Support NeoGAF

[Soybean]

I'm an Apple shareholder so I obviously want Apple to make as much money as possible, but I don't see this as a good move towards that goal. What choice will Netflix (of which I'm also a shareholder) have but to pull their app? Then it's Android/webOS/Playbook/etc. that have Netflix, and those who value this will depart iOS.

 

[D4Danger]

Really. I'm not so jaded to think that Apple as a company is in this to make anything but money. But if you drill down to individuals within the company, it's clear they want to change the world.

in what way?

 

[Burger]

Change the world to what? One they control and run primarily along their vision?

Change the world. Take a look at the modern smartphone if it's unclear, or the music industry, or the graphic design industry....

"You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things..."

 

[numble]

At the Daily launch, Rupert Murdoch said he thinks the 70/30 split will be negotiable.

Cavuto: I want to ask you, how much are you making on that? Because it’s $0.99, but typically, typically Apple takes a third.

Murdoch: That’s correct.

Cavuto: Now, is it taking a third here?

Murdoch: At least the first year, yes. We’ll be getting $0.70.

Cavuto: All right. But it goes—so you say at least the first year. It goes down after that?

Murdoch: We—no. Up, we hope.

Cavuto: But down for Apple.

Murdoch: That’s subject to negotiation.

http://paidcontent.org/article/419-murdoch-hopes-apple-will-lower-its-share-of-the-daily-take/

 

[dynamitejim]

Wait, Apple licenses 1-Click from Amazon? This is doubly hilarious. So Apple wants to charge Amazon 30% to use an Amazon patented system? And they're seriously claiming this is some kind of amazing innovation? Jobs is nuts.

 

[Burger]

Wait, Apple licenses 1-Click from Amazon? This is doubly hilarious. So Apple wants to charge Amazon 30% to use an Amazon patented system? And they're seriously claiming this is some kind of amazing innovation? Jobs is nuts.

Of course they license it to Apple. Amazon hold a patent on it.

Not sure where the rest of your extrapolations come from or how they relate to 1-Click.

 

[Of All Trades]

The Rhapsody application is free. So aside from paying a developer licence fee of $99 per year, Apple receives nothing from Rhapsody. No costs to cover bandwidth, App Store guideline reviews, all that junk. Nothing.

So like I said before, Rhapsody leverage the App Store for profits, and Apple receives no cut. Apple just changed those rules.

Apple always received a cut in the form of people being attracted to the iOS devices by the presence of apps, particularly free apps. Apple is profiting on each iDevice sold.

 

[Burger]

Apple always received a cut in the form of people being attracted to the iOS devices by the presence of apps, particularly free apps. Apple is profiting on each iDevice sold.

Cry me a river. When these devices came out Apple suggested making 'web apps', there was no App Store, which since being introduced has made overnight millionaires of many many developers.

Some of you people must think seriously that the App Store is some sort of evil scam forced upon the ignorant masses.

 

[Jamesfrom818]

The App Store and iOS in general is a mall.

Does a mall get a percentage of the sales from Gap, Footlocker, etc...? I can't say for certain but I'm pretty sure they don't. Those stores pay rent for the space and thats probably it.

If Apple wants more money, they should just increase the rent. They should be careful though, no one goes to a mall if all of the best stores pack up and head across town.

 

[numble]

Wait, Apple licenses 1-Click from Amazon? This is doubly hilarious. So Apple wants to charge Amazon 30% to use an Amazon patented system? And they're seriously claiming this is some kind of amazing innovation? Jobs is nuts.

What? Please elaborate.

 

[LCfiner]

The App Store and iOS in general is a mall.

Does a mall get a percentage of the sales from Gap, Footlocker, etc...? I can't say for certain but I'm pretty sure they don't. Those stores pay rent for the space and thats probably it.

If Apple wants more money, they should just increase the rent. They should be careful though, no one goes to a mall if all of the best stores pack up and head across town.

Alternately, the app store is Disneyland (another walled garden, amirite?) and Disney does get money from every store and shop inside.

Funny timing on your post since John gruber's twitter just had that Disney analogy posted a few minutes ago.

I guess we all just have to see how publishers deal with this. If the big video guys bail out then apple might have just lost their bet and they'll have to change their position. Similar to the dev tools debacle.

 

[Zaraki_Kenpachi]

I hope people do start leaving, 30% is way too high.

 

[delirium]

I'm sorry but fuck Apple with this. This has the affect of raising the cost of Netflix/Kindle subscriptions for everyone. Not even people who have an iOS device. Apple is not providing the bandwidth for these subscriptions, they do not deserve 30% of that money.

 

[Jamesfrom818]

Alternately, the app store is Disneyland (another walled garden, amirite?) and Disney does get money from every store and shop inside.

Funny timing on your post since John gruber's twitter just had that Disney analogy posted a few minutes ago.

I guess we all just have to see how publishers deal with this. If the big video guys bail out then apple might have just lost their bet and they'll have to change their position. Similar to the dev tools debacle.

Yeah but everything in a theme park is fucking expensive. If we continue with the analogy, anyone that has a store in Disneyland is not allowed to have a cheaper price at a store off the Disney property.

And no one goes to Disneyland or World for the shops. iOS is nice but its worthless without the apps

 

[Particle Physicist]

.

 

[Particle Physicist]

I'm laughing at people trying to compare this to Amazon's Kindle or Microsoft's Xbox or B&N's Nook. Ignore for a bit that Apple fans like to say their company is better and how ironic it now is to see them justify Apple's moves by claiming Microsoft does the same, it's just not the same. I'd like to see y'all link to the relevant part of Amazon's merchant agreement where they demand that content provider who makes an app for their platform should offer digital subscriptions through their cut as well.

