Apple Rejects 'Readability' iOS App, 'Software as a Service' Offerings Jeopardized

[marksman]

problem is Amazon started a new market so it was gamble and when it dropped the price for what publishers more publishers jumped on board but prices did go up.

In this case Apple is basic jacks up the price by 30%-43% over night. That is not going to fly very well. Apple is shooting itself in the foot.

They didn't jack it up overnight. Developers have many months to adapt and adjust. On top of that most of the developers were purposefully going around Apple's payment system to get their services for free for years now. So there is no tear to be shed for them. They should feel appreciative that Apple is giving them so much time to adjust given how they have treated Apple up until now.

Well run businesses evaluate engagements based on the potential to grow revenues and generate profits. If they can do those things through the iOS store, they will participate. If they can't they won't. In some cases, there may be negotiations where Apple is willing to accept a smaller comission. If Netflix can make money in Apple's store, they won't leave just because they make a bit more on the Android store. They will partner with both. You seem to think that businesses pick sales and distribution channels the way you buy a microwave oven. They don't.

Very Well Said. I have some things I make 100% profit on. Others I make 10% profit on. I don't just sell the things I make 100% profit on. There are a lot more reasons as to why a company would want to be in a particular marketplace. It is a point I made when the Mac Store came out and people said big name publishers would never go there. One key reason why they would and will is because if they don't the leave a huge door open to competitors to gain signficiant market share that will impact them outside the IOS Ecossystem. So business decisions are not just made to the short term instant bottom line. There is a lot more that goes into running a successful long term business.

TOS does not apply to something that's not available in the app store.
The lower priced subscription content is not accessible from iOS, so Apple has no say in it.

Won't happen. The price of a digital subscription has to be comparable. That it is available for a different device does not change what the actual subscription provides, so it simply won't fly. I know you think this is what will happen but it will not. The guidelines as they are written now already cover it. Some may try it, but it won't hold up. Offer the lowest available price for a digital subscription or don't have your app in the store. In the case of Netflix the digital subscription is being able to watch your on-demand queue on your digital device. What platform it works on is irrelevant to Apple.

They will just start charging you $11/month for the privilege of watching Netflix on your ipad, whereas every other platform will pay $8. You won't be able to buy it from the netflix site for $8 and then use it on ios, it won't work, so Apple TOS won't be violated.

Again not going to happen. It already violates their TOS.

+1

the 'price cannot be lower outside of App store' term is the most blatant price fixing seen (EU side) for a long time. NO chance that can stay as a legal term this side of the pond.

I am not sure you know what price fixing is.

Please show me the rulings that have punished companies for demanding they have the lowest possible price to sell things to their customers.

I have never heard of a case of price fixing involving companies wanting to have the lowest price possible.

Price fixing relates to businesses conspiring to keep rates artificially high. Apple is doing the exact opposite, so please explain how it is related at all.

 

[lilo777]

I am not sure you know what price fixing is.

Please show me the rulings that have punished companies for demanding they have the lowest possible price to sell things to their customers.

I have never heard of a case of price fixing involving companies wanting to have the lowest price possible.

Price fixing relates to businesses conspiring to keep rates artificially high. Apple is doing the exact opposite, so please explain how it is related at all.

Obviously, as a true Apple fan you "hold this argument wrong". The fact that Apple demands that in-app subscriptions cost no more than the ones outside, combined with the mandatory and draconian 30% fee, guarantees that vendors can not sell the same subscriptions CHEAPER elsewhere. So, 30% fee guarantees high prices, and the rule disallowing vendors to sell cheaper elsewhere guarantees that he prices will be fixed at this high level.

Personally I do not think it's important though. This Apple strategy will obviously fail.

 

[TuffLuffJimmy]

Obviously, as a true Apple fan you "hold this argument wrong". The fact that Apple demands that in-app subscriptions cost no more than the ones outside, combined with the mandatory and draconian 30% fee, guarantees that vendors can not sell the same subscriptions CHEAPER elsewhere. So, 30% fee guarantees high prices, and the rule disallowing vendors to sell cheaper elsewhere guarantees that he prices will be fixed at this high level.

Personally I do not think it's important though. This Apple strategy will obviously fail.

Do you really think they would pay less than a 30% overhead elsewhere? No company makes 100% profit.

 

[fertilized-egg]

Obviously, as a true Apple fan you "hold this argument wrong".

