The table below illustrates how the general principle of Apple's IAP Fees works, it's just set too high.
The chart shows the relative costs and fees associated with selling a $10 magazine on the 3 different channels - iOS, Android and Web. The first chart shows the revenue with the Apple IAP fee at 30%, the second table shows the effect with it at 20%. It has Android fees set at 10% as per Google's recent announcement.
I've made the following assumptions:
[1] That there is an additional 10% costs to selling a purchase on Android or the Web, due to the cost of having to build and maintain a website store and payment gateway and additional marketing.
[2] That sales through the web sit at a static and fairly low 10% of all sales.
What it demonstrates:
With the fees at 30%, the total revenue goes UP, the larger the market share for Android. So vendors would have an interest in promoting the Android channel.
With the fees at 20%, the total revenue is not affected by changes in market share between iOS and Android.
Apple could set the IAP fees at 20% and still have room to bring them lower if they felt they wanted to be even more competitive.
Now of course, you can argue my cost and sales assumptions aren't quite right, but it illustrates the point.
Developers and Content providers aren't greatly disincentive-ised by the new rules, you just need to factor the costs in from the start. Those early Apps - Amazon etc. May have to rethink their model. And Apple should consider dropping the fees to 20% for IAPs. Maybe even 15% !! At 15%, total revenues go UP as the market share for iOS goes up.
Well I am glad I dump my AAPL stocks at 358$. With the subscription problems and SJ sick the stock is going to drop all the way down to near 300$ levels. Then I will buy it back
I don't care what margin apple decides it wants to charge.
BUT when it says suscriptions outside their ecosystem cannot be cheaper THAT is called price fixing. They are using their market share to bully developers and screw customers.
It's not price fixing - Apple has inserted a most favored nation clause into IAP policies. Developers need to investigate the benefit vs trade off to determine the most effective pricing for their wares. Some will go the route of Readability while others won't forgo the additional revenue from IAP.
But there's nothing illegal or untoward about MFN provisions, even if you disagree with Apple's stance. It just means you can't give a sweetheart deal to another distributor without offering the same terms to the AppStore.
I don't care what margin apple decides it wants to charge.
BUT when it says suscriptions outside their ecosystem cannot be cheaper THAT is called price fixing. They are using their market share to bully developers and screw customers.
I think what Apple is doing is totally wrong, but I had to call out this separately. Actually, that's not price fixing.
Price Fixing is when two competitors agree behind the scenes to mutually keep prices set at a certain level where they're no longer effectively "competing". Like Exxon and Shell having a handshake agreement to never let gas prices go below $3.00 a gallon, even though they're supposed to be competing with each other.
This is actually called a Most Favored Customer (MFC) clause and basically says that the best deal you offer can't be lower than the one you're offering me. So if Apple wholesales to Best Buy and Target, and Target has an MFC agreement with Apple, then if they give Best Buy a lower wholesale price, they have to give Target the same price. They can't say "tough, your deal is separate and was made before". Apple is basically saying "you have to let us offer the best price to the customer".
Again, having said all that, this 30% margin is blowing up in their face. The App Store with iPhone apps was one thing because they created a new market from scratch, so they could basically create a new paradigm. You can't say "the world of magazines is changing... and by the way, it will cost you 30% more now thanks to this new Apple tax" and not have backlash.
... Again, having said all that, this 30% margin is blowing up in their face. The App Store with iPhone apps was one thing because they created a new market from scratch, so they could basically create a new paradigm. You can't say "the world of magazines is changing... and by the way, it will cost you 30% more now thanks to this new Apple tax" and not have backlash.
I don't think anything is blowing up in their face, nor do I think this is going to increase subscription costs. Publishers already pay commissions on subscriptions, and most of their revenue will come from ads, anyway. Publishers are mostly grumpy because giving up your personal data to subscribe is opt in, but they'll get over it.
As far as the Amazon-iOS business model (give away free shell app, sell all content out the back door to circumvent developer agreement) goes, I don't think Apple is making a mistake there either. Particularly with Amazon, it's an utterly mistaken notion that they will pay 30% of their eBook sales revenue to Apple. I'd be surprised if what they pay to Apple even amounted to 10% since there are so many other ways and platforms to buy Kindle content. At most this might end up "costing" 5%, but the advantages of being on iOS will likely greatly offset that cost. They'll scream about it and send out the astroturfers, but they know they've been getting a free ride in the App Store up till now.
It's possible that Apple will at some point fix lower revenue sharing percentages for certain types of content (or maybe they won't) but, if that's going to happen, they have no choice but to play hardball now, otherwise, companies like Amazon have absolutely no incentive to agree to even a lower percentage since by cheating on the developer agreement they pay 0% toward the cost of running the App Store.
P.S. We’d be glad to deliver Readability for iOS – with in-app purchasing – if you’d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.
If Apple did this, Readability to renegotiate subscription payouts for purchases made with IAP because it would allow them to STILL make something, and it wouldn't screw over content producers.
One Again, AI shows it's inability to even attempt anything close to real journalism.
And the difference is (Apple appstore VS Amazon)???? Right. zero. Nobody is crying that Amazon takes a share of sales on ITS store?!?!
No one's complaining about the rate iBooks charges publishers (it was a really good deal, forcing Amazon to change its practices), or about the 30% subscription rate for iOS only publications which are the only two scenarios where your analogy applies.
