Apple has gone too far. I think Skype, Netflix, Amazon, and all the other companies should not update their apps and see if Apple bans all the apps. Apple's customers would revolt if all those apps were suddenly not available because of Apples's greedy policy. They have a gold mine in terms of dales and they ate on the verge if selling out to greed. If they go through with this, I will stop cease all purchases if future Apple gear and will sell ally stock. Apple has go e too far.
Here's a question for you. How much do you think Apple charges Netflix to be on AppleTV or any other device? I highly doubt its 30%.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
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.
Just like when they carefully calculated the reaction to banning third party development tools and didn't reverse their decision.... oh wait.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
I'm for In-App purchases.
How will Amazon make money, when Apple's share of the purchase is the ENTIRETY of Amazon's share of the purchase for most books? Amazon sells an ebook through iOS for $9.99. Apple takes $3.00. The Publisher takes their contractually required $6.99 (70% of the purchase price), leaving Amazon holding the bag for all the costs associated with serving, maintaining and managing its store, files and inventory, and absolutely no income with which to cover those costs.
In the end, I get screwed by this, because the logical move by Amazon would be to not lose money on every book sold through the iOS in app model, and pull their app from the store.
Apple is toxifying the environment against Kindle, Netflix, Hulu -- the very apps that make the iPad most attractive in my opinion.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
I'm for In-App purchases.
As I've written above, this is not so much of an issue for many publishers, but it is an issue for other retailers/distributors like Amazon. Amazon probably pays the publisher 70% when they make a sale leaving only 30% for Amazon. Now, Apple wants that 30% leaving Amazon with nothing. Amazon will be forced to withdraw from the App Store. Customers will look in the iBookstore and not be able to find the book they want so they will then go to Amazon and Apple will get nothing. Customers will not get the benefit of in-app purchase and, in fact, will have been inconvenienced because he struggled to find the book using an app. In the future, he goes directly to Amazon (or maybe moves to Android) and Apple, again, gets nothing.
Apple could make a tidy sum by asking for just 5-10% from other retailers and could do better by the subscription partners, as well.
Apple is following the market trend that bringing a customer to the table is worth 30%-50% of the sale.
My ISP is the one that actually makes the link. Don't you think they should get 50%? I bought my iPhone at AT&T, so shouldn't AT&T get 50%? Then there's 50% for the developer. That leaves 50% for the publisher.
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.
Publishers haven't. They supported Apple's 30% agency model against Amazon so they could price ebooks what they consider a fair price.
Amazon's response has been to enter the publishing business to "cut out the middleman".
Should be interesting but I'll reiterate a point many folks are missing:
If most Kindle book readers are using the Kindle as their primary reading device then this change is a non-issue. Most books will be purchased natively on the Kindle device and Apple gets no cut except off the very few books folks by via the iPad app. Amazon that write this cost off as a convenience for their customers.
If most Kindle book readers are using the iPad as their primary reading device then this change is fair. Amazon has been leeching off the iPad's success to increase their Kindle book market share at the expense of all the other books stores including Apple's. Pay up or get back on your own ecosystem and everyone has an even playing field.
Here's the kicker. B&N and Sony and the other bookstores that use Adobe DRM and ePub need to only make sure there is at least one reader app on the app store that can read their common DRM format and make it easy to load books purchased from any store into that app.
Add a way to purchase books on the web and simply drop them into a place any ebook reader can grab. The reader isn't associated with a store so this isn't an in app purchase...it's an agnostic ebook reader with dropbox integration. Any epub book stashed in DropBox (or whatever) it can read.
Then all the Sony and Nook books can be read on the iPad. Not so great for Sony but not so bad for B&N. They want to sell books more than they want to sell Nooks. The margins on the Nook Color are probably very thin.
Alas, this app won't be Stanza because Amazon bought Stanza and killed Adobe DRM support in Stanza. That was annoying so I sure as hell ain't crying for Amazon.
Apple has gone too far. I think Skype, Netflix, Amazon, and all the other companies should not update their apps and see if Apple bans all the apps. Apple's customers would revolt if all those apps were suddenly not available because of Apples's greedy policy. They have a gold mine in terms of dales and they ate on the verge if selling out to greed. If they go through with this, I will stop cease all purchases if future Apple gear and will sell ally stock. Apple has go e too far.