The antenna gate is an excellent example of how Apple, as the foremost tech evil empire, gets the blame while others get no negative publicity.

Apple tells customers "avoid holding it in that way"

Response: "FAIL" "Great Answer, still people will be buying crApple as iSheeps" "Design fail" "Jobs is a d!*#" "They are blaming the consumers"

And people are still latching onto "holding it wrong" phrase to this day to deride Apple.

Now compare that to:

Samsung tells customers "hold your phones in the correct way and avoid making contacts in the antenna area"

Response: *crickets*

 

[QuarterSwede]

Please use

 

[fertilized-egg]

Please use .[/QUOTE]

Thanks. I just uploaded a smaller pic.

 

[marksman]

Yep, and if they leave, good luck getting those developers back once they inevitably relax the rules...

Yeah right. They won't come back because they hold a grudge. That is good business. The good news is they will not be wanted back because competitors will have stepped in to fill their void in the IOS marketplace, and likely also taken some of their market share outside of IOS as well, so they might be struggling just to survive.

This remains to be seen. Myself and others I know are afraid our favorite apps will disappear from iOS.

I can't think of a single app I would leave IOS for to be forced to use android. No way no how.

Leaving Apple's ecosystem? Not a good idea when you're interested in mindshare, money, and appealing to the most well-heeled segment of the market. No one wants to be left off the iPad.

Not being in the IOS space will cause some businesses to cease to exist because competitors while thrive or sprout up there, build significant market share, and then leverage that to challenge those businesses in other marketplaces as well.

They don't have consumers best interest at heart, but if you're the underdog, your'e willing to make concessions. The biggest thing though, Google nor Microsoft are content providers. I take that back Google is not a content provider.

Google is one of the biggest content providers in the world.

You need to stop viewing this as a revenue discussion vs. a profitability discussion. Let's use some concrete numbers instead of abstracts...

You own a company that acts as a distributor of content. Since the inception of your company you have held contracts with the content owners that allow your company to keep 30% of the sales price and the remaining 70% is provided to the content owners. Let's say that you are selling content item A for $100. For each sale of A you receive $30 of revenue and provide $70 of revenue to the content owner. Let's assume that you had to pay $10,000 (+$99 developer fee) to develop your iOS application. Hosting/bandwidth fees for that content item is $0.10 per download (assumes that you have many other content items to spread these fees across). Visa/MC/Paypal charge you 3% for payment processing. Finally let's assume you have 100 downloads of A per month.

Payment processing per download is $3 (3% of sales price). With a revenue stream of $26.90 per download, you would need to sell 376 downloads before you break even on your initial costs (just under 4 months). For simplicity, let's say that you are a one person company and only have to pay your salary. After the first 376 downloads, every other download nets you $26.90 which can be reinvested into new apps or paid out as a salary.

Let's add in the 30% IAP fee...

Apple charges you $30 per download. The content owners are owed $70 per download per contract. The payment processing fee goes away as Apple is handling that for you. Since your company is still hosting the content, you still need to pay the $0.10 per download.

Here you can see the problem. You have invested $10,099 in upfront costs for your app development. And you are hit with a recurring expense of $0.10. Increased sales will only hurt you more.

The only path for your company is to renegotiate your contracts with the content providers or leave the iOS store. Then the question becomes, why would the content providers renegotiate their contracts with you, when they can work directly with Apple and sell through iBooks etc and continue making the same revenue per download (70% of the sales price)?

The drawback to this relationship is that the content purchased through Apple can only be used on iOS devices. Your company can continue to work with the content owners on other platforms as the 10% fee paid to other marketplaces, while it reduces your profit per download, it still does not eradicate your profitability.

This is the type of issue that apps like the Kindle and Netflix could face. Is it dependent on how the terms are written in the contracts with the content owners. This example uses sales price. Other examples could be based on distributor revenue (as you hinted at) and others can be based on a flat fee.

All I know is that if your model was based on a percentage of sales price you got screwed as 30% is a pretty standard rate. If you have a flat fee contract type, you likely got screwed (but it depends on if the flat fee happens to be less than the 70% of what you can actually sell the content for). If you are a revenue type (the least likely as the content owners would have to accept that they are selling there content for variable rates), then you are not affected.

This is the dilemma.

GL

If you are not making money raise your prices. it is not Apple's fault that your business model is flawed. If you want to participate in the App Store there is a cost associated that, in exchange for some real value. Decide if it is worth it or not.

