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MacRumors
Jun 9, 2011, 04:55 AM
http://cdn.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2011/06/09/apple-reverses-course-on-in-app-subscriptions/)


http://cdn.macrumors.com/article-new/2011/06/091004-app_store_icon.jpg

Apple has quietly changed its guidelines on the pricing of In-App Subscriptions on the App Store. There are no longer any requirements that a subscription be the "same price or less than it is offered outside the app". There are no longer any guidelines about price at all. Apple also removed the requirement that external subscriptions must be also offered as an in-app purchase.

Content providers may offer In-App subscriptions at whatever price they wish and they are not required to offer an in-app subscription simply because they sell a subscription outside the App Store as well.

This past February, Apple introduced App Store Subscriptions (http://www.macrumors.com/2011/02/15/apple-debuts-app-store-subscriptions/). This opened the door to a wide range of in-app subscription services such as magazines and newspapers. Just last month, Conde Nast rolled out iPad magazine subscriptions (http://www.macrumors.com/2011/05/16/conde-nast-rolls-out-four-new-ipad-magazine-subscriptions-new-yorker-launch-successful/) for a number of its periodicals.

When Apple rolled out the new subscription plan, however, it placed several requirements on app developers -- via the App Store Review Guidelines (http://developer.apple.com/appstore/guidelines.html) -- with regard to pricing of subscriptions. Enforcement of the new policies were to go into effect on June 30 (http://allthingsd.com/20110215/june-30-deadline-for-apple-subscriptions/) of this year. By far the most controversial (http://www.timothyschmitz.com/blog/2011/02/what-if-there-were-no-coke-at-disney-world-or-problems-with-apples-in-app-purchase-rules/) was section 11.13:
11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions. [Emphasis added]Apple also emphasized these points in its press release announcing the In-App Subscription service (http://www.apple.com/pr/library/2011/02/15appstore.html). For publishers who choose to "sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app."

However, this left publishers with the requirement that App Store users be given the lowest possible pricing on all subscriptions. Just this week, the business newspaper the Financial Times dropped its iOS App (http://www.macrumors.com/2011/06/07/financial-times-wont-give-apple-a-cut-drops-ios-for-web-app/) in favor of a web app to give it more control over subscription pricing. The guidelines were also somewhat vague on whether companies like Netflix, Hulu or Rhapsody were required to implement an in-app purchasing mechanism and meet the pricing guidelines Apple put forth.

With the enforcement deadline looming, this week Apple introduced updated App Store Review Guidelines, of which MacRumors has obtained a copy. The corresponding 11.13 (now 11.14) section is significantly different:11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the appThe new section 11.14 states that apps can play content "subscribed to or purchased outside of the app" as long as the app doesn't include a way for users to go directly from the app to the outside purchasing mechanism. That is, these apps can't have a "buy" button that takes users to an external subscription page.

According to these new guidelines, existing subscription services such as Netflix may continue to function without offering in-app purchases. Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a premium to cover Apple's 30% cut for In-App Subscription payments.

This is a significant reversal from Apple's position in February, and it will have a major impact on the strategy of content providers regarding the App Store.

Thanks to Armin for the tip, and to Heise Online's Mac & i blog (http://www.heise.de/mac-and-i/meldung/Apple-streicht-umstrittene-In-App-Kaufvorgabe-1257422.html)

Article Link: Apple Reverses Course On In-App Subscriptions (http://www.macrumors.com/2011/06/09/apple-reverses-course-on-in-app-subscriptions/)



Andy-V
Jun 9, 2011, 05:00 AM
That seems about fair. It means Spotify etc can now just continue doing what they're doing and all they need to do is display a message rather than a link (they can even say go to spotify.com to buy, and it wouldn't infringe on those terms if it wasn't clickable).

yetanotherdave
Jun 9, 2011, 05:01 AM
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Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.

teme
Jun 9, 2011, 05:06 AM
This is really good news. Content providers make iOS more attractive to customers, and that brings lot of value for Apple, even though they don't get their share of all possible subscriptions.

iRobby
Jun 9, 2011, 05:10 AM
I hope that now this brings MacLife and Macworld magazines to the iPad and iPhone Newsstand app.

adrian.oconnor
Jun 9, 2011, 05:11 AM
Smart move, not least of all because it's the Right Thing to do. I also wonder if they were breaking the law a little bit -- as far as I know, you can only dictate the 'minimum advertised price' -- forcing a retailer to sell at a particular price is illegal, and Apple were kind of coercing the publishers in to doing that.

0dev
Jun 9, 2011, 05:11 AM
Good, I don't see why they did this in the first place, but then, nothing Apple does with App Store guidelines make much sense anyway.

marksman
Jun 9, 2011, 05:14 AM
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Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

NightFox
Jun 9, 2011, 05:17 AM
Glad Apple did the sensible thing now rather than stubbornly keep pushing this until they had done irreparable damage. There's a time to stick to your guns, and a time to realise you've got it wrong; it's the successful companies who get this judgement right. I wonder if the FT move was what finally pushed them to backtrack?

cal6n
Jun 9, 2011, 05:18 AM
Let's hope that they maintain their position regarding user-data, though.

NightFox
Jun 9, 2011, 05:20 AM
I hope that now this brings MacLife and Macworld magazines to the iPad and iPhone Newsstand app.

Yes, I'd love to get anything on my Newsstand app if only to avoid having that empty shelf icon just sitting there that I can't delete or even hide in a folder!

pdurrant
Jun 9, 2011, 05:20 AM
Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a 30% premium to cover Apple's usual cut for In-App Subscription payments.

43% premium, not 30%. Apple take 30% of the in-app price. So if an item is selling outside the app for $1, it would need to sell at $1.43 inside the app to return the same $1 to the developer. (30% of $1.43 = $0.43)

pagansoul
Jun 9, 2011, 05:26 AM
All I can say is WOW. I'm glad Apple was able to do a quick turn around. Some companies take years to reverse their rules even if they know something has to change. The company I used to work for took 2 years to amend a rule after they realized it was doing more harm than good.

Kitman
Jun 9, 2011, 05:26 AM
Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a 30% premium to cover Apple's usual cut for In-App Subscription payments.

The premium would need to be more like 43% to cover fully the 30% cut taken by Apple.

Just sayin' :)

Another mathematician - pdurrant - beat me to it!

amorya
Jun 9, 2011, 05:27 AM
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Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

I'm fine for the market to decide this one. I didn't like Apple trying to enforce it, because there's some situations where people are reselling content and don't get to set the price.

BLACKFRIDAY
Jun 9, 2011, 05:27 AM
Still people bitch.

But good thing, Apple has realised this sooner than later. :)

Northgrove
Jun 9, 2011, 05:27 AM
Sounds good! In the country I live in, subscriptions haven't taken off at all, and I hope this will help nudge hesitant publishers in the right direction. It's a pretty major change of terms. I'd love to have a good choice of magazines to read on my iPad 2 that's still on its way to me (can't wait for the forthcoming week!).

NightFox
Jun 9, 2011, 05:29 AM
Can someone tell me - with in-app purchases, is Apple obliged under its own T&Cs to host the downloadable content as well as the app (at no additional charge to the developer)?

In other words, if Amazon did decide to meet Apple's original T&Cs to allow purchases through the iOS Kindle apps, would Apple have been obliged to host a copy of the entire Kindle library if Amazon had wanted them to?

gnasher729
Jun 9, 2011, 05:33 AM
The premium would need to be more like 43% to cover fully the 30% cut taken by Apple.

Just sayin' :)

Another mathematician - pdurrant - beat me to it!

On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again. More likely to give your app a minus five star rating (or the lowest rating possible) on the store before uninstalling it.


Smart move, not least of all because it's the Right Thing to do. I also wonder if they were breaking the law a little bit -- as far as I know, you can only dictate the 'minimum advertised price' -- forcing a retailer to sell at a particular price is illegal, and Apple were kind of coercing the publishers in to doing that.

Forcing a retailer to sell _your product_ at a particular price.

ChristianJapan
Jun 9, 2011, 05:40 AM
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Great news; i was worry about Kindle might move out.

KnightWRX
Jun 9, 2011, 05:46 AM
Great news if not for the new 1.14 section. Drop that and let the market decide if Apple's "30% credit card processing fee" is good or not. Still seems to me they are trying to cling to some shred of restrictions in-order to make their service viable. Try to let it stand on its own merit.

Stella
Jun 9, 2011, 05:49 AM
Congratulations Apple for doing the right thing. This will benefit the user. There's going to be a great deal more media content coming very soon!

If users want a cheaper price, subscribe outside the app - no big deal!

Can someone tell me - with in-app purchases, is Apple obliged under its own T&Cs to host the downloadable content as well as the app (at no additional charge to the developer)?

In other words, if Amazon did decide to meet Apple's original T&Cs to allow purchases through the iOS Kindle apps, would Apple have been obliged to host a copy of the entire Kindle library if Amazon had wanted them to?

Subscription content never touched apple's servers, so I would guess "No". Only the application was hosted by Apple.

foidulus
Jun 9, 2011, 06:00 AM
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Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.

My guess is that even if Apple forces them too, they can just add a button that says "My Kindle Account" or something like that which will take them to an account page, and from there amazon may offer helpful suggestions on which books to buy.

The Phazer
Jun 9, 2011, 06:03 AM
Not being able to link to the other store is still amazingly clunky and wrong (why does Apple of all people want to insist on **** UX just to be anti-competitive? It doesn't just work.), but otherwise this is good news - the terms as was were clearly a breach of anti-trust in Europe and morally indefensible.

Phazer

Optimus Frag
Jun 9, 2011, 06:04 AM
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Common sense has prevailed.

It does happen from time to time.

tatonka
Jun 9, 2011, 06:13 AM
Looks like Apple takes care of everyone...
Still people bitch.

But good thing, Apple has realised this sooner than later. :)

Apple did not take of anyone before all that bitching storm broke loose and they probably got told a few not that pleasent things behind closed doors by the great publishing houses.

That whole thing was just a step to far .. good Apple was forced to realize that, before more damage to the plattform was done.

T.

kdarling
Jun 9, 2011, 06:15 AM
Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.

haravikk
Jun 9, 2011, 06:33 AM
Hmm, while it's good they've decided not to be so strict about it, I can't help but think that it would be better if they simply didn't take such a big cut of in-app subscriptions, as these are long-term anyway so such a high percentage doesn't seem especially reasonable.

OllyW
Jun 9, 2011, 06:36 AM
On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again. More likely to give your app a minus five star rating (or the lowest rating possible) on the store before uninstalling it.

Easy to solve, tell them before they buy it.

As you click to subscribe they should be able to inform you that the in-app purchase includes a surcharge to cover Apple's charges and let you know it is available at the normal price elsewhere.

Torrijos
Jun 9, 2011, 06:40 AM
So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?
And they should maintain the same level of excellence while not receiving a penny, right?
The app dev, the movie and music producers, the editors profiting of the reputation and stability of the store, of the tools Apple provide while never having to pay anything.

Somehow I feel it wouldn't be such a great business model, if you wanted to turn a profit from time to time.

Stella
Jun 9, 2011, 06:52 AM
So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?
And they should maintain the same level of excellence while not receiving a penny, right?
The app dev, the movie and music producers, the editors profiting of the reputation and stability of the store, of the tools Apple provide while never having to pay anything.

Somehow I feel it wouldn't be such a great business model, if you wanted to turn a profit from time to time.

In App subscriptions was a failure. Do you want Apple to continue down this dead end road without changing anything? The free market spoke, they weren't interested in giving Apple a 30% cut.. its up to Apple to adapt and learn.

Having 3rd party content without a guaranteed 30% cut is better than no content at all. Having content will attract customers to iOS. See KDarlings quote above to see what may have happened if Apple didn't change things. Is this what you want?

Bernard SG
Jun 9, 2011, 06:56 AM
In App subscriptions was a failure.
Source?

KnightWRX
Jun 9, 2011, 06:58 AM
So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?

Apple doesn't transfer subscription content. They don't host it, nor store it either. For the in-app subscription and in-app purchase, all Apple does is cover billing. If you're going to go on this wild emotional "Apple is a victim!" tangeant, at least get the facts straight. ;)

Apple is a payment processor. They are charging 30% to process a payment and you are left on your own with : Server storage, content transfer, account management, marketing, etc...

That's one hefty payment charge, even Visa and Mastercard don't charge that much to process payments.

And they should maintain the same level of excellence while not receiving a penny, right?

Who said not receiving a penny ? They should simply charge reasonable rates for payment processing. What's the industry going rate for that ? Under 5% ? Do they even do percentage based transactions or is it fixed charges ? Charge that. You still get money for processing the payment and maybe a few more devs will embrace your service.

These new rules at least let the service stand on its own in the market. You now at least have a choice of payment processors for your in-app subscription stuff. Will it be Apple at 30% or Visa at 5% or a fixed rate payment processor ?

marksman
Jun 9, 2011, 07:02 AM
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Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a 30% premium to cover Apple's usual cut for In-App Subscription payments.

43% premium, not 30%. Apple take 30% of the in-app price. So if an item is selling outside the app for $1, it would need to sell at $1.43 inside the app to return the same $1 to the developer. (30% of $1.43 = $0.43)

Wrong. Duplicate costs are involved.

iSee
Jun 9, 2011, 07:14 AM
Yay!

Good move Apple -- well, actually first a very bad move but then finally the correct move.

I was going to leave the iOS universe if Apple kicked my ebooks (Amazon Kindle) off the platform.

Still it's been bad business all around. The Financial Times had to waste its time and money developing the HTML5 app. Who knows how many other content providers and developers likewise wasted time trying to deal with this?

OllyW
Jun 9, 2011, 07:14 AM
Wrong. Duplicate costs are involved.

No, they are spot on with their figures.

designedbyapple
Jun 9, 2011, 07:15 AM
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First: I think this decision will be good for the market
Second: I want to thank Jordan for writing in a more 'macrumors' style. I didn't even think to check till the end who the author was and I was pleasantly surprised to see that it was Jordan. I enjoyed reading the article and it felt just like reading any other on macrumors! :)

Madmic23
Jun 9, 2011, 07:16 AM
I'm glad that Apple realized how stupid this policy was. The Fiancial Times was a good example of what developers would have done to avoid these ridiculous charges. I can just imagine Amazn being forced to create a "Kindle web app" to be compliant with the original rules set to take effect at the end of the month.

ericinboston
Jun 9, 2011, 07:31 AM
I have to say, it's been very obvious to me for quite some time that the iPad is just not the e-reader (books and mags) that Apple has been touting for 1.5 years. I've noticed the tv commercials stressing e-reading are gone or altered, there is no news/hoopla about mags and books at any Apple events, and then a few topics like this where Apple quietly reverses course.

