I don't know if Kindle is a killer App for the iPad. I can't imagine reading anything long-form on the iPad - but it has a big advantage for reference books (speed, colour). With the Kindle priced as it is, I don't think it's an either/or decision.
And lest we forget, Amazon/Kindle was far worse for publishers that Apple's 30% model, because it dictated overall pricing to the publisher. Walmart get to dictate similar conditions on suppliers too.
(Although it's obvious that one aim in this is to make publishers want to deal directly with Apple, rather than via third-party eBook distributors).
The more pricing models in the market, the better - it will settle down at the one that is most effective for both sides. At the moment, things are far too biased towards the platform owners.
I can kind of see why Apple are doing it - they don't want to create a mechanism where people start giving Apps away for free, while billing for all the actual content outside of the store. maybe via Amazon or Google payments to actually make that simple.
But I think they will have to give. They're not really offering a lot more than Paypal or Google Payments - it feels a lot more like a 5% cut kind of thing. But until there is competition it will stay as it is.
(Remember when credit card transactions were more like 50c a shot??).
In the case of Netflix, Kindle or Nook books, whichs saving can they have having Apple or Google? The distribution, hosting and advertising doesn't change, only chganges the pay processing.
Good question. I'm considering physical media vs. bits. So storage, shipping, handling, etc. I don't know but I assume that Apple adds value by bringing customers without too much incremental advertising costs. I admit that I don't know. I *assume*. I'm just an armchair analyst.
Quote:
Originally Posted by charlituna
Are you an app developer by chance. I'm thinking not.
Nor am I a developer. But in either case, we're talking (as far as I know) about the cut of subscriptions, not the developer cut.
For the record, I'm a happy customer and shareholder. Yeehaw.
The cost of producing at extra copy of a digital magazine is basically zero. Thus profitability for a publisher is determined entirely by revenues (okay once you clear fixed costs).
As long as having an iOS App delivers at least 30% more unit sales than not having an iOS app, then the publisher makes more money by going through the App Store.
So it's a simple question. Can the App Store deliver at least 30% more unit sales then a publisher's other digital channels? I would say yes. Way more than 30% even.
Of course the publishers are profit maximizers as well and they'd want to keep as much of that 30% cut as they can. There are really no moral or legal issues at play here. It's just a commercial dispute over how profits are split between Apple and the publishers. Whoever has the stronger bargaining position wins of course.
Simple Arithmetic? If a developer was selling $10 subscriptions to 100 people before the 30% fee that's $1,000. Now if you sell $10 subscriptions to 130 people (30% more unit sales) that's $1300 which makes the publishers take $910. To break even the publisher needs to sell at least 43% more subscriptions on iOS or hike up the price considerably.
The real question the big hitters like Netflix and Amazon will have to consider is whether it makes sense to change their entire pricing model to appease Apple. Especially if Netflix or Amazon isn't allowed to charge a lower rate outside an iOS app. I'm guessing either Apple will budge (can't say I recall the last time I've seen that happen) or the developers will pull their apps.
9to5 Mac reports that OnePass will work with any device that has a browser.
So... the question needs to be asked: what's stopping people from reading the content & books, watching movies and shows, etc. from the websites through their browser. Does iPad come with a browser? Does there REALLY need to be an App at all for these glorified websites and streaming?
So by ignoring iOS users, Netflix is somehow going to reduce the fixed cost they have to pay for the warehouses, data centers, license and royalty for the contents? Yeah, reduce your subscription base while doing nothing to fixed cost is really going to help your margin. World according to the business illiterate.
With a net negative variable revenue stream for every user serviced on iOS the impact on reduced total revenue would obviously increase the burden on fixed costs as a service component. So, it is actually you who is business illiterate as it does add fixed costs to netflix to service iOS accounts. Why would continue to offer a iOS client if it is a net loss? The greater number of subcribers that are serviced the greater the net loss to netflix. No other client channel (xbox, blue ray players, smart TV's, android ect.) charges netflix for a service that enhances the value of there devices for free. It makes no sense for netflix to operate under such circumstances, even the marketing and exposure they receive is on iTunes is dwarfed by there existing channels.
