Hey... think about... the new Apple HQ Mother Ship looks like a big Walled Garden!
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Apple Reverses Course On In-App Subscriptions
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Hey... think about... the new Apple HQ Mother Ship looks like a big Walled Garden!
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?
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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.
charlituna said:
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.
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.
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.
Certainly there is value to Apple in having a vast ecosystem of apps.
$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".
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.
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.
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.
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.
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 $60 every year to scan my 10-15 checks? No, but that is how they make money off the checking accounts that seem free at first.
I like that Walmart analogy. You can go in and get free use of the parking lot outside, lighting and A/C inside and browse through the merchandise for free. Then, when you buy something, Walmart charges you for all that and its profit. You cannot tell Walmart that its cut should only cover the cashier's salary, as everything else that came before it was included in the low entry price.
What low priced service ? I don't see a low-priced service. If Apple doesn't charge the proper price for the completely un-related Free App business, that's not related at all to IAP/IAS. IAP/IAS apps don't have to be free at all. Look at games like Infinity Blade that is usually 5.99$ (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.
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.
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.
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.
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.
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.
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.
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)
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.
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....
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....
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.
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.
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.
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
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.