The rules wouldn't apply to VOIP credit and for sure won't apply to Netflix plans that involve physical media being mailed to you. This is stated in the guidelines. I also don't believe that the rules apply to Instapaper app (the developer believes so too) since the subscription is not for products but services and features.
A new report claims Apple's just announced iOS App Store subscription policy may expose the company to an antitrust investigation, even as developers, publishers and distributors have responded negatively to the terms, with one company hinting at possible legal action.
After announcing App Store subscription services at a media event with News Corporation earlier this month, Apple revealed the details and terms of the new service on Tuesday. Apple's terms forbid publishers from including links to external websites to purchase content or subscriptions and require publishers to offer in-app deals equal to or better than the same deals offered outside of the app.
Apple CEO Steve Jobs explained the new subscription rules. "Our philosophy is simple ? when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Jobs. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app."
Antitrust issues
According to several law professors contacted by The Wall Street Journal, Apple's new subscription service could "draw antitrust scrutiny."
Antitrust professor Shubha Ghosh told The Journal that his "inclination is to be suspect" about the new service. At stake is whether Apple has a sufficiently dominant market position to block competitors and whether it is exerting "anticompetitive pressures on price," Ghosh said.
However, proving Apple is indeed a dominant market player could be a difficult task. Publishers could claim that Apple's share of the tablet market makes its subscription service terms anticompetitive. In response, Apple could argue that the market includes all digital and print media and the disgruntled publishers are free to utilize other outlets to reach their customers.
"Millions will be spent litigating how broad the market is," said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, adding that the most likely definition of the market would be digital media.
Though Hovenkamp doubts Apple has enough of a dominant position in that market to prompt an antitrust investigation, he noted that if Apple reaches 60 percent or more of all digital subscriptions, "an antitrust challenge would seem feasible."
According to Ghosh, Apple could defend itself by coming up with a "business justification" for its subscription terms, as courts often look for legitimate business reasons for actions that are accused of being anticompetitive.
Developer, publisher ire
Meanwhile, initial developer, distributor and publisher response to Apple's subscription details announcement has been overwhelmingly negative, with some publishers objecting to Apple's 30 percent revenue share, while others have expressed frustration over Apple's terms that require subscriptions to be sold through Apple for the same price or less as that of third-party websites.
Digital music subscription service Rhapsody issued a statement Tuesday calling Apple's 30 percent cut of subscription revenue "economically untenable," Engadget reports.
"The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee," the statement read.
Rhapsody also hinted at potential legal action in response to Apple's policy. "We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."
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.
Forbes reports that the Online Publishers Association, which includes publishers such as Time, Hearst, Conde Nast, Bloomberg and Forbes, is worried that Apple's policies don't provide sufficient flexibility for both publishers and consumers.
Apple has reportedly issued a compliance deadline of June 30 for apps already available in the iOS App Store. Earlier this month, Sony revealed that an e-reader application it had submitted to Apple's App Store had been denied, prompting speculation that Apple had changed its rules regarding in-app purchases. Apple denied the claim by saying that it was merely enforcing pre-existing guidelines.
Prior to Apple's announcement offering details of its subscription service, several consortiums of European publishers had expressed concerns over Apple's subscription service, with some publishers feeling "betrayed" by Apple's policies. Last month, Belgian economy minister Vincent Van Quickenborne requested an antitrust investigation of Apple over possible anticompetitive maneuvers in the newspaper market.
Are publishers being forced to do business with Apple? Also, here's how I see the subscription policy. Let's take Netflix as an example. I have a subscription to Netflix. I had it before I got the app. I downloaded the app, and I can watch film on Netflix using the account that I already have. In this case, Apple would not get a cut of the fees I pay to Netflix.
In the same scenario, say an iOS user downloaded the Netflix app. As I understand it, the rules are saying that there has to be an option for users to be able to subscribe within the app itself. If they subscribe through the app, Apple takes a cut of the revenue from that particular user. If the user already had a preexisting account, there would be no need to sign up within the app since the user would simply log in.
Breaking it down in this manner, I think it's fair. Apple is hosting the app within the App Store, spending time and resources to maintain the store infrastructure. Also, let's say someone signs up for Netflix within the app. In that scenario, Netflix has added on an extra subscriber as a result of someone using an iOS device. Apple is facilitating the sale by virtue of the subscriber using an Apple product.