9to5 Mac reports that OnePass will work with any device that has a browser.
So... the question needs to be asked: what's stopping people from reading the content & books, watching movies and shows, etc. from the websites through their browser. Does iPad come with a browser? Does there REALLY need to be an App at all for these glorified websites and streaming?
OMG! They're actually considering going without an App? How WILL they survive? /sarcasm
An app is better because it allows for offline viewing. However given Apples ridiculous terms, I don't see Kindle remaining in the App Store if they have a web app ready to go. They won't be using OnePass either though, since they have their own payment platform in place.
... The more Google creates these side-by-side comparisons with Apple, the better for Apple I think.
Because it only highlights the ways in which Apple is superior. ...
Exactly. And by offering a competing service, Google has killed the illogical "anti-competitive" argument. Apple isn't the only technology company offering media subscriptions through apps, and they're doing nothing to suppress competitors' success in that space.
You're delusional. The install base available to Netflix is > 100 Million with iOS. They aren't going to lose that base. I could care less about Kindle.
The size of the install base does not matter if you can't make any money in that market (say because of excessive fees...). Also, at the rate Android is growing, the size of the installed bases will be reasonably close in no time. That said, Google is still very much behind in facilitating paid apps and in-app payments in all countries.
Finally, One Pass is not just for Android. It can deployed anywhere on the web and Google will allow bypassing of One Pass by allowing web links in apps.
Apple has released their pricing model AFTER discussing a variety of options with the Content Providers.
The model has been flushed out with the various markets of digital content.
This isn't a pull it out of your rear solution.
Attention Apple apologists. Apple can make mistakes from time to time, even after "flushing out" the model in various markets.
There would have been a lot less backlash if Apple had done the 90/10 cut considering they aren't hosting the content, but merely processing the transaction.
I think this hasn't been fully thought out. It feels like they are trying to force a new problem to work with an existing solution. The model makes more sense for in-app purchases then subscriptions. I can see Netflix not wanting to add a store to their app to purchase a subscription for instance. It sounds like under the new requirements they would be forced to put a store for their subscriptions in their app.
Personally I think there should be a distinction between handling distribution (storage, transport, a fully implemented store, data signing, and digital rights management) and just processing credit cards... but ultimately this is Apple's decision. Currently they only handle distribution for Apps, Books, Videos, and Music. They may choose to continue granting exceptions to certain apps until the have it all figured out. I think Netflix will be one of those apps that continues to get an exception.
I think that adding features to an app should be 30% and Netflix subscriptions should be something less (maybe 10%) based on the services Apple is providing. Kindle books, etc. is a tricker situation because they both compete with Apple and provide an appealing reason to buy an iPad. I think that downloadable app content should also be a lower fee unless Apple provides more infrastructure. I think they should provide infrastructure in this case. I also think that Apple should provide a framework to create a great in-app store for developers.
What Apple has figured out and consumers have voted on with thier pocket books is keep it simple stupid. Apple has shown that you need to keep the options limited, the business model simple. The reason everyone hates dealing with all the other options out there is you have no idea how much something costs and what you are paying for and these on going recurring costs are killing people.
Apple has a very simple to understand business model which everyone seems to like, and ever attempt made by companies and content owners to have all these tier costs people have rejected.
Companies have created all these complicated tier pricing models since it allows them to make lots of money and keep the consumer confuse on what exactly they are paying for over time.
Attention Apple apologists. Apple can make mistakes from time to time, even after "flushing out" the model in various markets.
There would have been a lot less backlash if Apple had done the 90/10 cut considering they aren't hosting the content, but merely processing the transaction.
This is bullshit, troll. Apple's providing one-click access to customers with credit cards who actually buy things, and lots of them. The idea that they are simply providing payment services and nothing more is bogus.