For an ebook, Amazon's cut is 30%, the publisher receives 70%
It used to be 70% to Amazon and 30% to the publisher before the iBookStore opened.
Wise up and be fair people. Make like for like comparisons. You won't know what is really happening until you look or the whole picture across all vendors and retailers. Apple is the prime content retailer. It offers all its content holders access to a global marketplace of affluent buyers. These are prime markets of Apple's own creation. They have zero admin, marketing, sales, distribution or billing/collections burdens. Apple charges less than most retailers who are about 5% as effective in drumming up sales for content providers. It works. It is their marketplace. Vendors are not dragged to the Store at gunpoint. Apple delivers sales like.no.other. Why all the whining? It works. Even the greedy music industry has learned iTunes is sales and cashflow salvation when you are on the road to doom otherwise with your own limited vision and ideas.
If you were a pragmatic vendor, you would feel the pull of the Apple marketplace. No question. Protest and forego the avalanche of windfall sales that require no added effort or cost to generate, whydontcha? Or jump in with a positive 'nothing to lose' view and reap the rewards which were never coming your way anyway by other means. You are not restricted in the freedom to keep selling through every and ANY other channel of your choosing.
Just don't go playing dirty with your partner and try to undercut them. And, if you think this restriction is unfair, talk to RR, Rolex, Omega, Merc, BMW, Honda, or any other calibre vendor or retailer about undercutting.
I don't think anything is blowing up in their face, nor do I think this is going to increase subscription costs. Publishers already pay commissions on subscriptions, and most of their revenue will come from ads, anyway. Publishers are mostly grumpy because giving up your personal data to subscribe is opt in, but they'll get over it.
As far as the Amazon-iOS business model (give away free shell app, sell all content out the back door to circumvent developer agreement) goes, I don't think Apple is making a mistake there either. Particularly with Amazon, it's an utterly mistaken notion that they will pay 30% of their eBook sales revenue to Apple. I'd be surprised if what they pay to Apple even amounted to 10% since there are so many other ways and platforms to buy Kindle content. At most this might end up "costing" 5%, but the advantages of being on iOS will likely greatly offset that cost. They'll scream about it and send out the astroturfers, but they know they've been getting a free ride in the App Store up till now.
It's possible that Apple will at some point fix lower revenue sharing percentages for certain types of content (or maybe they won't) but, if that's going to happen, they have no choice but to play hardball now, otherwise, companies like Amazon have absolutely no incentive to agree to even a lower percentage since by cheating on the developer agreement they pay 0% toward the cost of running the App Store.
Ok... I'll try and make this simple for you:
IAP REMOVES advertising data, thus they will make LESS money in advertising. Heck, you know the first part, it's not a big jump to get to the second part. Opt in data is LESS useful because it's a statistical bias. How do I know this? I paid attention in school. Effective targeted advertising (the most profitable) depends on a wide range of data. Sure, a company could switch to general ads, but they make a LOT less money.
On top of that, Readability REMOVES ads. That's the POINT of the program, and WHY they give 70% back to publishers of content. This means, for those paying attention, that the ONLY revenue they get from a customer is the subscription, they don't get ad data because they don't place ads.
Furthermore, Apple will retain ALL that data and use it to pump you with targets iAds. As in, all you've done is shift your purchase data from one broker to another. If you trust Apple more, that's your prerogative, but don't think for a SECOND apple is going to keep the data they get through IAP and never use it.
As far as amazon goes, kindle is it's OWN ecosystem. They have content across multiple devices, and they have their own systems of payment, including gift cards. They're not trying to skirt the App purchasing model. If they were, Apple would've blocked them LONG ago. See, that model is there for stuff you purchase to use EXCLUSIVELY on your iOS device. Kindle books don't fit that model and apple has NO cost associated with their sale save the credit processing fee through IAP. (Amazon pays $100 a year for the "Right" to offer their app to iOS users, so they're not "freeloading")
Kindle handles their own authentication servers, their own hosting servers, and they negotiate the contracts with publishers.
Furthermore, Amazon WILL NOT make up the added cost by having the "benefit" of being on iOS. Again, this is simple math.
Currently:
Book Price: $10
Publisher Cut: $7
Amazon Cut: $3
7+3=10.
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $3
Amazon Cut: $0
7+3+0*=10
*But Amazon's costs aren't $0. Let's be cynical and say it only costs them on average $.05 a book. The reality is, that there is a cost.*
Now, because a majority of the major publishing houses use the "Agency Model" (something made popular by iBooks) Amazon can't increase the price to try and make money back. Instead, they'll have to renegotiate that model (70/30) to something that they can still turn a profit on if the book is sold via iTunes, similar to the distributing fee charged if a book is downloaded over 3G on the kindle.
The problem with that is that iBooks exists. Generally, I'm all for competition, but that's not what we're seeing here. What would happen is Apple is essentially positioning iBooks so that it becomes THE most profitable way to get content to iOS devices. They're not doing this by being aggressive with their own pricing, but rather they're actively trying to INCREASE the costs of their competitors by forcing a monopoly-like setup with iOS device. So Amazon won't really be able to pull that off, because those publishers will find someone else. Now, you could say this is just the "Market" at work, but it's not. Amazon's costs are artificially increasing because Apple wants to hedge them out of the market, Not because of any natural market factor.