With this rule in place, an easy work-around is to simply redirect users to the website and have them sign up there as a way to avoid paying a cut to Apple. I don't see why Apple should let this go on using a store that they are maintaining.
There are other platforms that publishers can work with. Let them go and work with Android, for all I care, but they should quit crying foul whenever they don't get their way with Apple. It's not like Apple is forcing them into anything.
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.
This would be like Microsoft insisting on taking 30% for every Windows app that offered any subscription content, and anyone offering subscription content outside of Windows would be required to also offer it for Windows. And they'd say, "We made the market, so you need to give us our due."
People like you would be screaming bloody murder if Microsoft did that.
I liked Apple better when they were content to be a hardware company that used superior software to drive sales.
I accept requiring developers to offer subscriptions through the App Store, but forcing them to sell at the same price is going to have a negative impact on the entire Apple ecosystem.
Steve Jobs is wrong when he says that Apple is bringing new subscriptions to a content provider. I can't believe anyone discovers the New York Times from the App Store. Instead they go looking for it in the store expecting it to be there. If Apple deserves a cut for that it's under 5%.
Steve, surely making 30-40% on millions of bits of hardware and a tidy profit on Apps is enough. I say that as a shareholder who is concerned about the long term viability of a business model that discourages businesses from offering their wares in your store.
Right now everyone expects apps to appear on iOS first, but it wasn't long ago when people thought there wasn't any software for Apple products, when applications appeared first on that other platform and only a select few ever made the jump often months or even years later. I sense a return to the bad old days and it's scary. I remember watching AAPL slip from $17 down below $12. I remember MSFT coming to the rescue, mostly out of self interest. Arrogance brings down successful endeavours and world leaders alike.
Apple can cut a deal with Netflix and pass them some cash to have the Netflix app on the aTV.
I've been thinking about that... if Netflix tells Apple to f-off, and pulls their service from Apple TV, that would basically kill that box. Not sure if Apple cares enough about Apple TV to make that a good negotiating position for Netflix, however.
Apple being dickish while being on top. Go figure.
Hey, sflocal, Instapaper app isn't published by a "publisher", but by a developer. Go read what he thought about the move.
This only proves what I have always suspected. Had Apple dominated the nineties, it would have been ten times worse than Microsoft's domination. Not that I liked it anyway.
not on top of the smartphone market certainly. Not on top of the digital media market. Not on top of the publishing market. What exactly is Apple on top of here. Apple creates an ecosystem of devices and services and sets rules and guidelines for using it and participate in it to make money - a fee-based platform. Certainly they are "on top" of their own ecosystem, not giving it away and letting it run unfettered. Nothing is proven here that you weren't already predisposed to believe in your naiveté, and your quest to vilify under false pretenses. Can you offer any sort of coherent defense of your statements that makes sense ?
What's wrong with devs/publishers upcharging an app/subscription by 30% in the App Store, but offering a coupon code on their own individual websites that discounts the purchase price (but only through them?) Then technically they would be offering the same good at the same price in the App Store, but not be taking a hit.
It doesn't have to work exactly this way, but do you see my point? And if consumers found out about this (which they certainly would), the devs/publishers wouldn't even have to have a hyperlink in their own app-- we'd find it ourselves.
Just a thought.
How is giving a discount charging the same? Must be the new math. How dumb do you think Apple is... or is it just you?
Simply put, most large scale businesses don't have a 30% profit margin, and even fewer would be as sustainable if they just decided to give it away to Apple. And because of their rules, especially the one requiring the price on a publishes website to be the same as the one in-app will lead to one of to things: a) prices raised for everyone (even if you don't own an iDevice) or b) a huge cut in profit that will eventually lead to c) developer pulling out of the App Store.
In none of these conditions are consumers the benefit. You'll either pay higher prices to have content or not get content on your iDevice. I don't see why anyone would realistically support this.
I can understand Apple making money if you used their resources from their servers, but besides downloading the app, most stuff is handled by a publisher on their servers. If they wanted more money to support their ecosystem, they could not have free apps or increae the cost of the developer program. If they were breaking even before on their 30% cut on apps, surely they'd be making gobs of money when these rules go into effect.