By the way most content rights deals do not determine what the resell price is, so they can set whatever price they want on it. What if the content provider decides when the current contract is up that they want twice as much for rights fees? Costs in businesses can change all the time. It is the way of the world. If the business wants to be in the Apple App Store, they have to pay the going rate like everyone else.

As for the content providers going directly to Apple that will happen in a lot of cases, because it means more money for them while potentially meaning lower prices for the consumer. That is a big win-win. Companies that fill the middleman role are always in a dangerous position and know what lead their ability to be in business could easily go away at any time. The reasons for these middlemen almost always rely on inefficiencies that can be exploited to take out money and be profitable. They are almost always tenuous though...

Personally, if middlemen companies go away, who cares. The content will still end up on the IOS devices, and potentially for a lower price. That is a real potential outcome in a lot of cases here.. and that is good for Apple, good for the content providers and good for the consumers.

Obviously, as a true Apple fan you "hold this argument wrong". The fact that Apple demands that in-app subscriptions cost no more than the ones outside, combined with the mandatory and draconian 30% fee, guarantees that vendors can not sell the same subscriptions CHEAPER elsewhere. So, 30% fee guarantees high prices, and the rule disallowing vendors to sell cheaper elsewhere guarantees that he prices will be fixed at this high level.

Personally I do not think it's important though. This Apple strategy will obviously fail.

Most of these businesses already have competitors, those that don't and raise their prices will soon find themselves with new competitors.

The 30% fee does not guarantee high prices. Apple is charging for their services.

Again you do not understand what price fixing is, and ultimately these is a good thing as it relates to app pricing for IOS customers.

Companies could raise their prices across the board, but that is certainly not Apple's fault. Apple is asking for compensation for providing a set of services. The companies are not forced to make that deal with Apple if they do not want to do so.

If they raise their prices across the board, it will allow better run businesses to come in and undercut them.

 

[zenio]

no worries, Apple always wins.

 

[Bubba Satori]

no worries, Apple always wins.

Pride goeth before a fall.
The bigger they are, the harder they fall.
Unbridled arrogance is a cancer none survive.
Magic.

 

[fanlynne]

I don't have Netflix, yet am considering getting the App on my iPad. Otherwise, I would not have Netflix. So should Apple get some of the profit? (ultimately it is the Studio who is trying to move movies - Netflix didn't create the content). It would seem, again, just an opinion here, that Apple is saying they are creating a customer for the content creator, so deserve a cut, like Netflix, for moving sales.

 

[Rodimus Prime]

I don't have Netflix, yet am considering getting the App on my iPad. Otherwise, I would not have Netflix. So should Apple get some of the profit? (ultimately it is the Studio who is trying to move movies - Netflix didn't create the content). It would seem, again, just an opinion here, that Apple is saying they are creating a customer for the content creator, so deserve a cut, like Netflix, for moving sales.

exept I think in the Netflix and Apple arrangment Apple is getting more sales because of Netflix that Apple is giving to Netflix.

Most people I know with it think streaming to other devices like the iPod and iPad is a nice bonus but if they could not do that iPad would go before Netflix.

Add in the fact Android is going to start getting Netflix, WebOS is going to get it, WP7 gets it. iOS would be the one locked out.

 

[k995]

We shall see what happens.
Market forces are brutal.

C.

Indeed wich why it is stupid of apple to give it a that hard shove in the early days of this developing market.

 

[k995]

I don't get the big deal. Apple has always took 30% of any money made by an app since the Appstore first came out. How is this any different?

The app is checked/hosted by apple itself, here we are talking about having to pay while apple does little to nothing.

Just because you ALSO decide to split up 30% more of your 70% to keep for yourself, what does that have to do with Apple? If you don't want to pay 30% to Apple for selling an app on the Appstore, don't use it.

That isnt the problem, people who dont want that apple gets 30% dont have apple app so they have no problem with these changed rules (just confirmed what they already thought)

You can sell your app somewhere else. Just because your app says "free" to download but costs money to unlock features, why do you think you can get away with it for free? Apple is just asking you to offer the feature inside the app.

Actually its more then that. Not only does it want more revenue from in app content, its also (mho) an atempt to get more publisher trough itunes and get less simple resellers. Apple wants that they are the middle man for everything.

The antenna gate is an excellent example of how Apple, as the foremost tech evil empire, gets the blame while others get no negative publicity.

