People need to recognize that there are three different constituencies: developers, publishers and distributors. It is important that these groups not be conflated since their interests are different with the exception that they would all, of course, like to take 100% of their products' selling price.
Most developers have little problem with the current 30% revenue share given to Apple. Apple has delivered more customers and in many cases (e.g., Pixelmator) eliminated the need for them to maintain a e-commerce site.
Publishers will have a range of reactions. The truth is that many publishers can afford the 30% revenue share if their selling price has not been lowered to reflect the elimination of all physical distribution cost. However, I am still not convinced that Apple deserves a 30% share, even allowing for the platform argument. IMO, Apple should lower their share to reflect that their primary service is providing payment processing plus some remuneration for "merchandising" (basically hosting the app). Again, IMO, 5-10 percent is more than generous and Apple would be generating a steady on-going revenue stream. I doubt most publishers would have a problem with paying this amount. Apple could offer other merchandising programs to highlight content from specific publishers and be paid accordingly for that service.
The final group is distributors like Amazon, Hulu Plus, Netflix, B&N, Rhapsody and others. Many of these will only be receiving a 30% (maybe less) revenue share from the publishers they represent. That means that they would be handing Apple their full profit (or maybe generating a loss). Significantly, these are the very same companies that are in direct competition with Apple's services (iTunes Store, iBookstore). I really have no suggestion of how to fairly address these other then allowing them to operate exclusively outside the App Store but that may not be good for the iOS platform (especially as these products are made available on competing platforms.).
The cynical side of me thinks that Apple is trying to force these apps out of its ecosystem. I bet Apple would love to go to Random House and say "your products are not available to the huge number of iOS users because no one is selling them in the App Store. Why don't we talk some more about the iBookstore." This upsets me becauseI am not, by nature, a cynical person yet here I am contemplating this possibility.
I really think that the subscription model and dealing with other distributors/retailers has not been thought out well. I think Apple needs to be more reasonable - willing to take a small portion of a much larger number of transactions.
Responding to Apple's announcement, Marco Arment, creator of the popular Instapaper app, called Apple's requirement of matching subscription prices through iTunes "a huge dick move" in a post to Twitter on Tuesday.
That's an understatement. So what happens when Google and Microsoft/Nokia get their crap together and developers tell Apple to go fuck themselves? Just when you think Apple has learned the lesson of the last platform war they lost, they pull this crap. Does Apple want to sell iPhones and iPods or do they want to get 30% cuts on Kindle books? Cause they can't have both. Amazon can't make enough money and still compete with iBooks with the 30% cut. So the Kindle app goes, and small outfits like Instapaper go, and pretty soon its 1997 all over again.
I can see why publishers are reluctant to do things Apple's way. Has iTunes been the saviour to the music industry? No. Sales were at a all time low last year despite millions of iPhones, iPods and iPads being sold.
I've been following Apple since before the iPhone. One thing I have discovered is they do nothing that hasn't been calculated in advance. That means that they have had their legal team review this to the point of bulletproof. They have also run models that show that 30% is the "sweet spot" for profitability. They also invest billions into new products and marketing the app store. I think that publishers will be foolish to avoid the App Store. New media businesses will emerge and the old newspapers will wonder what happened. They failed to act. This won't be too surprising given their track record.
I hate to tell you, but the margins in the real world are easily 50% at the retail level. You pay a LOT when you buy something at a retail store. This covers the rental space, staff, inventory costs, etc.
Publishers pay quite a bit to those who sell subscriptions. I dare say that it is more like 60% of a subscription is paid to the company getting the subscription, not the magazine. Just think about how you can get reasonable pricing for subscriptions through fund raisers for schools, and the school still gets a great profit.
Apple is following the market trend that bringing a customer to the table is worth 30%-50% of the sale. Seems quite reasonable if you actually understand what value they are bringing: paying customers.
The cost to get those customers with advertising, etc, is a substantial cost for businesses. With iOS apps, that cost is dramatically reduced (but you still need to advertise your app to get good penetration in the market).