Apple, sooner or later, will learn that the My Way Or The Highway approach will rarely win business. Additionally, IMO, reading any content for longer than 20 minutes on the iPad 1 and 2 is a strain on the eyes...while the Kindle is beautiful. Emails or a quick website article?...sure. But actually sitting and reading text for long periods of time like you do with a physical mag or newspaper just is not great on the iPad....Apple will have to address this if Apple truly wants the iPad to be an e-reader.

kyeblue
Jun 9, 2011, 07:31 AM
Apple needs content providers more than content providers need them. You can't push around big weight like FT and WSJ as you did to small fish and tadpoles. Reluctant to change to send readers of FT and WSJ into the arms of RIM and Android.

newagemac
Jun 9, 2011, 07:32 AM
Yay! Now they get to charge us higher prices on our mobile devices! Big win for consumers!

/sarcasm

jimboutilier
Jun 9, 2011, 07:33 AM
Good news.

It will still be a little less convenient not to have BUY links inside apps like Kindle or Zinio, but at least it will not impact the availability or pricing of the content I choose to enjoy from the vendors I choose to get it from.

Frankly, had Apple persisted in its misguided efforts I would have left the iOS platform I dumped my iPhone in favor of an Android phone to get away from AT&T, and I was already shopping Android tablets to replace my iPAD had Apples proposed subscription policy impacted my content.

Given Apples attempt at this, I have little confidence they won't try something similar in the future, so I may still go with another platform, but at least now I have more time to decide.

Jcoz
Jun 9, 2011, 07:35 AM
Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.

I agree.

Still it's not like Publishers bringing magazines to Android tablets is the only thing holding those things back.

They could have went, but it was still largely an empty threat considering it absolutely would have been a losing proposition on their part in the short term.

But good for them for threatening and good for apple that they didn't stick to their guns just because the threat had no teeth short term.

I've seen Apple stand behind decisions with a WHOLE lot more tangible reasons not to than this situation.

samcraig
Jun 9, 2011, 07:36 AM
On the other hand, anyone who buys something in-app once and later finds out that you charged them 43% more will feel totally ripped off and is not likely to buy anything through your app ever again.\

I didn't see anything that prevents the app developer from WARNING the customer that buying the app externally SAVES them XX vs buying in-app. In fact - if anything it could increase sales as people like the perceived notion they are getting a deal.

Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.

Exactly kdarling - and this is why you are one of the most level headed and respected (by at LEAST me) poster on these forums.

Sora
Jun 9, 2011, 07:36 AM
43% premium, not 30%. Apple take 30% of the in-app price. So if an item is selling outside the app for $1, it would need to sell at $1.43 inside the app to return the same $1 to the developer. (30% of $1.43 = $0.43)

With this said, will it be enough to keep developers happy? Will the Financial Times return? And most importantly, will consumers respond by closing their wallets?

ChazUK
Jun 9, 2011, 07:37 AM
Far better. :cool:

MacObsessed
Jun 9, 2011, 07:37 AM
While I think that it was a bad move to begin with, I also think that Apple's change of heart is proof that the free market works. Ever since their original decision was made, some people have been crying out for regulators to get involved and force Apple to change its policy, in its own proprietary store. Again it was a seemingly unfair, anti-competitive, and counterproductive decision from the beginning, but this is the way these things should be resolved: customers and content providers became angry and threatened to take business elsewhere (after-all, Android has always been an option), and Apple saw the potential harm in staying the course, so they changed the policy without outside intervention.

Stella
Jun 9, 2011, 07:45 AM
Source?

Your source is in front of you in iTunes and this article. How many companies offered in app subscription purchases, especially large media companies such as the FT? Not many.

If in app-subscriptions was a success Apple would not be relaxing the rules.

The Phazer
Jun 9, 2011, 07:49 AM
While I think that it was a bad move to begin with, I also think that Apple's change of heart is proof that the free market works. Ever since their original decision was made, some people have been crying out for regulators to get involved and force Apple to change its policy, in its own proprietary store. Again it was a seemingly unfair, anti-competitive, and counterproductive decision from the beginning, but this is the way these things should be resolved: customers and content providers became angry and threatened to take business elsewhere (after-all, Android has always been an option), and Apple saw the potential harm in staying the course, so they changed the policy without outside intervention.

IMO the threat of regulatory action is unquestionably why Apple have rowed back.

Phazer

supmango
Jun 9, 2011, 07:53 AM
This is closer to being what publishers need. I find it interesting that Apple still refuses to let there be a way to access content on the device outside of the in-app purchasing mechanism. What Apple really needs to do is reduce the cut it takes. Then publishers might actually be able to make it work.

This is the same issue that most developers have with the Mac App store. The cut is too great on the more well established apps. If you have a good app, you spent too much time on it to allow a 30% cut.

People will still use the in-app purchase over the web, many times simply because they don't realize they have the option, or that the web price might actually be cheaper. Apple is banking on this. So in the end, if you are ignorant of your options, you are screwed and Apple wins. We will have to see how publishers respond.

waldobushman
Jun 9, 2011, 07:54 AM
This is a good compromise. Vendors cannot use any in-app purchase features (Apple's or a vendor specific mechanism) without giving Apple their cut.

The issue for vendors is then is the premium charged by Apple.

BTW, to all mathematicians, the premium really IS about 30% and not 43%. Why? Because out of the $1 you're charging today, about 5% plus some per transaction fee is going to Visa/Mastercard and the secure payment vendor you are already using. That is, part of Apple's 30% take includes what you are already paying out for this similar financial service. So it is 30% - 5% that Apple gets.

So $1 / .75 = $1.33.

If the per transaction fee raises your current charges to 7%, we get $1 / .77 = $1.299. In any case, the premium is really significantly less then 43%.

macsmurf
Jun 9, 2011, 07:58 AM
We're seeing again and again that Android is keeping Apple honest, so to speak.

Remember Vic Gundotra's "draconian future" remark at Google I/O? Although overly dramatic, situations like this is what he was talking about.

Apple is a great number 2 and a pretty horrible number 1.

samcraig
Jun 9, 2011, 08:02 AM
This is a good compromise. Vendors cannot use any in-app purchase features (Apple's or a vendor specific mechanism) without giving Apple their cut.

The issue for vendors is then is the premium charged by Apple.

BTW, to all mathematicians, the premium really IS about 30% and not 43%. Why? Because out of the $1 you're charging today, about 5% plus some per transaction fee is going to Visa/Mastercard and the secure payment vendor you are already using. That is, part of Apple's 30% take includes what you are already paying out for this similar financial service. So it is 30% - 5% that Apple gets.

So $1 / .75 = $1.33.

If the per transaction fee raises your current charges to 7%, we get $1 / .77 = $1.299. In any case, the premium is really significantly less then 43%.

Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

dexthageek
Jun 9, 2011, 08:04 AM
I wonder if these changes will help BeamItDown Software stay in business with iFlow Reader. I have never used the product, but as a fellow small business owner, I hate seeing other small businesses close their doors.

MacObsessed
Jun 9, 2011, 08:10 AM
IMO the threat of regulatory action is unquestionably why Apple have rowed back.

Phazer

That could be, but there has yet to be any formal investigations launched, and there was a threat of investigation over Apple's flash exclusion policies, but they didn't budge on that one. I think if Apple was still convinced that this was a viable model, they would have waited for an investigation to materialize and addressed it then.

jonnysods
Jun 9, 2011, 08:10 AM
Glad to see some flexibility on this. It would suck to see the app store start to show some cracks and have developers walk away.

alent1234
Jun 9, 2011, 08:20 AM
guess i don't have to look for a cheap android tablet now just in case i needed a way to read kindle books

MacObsessed
Jun 9, 2011, 08:20 AM
Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

I think that it is misdirected to imply that Apple's 30% cut is simply a credit card transaction fee, they are charging developers for providing them with easy access to millions of impulsive customers.

Popeye206
Jun 9, 2011, 08:25 AM
LOL! I love all the comments from people that have NO CLUE as to how publishing works and have no value for the power of the channel.

First... this is great that Apple modified it's agreement. They needed to.

Second. The 30% is again a none issue. It's reasonable given they offer the largest single installed base of customers - especially when it comes to tablets.

Third... people keep acting like this all defined and Apple is just being chuckle heads. But keep in mind, this is not all business as usual. It's all new. A new market and new distribution opportunity that has no rules - no proven business model - and no, free with no advertising is not a business model that works. Publishers are trying things, Amazon is trying things and Apple is trying things all with the goal of finding the final common ground. But as we can see from the history of music, it's going to take a few years to pan out.

This is all good news and will open the door for more publishers to buy in. Good move on Apple to adapt and change.

JHankwitz
Jun 9, 2011, 08:25 AM
Apple should see little change in sales commissions since many users will be more than happy to pay an extra 30% to be able to install the software on all their computers from the App Store.

KnightWRX
Jun 9, 2011, 08:37 AM
Second. The 30% is again a none issue. It's reasonable given they offer the largest single installed base of customers - especially when it comes to tablets.

The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

samcraig
Jun 9, 2011, 08:39 AM
I think that it is misdirected to imply that Apple's 30% cut is simply a credit card transaction fee, they are charging developers for providing them with easy access to millions of impulsive customers.

I never suggested it was. I think the CC fee Apple is charged is 'relevant' in the accounting aspect. But in terms of their 30% take - has very little impact. There's a difference between the cost of doing business and the infrastructure built. the CC fees are a given to Apple. The 30% is to pay for the infrastructure, human resources and profit.

sishaw
Jun 9, 2011, 08:39 AM
Good, I don't see why they did this in the first place, but then, nothing Apple does with App Store guidelines make much sense anyway.

Ha ha. They WANTED THE MONEY. But the economics of publishing simply won't support their former approach.

Sharkus
Jun 9, 2011, 08:42 AM
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Thank god they saw sense. So apps like kindle can continue. They just need to remove the link to the kindle store.

Or remove the entire store experience if their app currently has that, or perhaps just remove the "buy" buttons. This could be more involved than it sounds, as it would probably require a little more design than just pulling out a button / list.

What about buttons for obtaining previews of books though, is that allowed? Additionally, how do you inform a user they cannot purchase in-app any longer (if you don't yet have support of IAP; eg; large catalog of items, different price points, etc...), are you allowed to display a message indicating a user needs to go to your website to purchase content? I thought previously this was frowned upon and has had the odd app rejected for doing so.

KnightWRX
Jun 9, 2011, 08:49 AM
The 30% is to pay for the infrastructure, human resources and profit.

In a 1%, 1% and 98% distribution ? Because 30% is quite a hefty fee for simply processing a payment.

Don.Key
Jun 9, 2011, 08:51 AM
Quiet out = Quiet in!

Apple should say it clearly and loudly that they will not bring this rule back anymore.

As long as they do not do that and perform a kind of "hush hush" move - I would not trust them, they might bring the thing back just as well in a year or two when content providers and users are hooked.

AaronEdwards
Jun 9, 2011, 08:54 AM
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Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

Why?
Aren't Apple users in general willing to pay more for the better user experience?
Doesn't an iOS app deliver a better user experience?

amorya
Jun 9, 2011, 08:57 AM
Not being able to link to the other store is still amazingly clunky and wrong (why does Apple of all people want to insist on **** UX just to be anti-competitive? It doesn't just work.), but otherwise this is good news - the terms as was were clearly a breach of anti-trust in Europe and morally indefensible.

Phazer

This.

Elven
Jun 9, 2011, 08:58 AM
A good change in the right direction.:apple:

Phil A.
Jun 9, 2011, 09:01 AM
Good to see common sense has prevailed eventually, although a (very) cynical view would be to say Apple have done this to get rid of external "buy" buttons without causing complaints:
If they'd just announced they were banning "buy" buttons that took you to external websites, there would have been an outcry from everyone similar to what there was with the original announcement. However, by doing what they've done they got the initial outcry but have seemingly now backed down, leaving people are happy with the new, apparently relaxed, requirements that include the removal of the buy buttons...

Popeye206
Jun 9, 2011, 09:11 AM
The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

Sorry... wrong. They are WAY more than payment processing. iTunes and the new Newstand is a channel. It's easy access to millions of potential customers and that is worth the 30%.

AaronEdwards
Jun 9, 2011, 09:11 AM
Yay! Now they get to charge us higher prices on our mobile devices! Big win for consumers!

/sarcasm

Because they were going to absorb the 30% AppleTax and not charge us more to cover it?

chukronos
Jun 9, 2011, 09:15 AM
I wonder if this has anything to do with the Lodsys issue. Seems interesting to me that they changed the rules so soon after the lawsuits started.

Popeye206
Jun 9, 2011, 09:16 AM
In a 1%, 1% and 98% distribution ? Because 30% is quite a hefty fee for simply processing a payment.

LOL! Again... you do realize Apple is not a Bank? They too have the pay credit card processing fee's when a transaction is done. Visa, Mastercard, AMEX all get their cut along with the actual processor that Apple uses.

Again... It's called Channel. That is what the 30% is for. It's just like the margin the book stores take when they sell a magazine or book.

If you don't understand how things are sold, you should educate yourself before going on about things you don't know.

DirtySocks85
Jun 9, 2011, 09:18 AM
Glad Apple finally decided to do the right thing on this one, but I'm still going to be annoyed when they force Amazon to remove the link to the Kindle Store from the Kindle App. I guess I'll just have to bookmark it in Mobile Safari. Maybe I'll make a homescreen icon to the Kindle Store and put it in my books folder right next to the Kindle App.

KnightWRX
Jun 9, 2011, 09:18 AM
Sorry... wrong. They are WAY more than payment processing. iTunes and the new Newstand is a channel. It's easy access to millions of potential customers and that is worth the 30%.

Nope, there is nothing more than payment processing in the 30%. All marketing and channel distribution is done by the developer for In-app subscription. Apple does no channel work or newstand work. You need to provide your own app, market it, and then are in charge of managing accounts, distributing the content through your own channels. All Apple does is process payment and tell you XX has paid YY$.

You're talking about something else entirely, the Newstand feature in iOS 5.

So wrong yourself bub. :p

LOL! Again... you do realize Apple is not a Bank? They too have the pay credit card processing fee's when a transaction is done. Visa, Mastercard, AMEX all get their cut along with the actual processor that Apple uses.

No where close to 30%.

If Apple provided more than just a payment processing (they don't provide any channels for in-app purchases or subscriptions), then you'd maybe start having a point. As it stands, you don't.

AaronEdwards
Jun 9, 2011, 09:23 AM
Sorry... wrong. They are WAY more than payment processing. iTunes and the new Newstand is a channel. It's easy access to millions of potential customers and that is worth the 30%.