Apple tells customers "avoid holding it in that way"



Response: "FAIL" "Great Answer, still people will be buying crApple as iSheeps" "Design fail" "Jobs is a d!*#" "They are blaming the consumers"

And people are still latching onto "holding it wrong" phrase to this day to deride Apple.

Now compare that to:

Samsung tells customers "hold your phones in the correct way and avoid making contacts in the antenna area"



Response: *crickets*

The main problem I had with apple and antennagate that up until this moment they still dont want to admit it.

Antennagate wasnt about what apple tried with fud to make it in, wrapping your hand in quit unlogique ways around your phone and block signal by the mass and conductivity of your hand. Antennagate was with the "new and revolutionary" way apple put the antenna's on the outside (to help with the not so great reception iphones always had) . It helped to solve the problems old iphones had but introduced a new quit serious design flaw: connecting the antenna's "shortcircuited" them and created a quit big loss in reception.

That problem was and still is unique, I dont know 1 other phone where you put the tip of your finger on 1 place (and a not so hard to do spot btw) and loose quit a bit of reception.

The iphone 4 remains a great phone but some people have noticed this in real life and have had problems with it. No need to be bitter and pretend this never happened.

Yeah right. They won't come back because they hold a grudge. That is good business. The good news is they will not be wanted back because competitors will have stepped in to fill their void in the IOS marketplace, and likely also taken some of their market share outside of IOS as well, so they might be struggling just to survive.

Its not that simple. We arent talking about making another fart app, we are talking about content providers.

Not being in the IOS space will cause some businesses to cease to exist because competitors while thrive or sprout up there, build significant market share, and then leverage that to challenge those businesses in other marketplaces as well.

And spending too much in the IOS space will cause some businesses to cease to exist .... lets not pretend all apps always make profit.

Google is one of the biggest content providers in the world.

More like reseller. Google creates little content of its own.

If you are not making money raise your prices. it is not Apple's fault that your business model is flawed. If you want to participate in the App Store there is a cost associated that, in exchange for some real value. Decide if it is worth it or not.

And that cost suddenly is changing, in fact the whole way is changing with these new rules and who knows what apple is going to demand after these changes.

Raising the prices isnt always easy or possible.

By the way most content rights deals do not determine what the resell price is, so they can set whatever price they want on it. What if the content provider decides when the current contract is up that they want twice as much for rights fees? Costs in businesses can change all the time. It is the way of the world. If the business wants to be in the Apple App Store, they have to pay the going rate like everyone else.

Or just plainly leave it as it get too risky . Wich is what I am afraid is going to happen.

As for the content providers going directly to Apple that will happen in a lot of cases, because it means more money for them while potentially meaning lower prices for the consumer. That is a big win-win.

Depends of course, for some perhaps other not really.

Companies that fill the middleman role are always in a dangerous position and know what lead their ability to be in business could easily go away at any time. The reasons for these middlemen almost always rely on inefficiencies that can be exploited to take out money and be profitable. They are almost always tenuous though...

Apple wants to be the middle man , I do hope you realise this?

Personally, if middlemen companies go away, who cares. The content will still end up on the IOS devices, and potentially for a lower price. That is a real potential outcome in a lot of cases here.. and that is good for Apple, good for the content providers and good for the consumers.

Without middle men you wouldnt need itunes and the system would be quit open , so yes that would be a good way around. Just not what apple wants.

The 30% fee does not guarantee high prices. Apple is charging for their services.

And what services would that be? Lets not forget device and app are already paid for.

 

[MrNomNoms]

I don't understand what the whining is about; Evernote for example offers paid service that doesn't got through the Apple system. Sure, you have to log onto their website and then manually pay for the service then it is applied to your account but none the less it is possible to do it.

As for Apple 'gouging' - please, if Apple wanted to be complete pricks about it they would charge people producing free applications as well, or some sort of 'download fee' given that they're using up far more bandwidth and resources per year than what the $99 developer sub would ever pay for.

I think it is a pretty good deal - make free applications and all you pay is $99 per year to get access to sell in their shop, want to make money off it then it'll cost you 30%. Once you take into account the datacentre, bandwidth, support etc. the amount Apple makes off each purchase would be below what the average retailer would bring in. There is a reason why companies offer 'interest free deals' - its because the margins on what they sell are so high they can off set the cost of the loan with a slightly lower margin (which also explains why some retailers where I live don't offer interest free deals on Apple computers given their margins are lower than other hardware they sell).