Apple Debuts App Store Subscriptions

[cmaier]

Actually Netflix and Kindle were doing just fine before they came out with iOS apps. As was Sirius, Skype, and many other providers with subscription-based services that can be accessed on multiple platforms.

iOS is not the main focus of many of these services, being able to use them on your phone/tablet is just icing on the cake. All Apple is doing is hurting customers.

Actually, Sirius was not (and isn't - as is evidenced by their stock) doing fine. No one actually knows how Kindle is really doing because Amazon doesn't break down sales. But you can bet that iOS readers are a major portion of its ebook customer base. Netflix, too, got a big boost from iOS streaming.

The fact that these things CAN be accessed on multiple platforms doesn't mean people ARE doing so.

 

[marksman]

Everyone keeps throwing "marketing" around. Apple doesn't launch a marketing campaign for something you drop in the App store. It markets itself as a company.

Being accessible in a store that is easily used by millions of people for one click buying is significant and beneficial marketing.

 

[manu chao]

The only people who lose are middlemen..

And you do really think the middlemen will not try to push some of that loss onto both actual content producers and consumers?

 

[LagunaSol]

Appearing and for distributing the Netflix apps are one thing. Taking a slice of the subscription is another.

Do you know that Netflix didn't have to write a check to Microsoft and Sony to be allowed on their locked consoles? After all, Netflix competes with MS and Sony video rental services.

Amazon puts the DRM on, they handle the logistics , etc. Apple isn't doing jack but adding a second middleman to the equation in the case of the kindle app. The content isn't coming from Apple servers. It is still Amazons DRM and logistics chain. 30% for processing a credit card? BS, utter BS.

So I spend 3 years of my life writing a book, Amazon slaps some DRM on my 250kb text file and processes the payment and they want 30%? For a DRM tag, a pitifully-small download and a credit card processing fee? BS, utter BS.

You seem to have the problem with what retail stores do. They add some value. They do the logistics, hold inventory, provide the storefront. The "storefront" for an in-app purchase is the app . Apple didn't do the app.

Apple built the platform that makes the potentially-lucrative new sales model possible. It's their right to ask for a cut. The free enterprise system will determine whether or not this cut is fair and reasonable.

They could, of course, build their own platforms if they'd like. Or they can go to a model (Android) where users are historically resistant to paid content.

The choice is theirs.

 

[marksman]

I guess to me Marketing means getting people inside the App store. Once I get there I can just hit search and get whatever I want. Marketing to me is seeing commercials, ads in magazines, things that bring clients to the App Store. To be honest most of the featured and top stuff, I ignore because I don't want Fart Apps or Angry Birds.

Marketing is anything that helps you sell products.

Anything.

 

[cmaier]

And you do really think the middlemen will not try to push some of that loss onto both actual content producers and consumers?

The middleman will go out of business (see my previous post about apple's real intentions here).

 

[manu chao]

Actually, Sirius was not (and isn't - as is evidenced by their stock) doing fine. No one actually knows how Kindle is really doing because Amazon doesn't break down sales. But you can bet that iOS readers are a major portion of its ebook customer base. Netflix, too, got a big boost from iOS streaming.

The fact that these things CAN be accessed on multiple platforms doesn't mean people ARE doing so.

And what about Skype? Do you really think that anybody wanting to use Skype would be deterred by the less orderly Android Marketplace?
I really do not think that Skype usage is any higher on iOS then on Android (apart from those situations where the carriers block Skype).
Yes, Skype profits from the sales of smartphones but so it did from the spread of high-speed internet access. Do you really think the cable companies should levy a 30% cut on all digital commerce done over their internet connections? Why shouldn't Netflix pay 30% to your cable company? Without the fast internet connection that your cable company provides Netflix could not exist.
The whole debate about net neutrality is exactly about fighting this, network providers getting a cut from business made over their networks. Now, Apple wants to get a larger cut from business made with their devices.

 

[deconstruct60]

Then you're out of business on iOS. And iOS is the only platform where people pay for content, which means you're out of business.

Two fallacies.

