple should get a commission if they provided the service through which you downloaded the new content. The issue is whether 30% for doing nothing but passing on the data is a fair amount, especially if they are going to require that option to be included in every subscription app.
Apple has some strict moral guidelines for what they allow for apps in the App Store. If they are requiring all content to be available via in-app purchases facilitated by the App Store, what happens if that content violates those guidelines? Will they be reviewing and blocking the content they find objectionable? And if they allow it to be downloaded via the iTunes, should they also allow the same content in the applications themselves?
Might be a bit of a moral quandary for them.
But overall, I think we agree. Certainly, Apple should get a commission if they provided the service through which you downloaded the new content. The issue is whether 30% for doing nothing but passing on the data is a fair amount, especially if they are going to require that option to be included in every subscription app.
Even the staunchest of Apple enthusiasts should see this as unfair. IMO, Apple should get somewhere between 5 and 7 percent for "merchandising" and payment processing. Maybe, 10% tops, but that seems like a lot to me.
Hopefully, Apple will be fair with its partners because they do need partners.
Even the staunchest of Apple enthusiasts should see this as unfair. IMO, Apple should get somewhere between 5 and 7 percent for "merchandising" and payment processing. Maybe, 10% tops, but that seems like a lot to me.
Hopefully, Apple will be fair with its partners because they do need partners.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
Retail channel buys at about 50-55% of retail for most low cost non-consumable product. Selling through Apple's channel is selling into the retail channel at 70%. No matter how you try to spin it, Apple is giving a better deal than retail, and for a lot of developers, they are voting with their Apps that it costs more than 30% of their gross to run their own stores or contract out the storefront.
I think you need to understand business better before you try to make pricing judgements.
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
Which I clearly stated in my 2nd paragraph which you conveniently deleted from your reply to my post. Don't selectively quote someone just so you can have an excuse to be argumentative. You've contributed nothing to this conversation.
My orignal post:
And if I only subsquently purchase 1 issue (or even none) vs if I then purchase 100 issues over the next couple of years, why should Apple be compensated 100x more when the original app was only downloaded once? Apple created the problem buy insisting all app distribution goes through them. That's not necessarily a bad thing, but they also need to recognize the problems it creates. A 30% cut is probably reasonable for applications because of the marketing iTunes provides. But it's unreasonable for content if all Apple is doing is act as a data pipe from the application to the providers content. If I recall, the estimates for music was that Apple got about 10% of the sale price, the rest went to the content owner. Why then 30% for a magazine or book?
If Apple were trying to be "fair" (vs just plain greedy), they would create a more flexible pricing structure. A few possibilities:
1. Charge a lower commision (ie, 10%) for in-app content purchases via the iTunes infrastructure than for application sales (30%).
2. No longer allow free commerical applications. You'd need to define "commercial"...such as an application which was meant to generate revenue for the developer via content subscriptions. This would allow Apple to be compensated for distributing the orignal application which is currently free.
3. (Not sure if the current rules already allow for this one) Allow the developer to have different prices for in-app content purchases via iTunes vs. non-iTunes distribution of content. So I could charge $10 for my content if you get if from me, $13 if you get it from Apple. This lets the customer decide if Apple's channel is enough of a convenience to justify Apple getting a 30% cut.
#2 isn't really feasible. #3 creates confusion for the user and would make Apple look bad for being greedy for "taxing" content purchases through their store. #1 seems like the best, most "fair" solution.
If it were MS doing something like this, every single person here would be calling them pure evil for it. To pretend otherwise would be naive Apple fanboy-ism.
There, I quoted your whole post. Are you happy now?
It still doesn't make it right to compare Apple to Microsoft. The line I quoted is still wrong
There, I quoted your whole post. Are you happy now?
It still doesn't make it right to compare Apple to Microsoft. The line I quoted is still wrong
Sony was once an innovate company - they brought Beta to market, which was superior to VHS. They once stood for the consumer. Working in the broadcast industry, I saw that innovative steam ran out, and rather they relied on marketing - producing products at least twice the price of its nearest competitor Panasonic. Nowadays, their products are junk - I won't even buy any of their made-in-china televisions.
I don't know what they're thinking - their CEO must be Mr. Schizophrenia living in Dementia - how can they think that way??? It is slightly delusional to think that someone would subscribe to a service that would not allow them access to songs from the other 3 of the big four, isn't it??? I only see their tactic as trying to extort Apple, without them their music division would be nothing. Universal tried it with Pressplay, and failed miserably. With Sony - you'd have a major DRM infestation like Blu-Ray - look at the tactics they're using against the PS3 jail breakers - reminiscent of tactics used by the Costra Nostra, N'dranghetta, and Commora organizations (Mafia).
Kudos to Apple. Apple is a great American company that got to where it is by innovation - creating products that its customers want, rather than forcing things down someone's throat.
You are ignoring the fact that for that 50% cut the retailer is handling inventory, merchandising and payment processing. If all that Apple provides is a spot in the store and payment processing (i.e., they do not handle the download), then 30% seems high.
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
No, I'm not ignoring these. The fact Apple is doing something for a lower cost than the traditional retail sector is known as a business advantage. Entirely justifiable, and they are giving the wholesaler a nearly 40% discount on sales services.
What you are ignoring is that the cost of the service isn't the incremental cost of a single transaction. The actual cost includes the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage. At best Apple is clearing a couple percent as profit margin.
Yes that 2-3% percent adds up over the full number of sales, but it isn't a make all the money over the developer proposition. Apple set the aggressive service pricing because there is a clear benefit to the hardware side of the house and support for the vertical market health. The only folks who are complaining about the 30% service cut are the ones who never priced out what it actually costs to sell software as a serious business.
Regardless of the fact that Sony has been losing money, the market cap on Sony is $35 billion. Apple would have to pay a premium to buy it. Japanese regulations probably wouldn't permit a non-Japanese company to buy it anyway. Why would Apple buy it?
In 2009, Sony had 171,000 employees. Apple has about 37,000 employees. Absorbing Sony would be completely overwhelming to Apple. You can't run a company the size of Sony the way that Apple is run (with a very hands-on executive team). Apple has a relatively few number of products and services. Sony has tens of thousands, if not more.
It would never happen and if it did, it would kill Apple. Get real. The only possibility is that Sony decides to get out of the music business, but I doubt U.S. regulators would permit Apple, as the largest distributor of online music, to buy one of the remaining four large music companies. But even if the regulators permitted it, Sony would never sell, if only for face-saving reasons and especially after absorbing most of BMG (RCA).
My bet is that regardless of their cash hoard, there are no big Apple acquisitions while Steve is still CEO and unhealthy.
I couldn't agree more with you . Very well put.
No, I'm not ignoring these. The fact Apple is doing something for a lower cost than the traditional retail sector is known as a business advantage. Entirely justifiable, and they are giving the wholesaler a nearly 40% discount on sales services.
What you are ignoring is that the cost of the service isn't the incremental cost of a single transaction. The actual cost includes the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage. At best Apple is clearing a couple percent as profit margin.
Yes that 2-3% percent adds up over the full number of sales, but it isn't a make all the money over the developer proposition. Apple set the aggressive service pricing because there is a clear benefit to the hardware side of the house and support for the vertical market health. The only folks who are complaining about the 30% service cut are the ones who never priced out what it actually costs to sell software as a serious business.
What you are ignoring is that Apple is not doing any of this for Amazon, or Sony. The 30% is for a forced credit card transaction. These companies do all of the maintenance, website updates, bandwidth, backup, redundancy, banking services, IT staff supporting the enterprise, and all that is before you get to the physical hosting and storage [sic] themselves. Thats what Kindle does when you re-direct.
Or do you think that Sony or Amazon were storing the e-books on Apple's servers. If you do, then let me put is as simply as fucking possible. They aren't.
The cult continues to defend Dear Leader without any factual evidence.
And don't forget property costs, payroll for sales clerks, utilities, theft, breakage, etc, associated with a retail storefront. So add all those to that 50% buy-in for retail and see just how much of that is left as profit. Compare that to the less-than-a-penny for Apple to process the transaction which results in a pretty hefty profit for them.
It's unlikely that the payment processing costs less than a penny. Apple probably pays the payment processor about 1.8% (maybe they could get a deal a bit lower but not much) plus they have to pay the transaction fee. Even if Apple negotiated a great deal for the transaction fee, I suspect it would still be 10 cents.
The rest of your comments are right on the money. If Apple does not provide the actual e-delivery, they should be asking for much less than 30%.
Apple could still make extra money in merchandising fees by allowing their supplier to pay the equivalent of shelf fees for premium placement (promotion) within the store - this is the equivalent of someone paying for an end-cap in a B&M. They may already be doing this for all I know.