And that shows you it's just a money grab for Apple and Apple alone.
Lame, lame, lame, yes a same old same old retort dagamer34. What don't you and similar apologists understand about nobody is forcing you to sell or market via the App Store.
Yeah, and please do not be furious about all this, since you shouldaveknown better than investing your money and time in building apps for the app store, that we would make this kind of dickish moves arbitrarily and with no pre warning.
Because ah, what are 30 percent anyways? It's not as if you lost all the margins in ...? Oh, you did? Oh poor developers/publishers... so I guess you won't make it to have your shops in our app store, now will you? Oh look, our iBook app is so lonely there, and turning such a great profit! I wonder how so suddenly apple got a 100% market share in book publishing inside iOS...
Would you like some cheese with that whine?? ANy developer worth the moniker knows that you should not depend solely on one platform (the whole "all your eggs in one basket" market wisdom comes to mind). Speaking of dickishness, can you in fact offer any sort of logical reasoning based on the reality of actually working as a developer in a competitive market, or is this just another opportunity for you to vent your spleen because something is not handed to you on a silver platter, with a kindly pat on the head and an ever-present "here let me help you with that..."?
Seriously this is only one marketing approach for one segment of development for the platform. There are several different revenue streams available for a developer to leverage, and a savvy dev will look to use whichever seems most likely to offer the best revenue. Wherefore this sense of entitlement... never mind, it seems more productive to just ignore you at this point...
To summarize: Multi-mega-media-conglomerates that have a choke-hold over global information publishing say to Apple, "you need to bend over and take it in the ass so we can monetize your efforts straight into our wallets, or we'll sue you for anti-trust violations while we're busy price-fixing the world". Uh, yeah. Cry me a fucking river.
Comments
Here's a question for you. How much do you think Apple charges Netflix to be on AppleTV or any other device? I highly doubt its 30%.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
I'm for In-App purchases.
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.
Just like when they carefully calculated the reaction to banning third party development tools and didn't reverse their decision.... oh wait.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
I'm for In-App purchases.
How will Amazon make money, when Apple's share of the purchase is the ENTIRETY of Amazon's share of the purchase for most books? Amazon sells an ebook through iOS for $9.99. Apple takes $3.00. The Publisher takes their contractually required $6.99 (70% of the purchase price), leaving Amazon holding the bag for all the costs associated with serving, maintaining and managing its store, files and inventory, and absolutely no income with which to cover those costs.
In the end, I get screwed by this, because the logical move by Amazon would be to not lose money on every book sold through the iOS in app model, and pull their app from the store.
Apple is toxifying the environment against Kindle, Netflix, Hulu -- the very apps that make the iPad most attractive in my opinion.
Has nothing to do with the quality of content....
The crappy content is the only thing selling well.
How much does Apple charge Google for the YouTube app, and Maps app in iOS. These are Apple designed apps with a Google backend. The question should be, how much does Google or Netflix charge apple for access to their servers?
Probably nothing.
The truth of the matter is. Apple has every right to make this move. It is their store, that they created. When you buy an Apple product. You buy into an ecosystem that is secure, and easy to use. The average customer loves being able to make purchases through their iTunes accounts because it is easy. Customer love their kindle, not Amazon. Customers love buying books. So they will buy books with In-App purchases because its the fastest way to do it. Developers will still make money. It's like Apple is telling the customer its easier to do it this way, as opposed to the old way. The Publishers are just boo-hooing because now they wont make as much money. Publishers, and content providers hate change, because they have to think of new ways to making money.
I'm for In-App purchases.
As I've written above, this is not so much of an issue for many publishers, but it is an issue for other retailers/distributors like Amazon. Amazon probably pays the publisher 70% when they make a sale leaving only 30% for Amazon. Now, Apple wants that 30% leaving Amazon with nothing. Amazon will be forced to withdraw from the App Store. Customers will look in the iBookstore and not be able to find the book they want so they will then go to Amazon and Apple will get nothing. Customers will not get the benefit of in-app purchase and, in fact, will have been inconvenienced because he struggled to find the book using an app. In the future, he goes directly to Amazon (or maybe moves to Android) and Apple, again, gets nothing.
Apple could make a tidy sum by asking for just 5-10% from other retailers and could do better by the subscription partners, as well.