While I agree, there is a problem if the publisher has lowered the cost of his digital product to reflect the lower costs of digital distribution. In this case, the publisher may already be operation at the same margin he was receiving in the physical distribution channel.
Most magazine apps are free for the first issue or have a 'reader' App that is free. Where do publishers expect Apple to make money if they are only providing free hosting and bandwidth for each and every issue while the company is taking all the money via their credit card billing/website?
The publishing companies better get with the program or they will be where the record companies where when music went digital.
Personally I hope they all cling to the outdated model and content they have and we get some new and original players in the market!
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
People need to recognize that there are three different constituencies: developers, publishers and distributors. It is important that these groups not be conflated since their interests are different with the exception that they would all, of course, like to take 100% of their products selling price.
Most developers have little problem with the current 30% revenue share given to Apple. Apple has delivered more customers and in some cases (e.g., Pixelmator) eliminated the need for them to maintain a e-commerce sight.
Publishers will have a range of reactions. The truth is that many publishers can afford the 30% revenue share if their selling price has not been lowered to reflect the elimination of all physical distribution cost. However, I am still not convinced that Apple deserves a 30% share, even allowing for the platform argument. IMO, Apple should lower their share to reflect that their primary service is providing payment processing plus some remuneration for "merchandising" (basically hosting the app). Again, IMO, 5-10 percent is more than generous and Apple would be generating a steady on-going revenue stream. I doubt most publishers would have a problem with paying this amount. Apple could offer other merchandising programs to highlight content from specific publishers and be paid accordingly for that service.
The final group is distributors like Amazon, Hulu Plus, Netflix, B&N, Rhapsody and others. Many of these will only be receiving a 30% (maybe less) revenue share from the publishers they represent. That means that they would be handing Apple their full profit (or maybe generating a loss). Significantly, these are the very same companies that are in direct competition with Apple's services (iTunes Store, iBookstore). I really have no suggestion of how to fairly address these other then allowing them operate exclusively outside the App Store but that may not be good for the iOS platform (especially as these products are made available on competing platforms.).
The cynical side of me thinks that Apple is trying to force these apps out of its ecosystem. I bet Apple would love to go to Random House and say "your products are not available to the huge number of iOS users because no one is selling them in the App Store. Why don't we talk some more about the iBookstore." This upsets me becauseI am not, by nature, a cynical person yet here I am contemplating this possibility.
I really think that the subscription model and dealing with other distributors/retailers has not been thought out well. I think Apple needs to be more reasonable - willing to take a small portion of a much larger number of transactions.
Well written and Apple will sell lots of devices in the process.
Same or better offer for th app. It doesn' matter how you get to the lower price, if it is available on the outside site, the app price can't be higher.
These folks need to get over it. When you join the program you agree to give Apple 30%. The in app rule has been around for a while so they should have been expecting enforcement. And they also agreed that Apple can change the rules whenever they want. If they don't like the rules, get out.
Apple has tons of lawyers. If there was a real chance for anti-trust they will have already dealt with it. After all this is not the first time this has been tried since the whole store started (or even the phone for that matter)
The real issue here is whether Apple's actions will chase partners out of the App Store (and into competing ecosystems). Thinking that Apple is invincible will be a real mistake. IMO, all sides can agree on a more equitable solution.
YOU CAN STILL SELL YOUR STUFF HOW YOU ARE DOING IT. YOU JUST HAVE TO ADD THE OPTION OF SELLING IT THROUGH APPLE.
YOU DON'T HAVE TO SELL THINGS ON THE APP STORE. REALLY. IF YOU DON'T LIKE IT, DON'T SELL THERE.
If you want to tap into a market made by Apple, you need to give them their due.
I think it's more about the percent than anything. If you look at book, movie and music providers and sellers, they have other fees to pay for the rights to the content.
Let's say the fee is 5% (which is high), that's equivalent to about 6 people that have to brought the traditional way vs through an app. (for 2.5%, it's about 12 people) Think about it, Visa or MasterCard can't charge 30% for a single transaction, so why should Apple be able to? Yes, Apple should get a fee, but why not be nicer to content providers that have to pay for their content?
Apple why not try at 95/5 format, it's a lot more reasonable!