How is it not the same? Ignore Amazon... and let's focus on Microsoft, because that was my comparison. Does Microsoft get a cut of all sales through the Marketplace? Can publisher's sell subscriptions, or downloads through the web-browser (i.e. outside the Marketplace)? I also don't see how my comments have been fanboyish at all.

 

[Marty Chinn]

Alternately, the app store is Disneyland (another walled garden, amirite?) and Disney does get money from every store and shop inside.

Funny timing on your post since John gruber's twitter just had that Disney analogy posted a few minutes ago.

I guess we all just have to see how publishers deal with this. If the big video guys bail out then apple might have just lost their bet and they'll have to change their position. Similar to the dev tools debacle.

Every store inside Disneyland is owned by Disney though. That would be like Apple owned Amazon, Netflix, Barnes and Noble, etc.... The mall analogy is by far closer even though its off.

 

[Technosteve]

Think of it this way, iOS as a gaming console. Content that goes on the platform requires platform fees, in this case 30 percent. It makes sense for everything except subscription services.

 

[Liu Kang Baking A Pie]

I hope people do start leaving, 30% is way too high.

Steam is 60/40.

 

[Quasar]

Well I'd just hope Amazon gets the web version of kindle running well on mobile safari. That would solve all their problems.

Actually moving to HTML5 web based apps would solve a lot of peoples problems with Apple. Certainly that's how Playboy is planning to solve their problems.

 

[Somnid]

Well I'd just hope Amazon gets the web version of kindle running well on mobile safari. That would solve all their problems.

Actually moving to HTML5 web based apps would solve a lot of peoples problems with Apple. Certainly that's how Playboy is planning to solve their problems.

It doesn't solve everything. Browsers (especially mobile) aren't optimized to run web pages as apps. Also, things like touch gestures go out the window and the interfaces may not be as intuitive as they once were and certainly there's a lot of hardware you can no longer take advantage of. Not to mention offline options. You give up a lot for that detachment.

 

[Quasar]

It doesn't solve everything. Browsers (especially mobile) aren't optimized to run web pages as apps. Also, things like touch gestures go out the window and the interfaces may not be as intuitive as they once were and certainly there's a lot of hardware you can no longer take advantage of. Not to mention offline options. You give up a lot for that detachment.

Well HTML5 has offline support (though I'm unsure if mobile safari supports that feature of HTML5). Don't know if you could build a gesture based interface with HTML5 though.

 

[kame-sennin]

The anti-competitive claim would be that it forces Amazon to raise prices while the iBookstore gets cheaper rates. Not sure if it would create a cognizable anti-competitive claim though, since it brings counter-claims regarding Amazon's predatory pricing strategy using subsidies to keep prices below iBookstore prices.

This is a bullshit term and a bullshit charge to pull against Amazon:

Critics of the concept argue that it is a conspiracy theory, that there are "virtually no... economists" who believe the theory behind the concept (although a few believe it is theoretically possible based on models, there are virtually none who believe it is an empirical phenomenon), and that there are no known examples of a company raising prices after vanquishing all possible competition.

http://en.wikipedia.org/wiki/Predatory_pricing

Amazon's not eating the loss so they can destroy their competitors and then ratchet up the costs when they have a monopoly of the ebook market. They are eating the cost because Jeff Bezos knows there will be no ebook market if the publishers set the price. Amazon understands how customers think and they know that the public perceives ebooks as low cost. People simply will not go for ebooks priced at hardcover levels. Amazon's actual plan is to grow the market until publishers are dependent on it, then probably go back to the agency model. At that point, customers will be used to $9.99 and any publisher that wants to raise prices will do so at their peril. Right now, the ebook market is too young and fragile to allow publishers to fuck it up.

 

[Burger]

Well I'd just hope Amazon gets the web version of kindle running well on mobile safari. That would solve all their problems.

I didn't think it had been established yet whether or not Amazon actually has a problem.

I'll be bummed out if the Kindle app stops syncing my books across. Hardly end of the world stuff (I have a Kindle after all) though.

 

[Recon]

Steam is 60/40.

70/30 is the figure i keep hearing. link for 60/40?

 

[numble]

This is a bullshit term and a bullshit charge to pull against Amazon:



http://en.wikipedia.org/wiki/Predatory_pricing

Amazon's not eating the loss so they can destroy their competitors and then ratchet up the costs when they have a monopoly of the ebook market. They are eating the cost because Jeff Bezos knows there will be no ebook market if the publishers set the price. Amazon understands how customers think and they know that the public perceives ebooks as low cost. People simply will not go for ebooks priced at hardcover levels. Amazon's actual plan is to grow the market until publishers are dependent on it, then probably go back to the agency model. At that point, customers will be used to $9.99 and any publisher that wants to raise prices will do so at their peril. Right now, the ebook market is too young and fragile to allow publishers to fuck it up.

Amazon sells digital videos at a loss to try to gain marketshare on iTunes. They took off all of Macmillan's books (e-books and physical) from their store because Macmillan refused to sell e-books a certain way. They got a court to stop Barnes and Noble for awhile from selling things that only required one click to buy.

I don't know why you think the agency system is going to destroy the ebook market, since Amazon has been using it with most major publishers since 2010.

I don't want to get into a discussion of predatory pricing and the related phenomenon of limit pricing, but arguing that it's not bad just because we trust Jeff Bezos won't raise prices on consumers later on is besides the point, they may demand lower prices from publishers, and the discouragement of competition is bad in itself (Microsoft was not going to charge for IE after getting a monopoly). Forcing Netscape, Borders and B&N to have to borrow themselves into bankruptcy to match your prices because you have deep pockets from selling video games and home appliances or MS Word and Windows, might not be an overall good even if consumers don't see a difference.

 

[kame-sennin]

Amazon sells digital videos at a loss to try to gain marketshare on iTunes. They took off all of Macmillan's books (e-books and physical) from their store because Macmillan refused to sell e-books a certain way. They got a court to stop Barnes and Noble for awhile from selling things that only required one click to buy.