Last time I saw any numbers for magazines sold on the iPad, they didn't look very good, and they had fallen quite a lot since the introduction.

The number of songs sold through iTunes, the number of books sold through iBooks, and the number of apps sold in the AppStore were mentioned during the keynote. Can't remember anything about magazines though.

From FT's decision it's obvious that they, based on their data, didn't think that "the easy access to millions of potential customers" was worth the 30%.

samcraig
Jun 9, 2011, 09:24 AM
In a 1%, 1% and 98% distribution ? Because 30% is quite a hefty fee for simply processing a payment.

Not for the payment processing. For the infrastructure and human resources required by the app store in total. There's equipment, labor, a mortgage, taxes, yadda yadda + profit margin as part of the 30% Apple charges.

KnightWRX
Jun 9, 2011, 09:26 AM
Not for the payment processing. For the infrastructure and human resources required by the app store in total. There's equipment, labor, a mortgage, taxes, yadda yadda + profit margin as part of the 30% Apple charges.

Again, 1% (infrastructure), 1% (human ressources), 98% (profit).

What kind of infrastructure/human ressources do you think is required to simply process payments ? ;)

samcraig
Jun 9, 2011, 09:36 AM
Again, 1% (infrastructure), 1% (human ressources), 98% (profit).

What kind of infrastructure/human ressources do you think is required to simply process payments ? ;)

I suppose the datacenter required for all the throughput of the app stores comes free. And no doubt that lawyers, accountants, app reviewers, etc are all free too.

Does that all come out of the 30%. No. Of course not. You did note that I listed several things INCLUDING profit, right? I didn't give any percentages. And clearly there are other aspects of Apple's business which defray costs of running the store/reviews/etc.

Since you (and I) aren't privvy to the actual breakdown of costs and where those monies are appropriated from and to - it's all conjecture. My original point was that there's no chance Apple is paying 5% as someone suggested. That's ridiculous. And I don't think 99 percent of the 30% is profit either. The truth lies somewhere in the middle :)

KnightWRX
Jun 9, 2011, 09:39 AM
I suppose the datacenter required for all the throughput of the app stores comes free. And no doubt that lawyers, accountants, app reviewers, etc are all free too.

Are we talking about In-app subscriptions or Apps in the app store here ? Because I'm pretty sure the 30% in the case of in-app subscription requires no throughput of the app store, app reviewers, etc.. and that lawyer and accounting fee for a simple transaction isn't near 30% of the cost of the subscription. (hence, the 1% allocation) ;)

Don't mix the 2 together. Selling actual apps is 1 thing. Apple provides a lot more than payment processing for your 30%. Selling In-App purchases/subscription is a completely different beast and Apple provides nothing but payment processing in that case.

I thought that was fairly clear, but it's obvious some people still don't understand it.

We are not discussing selling apps here. Not at all, whole different game. Much less infrastructure/human ressources required in what we are discussing vs selling the actual apps.

baleensavage
Jun 9, 2011, 09:40 AM
Again, 1% (infrastructure), 1% (human ressources), 98% (profit).
Actually, this is incorrect. For example if I wanted to use Paypal to process my transactions, I would be looking at a 3% fee plus 30˘ per transaction. That adds up. They have a micropayment model as well which does 5% and a smaller per transaction fee. Either way, if you are looking to do any online business between merchant account and credit card processing fees, you are looking to pay at least 5% in basic costs, more likely something like 10% when you figure in secure certificates, etc. Of course that still leaves something like 66% profit for Apple which is a very high profit margin. I guess the important thing is to never underestimate just how much the credit card companies are screwing the public. ;)

darbus69
Jun 9, 2011, 09:59 AM
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So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?
And they should maintain the same level of excellence while not receiving a penny, right?
The app dev, the movie and music producers, the editors profiting of the reputation and stability of the store, of the tools Apple provide while never having to pay anything.

Somehow I feel it wouldn't be such a great business model, if you wanted to turn a profit from time to time.

well put! Who wouldn't love to take a free ride to profitability on Apple's back, it's a sound capitalistic principle!

Rodimus Prime
Jun 9, 2011, 10:03 AM
Apple doesn't make money decisions based on "it's the right thing".

From jobs I've been offered, publishers are planning a major move into Android.

Without outside pressure, Apple would keep iOS as tightly controlled as possible.

I am not surpised Apple back down but of course they waited until last minute so the damage has been done.
Apple knew that if they kept pushing the big players would more or less say FU to Apple and walk away. Apple for example Amazons kindle Apple a hell of a lot more than Amazon needs Apple for it. Nook would be the same way. ibooks is still way to limited being on ONLY Apple. I know for my Ereading I do most of it on my Kindle because eInk is by far better than LCD but I do use kindle app on both my phone and my iPod for times when I am at school and need to kill time.;

All this does is slow down the move but I think the publishers and others are done putting any faith in Apple and going to move quickly to other plateforms so if they have to cut off iOS the damage is not as bad and it hurts Apple a lot more than it hurts them.
I suppose the datacenter required for all the throughput of the app stores comes free. And no doubt that lawyers, accountants, app reviewers, etc are all free too.

Does that all come out of the 30%. No. Of course not. You did note that I listed several things INCLUDING profit, right? I didn't give any percentages. And clearly there are other aspects of Apple's business which defray costs of running the store/reviews/etc.

Since you (and I) aren't privvy to the actual breakdown of costs and where those monies are appropriated from and to - it's all conjecture. My original point was that there's no chance Apple is paying 5% as someone suggested. That's ridiculous. And I don't think 99 percent of the 30% is profit either. The truth lies somewhere in the middle :)
Do you have any idea how cheap storage space is. Price today it is about a $100/TB for data storage. Given that most apps are under 5 megs and big time for things like the subscription service that should show you that it is dirt cheap for Apple. Just 1 iPod or iPad sell from due to having that App is worth more than it cost Apple to run its data storage and service for that same App.

darbus69
Jun 9, 2011, 10:04 AM
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So you people want Apple to forfeit their cut of this market, they have created, while maintaining the store servers, software, APIs, billings, paying for the data transfers etc.?

Apple doesn't transfer subscription content. They don't host it, nor store it either. For the in-app subscription and in-app purchase, all Apple does is cover billing. If you're going to go on this wild emotional "Apple is a victim!" tangeant, at least get the facts straight. ;)

Apple is a payment processor. They are charging 30% to process a payment and you are left on your own with : Server storage, content transfer, account management, marketing, etc...

That's one hefty payment charge, even Visa and Mastercard don't charge that much to process payments.

And they should maintain the same level of excellence while not receiving a penny, right?

Who said not receiving a penny ? They should simply charge reasonable rates for payment processing. What's the industry going rate for that ? Under 5% ? Do they even do percentage based transactions or is it fixed charges ? Charge that. You still get money for processing the payment and maybe a few more devs will embrace your service.

These new rules at least let the service stand on its own in the market. You now at least have a choice of payment processors for your in-app subscription stuff. Will it be Apple at 30% or Visa at 5% or a fixed rate payment processor ?

Are you forgetting that the app store app was the vehicle which led the customer to purchase??? What is being said was all the standards of excellence that encourages people to use the app store is not a free nor easy service for apple to provide.

dvkid
Jun 9, 2011, 10:16 AM
The fact is, publishers don't need Apple as a payment processor to reach these customers.

That's certainly true. My company uses Authorize.net for magazine sales outside our app, and pays far below 30%.

However, I'd make the same argument to you that I made to my boss when he scoffed at the 30%:

We are getting much more than payment processing for that share of our profit. In Monday's keynote, Jobs brought up one very important element of the App Store when he mentioned the 225 million iTunes Accounts, all with credit card numbers attached to them.

Would I have trusted Rovio with my credit card if asked to buy Angry Birds from them directly? What about Chillingo if I fancy some Cut The Rope?

Maybe, maybe not.

With the App Store, I don't have to. Apple has created a sense of security between the user and the publisher.

Moreover, the same mechanism creates an idea of "play money" that have had me spend two or three bucks on something without thinking twice about it on more occasions than I care to admit.

All in all, when looking at sales of our digital magazine, I am quite satisfied with what Apple gives us for our 30%.

Sure, I wish they weren't so stingy, but to say it is nothing more than a credit card fee is to discount a lot of benefits of selling within the App Store(s).

Edit: Just to clarify, I'm not talking about apps here, either. Apple still provides the same trust-inducing experience for in-app subs as they do for anything else. That one-click mentality that has caused so many of us to spend so much in the iTunes and the App Store is what we get for our 30%.

KnightWRX
Jun 9, 2011, 10:18 AM
Are you forgetting that the app store app was the vehicle which led the customer to purchase??? What is being said was all the standards of excellence that encourages people to use the app store is not a free nor easy service for apple to provide.

The App Store app itself is covered by the 99$ yearly developer fee or the 30% of its price on purchase. The 30% for in-app purchases/subscription has nothing to do with the app itself, which is paid for through other means.

So no, I am not forgetting it. It's not even a factor in the equation.

addicted44
Jun 9, 2011, 10:24 AM
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Common sense has prevailed.

It does happen from time to time.

+++

Hopefully this is the first few steps to Apple releasing their iron grip on the App Store a little bit.

Don't get me wrong. The curated nature of the App Store is what has made iOS such a hassle-free experience for me, as opposed to Android. However, I think Apple has swung the pendulum too far to the control side. They need to achieve a better balance.

jeffsonderman
Jun 9, 2011, 10:27 AM
My reading of the guidelines, as well as looking at Newsstand, suggests that this is going to make it more difficult to sell subscriptions that don't go through Apple. Here's the explanation I wrote on Poynter.org: http://journ.us/jAK43A

waldobushman
Jun 9, 2011, 10:36 AM
Bad math. I don't know any company paying 5% on charges let alone a company with the kind of volume Apple does. Banks charge LESS for volume transactions. I'd be surprised is Apple is paying more than 1-1.5% on credit card transactions.

You're missing the point. It doesn't matter what Apple is paying for CC transactions, the calc of the Apple premium is the same from the vendor's standpoint, because the especially small vendor, charging $1 for an app add-in might be charged by a PayPal-type 5% + 5 cents per transaction which amounts to 10% to the vendor. That Apple's cost is less is not relevant. The premium to use Apple in-app purchase still means the vendor will need to charge $1.30 to use the in-app process to get the same revenue-cost that the original $1 charge would bring.

If the value to the vendor that Apple brings to the in-app purchase process is worth the premium then it's a good deal.

I would also be willing to bet that in-app + iCloud + RFID purchases will be part of the Apple biosphere.

PeterQVenkman
Jun 9, 2011, 10:38 AM
Hell. It's about time.

http://i75.photobucket.com/albums/i287/devious742/blizzard_starcraft_2.jpg

manu chao
Jun 9, 2011, 10:40 AM
With this said, will it be enough to keep developers happy? Will the Financial Times return? And most importantly, will consumers respond by closing their wallets?
The FT has already invested in their web app, they might as well let it run for a while to see how it works and whether customers like it. Apple might have come to late with this move, any serious content provider by now has drawn up contingency plans (eg, the FT's web app). Apple might have set something in motion they could regret in the future.

I also think that Apple's change of heart is proof that the free market works. Ever since their original decision was made, some people have been crying out for regulators to get involved.
While we have some clues (FT's web app), we cannot say for sure whether it was mainly commercial or also feared regulatory pressure that forced Apple's hand.
(Though I think it is more likely commercial pressures, we cannot not take is as a proof that the market works, the available clues are certainly indications but there is a difference between indications and proof.)

MacAddict1978
Jun 9, 2011, 10:40 AM
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Providers who charge the same will do well. Those that try to jack up prices for iOS access will find people much less receptive.

But unless I'm reading this wrong, while buying direct through the app is the most convenient, you have the option to shop around for a better price and still use the app.

I'm glad they relaxed those terms, but I think the sore spot for most content providers was more the 30% cut than matching their best subscription offer they were offering consumers anyway. For many companies, 30% is a big chunk of their profit margin, and in some cases, most of it.

Popeye206
Jun 9, 2011, 10:40 AM
Last time I saw any numbers for magazines sold on the iPad, they didn't look very good, and they had fallen quite a lot since the introduction.

The number of songs sold through iTunes, the number of books sold through iBooks, and the number of apps sold in the AppStore were mentioned during the keynote. Can't remember anything about magazines though.

From FT's decision it's obvious that they, based on their data, didn't think that "the easy access to millions of potential customers" was worth the 30%.

I think subscriptions stink because the pricing stinks. Which has nothing to do with Apple's 30%... it just has to do with what consumers will pay.

If you look at the offerings, the cost is about the same as the list subscription price. Which most people know, you can get a year subscription through a clearing house like Publishers Clearing house for 50-80% off that price.

Publishers need to get more aggressive with the pricing. They also need to make digital versions standard if you're a print subscriber (which some have) and give the option to go 100% digital.

If they would just allow a check box on their standard subscriptions of Digital, Printed or Both and nothing else would change, at least they would get more action.

But to be honest... this is part of the industry I serve... subscriptions and magazine sales are down across the board. The internet is making them more and more irrelevant. Publishers are looking for ways to change this and timely, media rich content will be the key in the long run. But it's not easy going from print to screen for these guys. Big investments with little initial return.

jdechko
Jun 9, 2011, 10:49 AM
This is how it should have been written in the first place. It's good to see that Apple is willing to change its course when it comes to some things. While Netflix is a beneficiary, I suspect that this is mainly to keep Amazon on iOS.

ep1curus
Jun 9, 2011, 10:50 AM
Looks like the removal of in-app purchases is to protect developers from Lodsys. No in-app purchase, no Lodsys looking over your shoulder. Just slapping them in the face.

manu chao
Jun 9, 2011, 10:50 AM
Again... It's called Channel. That is what the 30% is for.
Exactly, and companies sell the same product via different channels for different prices, taking into account that some channels offer more to the customers and they are thus willing to pay more.

Before, Apple was not allowing this.

Popeye206
Jun 9, 2011, 10:51 AM
Nope, there is nothing more than payment processing in the 30%. All marketing and channel distribution is done by the developer for In-app subscription. Apple does no channel work or newstand work. You need to provide your own app, market it, and then are in charge of managing accounts, distributing the content through your own channels. All Apple does is process payment and tell you XX has paid YY$.

You're talking about something else entirely, the Newstand feature in iOS 5.

So wrong yourself bub. :p

No where close to 30%.

If Apple provided more than just a payment processing (they don't provide any channels for in-app purchases or subscriptions), then you'd maybe start having a point. As it stands, you don't.