The discussion of if they should be allowed to do this (lock out their users) is something left for another day. The end result is that you as an iOS consumer will have an INCREASING amount of your purchases locked to an ecosystem that will give you no easy way to escape. Furthermore, Amazon (and other companies) have developed an ecosystem that encourages cross platform compatibility with their products, in part, because Apple didn't seem to care when they first launched the App store and they were desperate for big name companies to release content. Now that the App store is popular, they're suddenly claiming the deserve a part of that ecosystem. Sounds like a bait and switch to me.
But what about volume? You said it before, I'm sure you'll say it again since you will skip over the numbers above. But here's the reality: No matter HOW MANY BOOKS you sell at a -$.05 loss you can NEVER turn a profit. This means that there is NO way IAP (and thus iOS) becomes "Worth it" for a distributor like Amazon to develop for. it doesn't matter if they would only "lose" 5% of their revenue to offer it on iOS. The point is that EVERY sale they make on the platform would be a loss.
This means the ONLY way iOS customers would be attractive enough to offer the app (at a loss) is if an overwhelming number primarily purchased their books on amazon's website or on another non-iOS device. Do some customers do that? Yes. But the whole point of IAP is for the convenience factor, with Apple going so far as to say companies can offer NO incentive or direct link (in app) for the customer to buy online. The reality is that convenience sells, especially within the iOS ecosystem. (it's one of their marketing hallmarks) Apple knows this, which is why they wrote the guidelines the way they did. If a customer has an iOS device that they actively use for reading, the reality is that they will almost always purchase the book from their device, meaning that iOS customers are no longer an attractive market, no matter HOW much they spend or how many there are.
I know you have issues with anything that paints an Apple move as negative, going so far as to claim that links giving you the evidence you requested "won't work" in your browser. But please tell me how losing even .05 of EVERY SALE could ever be worth it to a company?
I disagree, I do not think Apple would be able to legally dictate the price of a service on another platform..... I am pretty sure the fed would have to put a stop to that....
Of course, it may just force content providers like Netflix, Hulu, Pandora, etc to simply abandon the iOS platforms....
I suggest you look carefully at the pricing history of prime brands like Apple, Bang&Olufsen and many many more. RPM may not be common any more but no retailer will work with a vendor/publisher who casually undercuts them on price. Open a shop if you disagree. You will 'get it', soon enough as you zoom towards bankruptcy.
P.S. We?d be glad to deliver Readability for iOS ? with in-app purchasing ? if you?d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.
If Apple did this, Readability to renegotiate subscription payouts for purchases made with IAP because it would allow them to STILL make something, and it wouldn't screw over content producers.
One Again, AI shows it's inability to even attempt anything close to real journalism.
Once again, Menno shows his ability to completely misrepresent reality. First of all, this 70/30 split with "writers and publishers" is a bit of a fairy tale. They will basically steal content from anywhere on the web and repurpose it for their delivery. The "writers and publishers" are only going to get a cut (of a very small amount) if they give Readability permission to steal their content, which most of them are not likely to do. So, who exactly will Readability be paying all this money out to?
This P.S. is just a bit of disingenuous grandstanding on their part, and entirely irrelevant.
It used to be 70% to Amazon and 30% to the publisher before the iBookStore opened.
Wise up and be fair people. Make like for like comparisons. You won't know what is really happening until you look or the whole picture across all vendors and retailers. Apple is the prime content retailer. It offers all its content holders access to a global marketplace of affluent buyers. These are prime markets of Apple's own creation. They have zero admin, marketing, sales, distribution or billing/collections burdens. Apple charges less than most retailers who are about 5% as effective in drumming up sales for content providers. It works. It is their marketplace. Vendors are not dragged to the Store at gunpoint. Apple delivers sales like.no.other. Why all the whining? It works. Even the greedy music industry has learned iTunes is sales and cashflow salvation when you are on the road to doom otherwise with your own limited vision and ideas.
If you were a pragmatic vendor, you would feel the pull of the Apple marketplace. No question. Protest and forego the avalanche of windfall sales that require no added effort or cost to generate, whydontcha? Or jump in with a positive 'nothing to lose' view and reap the rewards which were never coming your way anyway by other means. You are not restricted in the freedom to keep selling through every and ANY other channel of your choosing.
Just don't go playing dirty with your partner and try to undercut them. And, if you think this restriction is unfair, talk to RR, Rolex, Omega, Merc, BMW, Honda, or any other calibre vendor or retailer about undercutting.
Exactly, Apple changed the way publishers got paid. Which is why the 30% is DEVASTATING for companies like Amazon. It means that they essentially CAN'T reduce the cut given to publishers to compensate for the loss thanks to IAP because publishers know they can reach those consumers through another source (iBooks).
THIS IS NOT COMPETITION. This is a monopolistic practice, where Apple is using their marketshare (100% of iOS users) to jack up the rates of their competitors knowing that that there is NO way for them to come up on top.
Under these new rules, with the restrictions of commissions Apple helped to create, iOS is NO LONGER a "Draw" for companies like Amazon, no matter how much they spend, or how many customers there are.
Apple's not a "Partner" in this analogy. They're doing NOTHING for Amazon but creating a media consumption platform, a platform the customers ALREADY PAID FOR. Apple will assume NONE of the costs associated with getting content to a customer past the credit processing fee, and they're doing that at gunpoint. Amazon PAYS THEM $100 a year to host their app, and features iOS devices in their own ads (largely in a positive light until the iPad came about).