I don't know why you think the agency system is going to destroy the ebook market, since Amazon has been using it with most major publishers since 2010.

The agency system in principle is not the problem. It's publishers who want to charge absurd prices for digital files. $15 for ebooks would kill the market before it got started. All Amazon is doing is making sure that doesn't happen. They're taking a loss to grow a new market (although, I have a feeling they are recouping those losses with Kindle sales, but I honestly don't know). The examples you posted have nothing to do with what I originally said. You think Amazon was mean to pull McMillan books or enforce their patents? Fine, they're meanies. That doesn't mean they're engaging in predatory pricing - which is silly charge in almost any circumstance - to do so would require Amazon to raise prices above the level the market would otherwise bare once they have achieved a monopoly. I really don't think Amazon is going to do this. They built their company on low prices, and I think they will continue to do so.

I don't want to get into a discussion of predatory pricing and the related phenomenon of limit pricing, but arguing that it's not bad just because we trust Jeff Bezos won't raise prices on consumers later on is besides the point, they may demand lower prices from publishers, and the discouragement of competition is bad in itself (Microsoft was not going to charge for IE after getting a monopoly). Forcing Netscape, Borders and B&N to have to borrow themselves into bankruptcy to match your prices because you have deep pockets from selling video games and home appliances or MS Word and Windows, might not be an overall good even if consumers don't see a difference.

My point is that digital distribution will be strangled in its crib by short-sighted publishers if Amazon doesn't do what it's doing. The fact that they are taking a loss on $9.99 ebooks is proof of that. Any sane person knows there's no reason to price an ebook above mass market paper back levels, but publishers are terrified of digital distribution. Hollywood is doing the same thing and Netflix is having a hard time providing customers with the content they want at a reasonable price. Old media publishers are going to continue to shit on digital distribution for as long as possible. It's not unreasonable for Amazon to try and prevent this.

 

[numble]

The agency system in principle is not the problem. It's publishers who want to charge absurd prices for digital files. $15 for ebooks would kill the market before it got started. All Amazon is doing is making sure that doesn't happen. They're taking a loss to grow a new market (although, I have a feeling they are recouping those losses with Kindle sales, but I honestly don't know). The examples you posted have nothing to do with what I originally said. You think Amazon was mean to pull McMillan books or enforce their patents? Fine, they're meanies. That doesn't mean they're engaging in predatory pricing - which is silly charge in almost any circumstance - to do so would require Amazon to raise prices above the level the market would otherwise bare once they have achieved a monopoly. I really don't think Amazon is going to do this. They built their company on low prices, and I think they will continue to do so.

My point is that digital distribution will be strangled in its crib by short-sighted publishers if Amazon doesn't do what it's doing. The fact that they are taking a loss on $9.99 ebooks is proof of that. Any sane person knows there's no reason to price an ebook above mass market paper back levels, but publishers are terrified of digital distribution. Hollywood is doing the same thing and Netflix is having a hard time providing customers a reasonable price while still providing the content they want. Old media publishers are going to continue to shit on digital distribution for as long as possible. It's not unreasonable for Amazon to try and prevent this.

The point of those examples are other examples of anti-competitive practices that have nothing to do with that idealized portrayal of Amazon eating costs for the good of everyone. They slashed prices by 50% (and paid subsidies) right after Apple unveiled their new TV rental model, so it's an example of them directly taking losses to respond to the competition's prices. They tried to push a publisher around on ebook sales by removing their physical books from their store. And the 1-click lawsuits are another example of activity aimed at preventing competition from having success.

They've been on the agency model for the top 4/5 publishers for the past year and seem to be doing fine. B&N is on the agency model for most publishers I think and still got a million downloads on Christmas.

I don't want to get into an off-topic discussion of Amazon's subsidization strategies. You can argue it either way. But my overall point is that the legal matter here would revolve around anti-trust/anti-competitive violations, and those will only be in those markets--books, video, and music, that Apple directly competes in. There are no apps that let you buy video or music in the way iTunes does, but there are apps like Amazon and B&N's app that do, and the argument will be that Apple is giving the iBook Store a competitive advantage because it doesn't have the extra 30% charge. But I think pursuing this avenue would open up Amazon to similar attacks of anti-competitive behavior in the e-book marketplace.

Oh, and predatory pricing does not require the monopolist to later raise prices--discouraging or kicking competitors out, requiring suppliers to accept lower prices, is enough. Don't base everything on a Wikipedia article.

 

[SickBoy]

I think this is potentially terrible and I'm worried about what it means for content providers' support for the iPad. Someone else mentioned Edge via Zinio and that was my first thought, too.

I think a 30% cut probably takes all or most of many companies' profit margins on subscription fees. So what's the point of offering an iPad app if you're essentially offering your service for free or at a loss?

I have an iPad now, but I will go wherever the services I want live... so if they chase those off, it won't be with their tablet any more.

Part of me hopes there's some level of misunderstanding here -- that the piece of the agreement in question refers only to apps that offer a connection to subscription services. While I doubt it, perhaps this only applies to apps that want to offer a link to storefronts or subscription servers...

I don't care if I can't subscribe, or find a link to a subscription website from the Netflix app, or from the Zinio app. If I have to go to their website first to subscribe before the programs are any use to me, that's fine.

And, just for the record, according to Amazon's Kindle VP, while they may sell best-sellers at a loss, they're definitely not losing money on overall Kindle media sales... I've seen that said a lot and I always thought it was counterintuitive...

Q: Aren't you losing money by paying publishers 50 percent of the cover price for a $25 hardcover and selling it for $9.99?