In first case one option is to move to iOS exclusively. If what is the primary source of low margins is the overhead that Apple will assume for their 30% of the action then margins might get better. (e.g., distribution and account management was 33% then this is better). Of course have to assume that *all* of your customers want to go into Apple's walled garden. If not then yeah, dumping iOS is the high on the list.

Lots of folks pay for content. *cough* Westlaw. There are hundreds of other examples many of which are multi-platform solutions (of which Apple's solution is not. )

 

[LagunaSol]

Most people up in arms about this don't understand how the retail business works for anything.

Imagine if they knew the markup on those Nike sneakers they're wearing. Torches and pitchforks for all!

The bottom line is business will decide what is good for business. That's the beauty of free enterprise. It's self-balancing. If business finds 30% to Apple oppressive, they will go elsewhere. If they go elsewhere, Apple will change the model to bring them back.

My guess is they won't go elsewhere because, as you stated, the 30% cut to Apple is worth it. Despite what all the non-business people here seem to believe.

Only time will tell. But the ranting and raving from the peanut gallery is certainly entertaining.

Some people would just rather everything in the world be free, with a targeted ad attached to it to pay the bills (Google's model). That's not my personal preference.

 

[manu chao]

The middleman will go out of business (see my previous post about apple's real intentions here).

Really, so you will give CC info to the actual publishers and each publisher will create its own app? Both the iBookstore and the Kindle Bookstore will get out of business?
Isn't this rather that all middlemen other than Apple will go out of business? What prevents Apple from undercutting the Kindle bookstore (assuming it pays the same to publishers as Amazon). Amazon has to add at least 43% to the prices its pays to publishers, Apple can add as little as 5% (to cover CC fees).

 

[cmaier]

And what about Skype? Do you really think that anybody wanting to use Skype would be deterred by the less orderly Android Marketplace?
I really do not think that Skype usage is any higher on iOS then on Android (apart from those situations where the carriers block Skype).

Great. So you found an exception. So what?

Two fallacies.

Lots of folks pay for content. *cough* Westlaw. There are hundreds of other examples many of which are multi-platform solutions (of which Apple's solution is not. )

Of course there are exceptions. PS3 owners play PS3 games. Lawyers access westlaw (though most don't "subscribe" - it's pay per use or pay per minute). Developers subscribe to development platforms, etc.

But of the consumer content platforms, by far Apple has had the most success allowing its developers and content producers to monetize their content by extracting money from customers. On Android, what success there has been has generally come from ad sales. On WM7, there is no success. Ditto on blackberry and WebOS.

Other than specialized content producers with captive audiences, the average content producer, knowing that between iPad, iPhone, and iPod Touch Apple has gargantuan market penetration and a huge customer base that has actually already demonstrated its willingness to PAY for content, has no choice but to develop a business model that lets it make money while playing by Apple's rules. You aren't going to see a lot of publishers getting rich while sticking only to Android, WebOS and WM7, I guarantee you that.

 

[cmaier]

Really, so you will give CC info to the actual publishers and each publisher will create its own app? Both the iBookstore and the Kindle Bookstore will get out of business?

Of course not. Apple doesn't want to put ITSELF out of business. It wants to be the ONLY middleman. It wants all the content in iTunes and in the iBookStore.

 

[quetzalcoatl]

The Kindle app won't disappear. Can't they just remove the buying books from within the app/link to safari feature? I'm sure most people wouldn't mind simply going to amazon.com themselves in safari.

No because they must offer in app purchace is they offer it elsewhere.

I think we may be lumping in services like Netflix and Amazon in without reason. It may apply to them, but they're services aren't "subscriptions" in a way that magazines are. Mag subs give you a brand new single product on a regular/recurring basis. Amazon lets you buy a singly product once, then another single product, then another single product once. Netflix charges you a recurring amount for access to several products.
The guidelines set-out inthe release may apply differently to those types of stores... or course they may not, but like everyone else, I'm just guessing.

I hope you are right in ths one in that it only applies to subscriptions but nexflix is a monthly sub.