What Apples doing here is akin to a mob boss inviting a small pizza chain into the neighborhood. They'll allow the chain access to all the residents in the area, but in order to be there, the Mob boss gets 30% of EVERY sale (delivered to his "family" run pizza place across the street) or he shuts the chainstore down. Apple's not a partner. They're an extortion racket here.
Yes, the App store helps sell apps, this is true, but does it help amazon sell kindle books? not really beyond the point of allowing an app to exist on the platform. Big names like Netflix, Amazon, etc helped spur app store development when it first launched. Does apple give them a kickback for every device sale? Sure, they have the promise of making a profit off of the content sold, but when apple is taking the ENTIRE cut that Amazon used to get, there's no longer a profit.
I am more surprised by the belief of many that they are entitled to be in the Apps Store, simply because they can create Apps. And, that they must dictate the terms of entry.
The ploy to rally the "public" to their cause has been tried very loudly in high profile soapboxes during the early stage of the Apps Store.
I was quite amused by a number of those who realize that the "uncaring internet public" never sacrificed their time to fight the fight for every soapbox preacher. Not fazed by their rejection, they were shamefaced in rationalizing their embrace what they despised as the Apple "walled garden" - when they there was no viable choice where they could make profit.
What was more amusing was that the Apps of those turncoats never made it among the popular choices.
Personally, if I have anything that is worth reading, or using and worth paying for, I would not do it through an intermediary -- Readability, Amazon, etc.
The point of the Apps Store is the empowerment of the creator to ply their own inventions and creative products directly to their consumer. What the Apple Ecosystems bring is a highly valuable of hundreds of millions of Apple products users who have been proven to be voracious consumers of such inventions and creations.
CGC
Exactly. Apple is empowering content creators, and it is shaking off the bloodsucking content distributors. For the creators and for the customers, that's all good!
Furthermore, Amazon WILL NOT make up the added cost by having the "benefit" of being on iOS. Again, this is simple math.
Currently:
Book Price: $10
Publisher Cut: $7
Amazon Cut: $3
7+3=10.
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $3
Amazon Cut: $0
7+3+0*=10
*But Amazon's costs aren't $0. Let's be cynical and say it only costs them on average $.05 a book. The reality is, that there is a cost.*
...
Let's be realistic and assume that, on average, it costs Amazon $0.50/book. (And I think that's a very generous to Amazon estimate of the true cost of this to them.)
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $0.50
Amazon Cut: $2.50
That's a much truer picture of what, in reality, this actually means to Amazon's bottom line. Your numbers falsely assume that every eBook Amazon sells will be sold through IAP, which is patently absurd, given the number of avenues customers have to purchase Kindle books. Frankly, I think that $0.50 as Apple's cut of the $10, spread over all of Amazon's eBook sales is probably significantly higher than it is likely to be, so the above is pretty much a worst case scenario for Amazon.
Once again, Menno shows his ability to completely misrepresent reality. First of all, this 70/30 split with "writers and publishers" is a bit of a fairy tale. They will basically steal content from anywhere on the web and repurpose it for their delivery. The "writers and publishers" are only going to get a cut (of a very small amount) if they give Readability permission to steal their content, which most of them are not likely to do. So, who exactly will Readability be paying all this money out to?
This P.S. is just a bit of disingenuous grandstanding on their part, and entirely irrelevant.
That's why Apple incorporated their technology into the Safari browser, right? So it's totally a pointless technology, right?
You can't write something off simply because you don't like it. Since you demand we provide you links (that mysteriously never work with your browser) I demand that you show me that they're pocketing more than the 30% they're claiming. It doesn't matter WHO that 70% goes to when it comes to publishers right now. what matters is if they only retain 30% for themselves. If they do, that means their ENTIRE gross profit would be eaten with this IAP fee. That's the point.
I know you love you some red herrings, but give it a rest.
I need some clarification on the nuances of Apple's subscription model.
Apple states that they don't take a cut from customers the Magazine generate on their own. I.e. Not through iOS. So Mag A has a current subscriber that's delighted to be able to read on an iPad. The subscription is up for renewal and is done through the iPad. Does Apple get 30%?
If it's more like Apple gets 30% on NEW customers only then I think this issue will blow over really quick. Otherwise it'll be interesting to see what competitors come up with to deal with this. Galaxy Tab 2 anyone?
If I decide to subscribe through Apple, perhaps I'll do so because I don't like my data being sold to any taker by some pimp publisher who doesn't see my privacy rights as any kind of concern.
Let's be realistic and assume that, on average, it costs Amazon $0.50/book. (And I think that's a very generous to Amazon estimate of the true cost of this to them.)
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $0.50
Amazon Cut: $2.50
That's a much truer picture of what, in reality, this actually means to Amazon's bottom line.
.05 != 30% of $10.
30% of $10 is $3.
This math lesson was brought to you by your third grade teacher, she really wishes you paid attention.
Comments
The chart shows the relative costs and fees associated with selling a $10 magazine on the 3 different channels - iOS, Android and Web. The first chart shows the revenue with the Apple IAP fee at 30%, the second table shows the effect with it at 20%. It has Android fees set at 10% as per Google's recent announcement.