A: Taking a loss on bestselling books is different than taking a loss on your overall book business. We may lose money on bestsellers, but across the breadth of our catalog, we run a profitable, sustainable book business.

http://www.vancouversun.com/busines...ing+industry/4065753/story.html#ixzz1E6fVXMga

 

[numble]

And, just for the record, according to Amazon's Kindle VP, while they may sell best-sellers at a loss, they're definitely not losing money on overall Kindle media sales... I've seen that said a lot and I always thought it was counterintuitive...
http://www.vancouversun.com/busines...ing+industry/4065753/story.html#ixzz1E6fVXMga

That is not talking about overall Kindle sales. Heck, it's a quote about buying hardcovers.

 

[dynamitejim]

They slashed prices by 50% (and paid subsidies) right after Apple unveiled their new TV rental model, so it's an example of them directly taking losses to respond to the competition's prices. They tried to push a publisher around on ebook sales by removing their physical books from their store. And the 1-click lawsuits are another example of activity aimed at preventing competition from having success.

How is cutting your prices on goods in response to a competitor with cheaper prices anti-consumer? And the agency model has resulted in some dumb shit like eBook versions costing more than the hardcover editions. The Kindle edition of Fall of Giants is 19.99 whereas the hardcover is 18.78 on Amazon right now. Amazon was right to push back against it.

Seriously, I don't know how anyone can defend Apple on this. They're basically forcing ebook retailers to give them 100% of the profits on any book they sell on an iDevice, raise prices across the board by 30% to cover the Apple tax, or pull their app completely. This is Mob level dirtiness.

 

[kame-sennin]

The article posted earlier does address non subscription in-app purchases:

Update: A couple more things. Apparently, Apple has just updated the App Store Guidelines alongside the announcement today. And yes, it seems that one-time in-app purchases like those made through Amazon for the Kindle will fall under the same rules. That brings up another question: could Amazon just make a Kindle reader app that didn’t allow you to buy anywhere in the app, but only use previously bought content? The guideline wording seems like it would still be a no-no but it’s not entire clear that such an app would be rejected.

http://techcrunch.com/2011/02/15/apple-in-app-subscriptions/

The point of those examples are other examples of anti-competitive practices that have nothing to do with that idealized portrayal of Amazon eating costs for the good of everyone.

Who said this? I said Amazon is protecting the ebook market because old media publishers feel threatened by it. You keep trying to inject morality into this. The ebook market has the potential to be huge for Amazon, but only if the userbase hits a decent size. And I don't believe that Amazon will turn around at that point and raise prices. I don't think you do either. So with regards to "predatory pricing", i.e. anti-trust/anti-consumer, the only issue here is whether or not they are railroading their competitors out of the market. As far as I know, Apple and B&N are their biggest competitors in the ebook market. Apple can obviously sell their books at 9.99 but choose not to in order to win over publishers. B&N might not be able to, but that's only because their core business is brick and mortar retail. There's a difference between undercutting competitors who have bloated overhead and conflicting interests versus railroading similarly motivated competitors out of the market with constant fire sales. Charging 30 percent more than a mass market paperback for a digital file is not what I would call predatory pricing.

 

[kame-sennin]

How is cutting your prices on goods in response to a competitor with cheaper prices anti-consumer? And the agency model has resulted in some dumb shit like eBook versions costing more than the hardcover editions. The Kindle edition of Fall of Giants is 19.99 whereas the hardcover is 18.78 on Amazon right now. Amazon was right to push back against it.

Seriously, I don't know how anyone can defend Apple on this. They're basically forcing ebook retailers to give them 100% of the profits on any book they sell on an iDevice, raise prices across the board by 30% to cover the Apple tax, or pull their app completely. This is Mob level dirtiness.

I think you can defend Apple on the grounds that it's their platform and they've provided publishers with an amazing storefront and a huge userbase. I personally think the anti-trust rumblings are ridiculous. But as business partners, what Apple is doing is indefensible. I believe developers and publishers are already charged a yearly fee for having their products on the App store. That really should cover the service Apple is providing. A good business partner doesn't try to eat into their partner's profit margins just because they can. Apple's also not showing any gratitude for the hardware sales they are getting due to apps that are being provided by publishers.

 

[numble]

The article posted earlier does address non subscription in-app purchases:



http://techcrunch.com/2011/02/15/apple-in-app-subscriptions/



Who said this? I said Amazon is protecting the ebook market because old media publishers feel threatened by it. You keep trying to inject morality into this. The ebook market has the potential to be huge for Amazon, but only if the userbase hits a decent size. And I don't believe that Amazon will turn around at that point and raise prices. I don't think you do either. So with regards to "predatory pricing", i.e. anti-trust/anti-consumer, the only issue here is whether or not they are railroading their competitors out of the market. As far as I know, Apple and B&N are their biggest competitors in the ebook market. Apple can obviously sell their books at 9.99 but choose not to in order to win over publishers. B&N might not be able to, but that's only because their core business is brick and mortar retail. There's a difference between undercutting competitors who have bloated overhead and conflicting interests versus railroading similarly motivated competitors out of the market with constant fire sales. Charging 30 percent more than a mass market paperback for a digital file is not what I would call predatory pricing.

Predatory pricing is about selling below cost to discourage competitors and new entrants. The fact that you're requiring the big pockets of Apple to subsidize their books or B&N to be richer to create a hypothetical where they can subsidize as well to compete is precisely the problem that predatory pricing creates.

 

[Of All Trades]

Cry me a river. When these devices came out Apple suggested making 'web apps', there was no App Store, which since being introduced has made overnight millionaires of many many developers.

This doesn't refute my point at all. You've repeatedly complained about how certain developers/publishers are practically raping Apple because Apple, out of their generous hearts, allows them to put apps up for free and pays for bandwidth for those apps (which tend to be very small but that's not super-relevant). The reality is that Apple does this because it benefits their platform which in turn drives sales, not because Apple is generous.