Please correct me if I am mistaken, but after reading the press release, I do not see how the new subscription policy poses a problem to apps like Kindle or Netflix -- Apple's press release specifically references "publishers" of content. The last time I checked Amazon and Netflix were not publishers of books and film, companies like Harper-Collins (for books) and Paramount Pictures or Disney (for film) are the publishers with Amazon & Netflix as different distribution channels. I think these apps will be fine.

And we can hope this is true and they are not talking about the publishers of the app.


Here is the problem I have and that is who is to say who is bringing whom to whom. According to apple anything that is bought in app they brought them to them. Yet at the sametime they will not allow them to have a link inside the app to purchase from them. Apple is stacking the deck. Anything purchased inside the app they will get a cut but no link to go outside. And people are like water they will take the path of least resistance. I know in my case I bought the iPad because the reader apps were avail. So the apps brought me to apple. But by apples definition anything bought in the app they brought them to the seller. And most people will have no idea that this is happening, they don't come to sites like these. Hubris thy name is apple.

They should level the playing field and allow both in app purchases as well as links to the sites. This would be real choice. As it stands now I suspect most people that come from outside would end up purchasing within the app on renewal and then even thoght the person was brought to apple by the contect prvoder they will then take the cut just because people are lazy.

 

[manu chao]

Great. So you found an exception. So what?

As I added to my post, would it be fine with you if your cable company would get a 30% of you Netflix subscription? Without the fast internet connection, Netflix's business could not exist.

 

[cmaier]

As I added to my post, would it be fine with you if your cable company would get a 30% of you Netflix subscription? Without the fast internet connection, Netflix's business could not exist.

I don't see how my opinion is at all relevant. I've never stated how I feel about what Apple is trying to do, so comparing my opinion to a hypothetical situation serves no purpose.

To answer your question, I do not have a cable company.

 

[marksman]

The Kindle store is dealing directly with publishers. It's not forcing subscription agregators out of business, because it's not a subscription platform.



A few do. But that is correct - only in the exact opposite direction to your claim. Most content businesses run on nothing like as high as a 30% gross margin. Netflix and Hulu don't.



More sales when you are losing money on every sale means a bigger loss. That is not good news.



Unless you have to pay eight dollars in rights costs per transaction to third parties who you licence your content from. In which case it's a dollar out of your pocket.



I think as an iPhone owner, lots of businesses won't. I think we'll see a massive pull of high profile services that millions of people use. And I think that's very bad news for customers.

Phazer

You don't understand how some businesses work. Take NetFlix for example.. the 30% does not come out of their margin. A good chunk of it is costs they already would be paying in the form of billing. Plus do you know how much money Netflix spends to acquire a single new customer? It is a lot of money... Again that has nothhing to do with their margin.

You want to take the 30% out of their margin but almost none of it would come from there.. I suggest you educate yourself a bit more on how businesses work before you continue to post your erroneous ideas in this thread about how this would cause people like Netflix to lose money.

 

[manu chao]

Other than specialized content producers with captive audiences, the average content producer, knowing that between iPad, iPhone, and iPod Touch Apple has gargantuan market penetration and a huge customer base that has actually already demonstrated its willingness to PAY for content, has no choice but to develop a business model that lets it make money while playing by Apple's rules.

If this is true than Apple could essentially set whatever percentage it wants. Which is another term for monopoly pricing.

 

[risingtiger]

I am thinking what it means for memberships in general. I pay $45 per year for a membership to a local non profit organization. As part of this membership I receive bi-monthly newsletters that are snailmailed out to me. But I also receive discounts on events, access to online information and chances to meet others like me. The advantages are far more than just receiving a newsletter.

If the newsletter was brought to the iPad it would be totally illogical that Apple receives 30% on my $45 because I'm paying for far more than just the newsletter. But I could imagine that a $10 dollar in app subscription would be offered for just the digital copy of the bi-monthly publications. The app itself would be free and would offer various free content. For more, a user could pay the in-app $10. But, obviously, the organization would entice the user to pay the $45 for the full membership with all the advantages--at which point the user pays outside of the Apple eco-system.

I think a scenario like this is perfectly acceptable. Now, would Apple approve an app like this? We'll see...