I've made the following assumptions:
[1] That there is an additional 10% costs to selling a purchase on Android or the Web, due to the cost of having to build and maintain a website store and payment gateway and additional marketing.
[2] That sales through the web sit at a static and fairly low 10% of all sales.
What it demonstrates:
With the fees at 30%, the total revenue goes UP, the larger the market share for Android. So vendors would have an interest in promoting the Android channel.
With the fees at 20%, the total revenue is not affected by changes in market share between iOS and Android.
Apple could set the IAP fees at 20% and still have room to bring them lower if they felt they wanted to be even more competitive.
Now of course, you can argue my cost and sales assumptions aren't quite right, but it illustrates the point.
Developers and Content providers aren't greatly disincentive-ised by the new rules, you just need to factor the costs in from the start. Those early Apps - Amazon etc. May have to rethink their model. And Apple should consider dropping the fees to 20% for IAPs. Maybe even 15% !! At 15%, total revenues go UP as the market share for iOS goes up.
For an ebook, Amazon's cut is 30%, the publisher receives 70%
And the difference is (Apple appstore VS Amazon)???? Right. zero. Nobody is crying that Amazon takes a share of sales on ITS store?!?!
The table below illustrates how the general principle of Apple's IAP Fees works, it's just set too high. ...
You have to admire the determination of those who make up numbers and scenarios to try to make their case.
I don't care what margin apple decides it wants to charge.
BUT when it says suscriptions outside their ecosystem cannot be cheaper THAT is called price fixing. They are using their market share to bully developers and screw customers.
It's not price fixing - Apple has inserted a most favored nation clause into IAP policies. Developers need to investigate the benefit vs trade off to determine the most effective pricing for their wares. Some will go the route of Readability while others won't forgo the additional revenue from IAP.
But there's nothing illegal or untoward about MFN provisions, even if you disagree with Apple's stance. It just means you can't give a sweetheart deal to another distributor without offering the same terms to the AppStore.
I don't care what margin apple decides it wants to charge.
BUT when it says suscriptions outside their ecosystem cannot be cheaper THAT is called price fixing. They are using their market share to bully developers and screw customers.
I think what Apple is doing is totally wrong, but I had to call out this separately. Actually, that's not price fixing.
Price Fixing is when two competitors agree behind the scenes to mutually keep prices set at a certain level where they're no longer effectively "competing". Like Exxon and Shell having a handshake agreement to never let gas prices go below $3.00 a gallon, even though they're supposed to be competing with each other.
This is actually called a Most Favored Customer (MFC) clause and basically says that the best deal you offer can't be lower than the one you're offering me. So if Apple wholesales to Best Buy and Target, and Target has an MFC agreement with Apple, then if they give Best Buy a lower wholesale price, they have to give Target the same price. They can't say "tough, your deal is separate and was made before". Apple is basically saying "you have to let us offer the best price to the customer".
Again, having said all that, this 30% margin is blowing up in their face. The App Store with iPhone apps was one thing because they created a new market from scratch, so they could basically create a new paradigm. You can't say "the world of magazines is changing... and by the way, it will cost you 30% more now thanks to this new Apple tax" and not have backlash.
... Again, having said all that, this 30% margin is blowing up in their face. The App Store with iPhone apps was one thing because they created a new market from scratch, so they could basically create a new paradigm. You can't say "the world of magazines is changing... and by the way, it will cost you 30% more now thanks to this new Apple tax" and not have backlash.
I don't think anything is blowing up in their face, nor do I think this is going to increase subscription costs. Publishers already pay commissions on subscriptions, and most of their revenue will come from ads, anyway. Publishers are mostly grumpy because giving up your personal data to subscribe is opt in, but they'll get over it.
As far as the Amazon-iOS business model (give away free shell app, sell all content out the back door to circumvent developer agreement) goes, I don't think Apple is making a mistake there either. Particularly with Amazon, it's an utterly mistaken notion that they will pay 30% of their eBook sales revenue to Apple. I'd be surprised if what they pay to Apple even amounted to 10% since there are so many other ways and platforms to buy Kindle content. At most this might end up "costing" 5%, but the advantages of being on iOS will likely greatly offset that cost. They'll scream about it and send out the astroturfers, but they know they've been getting a free ride in the App Store up till now.
It's possible that Apple will at some point fix lower revenue sharing percentages for certain types of content (or maybe they won't) but, if that's going to happen, they have no choice but to play hardball now, otherwise, companies like Amazon have absolutely no incentive to agree to even a lower percentage since by cheating on the developer agreement they pay 0% toward the cost of running the App Store.
How do I know they didn't read it? The missed the MOST IMPORTANT PART of what readability said.
http://blog.readability.com/2011/02/...tter-to-apple/
Here's the part they missed:
P.S. We’d be glad to deliver Readability for iOS – with in-app purchasing – if you’d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.
If Apple did this, Readability to renegotiate subscription payouts for purchases made with IAP because it would allow them to STILL make something, and it wouldn't screw over content producers.
One Again, AI shows it's inability to even attempt anything close to real journalism.
And the difference is (Apple appstore VS Amazon)???? Right. zero. Nobody is crying that Amazon takes a share of sales on ITS store?!?!
No one's complaining about the rate iBooks charges publishers (it was a really good deal, forcing Amazon to change its practices), or about the 30% subscription rate for iOS only publications which are the only two scenarios where your analogy applies.