Personally, I think competitive pressure will force Apple to relent somewhat on this issue. I think the compromise will be that Apple still gets 30% of first-year revenue, but they'll get less in subsequent years of continuous subscriptions. This is similar to the current model for magazines,
they do that, and the cheap rates, because their money comes from advertising. Which like the Nielsen ratings, is based on the numbers of folks seeing the ad.
This is also why the publishers freak about Apple not giving up demo info. They can get more money for showing they are hitting a company's prime audience not just random eyes
Comments
And lest we forget, Amazon/Kindle was far worse for publishers that Apple's 30% model, because it dictated overall pricing to the publisher. Walmart get to dictate similar conditions on suppliers too.
(Although it's obvious that one aim in this is to make publishers want to deal directly with Apple, rather than via third-party eBook distributors).
The more pricing models in the market, the better - it will settle down at the one that is most effective for both sides. At the moment, things are far too biased towards the platform owners.
I can kind of see why Apple are doing it - they don't want to create a mechanism where people start giving Apps away for free, while billing for all the actual content outside of the store. maybe via Amazon or Google payments to actually make that simple.
But I think they will have to give. They're not really offering a lot more than Paypal or Google Payments - it feels a lot more like a 5% cut kind of thing. But until there is competition it will stay as it is.
(Remember when credit card transactions were more like 50c a shot??).
In the case of Netflix, Kindle or Nook books, whichs saving can they have having Apple or Google? The distribution, hosting and advertising doesn't change, only chganges the pay processing.
Good question. I'm considering physical media vs. bits. So storage, shipping, handling, etc. I don't know but I assume that Apple adds value by bringing customers without too much incremental advertising costs. I admit that I don't know. I *assume*. I'm just an armchair analyst.
Are you an app developer by chance. I'm thinking not.
Nor am I a developer. But in either case, we're talking (as far as I know) about the cut of subscriptions, not the developer cut.
For the record, I'm a happy customer and shareholder. Yeehaw.
The cost of producing at extra copy of a digital magazine is basically zero. Thus profitability for a publisher is determined entirely by revenues (okay once you clear fixed costs).
As long as having an iOS App delivers at least 30% more unit sales than not having an iOS app, then the publisher makes more money by going through the App Store.
So it's a simple question. Can the App Store deliver at least 30% more unit sales then a publisher's other digital channels? I would say yes. Way more than 30% even.
Of course the publishers are profit maximizers as well and they'd want to keep as much of that 30% cut as they can. There are really no moral or legal issues at play here. It's just a commercial dispute over how profits are split between Apple and the publishers. Whoever has the stronger bargaining position wins of course.
Simple Arithmetic? If a developer was selling $10 subscriptions to 100 people before the 30% fee that's $1,000. Now if you sell $10 subscriptions to 130 people (30% more unit sales) that's $1300 which makes the publishers take $910. To break even the publisher needs to sell at least 43% more subscriptions on iOS or hike up the price considerably.
The real question the big hitters like Netflix and Amazon will have to consider is whether it makes sense to change their entire pricing model to appease Apple. Especially if Netflix or Amazon isn't allowed to charge a lower rate outside an iOS app. I'm guessing either Apple will budge (can't say I recall the last time I've seen that happen) or the developers will pull their apps.
The model has been flushed out with the various markets of digital content.
This isn't a pull it out of your rear solution.
So... the question needs to be asked: what's stopping people from reading the content & books, watching movies and shows, etc. from the websites through their browser. Does iPad come with a browser? Does there REALLY need to be an App at all for these glorified websites and streaming?
BTW: from Amazons website: "Kindle for the Web"
OMG! They're actually considering going without an App? How WILL they survive? /sarcasm
So by ignoring iOS users, Netflix is somehow going to reduce the fixed cost they have to pay for the warehouses, data centers, license and royalty for the contents?
With a net negative variable revenue stream for every user serviced on iOS the impact on reduced total revenue would obviously increase the burden on fixed costs as a service component. So, it is actually you who is business illiterate as it does add fixed costs to netflix to service iOS accounts. Why would continue to offer a iOS client if it is a net loss? The greater number of subcribers that are serviced the greater the net loss to netflix. No other client channel (xbox, blue ray players, smart TV's, android ect.) charges netflix for a service that enhances the value of there devices for free. It makes no sense for netflix to operate under such circumstances, even the marketing and exposure they receive is on iTunes is dwarfed by there existing channels.