Sorry I'm not.

You have to consider the whole sales cycle. Consumer gets Time Magazine App from App Store. See's in-app click for subscription. Buys subscription.

Again... Apple is bringing 100's or thousands of pre-qualified customers to the table. Even if the customer is just coming in the door and picking up a coupon. There is value in the ease of access.

In my example, the customer could have went directly to Times web site and bought the subscription, but they didn't. They used their Apple account to make the purchase. Why? Probably because it was easy. They are right there at the Virtual Apple Store and all they have to do is click "Buy".

This has value. Just like store promotions do to bring in customers and sales. No difference.

Retailers have played these sorts of games with manufactures for years. It's all about the bottom line. Get the sale. And if in-App purchases make the sale happen, then Apple deserves their 30%.

Remember, there is nothing to stop the retailer from doing their own marketing outside of the App in order to drive direct sales.

KnightWRX
Jun 9, 2011, 10:52 AM
Looks like the removal of in-app purchases is to protect developers from Lodsys. No in-app purchase, no Lodsys looking over your shoulder. Just slapping them in the face.

What removal of In-app purchases are you talking about exactly ?

Popeye206
Jun 9, 2011, 10:53 AM
Exactly, and companies sell the same product via different channels for different prices, taking into account that some channels offer more to the customers and they are thus willing to pay more.

Before, Apple was not allowing this.

+1

And with the price restriction gone, they are in line with everyone else and let the consumer decide.

KnightWRX
Jun 9, 2011, 10:54 AM
You have to consider the whole sales cycle. Consumer gets Time Magazine App from App Store.

This part is not under the In-App purchase/subscription based 30%. This part is paid for by the 99$ yearly fee and the 30% of the app's purchase price. Thus it doesn't apply.

Again... Apple is bringing 100's or thousands of pre-qualified customers to the table. Even if the customer is just coming in the door and picking up a coupon. There is value in the ease of access.

How is Apple "bringing" these people exactly ? Unless you market your app, you're just one link lost in a sea of 300,000 on the App Store. Apple does no marketing for you at all.

Rodimus Prime
Jun 9, 2011, 10:55 AM
Sorry I'm not.

You have to consider the whole sales cycle. Consumer gets Time Magazine App from App Store. See's in-app click for subscription. Buys subscription.

Again... Apple is bringing 100's or thousands of pre-qualified customers to the table. Even if the customer is just coming in the door and picking up a coupon. There is value in the ease of access.

In my example, the customer could have went directly to Times web site and bought the subscription, but they didn't. They used their Apple account to make the purchase. Why? Probably because it was easy. They are right there at the Virtual Apple Store and all they have to do is click "Buy".

This has value. Just like store promotions do to bring in customers and sales. No difference.

Retailers have played these sorts of games with manufactures for years. It's all about the bottom line. Get the sale. And if in-App purchases make the sale happen, then Apple deserves their 30%.

Remember, there is nothing to stop the retailer from doing their own marketing outside of the App in order to drive direct sales.

30% for maybe small time ones but for larger companies that already have a payment processing set up and other things it is worth at MOST 5%.
Payment processing for them cost maybe 3% so an extra 2% to Apple is not a huge deal.
They are gaining very little.
Add in the fact that Apple is the only place to get on iOS is an issue.

I also feel Apple gave because they knew if they kept pressing they would be facing a world of legal trouble for Antitrust and anti competive practices over in Europe which is a lot less forgiving than the US.

Jaro65
Jun 9, 2011, 10:56 AM
Will this be enough to help make FT change their mind? The browser "app" is ok, but not nearly as good as the dedicated iPhone and iPad applications.

charlituna
Jun 9, 2011, 11:00 AM
That seems about fair. It means Spotify etc can now just continue doing what they're doing and all they need to do is display a message rather than a link (they can even say go to spotify.com to buy, and it wouldn't infringe on those terms if it wasn't clickable).

Actually any mention of going outside of the app is likely against the rule.

The only thing this has changed is that they can, if they choose, charge more inside the app than out. It's an ego move to stroke the publishers more than anything else. They didn't like Amazon setting the price for Kindle books, they didn't like Apple setting the price for itunes tracks etc.

But in the end there is no proof any of them would have actually pulled out just like there is no proof that they will charge different prices.

mdatwood
Jun 9, 2011, 11:00 AM
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)



well put! Who wouldn't love to take a free ride to profitability on Apple's back, it's a sound capitalistic principle!

Why do people keep saying something that is completely wrong!? Without apps (ie, CONTENT) the iPhone wouldn't be anywhere near as popular as it is today. No one is taking a free ride on Apple, in fact Apple is constantly pushing the edge of taking a ride on all the content developers. Apple and developers are a symbiotic relationship and Apple needs to be careful to not kill its partners.

BC2009
Jun 9, 2011, 11:02 AM
This makes sense. I was all for Apple making money on the business they generate for the developer, but clearly that does not give them the right to govern the price outside the app. I think the biggest problem was folks who set up shop inside of Apple's ecosystem selling things to users without using IAP. Apple hosts the "free" app and makes no money on it (actually incurs a cost), then the developer can sell the user content from inside the app but Apple gets no cut of that. I call that free-loading.

The analogy that comes to mind is walking into the local McDonalds, getting a free cup of water, sitting at one of the tables taking up space, and selling sodas out of a ice chest to the customers that walked in. I should be allowed to sit at the table and maybe even sell sodas to those same customers, but I should not be advertising my soda-selling business from within the McDonalds -- I should be generating my business independently or giving McDonalds a cut of the sodas I sell from within their restaurant.

These new rules bring sanity back. If Apple really is providing a large customer base to these developers, then the volume will likely create the incentive to use IAP, else have a competitor who uses IAP beat you out due to convenience. And let the developers create whatever pricing model they want -- it is their business to manage -- just give Apple the 30% cut when the Apple ecosystem is generating the business for you. I know I would prefer IAP purchasing to going to some website after download in most cases.

charlituna
Jun 9, 2011, 11:03 AM
Smart move, not least of all because it's the Right Thing to do. I also wonder if they were breaking the law a little bit -- as far as I know, you can only dictate the 'minimum advertised price' -- forcing a retailer to sell at a particular price is illegal, and Apple were kind of coercing the publishers in to doing that.

Apple wasn't picking the specific price. Just setting the rule that what you set yourself has to be the same across the board. Rather like saying that a paper book publisher, DVD publisher etc can set a 'suggested retail price' for an item but they can't set a different one for every state. It's one price for everyone.

Now Apple is allowing the publishers to be more like the stores that carry the products. There's the App Store, the web store etc, each with its own markdown from the SMRP. But only time will tell if they go for that rule and actually set different prices.

BaconTime
Jun 9, 2011, 11:05 AM
Apple is bringing 100's or thousands of pre-qualified customers to the table. Even if the customer is just coming in the door and picking up a coupon. There is value in the ease of access.

A lot of people are arguing along these lines but I simply don't think that this "easy access" is going to translate into anything concrete for established content producers like WSJ, Conde Nast, etc. With the app store, yes, absolutely, there was zero market for most of those utilities and minigames before, but I don't think magazine subscriptions are going to see the same kind of explosive jump in revenue just because they are now available in the app store. I certainly haven't seen any impressive subscription numbers since they were added to the app store. So you can use that on a marketing sales pitch in theory, but in practice I don't it is resulting in enough concrete benefits to match what Apple was asking for.

Jcoz
Jun 9, 2011, 11:06 AM
This part is not under the In-App purchase/subscription based 30%. This part is paid for by the 99$ yearly fee and the 30% of the app's purchase price. Thus it doesn't apply.



How is Apple "bringing" these people exactly ? Unless you market your app, you're just one link lost in a sea of 300,000 on the App Store. Apple does no marketing for you at all.

Its completely foolish to try and establish a global value that apple would provide to each publication via in app purchasing.

Some would benefit, and other clearly benefit very little of nothing.

Questions regarding this would be are they getting new customers, or are existing ones just transferring over or adding services?

To act like every pub is in fine shape without this channel is just being intentionally dense.

And I'm not saying that you believe that, but it seems to be the way you assess this situation.

I've already said I'm happy with the results, so its not me arguing that apple needs 30%, just saying nothing is ever so black and white.

charlituna
Jun 9, 2011, 11:07 AM
This makes sense. I was all for Apple making money on the business they generate for the developer,


That has always been the way the game was playing. Apple was only getting a cut of what went through their system.


but clearly that does not give them the right to govern the price outside the app.

The notion was that they didn't want publishers to be able to punish users that picked to go through IAP where Apple's privacy rules would cut off demo data etc. Now Apple has decided what the hell, if a publisher wants to play games let them. Apple can say they don't control the prices and let the bad PR fall on the other guys.

KnightWRX
Jun 9, 2011, 11:08 AM
I think the biggest problem was folks who set up shop inside of Apple's ecosystem selling things to users without using IAP. Apple hosts the "free" app and makes no money on it (actually incurs a cost), then the developer can sell the user content from inside the app but Apple gets no cut of that. I call that free-loading.

That's patently false. First, free-apps are not "free loading". They provide value to Apple. It's called "Hey, look, we have 300,000 apps! We have 4 Billion downloads!". Users use the platform because of the apps. No "There's an app for that!", no iOS.

Second, developers pay 99$ yearly fee. That is what Apple decided to charge for the possibility of having free apps on the app store. If that is not enough money, then that isn't the developer's problem, that's Apple's problem.

So let's drop the notion that Apple is trying to make back some kind of profit on the In-App stuff because of the free apps. They are far from losing any money as it stands, they get great value out of the free apps in the form of platform viability and they also get a 99$ yearly fee.

Its completely foolish to try and establish a global value that apple would provide to each publication via in app purchasing.

Some would benefit, and other clearly benefit very little of nothing.


Same as it is completely foolish to ignore the value that each publication brings to Apple by simply making a native app for the App store. Hence why bother to try to put this in the equation ? The relationship as far as the presence of the app goes is symbiotic and both entities profit from it. It's also paid for, not through the 30% IAP/IAS stuff, but through the 99$ yearly fee and 30% of the app purchase price itself (if it isn't free).

Thus, again, the use of Apple's IAP/IAS service only provides payment processing. That is the only tangible and calculable value the publisher is getting. 30% for payment processing is astronomic.

Now that Apple relaxed the rules, it's much better, they are now completely optional as a payment processor. The only thing that I think still stinks in the whole deal is 1.14 and the restriction against linking to another payment processor directly in the app.

KnightWRX
Jun 9, 2011, 11:15 AM
double.

theBB
Jun 9, 2011, 11:16 AM
43% premium, not 30%. Apple take 30% of the in-app price. So if an item is selling outside the app for $1, it would need to sell at $1.43 inside the app to return the same $1 to the developer. (30% of $1.43 = $0.43)
That only makes sense if you assume the handling the subscriptions were not costing any money to the developer or the media company in the first place. Most magazines use third party junk mailers to bring them new subscribers, who may be taking an even bigger cut from them. Magazines offer larger discounts on top of that if you accept automatic renewals.

samcraig
Jun 9, 2011, 11:17 AM
Do you have any idea how cheap storage space is. Price today it is about a $100/TB for data storage. Given that most apps are under 5 megs and big time for things like the subscription service that should show you that it is dirt cheap for Apple. Just 1 iPod or iPad sell from due to having that App is worth more than it cost Apple to run its data storage and service for that same App.

Actually - working for a major IT firm - I do. And you're being very basic and simplistic in your argument against costs. You're not accounting for the mortgage, staffing, utilities, bandwidth, security, monitoring, and so on. It's not like Apple just has a bunch of cheap hard drives and is good to go... Your summation is either naive, an attempt to be sarcastic/clever, or something else entirely. But it's not exactly accurate.

You're missing the point.

I didn't miss anything. I was responding to someone's post which was factually incorrect. That's all. Nothing more - nothing less.

KnightWRX
Jun 9, 2011, 11:19 AM
I didn't miss anything. I was responding to someone's post which was factually incorrect. That's all. Nothing more - nothing less.

If you're referring to mine, I have explained it to you how my post is factually correct.

blueskymike
Jun 9, 2011, 11:23 AM
This move just prevents any sort of anti-trust litigation that surely would have come if Netflix, Barnes and Noble, and Amazon had their apps banned from the platform. But will it prevent further HTML5 app alternatives? If I were any of those media companies I would not bee too happy about not being able to link to my site and/or store.

Apple's change of terms did not go far enough. They are still making some powerful enemies of some very big companies.

theBB
Jun 9, 2011, 11:23 AM
How is Apple "bringing" these people exactly ? Unless you market your app, you're just one link lost in a sea of 300,000 on the App Store. Apple does no marketing for you at all.
Magazines keep sending me reminders mails to renew my subscriptions, which has a substantial cost. Subscribing through the App store would move the customers to automatic renewals, which most people refuse when they subscribe through mailed forms. It also makes it easier for magazines to up sell to the same customer base. There is certainly some value in having an App store, otherwise they would not do it in the first place. Apple wants a cut of that value. If that cut is too much for you, feel free to leave that avenue.

samcraig
Jun 9, 2011, 11:24 AM
If you're referring to mine, I have explained it to you how my post is factually correct.

No. And it's frustrating in general (not directed at you) that people jump into threads or skip pages, don't read posts, etc to see the development of the conversation. Some people come in - see a single post and it's taken out of context completely.

So I'll explain for those people. A poster intimated that Apple's CC transaction fee with the CC companies was 5%. My post which countered that was simply stating that there is NO way Apple is paying 5% for a CC transaction from their bank or 3rd party vendor. With the volume they do - they are at MOST paying 1-1.5% per transaction. And I think even that is being kind. But NO way is it 5%

KnightWRX
Jun 9, 2011, 11:28 AM
Magazines keep sending me reminders mails to renew my subscriptions, which has a substantial cost. Subscribing through the App store would move the customers to automatic renewals, which most people refuse when they subscribe through mailed forms.

Not a property of the App store at all. You could have auto-renewals through "mail" by charging the same CC:. You could have automatic-renewals through the magazines website by charging the same CC: too.

There is nothing inherent about the App store infrastructure that removes the need for renewals per se.

It also makes it easier for magazines to up sell to the same customer base.

How so ? What does a payment processor help with up-selling ?

There is certainly some value in having an App store, otherwise they would not do it in the first place. Apple wants a cut of that value. If that cut is too much for you, feel free to leave that avenue.

The App Store itself is not what we are discussing. Access to the App Store is not paid for by the 30% of IAP/IAS.