For an ebook, Amazon's cut is 30%, the publisher receives 70%
It used to be 70% to Amazon and 30% to the publisher before the iBookStore opened.
Wise up and be fair people. Make like for like comparisons. You won't know what is really happening until you look or the whole picture across all vendors and retailers. Apple is the prime content retailer. It offers all its content holders access to a global marketplace of affluent buyers. These are prime markets of Apple's own creation. They have zero admin, marketing, sales, distribution or billing/collections burdens. Apple charges less than most retailers who are about 5% as effective in drumming up sales for content providers. It works. It is their marketplace. Vendors are not dragged to the Store at gunpoint. Apple delivers sales like.no.other. Why all the whining? It works. Even the greedy music industry has learned iTunes is sales and cashflow salvation when you are on the road to doom otherwise with your own limited vision and ideas.
If you were a pragmatic vendor, you would feel the pull of the Apple marketplace. No question. Protest and forego the avalanche of windfall sales that require no added effort or cost to generate, whydontcha? Or jump in with a positive 'nothing to lose' view and reap the rewards which were never coming your way anyway by other means. You are not restricted in the freedom to keep selling through every and ANY other channel of your choosing.
Just don't go playing dirty with your partner and try to undercut them. And, if you think this restriction is unfair, talk to RR, Rolex, Omega, Merc, BMW, Honda, or any other calibre vendor or retailer about undercutting.
I don't think anything is blowing up in their face, nor do I think this is going to increase subscription costs. Publishers already pay commissions on subscriptions, and most of their revenue will come from ads, anyway. Publishers are mostly grumpy because giving up your personal data to subscribe is opt in, but they'll get over it.
As far as the Amazon-iOS business model (give away free shell app, sell all content out the back door to circumvent developer agreement) goes, I don't think Apple is making a mistake there either. Particularly with Amazon, it's an utterly mistaken notion that they will pay 30% of their eBook sales revenue to Apple. I'd be surprised if what they pay to Apple even amounted to 10% since there are so many other ways and platforms to buy Kindle content. At most this might end up "costing" 5%, but the advantages of being on iOS will likely greatly offset that cost. They'll scream about it and send out the astroturfers, but they know they've been getting a free ride in the App Store up till now.
It's possible that Apple will at some point fix lower revenue sharing percentages for certain types of content (or maybe they won't) but, if that's going to happen, they have no choice but to play hardball now, otherwise, companies like Amazon have absolutely no incentive to agree to even a lower percentage since by cheating on the developer agreement they pay 0% toward the cost of running the App Store.
Ok... I'll try and make this simple for you:
IAP REMOVES advertising data, thus they will make LESS money in advertising. Heck, you know the first part, it's not a big jump to get to the second part. Opt in data is LESS useful because it's a statistical bias. How do I know this? I paid attention in school. Effective targeted advertising (the most profitable) depends on a wide range of data. Sure, a company could switch to general ads, but they make a LOT less money.
On top of that, Readability REMOVES ads. That's the POINT of the program, and WHY they give 70% back to publishers of content. This means, for those paying attention, that the ONLY revenue they get from a customer is the subscription, they don't get ad data because they don't place ads.
Furthermore, Apple will retain ALL that data and use it to pump you with targets iAds. As in, all you've done is shift your purchase data from one broker to another. If you trust Apple more, that's your prerogative, but don't think for a SECOND apple is going to keep the data they get through IAP and never use it.
As far as amazon goes, kindle is it's OWN ecosystem. They have content across multiple devices, and they have their own systems of payment, including gift cards. They're not trying to skirt the App purchasing model. If they were, Apple would've blocked them LONG ago. See, that model is there for stuff you purchase to use EXCLUSIVELY on your iOS device. Kindle books don't fit that model and apple has NO cost associated with their sale save the credit processing fee through IAP. (Amazon pays $100 a year for the "Right" to offer their app to iOS users, so they're not "freeloading")
Kindle handles their own authentication servers, their own hosting servers, and they negotiate the contracts with publishers.
Furthermore, Amazon WILL NOT make up the added cost by having the "benefit" of being on iOS. Again, this is simple math.
Currently:
Book Price: $10
Publisher Cut: $7
Amazon Cut: $3
7+3=10.
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $3
Amazon Cut: $0
7+3+0*=10
*But Amazon's costs aren't $0. Let's be cynical and say it only costs them on average $.05 a book. The reality is, that there is a cost.*
Now, because a majority of the major publishing houses use the "Agency Model" (something made popular by iBooks) Amazon can't increase the price to try and make money back. Instead, they'll have to renegotiate that model (70/30) to something that they can still turn a profit on if the book is sold via iTunes, similar to the distributing fee charged if a book is downloaded over 3G on the kindle.
The problem with that is that iBooks exists. Generally, I'm all for competition, but that's not what we're seeing here. What would happen is Apple is essentially positioning iBooks so that it becomes THE most profitable way to get content to iOS devices. They're not doing this by being aggressive with their own pricing, but rather they're actively trying to INCREASE the costs of their competitors by forcing a monopoly-like setup with iOS device. So Amazon won't really be able to pull that off, because those publishers will find someone else. Now, you could say this is just the "Market" at work, but it's not. Amazon's costs are artificially increasing because Apple wants to hedge them out of the market, Not because of any natural market factor.