9to5 Mac reports that OnePass will work with any device that has a browser.
So... the question needs to be asked: what's stopping people from reading the content & books, watching movies and shows, etc. from the websites through their browser. Does iPad come with a browser? Does there REALLY need to be an App at all for these glorified websites and streaming?
BTW: from Amazons website: "Kindle for the Web"
OMG! They're actually considering going without an App? How WILL they survive? /sarcasm
An app is better because it allows for offline viewing. However given Apples ridiculous terms, I don't see Kindle remaining in the App Store if they have a web app ready to go. They won't be using OnePass either though, since they have their own payment platform in place.
... The more Google creates these side-by-side comparisons with Apple, the better for Apple I think.
Because it only highlights the ways in which Apple is superior. ...
Exactly. And by offering a competing service, Google has killed the illogical "anti-competitive" argument. Apple isn't the only technology company offering media subscriptions through apps, and they're doing nothing to suppress competitors' success in that space.
You're delusional. The install base available to Netflix is > 100 Million with iOS. They aren't going to lose that base. I could care less about Kindle.
The size of the install base does not matter if you can't make any money in that market (say because of excessive fees...). Also, at the rate Android is growing, the size of the installed bases will be reasonably close in no time. That said, Google is still very much behind in facilitating paid apps and in-app payments in all countries.
Finally, One Pass is not just for Android. It can deployed anywhere on the web and Google will allow bypassing of One Pass by allowing web links in apps.
Apple has released their pricing model AFTER discussing a variety of options with the Content Providers.
The model has been flushed out with the various markets of digital content.
This isn't a pull it out of your rear solution.
Attention Apple apologists. Apple can make mistakes from time to time, even after "flushing out" the model in various markets.
There would have been a lot less backlash if Apple had done the 90/10 cut considering they aren't hosting the content, but merely processing the transaction.
Personally I think there should be a distinction between handling distribution (storage, transport, a fully implemented store, data signing, and digital rights management) and just processing credit cards... but ultimately this is Apple's decision. Currently they only handle distribution for Apps, Books, Videos, and Music. They may choose to continue granting exceptions to certain apps until the have it all figured out. I think Netflix will be one of those apps that continues to get an exception.
I think that adding features to an app should be 30% and Netflix subscriptions should be something less (maybe 10%) based on the services Apple is providing. Kindle books, etc. is a tricker situation because they both compete with Apple and provide an appealing reason to buy an iPad. I think that downloadable app content should also be a lower fee unless Apple provides more infrastructure. I think they should provide infrastructure in this case. I also think that Apple should provide a framework to create a great in-app store for developers.
Apple has a very simple to understand business model which everyone seems to like, and ever attempt made by companies and content owners to have all these tier costs people have rejected.
Companies have created all these complicated tier pricing models since it allows them to make lots of money and keep the consumer confuse on what exactly they are paying for over time.
Attention Apple apologists. Apple can make mistakes from time to time, even after "flushing out" the model in various markets.
There would have been a lot less backlash if Apple had done the 90/10 cut considering they aren't hosting the content, but merely processing the transaction.
This is bullshit, troll. Apple's providing one-click access to customers with credit cards who actually buy things, and lots of them. The idea that they are simply providing payment services and nothing more is bogus.
Personally, I think competitive pressure will force Apple to relent somewhat on this issue. I think the compromise will be that Apple still gets 30% of first-year revenue, but they'll get less in subsequent years of continuous subscriptions. This is similar to the current model for magazines,
they do that, and the cheap rates, because their money comes from advertising. Which like the Nielsen ratings, is based on the numbers of folks seeing the ad.
This is also why the publishers freak about Apple not giving up demo info. They can get more money for showing they are hitting a company's prime audience not just random eyes