Really, the only crying seems to be coming from your slightly incoherent postings.

Some of you people must think seriously that the App Store is some sort of evil scam forced upon the ignorant masses.

Actually most people here are fairly reasonable; it's really just you and a couple others who really create the Apple fanatic stereotype by your constant inability to apply any sort of critical thinking that extends beyond "does Apple win?". It's really kinda creepy.

 

[mAcOdIn]

I think what I'm just really disliking about the appstore is it's all that there is. Like I said above I can not, without jailbreaking, get apps on there without going through Apple. In a way that's not a huge issue, the platform was like a toy but that's changing, it's not a toy any more, it needs to be bigger and the appstore model I think is too inflexible.

This is just being made more apparent to me with these new developments. I was never 100% against the app store, I think it's a great idea for small developers but many of the benefits I thought it would bring never materialized, those being better code(there's still buggy as hell shit put up), uncensored content(why am I getting 4 pages of newly released Chinese books and Magazines in the US region when I should have to search for Chinese language shit), releases being pulled for political reasons, literally the only thing it had going for it in all honesty was ease of purchase due to just needing the one account and everything being all in one place, but those aren't that big of deals to me. I still think the model has value for the smaller developers, I don't wish it away, I wish there was an alternative that was supported.

That said, I don't like what either Apple nor Amazon are doing in the ebook market. I always felt the publisher should set their prices, if that slows down ebook sales further because of the publishers, so be it, but I don't like the idea of a big store undercutting everyone, it's good for the consumer but not in a way, kind of a weird position. I also don't like Apple telling people they want their cut everywhere, everyhow.

I really think someone needs to hurry and ape the iPads design and UI but just not be Apple. Apple had the hardware right but they're killing me on the software side.

 

[SickBoy]

That is not talking about overall Kindle sales. Heck, it's a quote about buying hardcovers.

'

So what you're saying is Amazon's Kindle VP is describing a print business model?

As I see it, the question asked why they will pay the price they'd pay for a hardcover (50% of list, apparently) to sell a Kindle edition at $9.99 and take a loss.

I don't see Amazon selling $10 print copies of any bestsellers. Furthermore, even if that was their print model, certainly it would have been proven out by now, rendering the question pointless.

Given their reported volume on Kindle book sales, I find it extremely hard to believe that they're a money loser, and I've seen little proof (especially recently) to back that claim up. To me it reads a lot like something that has become accepted through repetition.

 

[Burger]

This doesn't refute my point at all. You've repeatedly complained about how certain developers/publishers are practically raping Apple because Apple, out of their generous hearts, allows them to put apps up for free and pays for bandwidth for those apps (which tend to be very small but that's not super-relevant). The reality is that Apple does this because it benefits their platform which in turn drives sales, not because Apple is generous.

Really, the only crying seems to be coming from your slightly incoherent postings.

Actually most people here are fairly reasonable; it's really just you and a couple others who really create the Apple fanatic stereotype by your constant inability to apply any sort of critical thinking that extends beyond "does Apple win?". It's really kinda creepy.

Woah slow down there! I say leverage, you say rape, whatever.

I'm sure the copious amounts of free apps on the App Store helps Apple an enormous amount, they use it to market their products, which drives sales, which brings developers and so on. Of course they benefit. But it's clearly a win for consumers as well, and the model has been pretty universally accepted amongst sellers of modern mobile applications.

I remain unconvinced about this new set of terms for subscriptions. Everyone should remain unconvinced until the market decides whether it wins or looses. I find the whole thing fascinating, I'm not convinced there are anti-competitive practices at work, and I think Apple has the right to a cut of what people sell through the App Store. If that's not going to work out for content peddlers, then Apple may well reverse their decision, it's happened before.

I think the current way the Amazon/Kindle/iOS relationship as it stands benefits Amazon and myself pretty well, and would hate to see it change.

 

[Loki]

Predatory pricing is about selling below cost to discourage competitors and new entrants. The fact that you're requiring the big pockets of Apple to subsidize their books or B&N to be richer to create a hypothetical where they can subsidize as well to compete is precisely the problem that predatory pricing creates.

Seriously. It's amazing that this isn't obvious.

 

[Ulairi]

Change the world. Take a look at the modern smartphone if it's unclear, or the music industry, or the graphic design industry....

"You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things..."

The modern smart phone comes from PalmOS, Apple just took it to consumers.

 

[tino]

Think of it this way, iOS as a gaming console. Content that goes on the platform requires platform fees, in this case 30 percent. It makes sense for everything except subscription services.

Console makers also subsidize the hardware by selling the console at cost or below cost. Does Apple sell iPhone for 200 unsubsided and 100 the iPod touch for 100?

 

[Tobor]

The agency system in principle is not the problem. It's publishers who want to charge absurd prices for digital files. $15 for ebooks would kill the market before it got started. All Amazon is doing is making sure that doesn't happen. They're taking a loss to grow a new market (although, I have a feeling they are recouping those losses with Kindle sales, but I honestly don't know). The examples you posted have nothing to do with what I originally said. You think Amazon was mean to pull McMillan books or enforce their patents? Fine, they're meanies. That doesn't mean they're engaging in predatory pricing - which is silly charge in almost any circumstance - to do so would require Amazon to raise prices above the level the market would otherwise bare once they have achieved a monopoly. I really don't think Amazon is going to do this. They built their company on low prices, and I think they will continue to do so.



My point is that digital distribution will be strangled in its crib by short-sighted publishers if Amazon doesn't do what it's doing. The fact that they are taking a loss on $9.99 ebooks is proof of that. Any sane person knows there's no reason to price an ebook above mass market paper back levels, but publishers are terrified of digital distribution. Hollywood is doing the same thing and Netflix is having a hard time providing customers with the content they want at a reasonable price. Old media publishers are going to continue to shit on digital distribution for as long as possible. It's not unreasonable for Amazon to try and prevent this.

There's a lot of misconceptions in this thread, especially regarding the agency pricing model. First of all it hasn't turned into an ebook Armageddon at all. Amazon bowed to publisher pressure and guess what? Ebook sales are up across the board.

The explosion in prices many predicted hasn't happened either, quite the opposite. A quick look at the iBooks new York times bestseller list shows not a single book above $12.99. The average price has dropped as the market regulates itself.

The agency model has done nothing to slow the growth of the market.

 

[Blackhead]

you seem so ...disappointed. lol.

Yeah I am. I never expected Apple to be this bad.

Change the world. Take a look at the modern smartphone if it's unclear, or the music industry, or the graphic design industry....

"You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things..."

You couldn't ignore Hitler either (yes, I just willingly broke Godwin's Law)

Here comes the fallout

Apple's "you must sell subscriptions through us, at the same price or less, if you also sell them on your website" is a huge dick move.
about 14 hours ago via Twitter for Mac

Why Apple’s Change of Subscription Service Rules Will Backfire, For The Users

As we mentioned in our previous post, Apple has published changes to their agreement with developers today that require that subscription services that offer digital subscriptions outside of their apps also provide them inside the app. And any subscriptions done inside the app will be subject to the 30% fee Apple charges for items sold through iTunes. This change applies to newspaper and magazine subscriptions as well as other digital content like music and video services.

Apple feels as though they are providing lots of new users for these services and Apple wants to be compensated for that. That makes sense. They are providing a service and bringing users to these subscription services, they should be compensated. But in the end, it’s going to backfire and we the users are going to lose out.

We reached out to a bunch of subscription service app developers for comment. Most are still evaluating the rule changes. Zinio and Rdio both told us that they are not commenting on the changes at this time. Rhapsody has clearly stated that they will pull out of the App Store if required to pay Apple 30%.

The real problem is that most of these service providers are providing licensed content. If you add up the licensing costs and the cost of providing the service (servers, app development, all the costs of doing business) there’s rarely 30% remaining in profit for the companies involved. There’s just no way that they can pay Apple 30% and still operate in the black.

To abide by these new rules, developers really have just 3 options. And in all three of these options, we the users are the real losers.

Option 1 – Pay up

Just pay the 30% for subscriptions through the app. Consider it part of the cost of acquisition for new customers. Companies aren’t going to be happy to lose that revenue and in the end, will go with number 2.

Option 2 – Increase Prices

The other option is to increase prices to balance out the 30% decrease in revenue. This, of course isn’t good for us, the users. It’s also not good for the companies involved where low price is a big draw. Increasing prices could be done across the board or as part of a iOS-only mobile access subscription package.

For instance, Rhapsody has their streaming cost of $10 month for streaming. But what’s to keep them from defining that as a service for any device other than iPhone and iPad? Then having a second offering for a streaming service to iOS devices for $15 per month.

We’re already sort of seeing this from companies like Mog, the music service. They charge one amount for streaming to the desktop and another amount for streaming to the desktop and mobile.

Now, let’s be clear, no one wants this to be the option. It stinks for the consumer as it adds confusion and it stinks for the companies selling the service. Not good, but seems like it will bypass the rule changes. Now, will Apple allow it, we’ll have to wait until companies start testing the boundaries of the rules to see. As we know from the past, Apple has the ability to interpret their rules however they wish and change their mind at any time.

Option 3 – Pull out

The only other option is to just pull out of the App Store. Remove the app from the App Store and lose out on the exposure. Users really lose if this happens.

Option 3b – Go HTML5 / Web App

Once out of the App Store, some developers could probably forego the native app and and go web app based. No reason a music streaming service couldn’t do that as most already provide this service on the desktop. But there will, at least initially, some lost functionality and confusion for users.

In the end, it’s us, the users of these apps that will lose.

Does Apple really want to have a “no links to your local bookstore” rule?

Apple has just done something that I would have previously believed impossible: They have given independent booksellers and Amazon a reason to join forces. A common enemy often does that.

Many years ago, when Barnes & Noble attempted to purchase the giant book wholesaler Ingram Book, those companies discovered that rules that may be flexible when you’re talking about channels for the distribution of, say, toothpaste, aren’t as flexible when those same rules are applied to books.

The whole “freedom of the press” thing works especially well when you apply it against any decision that makes it sound like you are trying to prevent readers from purchasing books from their favorite source, B&N and Ingram discovered.

So what does that have to do with Apple?

Deep in the announcement today by Apple regarding the subscription plan they are instituting for magazine and other media publishers (the subscription plan is okay, in my opinion, as I explained in the previous post) is a sentence about a prohibition against links inside an app to website stores where a user can purchase a digital product that could be sold through Apple’s iTunes Store. While in the context of the subscription press release, it was later clarified that Apple plans to apply the prohibition to eBook reader apps like the iPad version of the Kindle app. Let me try to say that again: Apple says it’s okay if the companies who have apps sell eBooks on their website, but they can’t have a link on the app that would automatically take the app user to those online, browser-based stores. Such a link is how the Kindle app — and all other eBook readers work today.

But the Kindle app will, in my opinion, prove to be a minor issue compared to what Apple will discover when they try to apply the rule to the Google Book app — a decision that could turn this issue radioactive for Apple.

Why? Because the Google Books iPad app has forged a relationship with the country’s 1,400 independent bookstores. In an effort to counter the Amazon juggernaut of eBooks, those independent bookstores have decided that Google is the best way to sell eBooks that can be read on Kindles, iPads, Nooks, etc.

But after today’s prohibition is in place, if you’re using the Google Books app and you want to purchase an eBook, but rather than from Apple or Amazon, you want to purchase it from your local bookstore, well, forget being able to have an easy to click link to your favorite bookstore if it’s on this growing list of Independent booksellers.

We’re talking independent booksellers. Small businesses. Community-loved stores. Mom and apple pie — but not Apple pie.

Does Apple really want to take on Amazon and all those independent booksellers to defend its “no links to local bookstores” policy?

Does Apple want to keep people from clicking over to the small business book stores of America.

Is Apple against small business that much?

Does Apple want to spend the next few years battling with states attorneys generals over links?

See what I mean: Radioactive.

Apple's Subscription Rules Raise Possible Antitrust Issues

Apple Inc.'s new subscription service could draw antitrust scrutiny, according to law professors.

Apple launched a new service that allows for magazine and newspaper subscriptions for its popular devices, but content providers aren't rejoicing. Marcelo Prince joins digits to discuss.

Apple will allow magazines, newspapers and other publishers to sell subscriptions of varying lengths to users of Apple's popular iPad, iTouch and iPhone products. But there are several catches.

For starters, subscriptions must be sold through Apple's App Store. For instance, a magazine that wants to publish its content on an iPad cannot include a link in an iPad app that would direct readers to buy subscriptions through the magazine's website. Apple earns a 30% share of any subscription sold through its App Store.

One more potential string attached: If publishers sell digital subscriptions outside the Apple orbit they must allow Apple to offer the subscriptions at the same price or less.

"My inclination is to be suspect" about Apple's new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh's mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."

An Apple spokeswoman declined to comment on any possible antitrust implications of the company's announcement Tuesday.

A U.S. Justice Department spokeswoman declined to comment.

Experts said that the first step in an antitrust analysis is to determine whether Apple is a dominant player in the market, which, in turn, requires an an assessment of the relevant market at issue.

Publishers, for example, might claim that Apple dominates the market for consumer tablet computers and that it has allegedly used that commanding position to restrict competition. Apple, in turn, might define the market to include all digital and print media, and counter that any publisher not happy with Apple's terms is free to still reach its customers through many other print and digital outlets.

"Millions will be spent litigating how broad the market is," said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law.

Mr. Hovenkamp said digital media is the most plausible market. He said he doubted that Apple, currently, has a sufficiently dominant position in that market to warrant antitrust scrutiny.

But, he said, if Apple gets to a point where it is selling 60% or more of all digital subscriptions through its App Store, "then you might move into territory where an antitrust challenge would seem feasible."

Mr. Ghosh said courts in antitrust inquiries may look favorably when a company can articulate a legitimate business justification for behavior alleged to be anticompetitive. For this reason, Apple may "come up with a business justification" for some of its restrictive subscription terms, he said. "They have invested in a platform so they need to create incentives to use the platform."

 

[LCfiner]

Console makers also subsidize the hardware by selling the console at cost or below cost. Does Apple sell iPhone for 200 unsubsided and 100 the iPod touch for 100?

Nintendo doesn't subsidize hardware. subsidizing is one strategy that console makers may use. it is not the way the console market works by default.

Sony made the practice popular with the PS1 but that strategy only works if you end up as the big winner in the market. this gen, the subsiding strategy really fucked over Sony. it's not a sustainable business unless you have no competition.

 

[Technosteve]

Console makers also subsidize the hardware by selling the console at cost or below cost. Does Apple sell iPhone for 200 unsubsided and 100 the iPod touch for 100?

Nintendo doesn't subsidize there consoles, but I don't see your point.

 

[Blackhead]

Do nintendo, Sony or microsoft demand that netflix offer subscriptions through the respective companies' payment processing systems?

 

[tino]

Nintendo doesn't subsidize there consoles, but I don't see your point.

My point is this pricing scheme will make iOS content service uncompetitive. I have good will with the Apple gaming apps but if this is what they are going to do I will rule out any future iDevice completely.

Let's face it, iDevice is only competitive in gaming before somebody hack Android into the NGX/PSP2. After that there is zero point in getting the iPhone/iPad, for me anyway.

 

[LCfiner]

An interesting post by Kontra. It lays out the options available to publishers. His slant is somewhat in Apple's favor as he points out how previous attempts to thwart Apple and itunes have not been very successful but, well, that's the point. Apple's throwing their weight around based on their previous success creating online stores. that's their gamble

http://counternotions.com/2011/02/16/stores/

Store Wars: Opt out, opt in, sell out, capitulate?
Wed, Feb 16, 11

Apple’s new App Store rules now mandate that users themselves must decide whether they want to give their own personal info to publishers when they subscribe. What would be the reaction of the publishing industry to this? Straight from a publisher, Forbes:

Pam Horan, publisher of the Online Publishers Association, says the trade organization’s members — a group that includes Time Inc., Hearst, Conde Nast, Bloomberg, National Geographic and, yes, Forbes — are worried the new regime doesn’t give them the flexibility they need to serve their customers.

The flexibility to serve their customers

What does Apple do to deny publishers that “flexibility” then? One click to opt in to data sharing. Pam Horan, again:

Anything that requires the consumer to take yet another step is always going to reduce the number of people that participate in the process. It limits the ability to gather audience insights to build the right products. With this inability to know who your consumers are, it really affects the ultimate product for the consumer.

Put simply, publishers don’t want readers to opt in, because they know readers will prefer to opt out. Transparency is not a friend of publishers who for decades made a mint by selling out readers to advertisers and list brokers. Most readers may not be aware of this, but those who are don’t like it. Publishers know that and hate Apple for calling their bluff. If personal info harvesting isn’t essential for publishers’ business model and it is in the interest of readers, then why would they be against an instant referendum in the form of the opt in button?