The discussion of if they should be allowed to do this (lock out their users) is something left for another day. The end result is that you as an iOS consumer will have an INCREASING amount of your purchases locked to an ecosystem that will give you no easy way to escape. Furthermore, Amazon (and other companies) have developed an ecosystem that encourages cross platform compatibility with their products, in part, because Apple didn't seem to care when they first launched the App store and they were desperate for big name companies to release content. Now that the App store is popular, they're suddenly claiming the deserve a part of that ecosystem. Sounds like a bait and switch to me.
But what about volume? You said it before, I'm sure you'll say it again since you will skip over the numbers above. But here's the reality: No matter HOW MANY BOOKS you sell at a -$.05 loss you can NEVER turn a profit. This means that there is NO way IAP (and thus iOS) becomes "Worth it" for a distributor like Amazon to develop for. it doesn't matter if they would only "lose" 5% of their revenue to offer it on iOS. The point is that EVERY sale they make on the platform would be a loss.
This means the ONLY way iOS customers would be attractive enough to offer the app (at a loss) is if an overwhelming number primarily purchased their books on amazon's website or on another non-iOS device. Do some customers do that? Yes. But the whole point of IAP is for the convenience factor, with Apple going so far as to say companies can offer NO incentive or direct link (in app) for the customer to buy online. The reality is that convenience sells, especially within the iOS ecosystem. (it's one of their marketing hallmarks) Apple knows this, which is why they wrote the guidelines the way they did. If a customer has an iOS device that they actively use for reading, the reality is that they will almost always purchase the book from their device, meaning that iOS customers are no longer an attractive market, no matter HOW much they spend or how many there are.
I know you have issues with anything that paints an Apple move as negative, going so far as to claim that links giving you the evidence you requested "won't work" in your browser. But please tell me how losing even .05 of EVERY SALE could ever be worth it to a company?
I disagree, I do not think Apple would be able to legally dictate the price of a service on another platform..... I am pretty sure the fed would have to put a stop to that....
Of course, it may just force content providers like Netflix, Hulu, Pandora, etc to simply abandon the iOS platforms....
I suggest you look carefully at the pricing history of prime brands like Apple, Bang&Olufsen and many many more. RPM may not be common any more but no retailer will work with a vendor/publisher who casually undercuts them on price. Open a shop if you disagree. You will 'get it', soon enough as you zoom towards bankruptcy.
Glad Apple Insider can't even be bothered to read readability's post on the subject.
How do I know they didn't read it? The missed the MOST IMPORTANT PART of what readability said.
http://blog.readability.com/2011/02/...tter-to-apple/
Here's the part they missed:
P.S. We?d be glad to deliver Readability for iOS ? with in-app purchasing ? if you?d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.
If Apple did this, Readability to renegotiate subscription payouts for purchases made with IAP because it would allow them to STILL make something, and it wouldn't screw over content producers.
One Again, AI shows it's inability to even attempt anything close to real journalism.
Once again, Menno shows his ability to completely misrepresent reality. First of all, this 70/30 split with "writers and publishers" is a bit of a fairy tale. They will basically steal content from anywhere on the web and repurpose it for their delivery. The "writers and publishers" are only going to get a cut (of a very small amount) if they give Readability permission to steal their content, which most of them are not likely to do. So, who exactly will Readability be paying all this money out to?
This P.S. is just a bit of disingenuous grandstanding on their part, and entirely irrelevant.
It used to be 70% to Amazon and 30% to the publisher before the iBookStore opened.
Wise up and be fair people. Make like for like comparisons. You won't know what is really happening until you look or the whole picture across all vendors and retailers. Apple is the prime content retailer. It offers all its content holders access to a global marketplace of affluent buyers. These are prime markets of Apple's own creation. They have zero admin, marketing, sales, distribution or billing/collections burdens. Apple charges less than most retailers who are about 5% as effective in drumming up sales for content providers. It works. It is their marketplace. Vendors are not dragged to the Store at gunpoint. Apple delivers sales like.no.other. Why all the whining? It works. Even the greedy music industry has learned iTunes is sales and cashflow salvation when you are on the road to doom otherwise with your own limited vision and ideas.
If you were a pragmatic vendor, you would feel the pull of the Apple marketplace. No question. Protest and forego the avalanche of windfall sales that require no added effort or cost to generate, whydontcha? Or jump in with a positive 'nothing to lose' view and reap the rewards which were never coming your way anyway by other means. You are not restricted in the freedom to keep selling through every and ANY other channel of your choosing.
Just don't go playing dirty with your partner and try to undercut them. And, if you think this restriction is unfair, talk to RR, Rolex, Omega, Merc, BMW, Honda, or any other calibre vendor or retailer about undercutting.
Exactly, Apple changed the way publishers got paid. Which is why the 30% is DEVASTATING for companies like Amazon. It means that they essentially CAN'T reduce the cut given to publishers to compensate for the loss thanks to IAP because publishers know they can reach those consumers through another source (iBooks).
THIS IS NOT COMPETITION. This is a monopolistic practice, where Apple is using their marketshare (100% of iOS users) to jack up the rates of their competitors knowing that that there is NO way for them to come up on top.
Under these new rules, with the restrictions of commissions Apple helped to create, iOS is NO LONGER a "Draw" for companies like Amazon, no matter how much they spend, or how many customers there are.