 

[marksman]

Visa/Mastercard etc... don't rely only on service charges. They rely on deadbeats who accrue lots and lots of interest at 20+%


Apple's method of app store income is their only method of making money by charging 30% on paid purchases while taking a hit on free software.


Data centers aren't free, nor is the bandwidth. several million copies of the 40+MB "Daily" app sent to Americans isn't free for Apple.

Actually Visa/MC are just networks owned by the banks to handle credit card transactions. All their money comes from transaction fees, they don't get any money from interest rates. Those are all for the credit card banks.

 

[Vizin]

1. Businesses cost money to run one way or another. Cut costs where you can and spend where it makes sense.

2. Built in exposure to how many millions of users by just getting your app in market place??? Run whatever ad campaign you want, let me know WHEN you get to the same level of exposure and what it costs you. Not to mention the time, headaches, etc.

3. 30% is steep only if not kept relative.

4. Ease of sale facilitated by clicking one button on a device you have with you nearly 24/7 (People I know go to bed looking at their screens) as opposed to entering in CC info on a website. Some of you don't understand how big a deal just that is.

If I sold you some SUPER DUPER AMAZING SALES PACKAGE for $10,000 and it truly increased your sales by some comparable amount, it would be money well spent.

If you went to a free seminar at the local hilton and gained nothing. Tremendous loss in time, gas money, etc.

It's all relative.

1. It's not up to some companies like Kindle, who can't cut costs. They have agreements with the publishers to provide a certain percentage of the sale price. If they lose thirty percent, they end up with nothing for themselves. It's as simple as that.

2. Many services that will be affected by this are simply companion apps to existing services; like Netflix, Skype, Kindle, etc. They didn't need Apple's help for promotion because they were already well-known.

3. No. 30% for a billing service (and it is ONLY a billing service) is absolutely astronomical.

4. Sure, it's really nice. If the cut was a little more reasonable it would be well worth it for devs.

 

[manu chao]

I don't see how my opinion is at all relevant. I've never stated how I feel about what Apple is trying to do, so comparing my opinion to a hypothetical situation serves no purpose.

To answer your question, I do not have a cable company.

Well, then I'll just waste another post to rephrase that question using the term ISP to give you one reason less to answer my question.

 

[cmaier]

If this is true than Apple could essentially set whatever percentage it wants. Which is another term for monopoly pricing.

Quite possibly, other than the fact that the reason that Android owners don't pay for apps or content has nothing to do with Apple's shenanigans - it's due to Google's incompetence at policing its Market, its unwillingness to prevent fragmentation, its unwillingness to prevent competing marketplaces [hence confusing customers and rendering its store barren], its incompetence at preventing piracy, etc.

Same story with blackberry. They have tremendous marketshare, but were late with a viable app store, and have developer-unfriendly policies and procedures.

 

[cmaier]

Well, then I'll just waste another post to rephrase that question using the term ISP to give you one reason less to answer my question.

Again, how is my personal feeling about such a hypothetical relevant? I've meticulously avoided offering a normative opinion on Apple's behavior, why should I render an opinion about a hypothetical situation?

 

[manu chao]

Quite possibly, other than the fact that the reason that Android owners don't pay for apps or content has nothing to do with Apple's shenanigans - it's due to Google's incompetence at policing its Market, its unwillingness to prevent fragmentation, its unwillingness to prevent competing marketplaces [hence confusing customers and rendering its store barren], its incompetence at preventing piracy, etc.

Same story with blackberry. They have tremendous marketshare, but were late with a viable app store, and have developer-unfriendly policies and procedures.

You can end up in a monopoly position without a fault of your own. Once you are there, you are no longer free in your business decisions. Simple as that.

 

[lilo777]

So, I am a content provider and I have a choice to make

Option #1

I can go with iOS and pay 30% fee to Apple. At the same time I can still sell the same content elsewhere but at the price inflated by Apple fee.

Option #2

I can go with Internet, Android, PalmOS, RIM and WP7 platforms and pay no fee whatsoever.

Considering that the market share of iOS devices among all mobile devices is small and shrinking, the choice is quite obvious.

I am afraid that this new subscription is DOA. It will be only good for such content providers like "iOS Magazine".