Rodimus Prime
Jun 9, 2011, 11:28 AM
Actually - working for a major IT firm - I do. And you're being very basic and simplistic in your argument against costs. You're not accounting for the mortgage, staffing, utilities, bandwidth, security, monitoring, and so on. It's not like Apple just has a bunch of cheap hard drives and is good to go... Your summation is either naive, an attempt to be sarcastic/clever, or something else entirely. But it's not exactly accurate.


Then provide better numbers.
I know for a fact that 3-4 years ago I could buy for less than $1/gig server data storage no problems off companies that would never expire.
End of store is data storage is dirt cheap and dropping like rock.
You put all the accounting in place (mortgage, staffing ect) and those are more or less fixed cost per server. HD space per gig is dropping like a rock and has been for a long time. So your fix yearly cost stay the same but the amount of storage increases.

Data storage is very cheap per gig and getting cheaper all the time.
No getting around that fact.
Bandwidth cost is getting cheaper for Mbit so you are getting more and more bandwidth at the same cost.
Staffing cost that is not growing at the same rate and it is becoming cheaper and cheaper pure gig (along with everything else)

BC2009
Jun 9, 2011, 11:28 AM
30% for maybe small time ones but for larger companies that already have a payment processing set up and other things it is worth at MOST 5%.
Payment processing for them cost maybe 3% so an extra 2% to Apple is not a huge deal.
They are gaining very little.
Add in the fact that Apple is the only place to get on iOS is an issue.

I also feel Apple gave because they knew if they kept pressing they would be facing a world of legal trouble for Antitrust and anti competive practices over in Europe which is a lot less forgiving than the US.

Rodimus, I am rarely in line with your point of view, but I am pretty much in agreement with what you said here.

1) Payment processing is NOT worth 30% to a big-time seller of an established product.

2) Price fixing the outside-of-app-purchase price was not going to hold up in many countries (likely even the US).

However, it is important to note that the 30% certainly covers more than payment processing. For example (today):
(a) App is hosted by Apple (distribution)
(b) App can be found on App Store (marketing)
(c) App description or buttons can direct the user to an external website (marketing)
(d) IAP reduces barriers to purchase since dealing with known entity (sales channel)
(e) Payment processing provided by Apple (fulfillment)

I won't cry for Apple on (a) since they forced all developers to sell on their App store which means nobody else can host their own app. Points (b) and (c) are fairly significant for small-time developers; however, big-time players like Amazon should be able to manage advertising their iOS apps along with how to subscribe to the service without doing it from within Apple's ecosystem (free-advertising which is no longer allowed under new rules). Point (d) is Apple's biggest focus when they spoke about the IAP rules and if they are right that they are truly generating a significant portion of the developer's business, then they deserve a cut. By allowing developers to set their own price though, competition will surely make it obvious if the 30% cut to Apple is truly worth the amount of business they generate on a per-developer basis. The last piece of this is of course payment processing (e).

For the small-time developer, (a) through (e) is a pretty good deal for 30%. For the established developers it seems a bit much since those companies are capable of absorbing the marketing and payment processing for less money. For developers who are themselves middle-men reselling somebody else's content through an agency model, then Apple's 30% was completely unmanageable.

The new rules are what they should have been all along. Allow the developer to sell content or subscription outside the Apple ecosystem, but make those developers 100% responsible for their own marketing of those features that are available from outside the Apple ecosystem and make them responsible for fulfillment and payment processing.

I think the end result will be a Kindle app that says you can read all the books you have purchased on Kindle with no links to purchase content from Kindle's bookstore (not even in the app's description). Basically, Amazon will be responsible for making users aware of how to get to their ecosystem and users will be able to access things purchased from the Amazon ecosystem on their iOS device. Essentially Store B won't be allowed to walk into Store A holding banners advertising for Store B (which is fair to Store A), while users who purchased something at Store B are not going to be banned from bringing it into Store A (which is fair to the user and Store B).

KnightWRX
Jun 9, 2011, 11:29 AM
No. And it's frustrating in general (not directed at you) that people jump into threads or skip pages, don't read posts, etc to see the development of the conversation. Some people come in - see a single post and it's taken out of context completely.

Agreed, I find myself often having to repeat the same things over and over in a thread because people fail to take context into account or fail to read the whole thread before replying to a post that was posted early in the thread that might have gotten clarified later.

However, it is important to note that the 30% certainly covers more than payment processing. For example (today):
(a) App is hosted by Apple (distribution)
(b) App can be found on App Store (marketing)

This is not covered by the 30% of IAP/IAS. Stop equating it to that 30%. This is covered by the 99$ yearly dev fee and the 30% of the App purchase price.

The 30% IAP/IAS charges are on top of that and only provide payment processing for the IAP/IAS service as defined in the StoreKit framework.

Also, simply being listed in the App Store is far from marketing. There's 300,000 apps in there, good luck making a decent living without doing your own marketing.

(c) App description or buttons can direct the user to an external website (marketing)

Built inside your app, thus not provided by Apple.

(d) IAP reduces barriers to purchase since dealing with known entity (sales channel)

Other well known entities exist. They charge much less. Is Apple really more well known than Visa ? MasterCard ? PayPal ?

(e) Payment processing provided by Apple (fulfillment)

The only service provided by Apple for IAP/IAS. 30% for (e). Compared to Visa or MasterCard or Paypal that charges much less, yet was prevented by Apple's rule based monopoly before these adjustments.

a.gomez
Jun 9, 2011, 11:33 AM
well done!

Jcoz
Jun 9, 2011, 11:34 AM
Same as it is completely foolish to ignore the value that each publication brings to Apple by simply making a native app for the App store. Hence why bother to try to put this in the equation ? The relationship as far as the presence of the app goes is symbiotic and both entities profit from it. It's also paid for, not through the 30% IAP/IAS stuff, but through the 99$ yearly fee and 30% of the app purchase price itself (if it isn't free).

Thus, again, the use of Apple's IAP/IAS service only provides payment processing. That is the only tangible and calculable value the publisher is getting. 30% for payment processing is astronomic.

Now that Apple relaxed the rules, it's much better, they are now completely optional as a payment processor. The only thing that I think still stinks in the whole deal is 1.14 and the restriction against linking to another payment processor directly in the app.

Incalculable does not = meaningless.

So you have two large variables in an equation which you'd like to just say are worth the same?

So magazines and newspapers are doing great then in your opinion? I doubt it.

I'd say its just impossible to say how much value that newstand and inapp subscriptions will benefit the publishers vs Apple.

You might disagree, but one thing that simply makes no logical sense whatsoever is you canceling out those to things and saying that clearly the only service here to a publisher is CC processing.

There is easily more tangible evidence that paid publications have more to gain by having that channel than apple does them. Simply look and the two businesses.

The two businesses have been on opposite trajectories.

theBB
Jun 9, 2011, 11:34 AM
But will it prevent further HTML5 app alternatives? If I were any of those media companies I would not bee too happy about not being able to link to my site and/or store.
Are you sure about that? Most media companies wishes there were no websites, where people can get content for free, in the first place. They are all trying different ways of putting up paywalls.

juicedropsdeuce
Jun 9, 2011, 11:35 AM
I want to ask Steve what it feels like to eat his own words. Again. The old man is losing it I think.

KnightWRX
Jun 9, 2011, 11:37 AM
Are you sure about that? Most media companies wishes there were no websites, where people can get content for free, in the first place. They are all trying different ways of putting up paywalls.

Websites don't have to provide free content. There is nothing about websites that obligates anyone to make the content on them free.

However, Websites bring the added advantage of being standard and platform agnostic. Thus you reach a much wider audience. More apps that are simply informational and require a connection should just be dropped and remade as websites.

Popeye206
Jun 9, 2011, 11:41 AM
A lot of people are arguing along these lines but I simply don't think that this "easy access" is going to translate into anything concrete for established content producers like WSJ, Conde Nast, etc. With the app store, yes, absolutely, there was zero market for most of those utilities and minigames before, but I don't think magazine subscriptions are going to see the same kind of explosive jump in revenue just because they are now available in the app store. I certainly haven't seen any impressive subscription numbers since they were added to the app store. So you can use that on a marketing sales pitch in theory, but in practice I don't it is resulting in enough concrete benefits to match what Apple was asking for.

The sales aren't there because the publishers have horrible pricing for digital subscriptions. Personally, I think it needs to be in the $10 a year range to be successful. Right now... it's cheaper to get the printed subscription in most cases.

skellener
Jun 9, 2011, 11:42 AM
I kinda wish there was a standard magazine format. That way I could just buy magazines, instead of entire apps. I could then use whatever reader I want. I guess Zinio (http://itunes.apple.com/us/app/zinio-magazine-newsstand-reader/id364297166?mt=8) is the closest thing to that at this point. Same goes for comics. Comixology (http://itunes.apple.com/us/app/zinio-magazine-newsstand-reader/id364297166?mt=8) seems to be the best, but of course Dark Horse (http://itunes.apple.com/us/app/dark-horse-comics/id415378623?mt=8) has their own app. So do a few others.

theBB
Jun 9, 2011, 11:51 AM
This is not covered by the 30% of IAP/IAS. Stop equating it to that 30%. This is covered by the 99$ yearly dev fee and the 30% of the App purchase price.
The apps are almost always free. 30% of free is nothing. Would you rather Apple force out all the free apps?

The 30% IAP/IAS charges are on top of that and only provide payment processing for the IAP/IAS service as defined in the StoreKit framework.
You keep bringing this up. Just because Apple offered a service for free (or just for $99) does not mean it has to offer every other additional service at cost. There are many businesses that offer low price for the entry level service, but charge more, a lot more, for additional features. It is the whole ecosystem that they are offering to developers or media companies. How the prices are broken down for each subset is up to Apple.

Built inside your app, thus not provided by Apple.
App descriptions are a billboard provided as part of the App Store. Feel free to leave that page blank.

The only service provided by Apple for IAP/IAS. 30% for (e). Compared to Visa or MasterCard or Paypal that charges much less, yet was prevented by Apple's rule based monopoly before these adjustments.
Learn the definition of monopoly. Apple does not even have the largest market share in smartphones. You cannot define a specific products offered by a specific company as a distinct market.

samcraig
Jun 9, 2011, 11:55 AM
The sales aren't there because the publishers have horrible pricing for digital subscriptions. Personally, I think it needs to be in the $10 a year range to be successful. Right now... it's cheaper to get the printed subscription in most cases.

There are a lot of factors at play. Pricing is just one. The medium is new and will experience growing pains.

There are those that assume digital media is cheaper because there's no physical distribution or printing costs. That's not necessarily true. And that explanation would take a lot more space.

You have to also remember that many people wouldn't be "happy" with the equivalent of the magazine in electronic form. The UI experience needs to be different.

Time, resources, and other factors all come into play with creating a new revenue stream like e-magazines. Which is why there IS such an issue with pricing and perceived value by the consumer.

Given that the print industry is already hurting - they would likely see e-publishing as a means to better solvency - and therefor are more likely to not want to "give away the farm" for cheap. But if they keep the price model high - the buy in will be low.

It's a tricky game - and again - will go through growing pains until it can either be economical for the publishers;when consumers understand and accept that physical media and electronic media are two completely different things and experiences/conveniences; or when one media wins out and "destroys" the other so there's no basis of comparison.

str1f3
Jun 9, 2011, 11:57 AM
I may be the only one who doesn't like this change. I don't plan to buy any subscriptions outside of the App Store so that publishers can sell my data to advertisers and I'm also not paying a significantly higher price for the version purchased through iTunes. I'd rather go to the free sites and get my news through content aggregators like the Huffington Post. This is the reason why the publishing industry is such a disaster.

The publishers can make a major push towards Android all they like but there has to be an Android tablet that will sell well first. The last thing I heard about Android tablets is that they're cutting production by 10% and their expectations weren't high to start.

phpmaven
Jun 9, 2011, 12:06 PM
The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

Likening Apple to merely a payment processor is an apples and oranges comparison.

They created the market, they bring the customers, they give you the tools to create the apps (essentially for free), they spend many millions promoting the app store and the devices they run on. You are getting the sales because of them.

How does that compare to a merchant bank that does nothing more than process the credit card payment? It would be like saying that the Walmart corporation should not be taking any more of a cut of the revenue of the company than a clerk who runs the cash register.

bobr1952
Jun 9, 2011, 12:13 PM
This was probably one of those Apple ideas that looked good in concept--until all of the issues and their ramifications were looked at--so good move Apple to make this slight course correction. :)

thatrandomguy
Jun 9, 2011, 12:17 PM
Called this a while ago. I'm far from the only person who did, but there were naysayers.

I believe that Apple may try to change the policy down the road if Google cannot make serious competitors in the tablet space (I love Android tablets and it pains me to say it, but they're not caught up yet...). Dominance tends to do that. Competition leads to the best consumer experience.

I may be the only one who doesn't like this change. I don't plan to buy any subscriptions outside of the App Store so that publishers can sell my data to advertisers and I'm also not paying a significantly higher price for the version purchased through iTunes.

Someone has to eat the costs. Like with credit cards (it's nice to have rules saying no minimum purchase, but the interchange costs have to be passed on - and if you're not making them up, someone paying with another payment method is).

I'd find it hard to believe they'd just round it up 30% for the iTunes version. There's going to be some credit card processing costs (lower for them), and they won't sell the data, but it is essentially a convenient referral method (attention in app store/in app purchasing making impulse buys anywhere easy). They may up the price slightly, but a full 30% would likely be noticed by a lot of consumers.

Allowing the use of external subscriptions but prohibiting linking to the signups for them is perfectly reasonable.

I'd rather go to the free sites and get my news through content aggregators like the Huffington Post. This is the reason why the publishing industry is such a disaster.

People have an expectation of free content because of the web and the wide market has lead to a problem: People are willing to put costly content out for free (even if supplemented with ads, covering costs is difficult) because of the growth potential. The NYT has struggled with this, as have plenty of news sources.

The reality is that the editing quality of a magazine is far higher than your typical blog. That's not to say blogs don't have appealing features (discussions with others, typically more up to date, a more personal writing style, etc.), but it's a different target. For technology geeks (i.e. people that would post on a technology forum and discuss news ;) ), freshness of content is critical.

A lot of people like the compact page-by-page nature of a magazine, the periodic publication of a bunch of content.

The publishers can make a major push towards Android all they like but there has to be an Android tablet that will sell well first. The last thing I heard about Android tablets is that they're cutting production by 10% and their expectations weren't high to start.