Apple is following the market trend that bringing a customer to the table is worth 30%-50% of the sale.
My ISP is the one that actually makes the link. Don't you think they should get 50%? I bought my iPhone at AT&T, so shouldn't AT&T get 50%? Then there's 50% for the developer. That leaves 50% for the publisher.
Yes, my name is Max Bialystock.
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.
Publishers haven't. They supported Apple's 30% agency model against Amazon so they could price ebooks what they consider a fair price.
Amazon's response has been to enter the publishing business to "cut out the middleman".
Should be interesting but I'll reiterate a point many folks are missing:
If most Kindle book readers are using the Kindle as their primary reading device then this change is a non-issue. Most books will be purchased natively on the Kindle device and Apple gets no cut except off the very few books folks by via the iPad app. Amazon that write this cost off as a convenience for their customers.
If most Kindle book readers are using the iPad as their primary reading device then this change is fair. Amazon has been leeching off the iPad's success to increase their Kindle book market share at the expense of all the other books stores including Apple's. Pay up or get back on your own ecosystem and everyone has an even playing field.
Here's the kicker. B&N and Sony and the other bookstores that use Adobe DRM and ePub need to only make sure there is at least one reader app on the app store that can read their common DRM format and make it easy to load books purchased from any store into that app.
Add a way to purchase books on the web and simply drop them into a place any ebook reader can grab. The reader isn't associated with a store so this isn't an in app purchase...it's an agnostic ebook reader with dropbox integration. Any epub book stashed in DropBox (or whatever) it can read.
Then all the Sony and Nook books can be read on the iPad. Not so great for Sony but not so bad for B&N. They want to sell books more than they want to sell Nooks. The margins on the Nook Color are probably very thin.
Alas, this app won't be Stanza because Amazon bought Stanza and killed Adobe DRM support in Stanza. That was annoying so I sure as hell ain't crying for Amazon.
Apple has gone too far. I think Skype, Netflix, Amazon, and all the other companies should not update their apps and see if Apple bans all the apps. Apple's customers would revolt if all those apps were suddenly not available because of Apples's greedy policy. They have a gold mine in terms of dales and they ate on the verge if selling out to greed. If they go through with this, I will stop cease all purchases if future Apple gear and will sell ally stock. Apple has go e too far.
The rules wouldn't apply to VOIP credit and for sure won't apply to Netflix plans that involve physical media being mailed to you. This is stated in the guidelines. I also don't believe that the rules apply to Instapaper app (the developer believes so too) since the subscription is not for products but services and features.
A new report claims Apple's just announced iOS App Store subscription policy may expose the company to an antitrust investigation, even as developers, publishers and distributors have responded negatively to the terms, with one company hinting at possible legal action.
After announcing App Store subscription services at a media event with News Corporation earlier this month, Apple revealed the details and terms of the new service on Tuesday. Apple's terms forbid publishers from including links to external websites to purchase content or subscriptions and require publishers to offer in-app deals equal to or better than the same deals offered outside of the app.
Apple CEO Steve Jobs explained the new subscription rules. "Our philosophy is simple ? when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Jobs. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app."
Antitrust issues
According to several law professors contacted by The Wall Street Journal, Apple's new subscription service could "draw antitrust scrutiny."
Antitrust professor Shubha Ghosh told The Journal that his "inclination is to be suspect" about the new service. At stake is whether Apple has a sufficiently dominant market position to block competitors and whether it is exerting "anticompetitive pressures on price," Ghosh said.
However, proving Apple is indeed a dominant market player could be a difficult task. Publishers could claim that Apple's share of the tablet market makes its subscription service terms anticompetitive. In response, Apple could argue that the market includes all digital and print media and the disgruntled publishers are free to utilize other outlets to reach their customers.
"Millions will be spent litigating how broad the market is," said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, adding that the most likely definition of the market would be digital media.
Though Hovenkamp doubts Apple has enough of a dominant position in that market to prompt an antitrust investigation, he noted that if Apple reaches 60 percent or more of all digital subscriptions, "an antitrust challenge would seem feasible."
According to Ghosh, Apple could defend itself by coming up with a "business justification" for its subscription terms, as courts often look for legitimate business reasons for actions that are accused of being anticompetitive.