Apple's not a "Partner" in this analogy. They're doing NOTHING for Amazon but creating a media consumption platform, a platform the customers ALREADY PAID FOR. Apple will assume NONE of the costs associated with getting content to a customer past the credit processing fee, and they're doing that at gunpoint. Amazon PAYS THEM $100 a year to host their app, and features iOS devices in their own ads (largely in a positive light until the iPad came about).
What Apples doing here is akin to a mob boss inviting a small pizza chain into the neighborhood. They'll allow the chain access to all the residents in the area, but in order to be there, the Mob boss gets 30% of EVERY sale (delivered to his "family" run pizza place across the street) or he shuts the chainstore down. Apple's not a partner. They're an extortion racket here.
Yes, the App store helps sell apps, this is true, but does it help amazon sell kindle books? not really beyond the point of allowing an app to exist on the platform. Big names like Netflix, Amazon, etc helped spur app store development when it first launched. Does apple give them a kickback for every device sale? Sure, they have the promise of making a profit off of the content sold, but when apple is taking the ENTIRE cut that Amazon used to get, there's no longer a profit.
I am more surprised by the belief of many that they are entitled to be in the Apps Store, simply because they can create Apps. And, that they must dictate the terms of entry.
The ploy to rally the "public" to their cause has been tried very loudly in high profile soapboxes during the early stage of the Apps Store.
I was quite amused by a number of those who realize that the "uncaring internet public" never sacrificed their time to fight the fight for every soapbox preacher. Not fazed by their rejection, they were shamefaced in rationalizing their embrace what they despised as the Apple "walled garden" - when they there was no viable choice where they could make profit.
What was more amusing was that the Apps of those turncoats never made it among the popular choices.
Personally, if I have anything that is worth reading, or using and worth paying for, I would not do it through an intermediary -- Readability, Amazon, etc.
The point of the Apps Store is the empowerment of the creator to ply their own inventions and creative products directly to their consumer. What the Apple Ecosystems bring is a highly valuable of hundreds of millions of Apple products users who have been proven to be voracious consumers of such inventions and creations.
CGC
Exactly. Apple is empowering content creators, and it is shaking off the bloodsucking content distributors. For the creators and for the customers, that's all good!
...
Furthermore, Amazon WILL NOT make up the added cost by having the "benefit" of being on iOS. Again, this is simple math.
Currently:
Book Price: $10
Publisher Cut: $7
Amazon Cut: $3
7+3=10.
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $3
Amazon Cut: $0
7+3+0*=10
*But Amazon's costs aren't $0. Let's be cynical and say it only costs them on average $.05 a book. The reality is, that there is a cost.*
...
Let's be realistic and assume that, on average, it costs Amazon $0.50/book. (And I think that's a very generous to Amazon estimate of the true cost of this to them.)
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $0.50
Amazon Cut: $2.50
That's a much truer picture of what, in reality, this actually means to Amazon's bottom line. Your numbers falsely assume that every eBook Amazon sells will be sold through IAP, which is patently absurd, given the number of avenues customers have to purchase Kindle books. Frankly, I think that $0.50 as Apple's cut of the $10, spread over all of Amazon's eBook sales is probably significantly higher than it is likely to be, so the above is pretty much a worst case scenario for Amazon.
Once again, Menno shows his ability to completely misrepresent reality. First of all, this 70/30 split with "writers and publishers" is a bit of a fairy tale. They will basically steal content from anywhere on the web and repurpose it for their delivery. The "writers and publishers" are only going to get a cut (of a very small amount) if they give Readability permission to steal their content, which most of them are not likely to do. So, who exactly will Readability be paying all this money out to?
This P.S. is just a bit of disingenuous grandstanding on their part, and entirely irrelevant.
That's why Apple incorporated their technology into the Safari browser, right? So it's totally a pointless technology, right?
You can't write something off simply because you don't like it. Since you demand we provide you links (that mysteriously never work with your browser) I demand that you show me that they're pocketing more than the 30% they're claiming. It doesn't matter WHO that 70% goes to when it comes to publishers right now. what matters is if they only retain 30% for themselves. If they do, that means their ENTIRE gross profit would be eaten with this IAP fee. That's the point.
I know you love you some red herrings, but give it a rest.
I need some clarification on the nuances of Apple's subscription model.
Apple states that they don't take a cut from customers the Magazine generate on their own. I.e. Not through iOS. So Mag A has a current subscriber that's delighted to be able to read on an iPad. The subscription is up for renewal and is done through the iPad. Does Apple get 30%?
If it's more like Apple gets 30% on NEW customers only then I think this issue will blow over really quick. Otherwise it'll be interesting to see what competitors come up with to deal with this. Galaxy Tab 2 anyone?
If I decide to subscribe through Apple, perhaps I'll do so because I don't like my data being sold to any taker by some pimp publisher who doesn't see my privacy rights as any kind of concern.
Eeesh.
Let's be realistic and assume that, on average, it costs Amazon $0.50/book. (And I think that's a very generous to Amazon estimate of the true cost of this to them.)
With IAP
Book Price: $10
Publisher Cut: $7
Apple Cut: $0.50
Amazon Cut: $2.50
That's a much truer picture of what, in reality, this actually means to Amazon's bottom line.
.05 != 30% of $10.
30% of $10 is $3.
This math lesson was brought to you by your third grade teacher, she really wishes you paid attention.