I predict Android tablets will make major inroads once Google gets Android Ice cream sandwich out the door. Problem is, that's a risky bet - Honeycomb was supposed to be the holy grail of Android tablets, and that didn't happen. However, the open nature of Android is bound to lead to great growth - I don't think it's a market Apple will dominate forever. Apple will hold a profitable place among the top players, but I don't think they'll maintain the lead. And that'll be fine.

kyeblue
Jun 9, 2011, 12:22 PM
The fact is, publishers don't need Apple as a payment processor to reach these customers. That's an artificial barrier placed on the ecosystem by Apple. Now they've removed it (except for 1.14 preventing in-app links to outside sources for subscription).

If Apple wants to play as a payment processor, they need to get in line with the payment processing industry rates, or like what happened with the FT, people are going to go elsewhere to peddle their wares.

They still rely on visa/mastercard and paypal to move the money. Apple is just a tax man collecting tax on everyone passing his gate.

kyeblue
Jun 9, 2011, 12:32 PM
Likening Apple to merely a payment processor is an apples and oranges comparison.

They created the market, they bring the customers, they give you the tools to create the apps (essentially for free), they spend many millions promoting the app store and the devices they run on. You are getting the sales because of them.

How does that compare to a merchant bank that does nothing more than process the credit card payment? It would be like saying that the Walmart corporation should not be taking any more of a cut of the revenue of the company than a clerk who runs the cash register.

merchant banks do not process credit card payment, Visa and mastercard do, and together they bare risk of fraud, and the banks also bare risk of credit loss. By taking the credit cards, Walmart and other merchant can boost their sales and avoid the pain handling a large quantity of cash at the end of every day.

On the other hand, the invention of iPad will not increase the readership of FT or WSJ, although their readers now have another way of reading the newspaper. Apple does not market for FT and WSJ and bring new readers to FT and WSJ, the high quality content of the newspaper does. Without all content available, iPad is nothing but a toy.

kyeblue
Jun 9, 2011, 12:39 PM
There are a lot of factors at play. Pricing is just one. The medium is new and will experience growing pains.

There are those that assume digital media is cheaper because there's no physical distribution or printing costs. That's not necessarily true. And that explanation would take a lot more space.

You have to also remember that many people wouldn't be "happy" with the equivalent of the magazine in electronic form. The UI experience needs to be different.



Many good point.

While you have to shut down their electronic device during taking off and landing, newspaper printed on pieces of paper has no such problem.

JGowan
Jun 9, 2011, 12:39 PM
Easy to solve, tell them before they buy it.

As you click to subscribe they should be able to inform you that the in-app purchase includes a surcharge to cover Apple's charges and let you know it is available at the normal price elsewhere.Agreed. And I'll still hit BUY. For me, the convenience of having a digital book to be used in iBooks to keep all of my reading material together is worth the surcharge. I don't want 50% of my books HERE and 20% of it HERE and 5% HERE, etc. I want it all in one app if at all possible and it's worth it to me to pay a little more for that convenience. If Amazon had DRM on their music and had to be played in another app or on other non-Apple devices, I'd never buy, no matter how cheap. Even a 99˘ Album (Gaga) would be passed up. I just want my stuff in as few places as possible and I'm willing to pay for that.

People call Apple a Walled Garden. First they forget that everybody else in way or another has propriety stuff to keep people "locked in" so it's a little silly to make it seem like Apple is the only company that builds Walls. Secondly, if it's a Walled Garden, so be it. I am amazed at how great it is and that it keeps better all the time. I also realize that no one has a gun to my head and I can leave for green pastures the moment I want to. So far, the grass is greener in Cupertino, and has been for some time.

dolph0291
Jun 9, 2011, 12:46 PM
I wish people would stop making such a big deal out of the 30% cut. Those who do obviously have little or no business sense.

If I made a product and a distributor said they would provide:

1. Placement in a store visited by millions of people every day from all over the world
2. With millions of already registered and proven customers from all over the world
3. With purchase devices (iPhones, Macs, etc.) already owned by millions of people from all over the world
3. With no worries about credit card approval or fraud
4. That can be purchased with gift cards that are available nearly everywhere, from corner convenience store to mall department stores
5. That provided full and excellent sales tech support
6. Where I could set my own price
7. Where I could upsell features (In-app purchasing) to increase income
8. That required me to manufacture (and pay for) not one physical item

And wanted only 30% of the net, I would say, "Where do I sign" not "let me think about it."

Do people really think that, if they buy software (or whatever) in a Best Buy (for example) for $100 that the entire $100 goes to the software company? Best Buy most likely purchased that software for less than 50% of the sales price. So Best Buy is taking their 50%, and rightfully so, and people complain about Apple's 30%? Get off the soapbox. Your griping doesn't make any sense at all. Do you have any idea as to the value of what Apple is offering? It's enormous.

Sure, you can make 100% off of a website sale, but deduct server hosting fees and lines (you're not selling this with your home computer and a cable modem), sales tech support, credit card fees, credit card fraud, website development costs, maintenance and repair, advertising, advertising, advertising to reach as many people as Apple does (if that's even possible), plus time and effort, and a host of other unseen costs associated with online sales, and you're not much further ahead, if at all.

juicedropsdeuce
Jun 9, 2011, 12:53 PM
I wish people would stop making such a big deal out of the 30% cut. Those who do obviously have little or no business sense.

If I made a product and a distributor said they would provide:

1. Placement in a store visited by millions of people every day from all over the world
2. With millions of already registered and proven customers from all over the world
3. With purchase devices (iPhones, Macs, etc.) already owned by millions of people from all over the world
3. With no worries about credit card approval or fraud
4. That can be purchased with gift cards that are available nearly everywhere, from corner convenience store to mall department stores
5. That provided full and excellent sales tech support
6. Where I could set my own price
7. Where I could upsell features (In-app purchasing) to increase income
8. That required me to manufacture (and pay for) not one physical item

And wanted only 30% of the net, I would say, "Where do I sign" not "let me think about it."

Do people really think that, if they buy software in a Best Buy (for example) for $100 that the entire $100 goes to the software company? Best Buy most likely purchased that software for less than 50% of the sales price. So Best Buy is taking their 50%, and rightfully so, and people complain about Apple's 30%? Get off the soapbox. Your griping doesn't make any sense at all. Do you have any idea as to the value of what Apple is offering? It's enormous.

Sure, you can make 100% off of a website sale, but deduct server hosting fees and lines (you're not selling this with your home computer and a cable modem), sales tech support, credit card fees, credit card fraud, website development costs, maintenance and repair, advertising, advertising, advertising to reach as many people as Apple does (if that's even possible), plus time and effort, and a host of other unseen costs associated with online sales, and you're not much further ahead, if at all.

Hello? Earth to noob. The article is about publishers, not software makers. Publishers already have the infrastructure you mention as they use it for the 80% of the market that is non-iOS such as computers, Android, web, etc...

Next time, read the article before typing out a thesis based on something completely unrelated. LOL. :rolleyes:

SamuraiArtGuy
Jun 9, 2011, 12:56 PM
I was wondering when Apple would wake up. The model they proposed made some sense for App upgrades, and possibly for periodical subscriptions. However, for streaming media, and books, where publishers are locked into complex licensing agreements with razor-thin margins in brutally competitive markets, the 30% Apple tariff and "most-favored" price leveling rules would be a NIGHTMARE. Many providers, Netflix and Hulu come to mind were seriously reconsidering their participation on the iOS platform. The Financial Times decided to go it on the outside as a web app. The NY Times response to digital subscriptions is still out to the jury... I expect they're likely to ... evolve it. Hope so, since I like Paul Krugman and David Pogue.

If Apple persisted in pushing a model that hoovered all the profit and then some out of a provider's enterprize, they would be well off pulling out. It's almost the exact opposite of the advantage the app store provides developers.

samcraig
Jun 9, 2011, 12:59 PM
I wish people would stop making such a big deal out of the 30% cut. Those who do obviously have little or no business sense.

If I made a product and a distributor said they would provide:

1. Placement in a store visited by millions of people every day from all over the world
2. With millions of already registered and proven customers from all over the world
3. With purchase devices (iPhones, Macs, etc.) already owned by millions of people from all over the world
3. With no worries about credit card approval or fraud
4. That can be purchased with gift cards that are available nearly everywhere, from corner convenience store to mall department stores
5. That provided full and excellent sales tech support
6. Where I could set my own price
7. Where I could upsell features (In-app purchasing) to increase income
8. That required me to manufacture (and pay for) not one physical item

And wanted only 30% of the net, I would say, "Where do I sign" not "let me think about it."

Do people really think that, if they buy software (or whatever) in a Best Buy (for example) for $100 that the entire $100 goes to the software company? Best Buy most likely purchased that software for less than 50% of the sales price. So Best Buy is taking their 50%, and rightfully so, and people complain about Apple's 30%? Get off the soapbox. Your griping doesn't make any sense at all. Do you have any idea as to the value of what Apple is offering? It's enormous.

Sure, you can make 100% off of a website sale, but deduct server hosting fees and lines (you're not selling this with your home computer and a cable modem), sales tech support, credit card fees, credit card fraud, website development costs, maintenance and repair, advertising, advertising, advertising to reach as many people as Apple does (if that's even possible), plus time and effort, and a host of other unseen costs associated with online sales, and you're not much further ahead, if at all.

I don't think you have much business sense. But that's besides the point. The comment most are making has nothing to do with the software purchase. It's the additional content in which Apple is raking in 30 percent per transaction.

And if you think that your laundry list of items is no longer a worry for the vendor - you're wrong. They still have to worry about all of that.

But you're very passionate :)

KnightWRX
Jun 9, 2011, 01:23 PM
You keep bringing this up. Just because Apple offered a service for free (or just for $99) does not mean it has to offer every other additional service at cost.

That isn't my point. Apple should definitely charge for the IAP/IAS payment processing service they offer. I just think 30% is astronomical compared to what other players in the field are charging.

That is why I'm happy Apple relented and is now going to let the market decide if they are too expensive or not.

Likening Apple to merely a payment processor is an apples and oranges comparison.

Not in the case of IAP/IAS. This is what we're talking about. For those services, Apple is only a payment processor.

SamuraiArtGuy
Jun 9, 2011, 01:27 PM
Hello? Earth to noob. The article is about publishers, not software makers. Publishers already have the infrastructure you mention as they use it for the 80% of the market that is non-iOS such as computers, Android, web, etc...

Next time, read the article before typing out a thesis based on something completely unrelated. LOL. :rolleyes:

EXACTLY. Addressed in general in my own post. Some folks are not looking at the entire picture. While Apple fully means to be disruptive, and change the game in many sectors, it's not in their best interest to break TOO many things their audience wants too dang quickly.

SamuraiArtGuy
Jun 9, 2011, 01:34 PM
People call Apple a Walled Garden. First they forget that everybody else in way or another has propriety stuff to keep people "locked in" so it's a little silly to make it seem like Apple is the only company that builds Walls. Secondly, if it's a Walled Garden, so be it. I am amazed at how great it is and that it keeps better all the time. I also realize that no one has a gun to my head and I can leave for green pastures the moment I want to. So far, the grass is greener in Cupertino, and has been for some time.

If Apple is a walled Garden, they sure spend a lot of time, energy and resources on gardening and landscaping. The grass is mowed, the hedges trimmed, lots or really pretty flowers, and the fertilizer is mostly(!) non-toxic. Even the walls are shiny.

Carry on.

Popeye206
Jun 9, 2011, 01:39 PM
I don't think you have much business sense. But that's besides the point. The comment most are making has nothing to do with the software purchase. It's the additional content in which Apple is raking in 30 percent per transaction.

And if you think that your laundry list of items is no longer a worry for the vendor - you're wrong. They still have to worry about all of that.

But you're very passionate :)

The other poster is way more right than wrong. Apple provides a distribution channel.... be it from iTunes or in an App. They deserve to take a cut.

Again... seems as though there are a lot of non-sales and marketing people making comments about the 30% when it's obvious they have no clue as to how distribution works or the value of what Apple brings to the table and why they are justified in their cut.

Here's an analogy that maybe some of you can relate too. On-line referral sales. The way it works is a customer visits site A. See's an offer for a product from company B... they click and buy and Company A gets a cut. Sometimes small, sometimes a big cut. Apple has defined that cut as 30% across the board.

It all comes down to the consumer. If they buy a subscription from Newstand, or an in-App purchase, Apple will get their 30%. The publisher can price it as they feel right. If the customer wants to shop around and find a better deal, they can do that too.

Prices, margins and policies will all find their level as all this new channel settles down.

GoodWatch
Jun 9, 2011, 01:39 PM
If you don't understand how things are sold, you should educate yourself before going on about things you don't know.

Indeed, you should educate yourself.... Apple doesn't own the goods or services it charges 30% for, neither does Apple host the files. As a result, Apple doesn't sell those goods or services, the suppliers of those goods or services do.

Popeye206
Jun 9, 2011, 01:50 PM
Indeed, you should educate yourself.... Apple doesn't own the goods or services it charges 30% for, neither does Apple host the files. As a result, Apple doesn't sell those goods or services, the suppliers of those goods or services do.

:rolleyes:

Sorry... I not trying to be rude, but it's obvious that there way too many people here who don't have any channel sales, or product marketing experience.

samcraig
Jun 9, 2011, 01:51 PM
The other poster is way more right than wrong. Apple provides a distribution channel.... be it from iTunes or in an App. They deserve to take a cut.

Again... seems as though there are a lot of non-sales and marketing people making comments about the 30% when it's obvious they have no clue as to how distribution works or the value of what Apple brings to the table and why they are justified in their cut.

Here's an analogy that maybe some of you can relate too. On-line referral sales. The way it works is a customer visits site A. See's an offer for a product from company B... they click and buy and Company A gets a cut. Sometimes small, sometimes a big cut. Apple has defined that cut as 30% across the board.

It all comes down to the consumer. If they buy a subscription from Newstand, or an in-App purchase, Apple will get their 30%. The publisher can price it as they feel right. If the customer wants to shop around and find a better deal, they can do that too.

Prices, margins and policies will all find their level as all this new channel settles down.

Oh Popeye! Don't make assumptions about the readership here. At least not about me. I have over 20 years in Marketing and PR. I'm well aware of how it all works. Especially since 8 of those years were in publishing.

Indeed, you should educate yourself.... Apple doesn't own the goods or services it charges 30% for, neither does Apple host the files. As a result, Apple doesn't sell those goods or services, the suppliers of those goods or services do.

Indeed GoodWatch. And no one is saying Apple can't "try" to charge whatever they want. Fact is - they tried. And failed. So they changed their model to adapt to tolerances of the vendors. Nothing wrong with that. Business try and make money. And if the methods they use aren't working - the smart ones change. The ones that don't fail.

Popeye206
Jun 9, 2011, 01:52 PM
If Apple is a walled Garden, they sure spend a lot of time, energy and resources on gardening and landscaping. The grass is mowed, the hedges trimmed, lots or really pretty flowers, and the fertilizer is mostly(!) non-toxic. Even the walls are shiny.