Developer, publisher ire
Meanwhile, initial developer, distributor and publisher response to Apple's subscription details announcement has been overwhelmingly negative, with some publishers objecting to Apple's 30 percent revenue share, while others have expressed frustration over Apple's terms that require subscriptions to be sold through Apple for the same price or less as that of third-party websites.
Digital music subscription service Rhapsody issued a statement Tuesday calling Apple's 30 percent cut of subscription revenue "economically untenable," Engadget reports.
"The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee," the statement read.
Rhapsody also hinted at potential legal action in response to Apple's policy. "We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."
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.
Forbes reports that the Online Publishers Association, which includes publishers such as Time, Hearst, Conde Nast, Bloomberg and Forbes, is worried that Apple's policies don't provide sufficient flexibility for both publishers and consumers.
Apple has reportedly issued a compliance deadline of June 30 for apps already available in the iOS App Store. Earlier this month, Sony revealed that an e-reader application it had submitted to Apple's App Store had been denied, prompting speculation that Apple had changed its rules regarding in-app purchases. Apple denied the claim by saying that it was merely enforcing pre-existing guidelines.
Prior to Apple's announcement offering details of its subscription service, several consortiums of European publishers had expressed concerns over Apple's subscription service, with some publishers feeling "betrayed" by Apple's policies. Last month, Belgian economy minister Vincent Van Quickenborne requested an antitrust investigation of Apple over possible anticompetitive maneuvers in the newspaper market.
[ View this article at AppleInsider.com ]
Are publishers being forced to do business with Apple? Also, here's how I see the subscription policy. Let's take Netflix as an example. I have a subscription to Netflix. I had it before I got the app. I downloaded the app, and I can watch film on Netflix using the account that I already have. In this case, Apple would not get a cut of the fees I pay to Netflix.
In the same scenario, say an iOS user downloaded the Netflix app. As I understand it, the rules are saying that there has to be an option for users to be able to subscribe within the app itself. If they subscribe through the app, Apple takes a cut of the revenue from that particular user. If the user already had a preexisting account, there would be no need to sign up within the app since the user would simply log in.
Breaking it down in this manner, I think it's fair. Apple is hosting the app within the App Store, spending time and resources to maintain the store infrastructure. Also, let's say someone signs up for Netflix within the app. In that scenario, Netflix has added on an extra subscriber as a result of someone using an iOS device. Apple is facilitating the sale by virtue of the subscriber using an Apple product.
With this rule in place, an easy work-around is to simply redirect users to the website and have them sign up there as a way to avoid paying a cut to Apple. I don't see why Apple should let this go on using a store that they are maintaining.
There are other platforms that publishers can work with. Let them go and work with Android, for all I care, but they should quit crying foul whenever they don't get their way with Apple. It's not like Apple is forcing them into anything.
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.
This would be like Microsoft insisting on taking 30% for every Windows app that offered any subscription content, and anyone offering subscription content outside of Windows would be required to also offer it for Windows. And they'd say, "We made the market, so you need to give us our due."
People like you would be screaming bloody murder if Microsoft did that.
Apple is toxifying the environment against Kindle, Netflix, Hulu -- the very apps that make the iPad most attractive in my opinion.
Apple can cut a deal with Netflix and pass them some cash to have the Netflix app on the aTV.
Same for Hulu...oh wait, they aren't on aTV. I guess that's something Hulu and Apple can negotiate.
Kindle...well...
I accept requiring developers to offer subscriptions through the App Store, but forcing them to sell at the same price is going to have a negative impact on the entire Apple ecosystem.
Steve Jobs is wrong when he says that Apple is bringing new subscriptions to a content provider. I can't believe anyone discovers the New York Times from the App Store. Instead they go looking for it in the store expecting it to be there. If Apple deserves a cut for that it's under 5%.
Steve, surely making 30-40% on millions of bits of hardware and a tidy profit on Apps is enough. I say that as a shareholder who is concerned about the long term viability of a business model that discourages businesses from offering their wares in your store.
Right now everyone expects apps to appear on iOS first, but it wasn't long ago when people thought there wasn't any software for Apple products, when applications appeared first on that other platform and only a select few ever made the jump often months or even years later. I sense a return to the bad old days and it's scary. I remember watching AAPL slip from $17 down below $12. I remember MSFT coming to the rescue, mostly out of self interest. Arrogance brings down successful endeavours and world leaders alike.