Beyond the smokescreen

This, of course, isn’t about the readers. It’s not even about Apple’s App Store. It’s about the clash of two different business models. One that sells the customer to the highest bidder through a product and the other that sells a product directly to the customer. For the former, the product is a vehicle, often an excuse, since it holds no value for the publisher. For the latter, the product is the source of value, it lives and dies by the utility and delight it brings to the customer.

Transitioning from one format or platform to a new one is often a long, arduous and financially disruptive process. Lately, however, we are seeing a time compression in these transitions. For example, moving from dial-up to broadband or from landlines to wireless took quite a bit of time. Transition from analog to digital music or from featurephones to smartphones have been much shorter. Shorter the transition, bloodier the financial impact on incumbents. Print economics have been around forever, virtually unchanged for decades. All of a sudden, though, there is an incredibly convenient format (iPad) and a platform (iTunes) for what used to live in the dead-tree zone. No wonder we have publishers up in arms about the freight train suddenly in front of them.

The grand opening

We can also look at the new App Store rules as a grand negotiation being conducted in public. Apple’s iTunes and iOS ecosystem make it abundantly clear that there’s now a platform ready for transition. Table stakes: 30% cut for the platform owner. Publishers have several choices:

1. Set up their own stores — If the most business savvy of all publishers, Rupert Murdoch, who never shied away from big and expensive bets, has come to the conclusion that News Corp alone can’t set up its own independent online store, what chance do other smaller, cash-strapped, technophobic publishers have?

2. Collude to set up a BigPublishers-only store — This would be standard operating procedure…that has repeatedly failed. Disparate corporations banding together against a successful market leader nearly always fails. Witness myriad roadkill behind iTunes.

3. Negotiate with Apple directly — Murdoch did negotiate with Apple separately, but may not have received much in return other than some technical help and launch presence. Companies like Amazon and Netflix may try to negotiate with Apple directly to leverage their popularity to wring some concessions on rules or rates.

4. Wage guerilla warfare against Apple in the press — Adobe, Part Deux. This is inevitable since many of those who produce the anti-Apple hysteria write for the publications that would financially benefit from a change in App Store policies.

5. Ask for government help — Publishers will likely ask the government to intervene and conduct a threatening investigation of App Store policies to browbeat Apple into changing its policies. Also, as the last refuge of scoundrels, they will appeal to the Congress for tax payer support under the guise of saving jobs.

6. Give up subscriptions — Google would love publishers to just give up the notion of subscriptions and go ads-only, either as free apps supported by AdMob on mobiles or browser based apps supported by AdSense. Sadly, content providers aren’t immune to making monumentally stupid mistakes and…implode.

7. Accept Apple’s terms — We heard similar, if not identical, complaints about the size of Apple’s cut or its intermediary position between content owners and customers at the onset of iTunes and later App Store. Nobody’s complaining much about those anymore, mostly because there have been no credible alternatives.

8. Create alternatives to iTunes/iOS — This is the perennial Plan B, if Apple doesn’t budge. The usual suspects are those with a store and the will to spend money liberally to undermine Apple, namely Google, Microsoft and Amazon. Google recently transferred its upcoming music store to Andy Rubin’s Android division and is now negotiating with publishers. Microsoft rolled Nokia’s Ovi into its own store and would be happy to bankroll publishers to attract Windows Phone users. Amazon has already tangled with Apple last year after the introduction of iBooks over the agency model Apple offered to publishers. These are all big competitive players with plenty of cash to render as absurd any notion that Apple somehow has a monopoly over digital stores. It is, however, a reminder that all such previous attempts to cut down Apple by direct competition has failed.

Rock and a hard place

Apple, the one company that makes bet-the-company type moves all the time, has done it again: they have decided to cull parasitic middlemen and aggregators from the ecosystem. What choice do publishers have then? They first have to ask themselves two fundamental questions:

1. What business are we in? — Are we in the business of creating scarcity in news and media to leverage it against eyeballs for advertisers? Can our current model survive the transition to digital? Are we capable of setting up our own stores? If not, do we understand we must change our revenue streams radically? What sorts of structural and financial remodeling do we have to undergo internally to adjust to giving up 30% to Apple?

2. Quo vadis? — If our current distribution has to change, on whose digital platform will we move? Is there, in other words, an alternative to Apple App Store?

Whatever conclusions the publishing industry may arrive at, there’s one undeniable fact staring them in the face:

By next year, Apple iTunes/iOS ecosystem will have over 200 million of the most lucrative online demographics ever assembled by a company.

Apple didn’t become the world’s most valued tech company by being naive. The fact that Apple’s longstanding discipline of selling products direct to customers aligns nicely with customers’ interests of accessing a well curated, efficient, price-competitive, easy-to-use store is just the icing on the cake. Nobody else comes close. You can’t do business by ignoring the App Store.

 

[neojubei]

After reading about this issue on various sites i have to admit this is a very dick move by Apple. One of the main reasons why i even bought an iPad was for netflix and kindle, now if they pulled out I am not sure what to do. (it will be a cold day in hell before i buy an adroid device). I prefer Apple products because of their quality and i thought the subscription service was going to be able to order magazine or newspaper services through iTunes, I didn't think this would even affect Netflix, Kindle and the like. This will definitely cause major problems for Apple, especially if netflix, amazon, pandora pull out of the app store. I would hate to see that happen as i have a lot invested not only in those services but also with itunes and the app store so having everything in one place works for me. If it comes to netflix pulling out, i might not buy an ipad2, probably a webOs tablet as long as there isn't any crapware on it, i do not want to have to "root" anything.

 

[Blackhead]

An interesting post by Kontra. It lays out the options available to publishers. His slant is somewhat in Apple's favor as he points out how previous attempts to thwart Apple and itunes have not been very successful but, well, that's the point. Apple's throwing their weight around based on their previous success creating online stores. that's their gamble

http://counternotions.com/2011/02/16/stores/

Apple sells ads too and it's opt-out not opt-in.