Carry on.


Hey... think about... the new Apple HQ Mother Ship looks like a big Walled Garden! :D

AaronEdwards
Jun 9, 2011, 01:55 PM
Magazines keep sending me reminders mails to renew my subscriptions, which has a substantial cost. Subscribing through the App store would move the customers to automatic renewals, which most people refuse when they subscribe through mailed forms. It also makes it easier for magazines to up sell to the same customer base. There is certainly some value in having an App store, otherwise they would not do it in the first place. Apple wants a cut of that value. If that cut is too much for you, feel free to leave that avenue.

Since they don't get any subscriber data automatically from those who subscribe using an iOS app, do you actually think it's cheaper or easier to get a former subscriber to renew? No user data means that they have no clue about them.
A lot of things aren't easier with the App Store, they are harder.

And companies have noticed that. And they have left. Why do you think Apple changed their rules?

marksman
Jun 9, 2011, 01:56 PM
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8G4 Safari/6533.18.5)

This makes sense. I was all for Apple making money on the business they generate for the developer,


That has always been the way the game was playing. Apple was only getting a cut of what went through their system.


but clearly that does not give them the right to govern the price outside the app.

The notion was that they didn't want publishers to be able to punish users that picked to go through IAP where Apple's privacy rules would cut off demo data etc. Now Apple has decided what the hell, if a publisher wants to play games let them. Apple can say they don't control the prices and let the bad PR fall on the other guys.

This is the reality. Apple realized it was not worth it and to let those businesses foolish enough to surcharge apple customers to suffer the consequences of such action. I will certainly not subscribe to any published who doss that. Variable delivery costs is part of running a business.

Popeye206
Jun 9, 2011, 01:56 PM
Oh Popeye! Don't make assumptions about the readership here. At least not about me. I have over 20 years in Marketing and PR. I'm well aware of how it all works. Especially since 8 of those years were in publishing.



Indeed GoodWatch. And no one is saying Apple can't "try" to charge whatever they want. Fact is - they tried. And failed. So they changed their model to adapt to tolerances of the vendors. Nothing wrong with that. Business try and make money. And if the methods they use aren't working - the smart ones change. The ones that don't fail.

Then where am I wrong in my statements?

deadkennedy
Jun 9, 2011, 02:02 PM
Not that I want to say I told you so, but.... I told you so

juicedropsdeuce
Jun 9, 2011, 02:10 PM
:rolleyes:

Sorry... I not trying to be rude, but it's obvious that there way too many people here who don't have any channel sales, or product marketing experience.

Yes, we need more people in the world with experience being an unnecessary middleman. Too many people are being paid for jobs that actually add value, it's a shame. :rolleyes:

samcraig
Jun 9, 2011, 02:16 PM
Then where am I wrong in my statements?

Where you asserted that dolph0291 was more right than wrong. Did you read his whole post? His analogy? His "summation" at the end.

He's not more right than wrong. And his business sense is not all that savvy. You want the proof? Look how many publishers went with the 30% commission Apple initially demanded (+ the stipulations). If it was so obvious and such an amazing deal - Apple wouldn't have changed their stance.

Other than that - and the assertion that others don't know anything about sales or marketing- I don't think I've argued anything about your comments being right or wrong.

BC2009
Jun 9, 2011, 02:19 PM
That's patently false. First, free-apps are not "free loading". They provide value to Apple. It's called "Hey, look, we have 300,000 apps! We have 4 Billion downloads!". Users use the platform because of the apps. No "There's an app for that!", no iOS.


Certainly there is value to Apple in having a vast ecosystem of apps.


Second, developers pay 99$ yearly fee. That is what Apple decided to charge for the possibility of having free apps on the app store. If that is not enough money, then that isn't the developer's problem, that's Apple's problem.


$99 per year is what Apple charges to developers providing that the developers play by Apple's rules which is quite a bit different. $99 does not buy a developer some inalienable rights to do whatever they want in Apple's ecosystem, but is the entry fee to allow a developer to participate in that ecosystem according to Apple's rule. And of course, like any good lawyer, Apple's lawyers put the stipulation that the "rules can change at any time".


So let's drop the notion that Apple is trying to make back some kind of profit on the In-App stuff because of the free apps. They are far from losing any money as it stands, they get great value out of the free apps in the form of platform viability and they also get a 99$ yearly fee.


Let's not drop it.... Certainly, Apple has some major competitors who are jumping into this ecosystem that Apple has created and trying to make huge amounts of money off that ecosystem with Apple's benefit being a whopping $99 per year. Amazon/Kindle comes to mind. Google saw this happening and they decided to backtrack on their "wide open" stance to "play by our rules or you don't get the latest Android version in a timely manner". This is a great defense for Google against the likes of Amazon or anybody else who seeks to replace services Google provides within the Android ecosystem.

Apple never had an "open" stance, but always had the terms and conditions for their developers. Like I said before, the $99 per year is the entry fee to play in the arena. It does not mean I could create a single free app which in turn is a gateway to my own app store which run my own apps within the primary app on the iOS device.

That would be like Microsoft making a game for the Wii that leveraged XBox Live for all of its online gaming and giving nothing back to Nintendo. First off, we know that each game developer for the Wii pays money back to Nintendo on every copy sold. Second, we know that Nintendo would never agree to such a game in the first place because it is not in their interests to turn their users into XBox users.


Same as it is completely foolish to ignore the value that each publication brings to Apple by simply making a native app for the App store. Hence why bother to try to put this in the equation ? The relationship as far as the presence of the app goes is symbiotic and both entities profit from it. It's also paid for, not through the 30% IAP/IAS stuff, but through the 99$ yearly fee and 30% of the app purchase price itself (if it isn't free).


But the old app-store rules allowed for an app to be free, but have limited to no functionality until some amount of money was given to the developer without going through IAP. That is nothing more than an attempt to circumvent the developer agreement. Again, Amazon Kindle comes to mind.


Thus, again, the use of Apple's IAP/IAS service only provides payment processing. That is the only tangible and calculable value the publisher is getting. 30% for payment processing is astronomic.


Now that is a naive statement. If you think the ease of purchase through IAP where you never have to retype your personal information, your credit card, or worry about receiving unwanted email does not reduce the barriers to purchase, then you are missing the whole point.


Now that Apple relaxed the rules, it's much better, they are now completely optional as a payment processor. The only thing that I think still stinks in the whole deal is 1.14 and the restriction against linking to another payment processor directly in the app.

Suppose I work for Vizio and I go out and purchase a Costco membership. Costco gets to brag about how many members they have in their annual earnings report, so certainly my annual membership benefits them, but additionally, I gave Costco some money and that helps too. But then I use my membership to enter Costco and start holding up signs advertising that you can purchase the same Vizio televisions online at vizio.com for less money, effectively taking Costco out of the loop. What was Costco anyway besides a place to host the product, accept payment, manage returns, and right me a check for inventory. Just payment processing, right? And my Costco membership should allow me do whatever I want right?

Maybe the metaphor is not perfect, but it helps to illustrate the problem here. The basic flaw in your argument is what you believe the $99 per year buys the developers. You are forgetting that the privileges afforded to the developer have always been subject to Apple's rules and restrictions.

Do I believe Apple was wrong in the subscription policy they announced earlier this year? Yes. I believe it would have hurt them in more ways than one and would not have held up in court due to the price controls.

Do I believe that IAP provides only payment processing. Heck no. I am not that naive.

theBB
Jun 9, 2011, 02:19 PM
That isn't my point. Apple should definitely charge for the IAP/IAS payment processing service they offer. I just think 30% is astronomical compared to what other players in the field are charging.

Again you keep forgetting the previous low priced service they offer as an incentive to get you through the door. You want Apple to justify any additional service starting from that base. No, it does not have to.

Look at the big three banks that offer free checking accounts. Yes, it is free, but then they charge $3 to $5 a month for giving you scanned checks. (You need this service in case you need to prove that the merchants, DMW or IRS has cashed your check.) Does it cost them $60 every year to scan my 10-15 checks? No, but that is how they make money off the checking accounts that seem free at first.

I like that Walmart analogy. You can go in and get free use of the parking lot outside, lighting and A/C inside and browse through the merchandise for free. Then, when you buy something, Walmart charges you for all that and its profit. You cannot tell Walmart that its cut should only cover the cashier's salary, as everything else that came before it was included in the low entry price.

KnightWRX
Jun 9, 2011, 02:24 PM
Again you keep forgetting the previous low priced service they offer as an incentive to get you through the door. You want Apple to justify any additional service starting from that base. No, it does not have to.

What low priced service ? I don't see a low-priced service. If Apple doesn't charge the proper price for the completely un-related Free App business, that's not related at all to IAP/IAS. IAP/IAS apps don't have to be free at all. Look at games like Infinity Blade that is usually 5.99$ (or 2.99$) on sale, they use IAP on top of the initial charge so they pay 30% for the app purchase, and 30% for every subsequent purchases.

Both services are distinct. It's time a lot of you understood that.

theBB
Jun 9, 2011, 02:33 PM
Since they don't get any subscriber data automatically from those who subscribe using an iOS app, do you actually think it's cheaper or easier to get a former subscriber to renew? No user data means that they have no clue about them. A lot of things aren't easier with the App Store, they are harder.
Sure, every sales channel is different. Previously they knew about my address and that was all.

Now, it is automatic subscription, so the "friction" for renewals is much less. Besides, they can track which articles I am reading and which ones I am skipping. They can get paid from a system that tracks which ads I am clicking on, which other apps I have purchased etc, making it a more valuable advertising opportunity. It is hard to argue that not knowing my address is such a big deal. In any case, they are free to offer an incentive so that I share my data with them. If the publishers do not know how to make use of the new opportunities and just lament the loss what they had, it is their loss.

samcraig
Jun 9, 2011, 02:36 PM
If I can divert the attention away from the current discussion for a bit - another "side" to this story is thus:

Apple wants to not only be competitive, but they also want to dominate marketshare.

That means - they're up against Amazon, for example - for books and magazines.

In short - Apple put these measurements in place because they wanted to lock in publishers, price control and maintain a competitive advantage. They wanted to ensure that if someone was buying music, books, magazine (all things they sell) that they were getting a cut. Especially since Amazon (for example) has a larger selection and often more competitive pricing.

What happens - as we all know and is obvious from the change of "heart" - is that it didn't work. Publishers didn't care for the model. And (enough) customers simply aren't paying premiums to get their content but going elsewhere.

You can argue (a lot) on whether the 30% is too much or too little; justified or not and what it does and don't cost Apple. That's only a piece of the political puzzle around this decision.

theBB
Jun 9, 2011, 02:40 PM
What low priced service ? I don't see a low-priced service. If Apple doesn't charge the proper price for the completely un-related Free App business, that's not related at all to IAP/IAS. IAP/IAS apps don't have to be free at all. Look at games like Infinity Blade that is usually 5.99$ (or 2.99$) on sale, they use IAP on top of the initial charge so they pay 30% for the app purchase, and 30% for every subsequent purchases.

Both services are distinct. It's time a lot of you understood that.
I understand the services are distinct. That does not mean the prices charged for each has to be independent. Apple could charge 70% for being in the store and just 5% for subscriptions and add-ons. They did not, it is their choice and it is not inherently, ethically or legally wrong. Amazon used to charge 70% for subscription to periodicals, there were other restrictions regarding the ownership of content and there was (and probably still is) not any way to have Kindle access to those magazines unless you subscribe through Kindle.

samcraig
Jun 9, 2011, 02:41 PM
Sure, every sales channel is different. Previously they knew about my address and that was all.

Now, it is automatic subscription, so the "friction" for renewals is much less. Besides, they can track which articles I am reading and which ones I am skipping. They can get paid from a system that tracks which ads I am clicking on, which other apps I have purchased etc, making it a more valuable advertising opportunity. It is hard to argue that not knowing my address is such a big deal. In any case, they are free to offer an incentive so that I share my data with them. If the publishers do not know how to make use of the new opportunities and just lament the loss what they had, it is their loss.

But you're assuming such tracking data is allowed by Apple to occur. Or that Apple shares that data, right? Which I don't believe they do. I don't think anyone here has a publishing contract with Apple and could verify either way. It's conjecture.

Popeye206
Jun 9, 2011, 02:51 PM
Where you asserted that dolph0291 was more right than wrong. Did you read his whole post? His analogy? His "summation" at the end.

He's not more right than wrong. And his business sense is not all that savvy. You want the proof? Look how many publishers went with the 30% commission Apple initially demanded (+ the stipulations). If it was so obvious and such an amazing deal - Apple wouldn't have changed their stance.

Other than that - and the assertion that others don't know anything about sales or marketing- I don't think I've argued anything about your comments being right or wrong.

Sam... yes... he has lots of technical things wrong in his statements, but I took them in for the intent of what he was saying which was distribution exists and there are people taking their percentages all over the place.

When people get wound up on this site about the 30% and start arguing that the 30% is not fair because it costs Apple nothing or little in processing fees to perform the transaction... these people don't see the value in the eco system and channel that Apple has produced.

Now.. with that said, I have made similar comments as you. This is all new. It's evolving and on this specific part of the topic (Apple's cut on subscriptions) it' yet to be seen if they back down more. It's all new. There are no rules. But in essence Apple is right in asking for something.

I think the bigger issue for publishers is they need to bring some value to the table. Most publishers I know are down on circulation. This is mostly because people aren't seeing the value in "old news" and the internet is too easy to find information. Also, (separate of Apple's take) their pricing for on-line subscriptions is too high. Consumers expect it to be similar to print subscriptions, which as you may know, you can get most magazines 50-80% off cover for a yearly subscription.

Many of the publishers are scrambling right now. They are trying to figure this out. So they too are trying not to leave money on the table and they want to see what the market will bare. Personally, I think it comes down to about a $1 an issue... but we're far from this with most the on-line mags right now.

Things are changing. I'm sure we'll see more changes. Publishers are not going to walk away from digital distribution. They need to sort if out as does Apple, Amazon, Google and others.

BTW... my comment about peoples experience in channel was not directed at everyone and not you. But it was directed a select vocal few here that obviously don't know how it works.

franswa za
Jun 9, 2011, 03:15 PM
Still people bitch.

But good thing, Apple has realised this sooner than later. :)

people (like us?) always shall bitch........

good move for all, apple included (who silently bithez)

samcraig
Jun 9, 2011, 03:23 PM
Many of the publishers are scrambling right now. They are trying to figure this out. So they too are trying not to leave money on the table and they want to see what the market will bare. Personally, I think it comes down to about a $1 an issue... but we're far from this with most the on-line mags right now.