It might not be a problem if Apple wasn't in the music, movie, tv show and book business, the companies who are mostly affected by this fee. If this isn't anti-trust then what is?
Right now, it's a little to soon to tell, but give it time and Apple could dominant the market, especially with all the rumors about new devices coming out. Most of these content providers (if not all) provide service to the Mac App Store, so if Apple's not stopped, it's only a matter of time before they add it to the Mac App Store or tell cell phone providers they want more.
You see where I'm going? If we allow Apple to do this to the iOS app store, it's only a matter of time before other companies start want to do the same thing and we pay more for the services we currently get.
It's time to tell Apple and others who may follow, they cannot charge unreasonable rates for providing the transaction! It's fair to charge a fee, but a more reasonable fee.
The results will set a precedent and we don't want the wrong one set!
That's an understatement. So what happens when Google and Microsoft/Nokia get their crap together and developers tell Apple to go fuck themselves? Just when you think Apple has learned the lesson of the last platform war they lost, they pull this crap. Does Apple want to sell iPhones and iPods or do they want to get 30% cuts on Kindle books? Cause they can't have both. Amazon can't make enough money and still compete with iBooks with the 30% cut. So the Kindle app goes, and small outfits like Instapaper go, and pretty soon its 1997 all over again.
I'm a developer who's making both iOS and Android apps. It's not the developer who makes the decisions. It's the end-user. As long as Apple holds the mind share of the public, they are going to have a lot of users. If Amazon, Instapaper and the like leave, they are shooting themselves in the foot. I think they understand this. It's going to take at least a year for the MS/Nokia deal to produce anything and by then Apple will be further ahead.
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
And how do you know that 30% of these companies costs go into distribution/printing?
Apple works hard to create and maintain the ecosystem.
Publishers are much better positioned to make money within the ecosystem.
Any good publication will be better off with 70% within the ecosystem than with 100% outside of the ecosystem.
The early adopters will make a killing. (Just ask News Corp)
In any case, the publishers have a choice to be in or out.
Time will tell.
Apple is foremost in creating and maintaining the iOS ecosystem, but they are not alone. The iOS ecosystem's success is also largely contributed to by the positive feedback cycle between increasing developer/publisher support and increasing customer user base. The question is how long can this be maintained as Apple increasingly takes steps to antagonize developers/publishers? Yes for developers/publishers that are also involved in selling physical media the savings in digital distribution will probably cover Apple's 30% cut. But those digital savings don't apply to developers/publishers which are already digital only and are already pricing their content lower as a selling point. Giving an additional 30% cut to Apple when digital distribution savings have already become incorporated into the business model may be untenable as Rhapsody claims.
Yes, Apple may well be within their rights to say tough-luck, you're living in our house, but is this really conducive to long-term developer/publisher relations? I'd rather developers/publishers who are positive in evangelizing the iOS ecosystem rather than just grudgingly supporting it as long as they still make money. Steve Jobs famously told Motorola that "I can't wait until we don't need you anymore" for CPUs. Does Apple want developers/publishers to have the same attitude towards them?
EDIT: In terms of a compromise, I think Apple should keep the 30% cut requirement for subscriptions in order to prevent large numbers of apps converting to subscriptions if the cut was smaller there. They should also keep the ban on direct linking to external websites for those looking to avoid the 30% cut since it's messy from a user interface perspective and I can understand Apple's push for one-click convenience. However, Apple should remove the requirement that in-app subscriptions be priced the same or lower than external sources. Developers should be allowed to charge more for in-app subscriptions to make up for the 30% cut if they want to. It'll be up to customer feedback to developers to determine how popular this is and whether they'll push for price parity, allowing the pricing scheme to evolve to consumer demand.
The article is full of speculative views expressed by 'experts' just hedging their opinion bets. It's no more than the print equivalent of click-bait.
Not too different from the various 'governance experts' that were trotted out by the likes of WSJ over the shareholders' supposed right to probe Steve Jobs's pipes because he took leave for health reasons.
I'm a developer who's making both iOS and Android apps. It's not the developer who makes the decisions. It's the end-user. As long as Apple holds the mind share of the public, they are going to have a lot of users. If Amazon, Instapaper and the like leave, they are shooting themselves in the foot. I think they understand this. It's going to take at least a year for the MS/Nokia deal to produce anything and by then Apple will be further ahead.
Kindle, Hulu and Netflix already have plenty of mindshare without being in the App Store. They will nor be hurt in any significant way. For smaller developers, the App STore is a good deal - they have to fight for even the small amount of mindshare that they hold.
Here's a question for you. How much do you think Apple charges Netflix to be on AppleTV?
I highly doubt its 30%.
Exactly. Apple realized that Netflix was required in order for the AppleTV to gain more traction. They need to hold that same understanding with regard to content providers in the App Store.
I can see why publishers are reluctant to do things Apple's way. Has iTunes been the saviour to the music industry? No. Sales were at a all time low last year despite millions of iPhones, iPods and iPads being sold.
While I agree, there is a problem if the publisher has lowered the cost of his digital product to reflect the lower costs of digital distribution. In this case, the publisher may already be operation at the same margin he was receiving in the physical distribution channel.
How many have, though? I bet, oh, not many. I mean look at digital copies of movies and music offered in iTunes. Shouldn't that all be less? Nope.
Most magazine apps are free for the first issue or have a 'reader' App that is free. Where do publishers expect Apple to make money if they are only providing free hosting and bandwidth for each and every issue while the company is taking all the money via their credit card billing/website?
Apple doesn't handle the hosting or bandwidth of issues of magazines sold through services like Zinio, or books sold to Kindle users from Amazon.
Quote:
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
Netflix's entire operation has a 37% gross margin. Amazon's share of the list price for most of the books it sells is 30%. Apple taking 30% of every transaction would devastate those two companies. They would be doing a disservice to their shareholders to give most of their profits, or even all of their profits driving them into the red in the case of Amazon ebook sales, to Apple. They will pull out of the iOS platform.
Those hurt will be the millions of us who use iPads, but also use Kindle for books and Netflix for movies, as both Kindle and Netflix are far better products than Apple's "competitive" offerings. This move smacks of Apple realizing it can't compete in terms of content, price or quality with Kindle or Netflix, and driving them off the platform in a fit of spite.
Apple benefits from having Kindle, Nook, Hulu and Netflix on the iOS platform -- it benefits greatly. Those apps are the sort of "killer apps" that make people interested in products like the iPad.
This move by Apple is selfish and stupid. It's the first thing they've done since iOS was released that has truly disappointed, and upset me.
Comments
Most developers have little problem with the current 30% revenue share given to Apple. Apple has delivered more customers and in many cases (e.g., Pixelmator) eliminated the need for them to maintain a e-commerce site.
Publishers will have a range of reactions. The truth is that many publishers can afford the 30% revenue share if their selling price has not been lowered to reflect the elimination of all physical distribution cost. However, I am still not convinced that Apple deserves a 30% share, even allowing for the platform argument. IMO, Apple should lower their share to reflect that their primary service is providing payment processing plus some remuneration for "merchandising" (basically hosting the app). Again, IMO, 5-10 percent is more than generous and Apple would be generating a steady on-going revenue stream. I doubt most publishers would have a problem with paying this amount. Apple could offer other merchandising programs to highlight content from specific publishers and be paid accordingly for that service.
The final group is distributors like Amazon, Hulu Plus, Netflix, B&N, Rhapsody and others. Many of these will only be receiving a 30% (maybe less) revenue share from the publishers they represent. That means that they would be handing Apple their full profit (or maybe generating a loss). Significantly, these are the very same companies that are in direct competition with Apple's services (iTunes Store, iBookstore). I really have no suggestion of how to fairly address these other then allowing them to operate exclusively outside the App Store but that may not be good for the iOS platform (especially as these products are made available on competing platforms.).
The cynical side of me thinks that Apple is trying to force these apps out of its ecosystem. I bet Apple would love to go to Random House and say "your products are not available to the huge number of iOS users because no one is selling them in the App Store. Why don't we talk some more about the iBookstore." This upsets me becauseI am not, by nature, a cynical person yet here I am contemplating this possibility.
I really think that the subscription model and dealing with other distributors/retailers has not been thought out well. I think Apple needs to be more reasonable - willing to take a small portion of a much larger number of transactions.
Responding to Apple's announcement, Marco Arment, creator of the popular Instapaper app, called Apple's requirement of matching subscription prices through iTunes "a huge dick move" in a post to Twitter on Tuesday.
That's an understatement. So what happens when Google and Microsoft/Nokia get their crap together and developers tell Apple to go fuck themselves? Just when you think Apple has learned the lesson of the last platform war they lost, they pull this crap. Does Apple want to sell iPhones and iPods or do they want to get 30% cuts on Kindle books? Cause they can't have both. Amazon can't make enough money and still compete with iBooks with the 30% cut. So the Kindle app goes, and small outfits like Instapaper go, and pretty soon its 1997 all over again.
I hate to tell you, but the margins in the real world are easily 50% at the retail level. You pay a LOT when you buy something at a retail store. This covers the rental space, staff, inventory costs, etc.
Publishers pay quite a bit to those who sell subscriptions. I dare say that it is more like 60% of a subscription is paid to the company getting the subscription, not the magazine. Just think about how you can get reasonable pricing for subscriptions through fund raisers for schools, and the school still gets a great profit.
Apple is following the market trend that bringing a customer to the table is worth 30%-50% of the sale. Seems quite reasonable if you actually understand what value they are bringing: paying customers.
The cost to get those customers with advertising, etc, is a substantial cost for businesses. With iOS apps, that cost is dramatically reduced (but you still need to advertise your app to get good penetration in the market).
While I agree, there is a problem if the publisher has lowered the cost of his digital product to reflect the lower costs of digital distribution. In this case, the publisher may already be operation at the same margin he was receiving in the physical distribution channel.
The publishing companies better get with the program or they will be where the record companies where when music went digital.
Personally I hope they all cling to the outdated model and content they have and we get some new and original players in the market!
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
People need to recognize that there are three different constituencies: developers, publishers and distributors. It is important that these groups not be conflated since their interests are different with the exception that they would all, of course, like to take 100% of their products selling price.
Most developers have little problem with the current 30% revenue share given to Apple. Apple has delivered more customers and in some cases (e.g., Pixelmator) eliminated the need for them to maintain a e-commerce sight.
Publishers will have a range of reactions. The truth is that many publishers can afford the 30% revenue share if their selling price has not been lowered to reflect the elimination of all physical distribution cost. However, I am still not convinced that Apple deserves a 30% share, even allowing for the platform argument. IMO, Apple should lower their share to reflect that their primary service is providing payment processing plus some remuneration for "merchandising" (basically hosting the app). Again, IMO, 5-10 percent is more than generous and Apple would be generating a steady on-going revenue stream. I doubt most publishers would have a problem with paying this amount. Apple could offer other merchandising programs to highlight content from specific publishers and be paid accordingly for that service.
The final group is distributors like Amazon, Hulu Plus, Netflix, B&N, Rhapsody and others. Many of these will only be receiving a 30% (maybe less) revenue share from the publishers they represent. That means that they would be handing Apple their full profit (or maybe generating a loss). Significantly, these are the very same companies that are in direct competition with Apple's services (iTunes Store, iBookstore). I really have no suggestion of how to fairly address these other then allowing them operate exclusively outside the App Store but that may not be good for the iOS platform (especially as these products are made available on competing platforms.).
The cynical side of me thinks that Apple is trying to force these apps out of its ecosystem. I bet Apple would love to go to Random House and say "your products are not available to the huge number of iOS users because no one is selling them in the App Store. Why don't we talk some more about the iBookstore." This upsets me becauseI am not, by nature, a cynical person yet here I am contemplating this possibility.
I really think that the subscription model and dealing with other distributors/retailers has not been thought out well. I think Apple needs to be more reasonable - willing to take a small portion of a much larger number of transactions.
Well written and Apple will sell lots of devices in the process.
Same or better offer for th app. It doesn' matter how you get to the lower price, if it is available on the outside site, the app price can't be higher.
These folks need to get over it. When you join the program you agree to give Apple 30%. The in app rule has been around for a while so they should have been expecting enforcement. And they also agreed that Apple can change the rules whenever they want. If they don't like the rules, get out.
Apple has tons of lawyers. If there was a real chance for anti-trust they will have already dealt with it. After all this is not the first time this has been tried since the whole store started (or even the phone for that matter)
The real issue here is whether Apple's actions will chase partners out of the App Store (and into competing ecosystems). Thinking that Apple is invincible will be a real mistake. IMO, all sides can agree on a more equitable solution.
One more time publishers:
YOU CAN STILL SELL YOUR STUFF HOW YOU ARE DOING IT. YOU JUST HAVE TO ADD THE OPTION OF SELLING IT THROUGH APPLE.
YOU DON'T HAVE TO SELL THINGS ON THE APP STORE. REALLY. IF YOU DON'T LIKE IT, DON'T SELL THERE.
If you want to tap into a market made by Apple, you need to give them their due.
I think it's more about the percent than anything. If you look at book, movie and music providers and sellers, they have other fees to pay for the rights to the content.
Let's say the fee is 5% (which is high), that's equivalent to about 6 people that have to brought the traditional way vs through an app. (for 2.5%, it's about 12 people) Think about it, Visa or MasterCard can't charge 30% for a single transaction, so why should Apple be able to? Yes, Apple should get a fee, but why not be nicer to content providers that have to pay for their content?
Apple why not try at 95/5 format, it's a lot more reasonable!
It might not be a problem if Apple wasn't in the music, movie, tv show and book business, the companies who are mostly affected by this fee. If this isn't anti-trust then what is?
Right now, it's a little to soon to tell, but give it time and Apple could dominant the market, especially with all the rumors about new devices coming out. Most of these content providers (if not all) provide service to the Mac App Store, so if Apple's not stopped, it's only a matter of time before they add it to the Mac App Store or tell cell phone providers they want more.
You see where I'm going? If we allow Apple to do this to the iOS app store, it's only a matter of time before other companies start want to do the same thing and we pay more for the services we currently get.
It's time to tell Apple and others who may follow, they cannot charge unreasonable rates for providing the transaction! It's fair to charge a fee, but a more reasonable fee.
The results will set a precedent and we don't want the wrong one set!
That's an understatement. So what happens when Google and Microsoft/Nokia get their crap together and developers tell Apple to go fuck themselves? Just when you think Apple has learned the lesson of the last platform war they lost, they pull this crap. Does Apple want to sell iPhones and iPods or do they want to get 30% cuts on Kindle books? Cause they can't have both. Amazon can't make enough money and still compete with iBooks with the 30% cut. So the Kindle app goes, and small outfits like Instapaper go, and pretty soon its 1997 all over again.
I'm a developer who's making both iOS and Android apps. It's not the developer who makes the decisions. It's the end-user. As long as Apple holds the mind share of the public, they are going to have a lot of users. If Amazon, Instapaper and the like leave, they are shooting themselves in the foot. I think they understand this. It's going to take at least a year for the MS/Nokia deal to produce anything and by then Apple will be further ahead.
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
And how do you know that 30% of these companies costs go into distribution/printing?
Apple works hard to create and maintain the ecosystem.
Publishers are much better positioned to make money within the ecosystem.
Any good publication will be better off with 70% within the ecosystem than with 100% outside of the ecosystem.
The early adopters will make a killing. (Just ask News Corp)
In any case, the publishers have a choice to be in or out.
Time will tell.
Apple is foremost in creating and maintaining the iOS ecosystem, but they are not alone. The iOS ecosystem's success is also largely contributed to by the positive feedback cycle between increasing developer/publisher support and increasing customer user base. The question is how long can this be maintained as Apple increasingly takes steps to antagonize developers/publishers? Yes for developers/publishers that are also involved in selling physical media the savings in digital distribution will probably cover Apple's 30% cut. But those digital savings don't apply to developers/publishers which are already digital only and are already pricing their content lower as a selling point. Giving an additional 30% cut to Apple when digital distribution savings have already become incorporated into the business model may be untenable as Rhapsody claims.
Yes, Apple may well be within their rights to say tough-luck, you're living in our house, but is this really conducive to long-term developer/publisher relations? I'd rather developers/publishers who are positive in evangelizing the iOS ecosystem rather than just grudgingly supporting it as long as they still make money. Steve Jobs famously told Motorola that "I can't wait until we don't need you anymore" for CPUs. Does Apple want developers/publishers to have the same attitude towards them?
EDIT: In terms of a compromise, I think Apple should keep the 30% cut requirement for subscriptions in order to prevent large numbers of apps converting to subscriptions if the cut was smaller there. They should also keep the ban on direct linking to external websites for those looking to avoid the 30% cut since it's messy from a user interface perspective and I can understand Apple's push for one-click convenience. However, Apple should remove the requirement that in-app subscriptions be priced the same or lower than external sources. Developers should be allowed to charge more for in-app subscriptions to make up for the 30% cut if they want to. It'll be up to customer feedback to developers to determine how popular this is and whether they'll push for price parity, allowing the pricing scheme to evolve to consumer demand.
Not too different from the various 'governance experts' that were trotted out by the likes of WSJ over the shareholders' supposed right to probe Steve Jobs's pipes because he took leave for health reasons.
I'm a developer who's making both iOS and Android apps. It's not the developer who makes the decisions. It's the end-user. As long as Apple holds the mind share of the public, they are going to have a lot of users. If Amazon, Instapaper and the like leave, they are shooting themselves in the foot. I think they understand this. It's going to take at least a year for the MS/Nokia deal to produce anything and by then Apple will be further ahead.
Kindle, Hulu and Netflix already have plenty of mindshare without being in the App Store. They will nor be hurt in any significant way. For smaller developers, the App STore is a good deal - they have to fight for even the small amount of mindshare that they hold.
Here's a question for you. How much do you think Apple charges Netflix to be on AppleTV?
I highly doubt its 30%.
Exactly. Apple realized that Netflix was required in order for the AppleTV to gain more traction. They need to hold that same understanding with regard to content providers in the App Store.
I can see why publishers are reluctant to do things Apple's way. Has iTunes been the saviour to the music industry? No. Sales were at a all time low last year despite millions of iPhones, iPods and iPads being sold.
Has nothing to do with the quality of content....
While I agree, there is a problem if the publisher has lowered the cost of his digital product to reflect the lower costs of digital distribution. In this case, the publisher may already be operation at the same margin he was receiving in the physical distribution channel.
How many have, though? I bet, oh, not many. I mean look at digital copies of movies and music offered in iTunes. Shouldn't that all be less? Nope.
Most magazine apps are free for the first issue or have a 'reader' App that is free. Where do publishers expect Apple to make money if they are only providing free hosting and bandwidth for each and every issue while the company is taking all the money via their credit card billing/website?
Apple doesn't handle the hosting or bandwidth of issues of magazines sold through services like Zinio, or books sold to Kindle users from Amazon.
Also people who are complaining that most companies don't have a 30% profit margin have got it all wrong... the 30% Apple takes will be replacing existing distribution/printing costs.
Netflix's entire operation has a 37% gross margin. Amazon's share of the list price for most of the books it sells is 30%. Apple taking 30% of every transaction would devastate those two companies. They would be doing a disservice to their shareholders to give most of their profits, or even all of their profits driving them into the red in the case of Amazon ebook sales, to Apple. They will pull out of the iOS platform.
Those hurt will be the millions of us who use iPads, but also use Kindle for books and Netflix for movies, as both Kindle and Netflix are far better products than Apple's "competitive" offerings. This move smacks of Apple realizing it can't compete in terms of content, price or quality with Kindle or Netflix, and driving them off the platform in a fit of spite.
Apple benefits from having Kindle, Nook, Hulu and Netflix on the iOS platform -- it benefits greatly. Those apps are the sort of "killer apps" that make people interested in products like the iPad.
This move by Apple is selfish and stupid. It's the first thing they've done since iOS was released that has truly disappointed, and upset me.