Apple can cut a deal with Netflix and pass them some cash to have the Netflix app on the aTV.
I've been thinking about that... if Netflix tells Apple to f-off, and pulls their service from Apple TV, that would basically kill that box. Not sure if Apple cares enough about Apple TV to make that a good negotiating position for Netflix, however.
Apple being dickish while being on top. Go figure.
Hey, sflocal, Instapaper app isn't published by a "publisher", but by a developer. Go read what he thought about the move.
This only proves what I have always suspected. Had Apple dominated the nineties, it would have been ten times worse than Microsoft's domination. Not that I liked it anyway.
not on top of the smartphone market certainly. Not on top of the digital media market. Not on top of the publishing market. What exactly is Apple on top of here. Apple creates an ecosystem of devices and services and sets rules and guidelines for using it and participate in it to make money - a fee-based platform. Certainly they are "on top" of their own ecosystem, not giving it away and letting it run unfettered. Nothing is proven here that you weren't already predisposed to believe in your naiveté, and your quest to vilify under false pretenses. Can you offer any sort of coherent defense of your statements that makes sense ?
So somebody correct me here:
What's wrong with devs/publishers upcharging an app/subscription by 30% in the App Store, but offering a coupon code on their own individual websites that discounts the purchase price (but only through them?) Then technically they would be offering the same good at the same price in the App Store, but not be taking a hit.
It doesn't have to work exactly this way, but do you see my point? And if consumers found out about this (which they certainly would), the devs/publishers wouldn't even have to have a hyperlink in their own app-- we'd find it ourselves.
Just a thought.
How is giving a discount charging the same? Must be the new math. How dumb do you think Apple is... or is it just you?
Simply put, most large scale businesses don't have a 30% profit margin, and even fewer would be as sustainable if they just decided to give it away to Apple. And because of their rules, especially the one requiring the price on a publishes website to be the same as the one in-app will lead to one of to things: a) prices raised for everyone (even if you don't own an iDevice) or b) a huge cut in profit that will eventually lead to c) developer pulling out of the App Store.
In none of these conditions are consumers the benefit. You'll either pay higher prices to have content or not get content on your iDevice. I don't see why anyone would realistically support this.
I can understand Apple making money if you used their resources from their servers, but besides downloading the app, most stuff is handled by a publisher on their servers. If they wanted more money to support their ecosystem, they could not have free apps or increae the cost of the developer program. If they were breaking even before on their 30% cut on apps, surely they'd be making gobs of money when these rules go into effect.
And that shows you it's just a money grab for Apple and Apple alone.
Lame, lame, lame, yes a same old same old retort dagamer34. What don't you and similar apologists understand about nobody is forcing you to sell or market via the App Store.
Yeah, and please do not be furious about all this, since you shouldaveknown better than investing your money and time in building apps for the app store, that we would make this kind of dickish moves arbitrarily and with no pre warning.
Because ah, what are 30 percent anyways? It's not as if you lost all the margins in ...? Oh, you did? Oh poor developers/publishers... so I guess you won't make it to have your shops in our app store, now will you? Oh look, our iBook app is so lonely there, and turning such a great profit! I wonder how so suddenly apple got a 100% market share in book publishing inside iOS...
Would you like some cheese with that whine?? ANy developer worth the moniker knows that you should not depend solely on one platform (the whole "all your eggs in one basket" market wisdom comes to mind). Speaking of dickishness, can you in fact offer any sort of logical reasoning based on the reality of actually working as a developer in a competitive market, or is this just another opportunity for you to vent your spleen because something is not handed to you on a silver platter, with a kindly pat on the head and an ever-present "here let me help you with that..."?
Seriously this is only one marketing approach for one segment of development for the platform. There are several different revenue streams available for a developer to leverage, and a savvy dev will look to use whichever seems most likely to offer the best revenue. Wherefore this sense of entitlement... never mind, it seems more productive to just ignore you at this point...
If Netflix, as a business, feels they would lose money cutting Apple 30%, then they can pull it out an be done with.
Or, they might discover, that even though they make less money, the sheer number of Apple customers is enough to keep anyone in business.
And so, life will go on. Money will still be made. Customers still served.