It's a perceived value issue. You say yourself - you see an online pub being worth a buck. Is that right? Based on what though?

Say Time Magazine winds up being about a buck an issue (or less) via subscription. I'm talking about a hard copy mailed to you. That's the paper medium.

An electronic version of the same pub - which HAS to be more than just a pdf - costs a lot more to produce and offers more than a static page, no? So why devalue it? Why should it be 1:1 - or for the consumer to be "taught" to expect even less of a cost since it's electronic. That's training your customers to devalue the work you're producing. On the flip side - you can only ask what the market will bear. Right now - it's a messy arena because you have both sides of the coin occuring (publishers/consumers). The "icing" on the cake was that Apple wanted in their cut. I'm not judging whether or not they should have the cut. Or how much. What I'm saying is - publishers are already wrestling with a prickly issue. So anything to dig into that further will only push them away.

If Apple REALLY wanted to entice publishers (and yes... it would be a losing proposition - but Amazon works this way from time to time) is to offset some costs by (instead of taking 30%) - absorbing that/some of that/even offer incentives - so that publishers all sign up. Make it more attractive. Again - it would be a hit for them to not get the 30% - but at the same time - the incentive for the publishers to stay on the platform would be greater.

The old and current model wasn't working. So it's time to try something else.

Popeye206
Jun 9, 2011, 05:04 PM
It's a perceived value issue. You say yourself - you see an online pub being worth a buck. Is that right? Based on what though?

Say Time Magazine winds up being about a buck an issue (or less) via subscription. I'm talking about a hard copy mailed to you. That's the paper medium.

An electronic version of the same pub - which HAS to be more than just a pdf - costs a lot more to produce and offers more than a static page, no? So why devalue it? Why should it be 1:1 - or for the consumer to be "taught" to expect even less of a cost since it's electronic. That's training your customers to devalue the work you're producing. On the flip side - you can only ask what the market will bear. Right now - it's a messy arena because you have both sides of the coin occuring (publishers/consumers). The "icing" on the cake was that Apple wanted in their cut. I'm not judging whether or not they should have the cut. Or how much. What I'm saying is - publishers are already wrestling with a prickly issue. So anything to dig into that further will only push them away.

If Apple REALLY wanted to entice publishers (and yes... it would be a losing proposition - but Amazon works this way from time to time) is to offset some costs by (instead of taking 30%) - absorbing that/some of that/even offer incentives - so that publishers all sign up. Make it more attractive. Again - it would be a hit for them to not get the 30% - but at the same time - the incentive for the publishers to stay on the platform would be greater.

The old and current model wasn't working. So it's time to try something else.

I don't disagree to a point. As you know being that you're in or have been in publishing, most magazines get their revenue from advertising. Not distribution. Distribution is almost a wash when it comes to the bottom line. Subscription rates basically cover costs of getting the physical magazine in their hands.

So given that magazines such as Time, Road and Track, etc, make their money on advertising revenue, anything they make on distributing electronically is a gain. And honestly, it's not that much more expensive to go from print to digital and do more than just a PDF. I've been very recently involved in this process and there is more effort and more costs, but it's not so much that it drives the layout costs that high.

The big problem with Magazines now is not Apple's 30%... Their BPA's are down (low subscriber rates for print and digital) and big buck advertisers are tougher to come by. The AD reps are hungry and they're cutting deals like crazy to get AD slots filled. Newspapers are in the same boat.

Apple and iOS devices is a conduit for publishers. The things that are killing them is their own ability to figure out this new market. And maybe the answer is to start making significant revenues off of circulation because the AD dollars aren't there? But I doubt this... I don't think the market will buy it. They are to use to "free internet info" and cut rate print subscriptions.

samcraig
Jun 9, 2011, 05:38 PM
I won't argue/ The riskiest - but highest yield for publishers would be to stop their print issues and offer only teasers on the web with e-pubs for full content or subscriptions to the rest of their website.

I don't think there's a publisher willing to risk something that bold (yet). I also think that the adoption rate will take time. As popular as the iPad is - and eBooks are - magazines and newspapers aren't in the same field of vision as the consumer. Perhaps it's because books are more permanent while news is more "cotton candy" - i.e. here today and gone quickly. Also competition online is fierce for news/mags of any variety.

You'd also have to have a bulk of the publishers/pubs going off printed copies at around the same time and I don't see that happening either.

So again - it's more a question of when and what will be the best model. We're NOT in a post-printed word era yet....

joegolo
Jun 9, 2011, 07:18 PM
Lots of good (and not so good?) discussion going on here!

There is a 30% "commission" that Apple makes on:

1. App Purchases
2. In App Purchases
3. In App Subscriptions


It's easy to say that Apple only does the work and earns the money for point 1 and that they shouldn't take a cut/as large of a cut for 2 and 3. This gets a bit sticky with all those free apps that have IAP/IAS. It would cut or reduce Apple's revenue quite a bit.

Example:
App A is free. To unlock its full potential it costs $100. If Apple's cut for IAP/IAS were reduced to 5% then they would only get $5 rather than the full $30.

To resolve this situation what should Apple do? Try to be "fair" and completely eliminate IAP/IAS? If they made all apps "fully loaded" at purchase time, there wouldn't be any thoughts that Apple is only a "payment provider".

By charging a flat 30% commission on everything it removes the distinction of free + IAP/IAS when maybe the app should have just been sold as a full copy rather than a lite/demo version that's unlocked in the first place.

GregAndonian
Jun 9, 2011, 07:45 PM
I wish Apple would reverse course on Blu-ray... :(

theBB
Jun 9, 2011, 07:53 PM
But you're assuming such tracking data is allowed by Apple to occur. Or that Apple shares that data, right? Which I don't believe they do. I don't think anyone here has a publishing contract with Apple and could verify either way. It's conjecture.
Apple may not share my data about where I live or which other apps I purchased, but it optimizes ad revenue based on that data and the publisher gets most of that revenue. I did not make any conjecture about what Apple shares.

theBB
Jun 9, 2011, 08:01 PM
An electronic version of the same pub - which HAS to be more than just a pdf - costs a lot more to produce and offers more than a static page, no? So why devalue it?
No, it does not have to be more than just text and pictures. They can offer a bit more interactive content if they wish, but right now there is hardly more than slideshows. They sometimes make maps, where you click on some spots to get more information about that location. I doubt this costs so much to prepare, especially considering the lack of printing and distribution costs. Besides, these kinds of interactive content depends a lot on screen size, so what looks good and user friendly in 10'' screen may be too small on 7'' or 3''. Text just reflows automatically, so iPhone, iPad or Galaxy Tab users can get to the same quality content.

samcraig
Jun 9, 2011, 08:43 PM
No, it does not have to be more than just text and pictures. They can offer a bit more interactive content if they wish, but right now there is hardly more than slideshows. They sometimes make maps, where you click on some spots to get more information about that location. I doubt this costs so much to prepare, especially considering the lack of printing and distribution costs. Besides, these kinds of interactive content depends a lot on screen size, so what looks good and user friendly in 10'' screen may be too small on 7'' or 3''. Text just reflows automatically, so iPhone, iPad or Galaxy Tab users can get to the same quality content.

Have you read reviews on this board, in the WSJ and other news sites? No - you're right - the publication doesn't HAVE to be interactive. But those publications that have just gone e-pub and not offered too much in the way of innovation have bombed

314631
Jun 9, 2011, 10:32 PM
I was a staunch defender of Apple's original revised terms for in-app subscriptions. Now they have reversed their decision, I am convinced they have made the right decision for shareholders and valued ecosystem partners. I am happy with the news.

AdrianWerner
Jun 10, 2011, 12:48 AM
Sorry... wrong. They are WAY more than payment processing. iTunes and the new Newstand is a channel. It's easy access to millions of potential customers and that is worth the 30%.

No, it's not worth it. Especially for digital retailers. COmpanies like Netflix or Amazon make less than 30% out of each purchase. So you're bassicaly saying it that just giving access to customers is worth more than everything those companies are doing? And that they should sell for loss just because of how great of a platform Apple has created? Suuure..:rolleyes:

Of course, this won't be a problem now that there's no rule to have the lowest price avaible on iOS. THis way even with in-app purchases those content providers can just rise the price up for iOS version enough to make a profit.

Popeye206
Jun 10, 2011, 03:48 AM
No, it's not worth it. Especially for digital retailers. COmpanies like Netflix or Amazon make less than 30% out of each purchase. So you're bassicaly saying it that just giving access to customers is worth more than everything those companies are doing? And that they should sell for loss just because of how great of a platform Apple has created? Suuure..:rolleyes:

Of course, this won't be a problem now that there's no rule to have the lowest price avaible on iOS. THis way even with in-app purchases those content providers can just rise the price up for iOS version enough to make a profit.

Why do people think magazines make money off of subscriptions? Printed magazines don't make much if anything on subscriptions and they make their money on advertising.

Jcoz
Jun 10, 2011, 07:51 AM
No, it's not worth it. Especially for digital retailers. COmpanies like Netflix or Amazon make less than 30% out of each purchase. So you're bassicaly saying it that just giving access to customers is worth more than everything those companies are doing? And that they should sell for loss just because of how great of a platform Apple has created? Suuure..:rolleyes:

Of course, this won't be a problem now that there's no rule to have the lowest price avaible on iOS. THis way even with in-app purchases those content providers can just rise the price up for iOS version enough to make a profit.

Amazon makes less than 30% on non-physical items? Historically? Try again.

samcraig
Jun 10, 2011, 07:54 AM
Why do people think magazines make money off of subscriptions? Printed magazines don't make much if anything on subscriptions and they make their money on advertising.

Magazine's ad rates are based on readership. So yes - the money comes from ad revenue - and that is why magazine (to a point) are willing to keep prices low to get an audience. It's a little chicken/egg

So the # of people a magazine has subscribing can illustrate are being exposed to their publication is relevant to the income generated by those ads.

Fukui
Jun 10, 2011, 08:23 AM
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)

Common sense has prevailed.

It does happen from time to time.

I have a feeling steve jobs does this kind of thing just to see how far people will submit to being pushed in a certain direction….

KnightWRX
Jun 10, 2011, 08:25 AM
BTW, for anyone still arguing IAP/IAS is more than just a payment processor. From the Documentation :

http://developer.apple.com/library/ios/#documentation/NetworkingInternet/Conceptual/StoreKitGuide/Introduction/Introduction.html#//apple_ref/doc/uid/TP40008267

Important: In App Purchase only collects payment.

You can try to see more value than there is, it remains that 30% is simply for processing payments. That's all the framework does. Anything else you can come up with is unrelated to IAP's 30%.

NightFox
Jun 10, 2011, 09:06 AM
BTW, for anyone still arguing IAP/IAS is more than just a payment processor. From the Documentation :

http://developer.apple.com/library/ios/#documentation/NetworkingInternet/Conceptual/StoreKitGuide/Introduction/Introduction.html#//apple_ref/doc/uid/TP40008267



You can try to see more value than there is, it remains that 30% is simply for processing payments. That's all the framework does. Anything else you can come up with is unrelated to IAP's 30%.

Thank you!

AdrianWerner
Jun 10, 2011, 10:04 AM
Amazon makes less than 30% on non-physical items? Historically? Try again.

Actually thanks to the agency model Apple pushed through they do get 30% flat cut out of book's price. COnsider the costs of transfer and infrastructure and yes, they make less than 30%. So try again.

AdrianWerner
Jun 10, 2011, 10:05 AM
Why do people think magazines make money off of subscriptions? Printed magazines don't make much if anything on subscriptions and they make their money on advertising.
And where did I mention magazines at all? :confused:

Also..yes..magazines make their money mostly on advertising. Unfortunately thanks to Apple's policies magazines' ability to make money this way has been severely crippled.

pkling
Jun 10, 2011, 01:58 PM
I got a question. So I have an idea for an application that would present the user of iphone/ipad the option to purchase highly personalized products. These products would need to be delivered via UPS or USPS. There is no way I can charge additional 30% and my margin will be tiny maybe 10%. So the question I have is do you think the iOS is a viable platform for my application?

charlituna
Jun 11, 2011, 08:40 AM
Why do people think magazines make money off of subscriptions? Printed magazines don't make much if anything on subscriptions and they make their money on advertising.

exactly. And they make more money off ads when they can give demo info about the folks seeing the ads.

THAT is the real beef with the whole In App rules. not the money. The money is just ego. It's the lack of info about the customers that is really pushing folks like Financial Times to leave the store.

charlituna
Jun 11, 2011, 08:43 AM
No, it's not worth it. Especially for digital retailers. COmpanies like Netflix or Amazon make less than 30% out of each purchase.

Really. Very interesting. Some hard core numbers from the source would help to drive this home. Particularly when you consider that on the internet anyone can say anything. Numbers from an impartial source to back up what you are saying always help to shut up those that would say that you are making things up to make your point.


I got a question. So I have an idea for an application that would present the user of iphone/ipad the option to purchase highly personalized products. These products would need to be delivered via UPS or USPS. There is no way I can charge additional 30% and my margin will be tiny maybe 10%. So the question I have is do you think the iOS is a viable platform for my application?

The real question is whether you think that you can generate enough sales to make the time and the developer sign up fees worth it. Particularly with a mere 10% margin.

My guess is no. That is if you can even get the app approved. Apple can be a bit not keen on apps that are just to sell things to folks when those things don't have an added benefit to the devices (like an ebook, movie, music track). You could invest in the $99 and the time to make the app and be rejected.

weaponofgod
Jun 11, 2011, 11:11 AM
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

Agreed! It's seems like slot of people here are siding with the providers. Even thou the providers are the ones who are trying to get around paying. I think Apple, should tell providers that they can either pay 30% for in apps purchases or a one time fee for the life
of the app, if they choose to bill outside the app!

KnightWRX
Jun 11, 2011, 11:13 AM
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

Agreed! It's seems like slot of people here are siding with the providers. Even thou the providers are the ones who are trying to get around paying. I think Apple, should tell providers that they can either pay 30% for in apps purchases or a one time fee for the life
of the app, if they choose to bill outside the app!

They already do pay a one time fee for the life of the app. Actually, it's a yearly fee.

No one is trying to receive services for free.

caspersoong
Jun 11, 2011, 07:25 PM
I wonder if Apple earns anything at all if they do that.

yoyolen
Jun 14, 2011, 02:02 PM
How does the loosening in 11.14 square with the restrictions below in 11.1 and 11.2?


11.1
Apps that unlock or enable additional features or functionality with mechanisms other than the App Store will be rejected

11.2
Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected