Apple's App Store Subscription Policies Raise Antitrust Issues as Content Providers F

[coleridge78]

Give us an analogy than oh savior and protector of content creators!

I'm not terribly interested in analogies when we can plainly see (at least, those who really want to, can) the facts at hand, and the alternatives. The alternatives are paying some other gatekeeper instead of Apple, any of whom--this isn't supposition, remember, it's the current state of, you know, facts:

1. Will charge a higher "commission";
2. Will be more lax with your personal data;
3. Will demand more onerous concession of licensing rights from the content owner.

There's a reason that as soon as iBooks came around, Amazon panicked and most publishers came aboard as quickly as they could. There's a reason that as soon as the iTMS came around, Rhapsody lost any of the momentum it had gained (granted this one was also strongly affected by the symbiosis of the iPod ecosystem). Etc., etc.

You still haven't denied any of this. You've just ignored it. So, what exactly is your agenda?

 

[coleridge78]

It sounds like it is choice superficially, but when you look closely at it, it's not. In-app purchase will always be more convenient than going outside the app, so this requirement will be unsustainable for music services and literary publishers. Book and magazine publishers, for example, don't have the kind of margins to fork over 30% to Apple. They will have to raise their prices by around 42% or leave the platform altogether.

No, they'll have to use Apple as a middleman instead of Amazon, and they'll be happy to because Apple has never tried to make them give up 70% of their gross sales, or sign over essentially all rights to their content.

Seriously. Go read about it before you talk.

 

[mdelvecchio]

Give Android Marketplace time. Its taking shape nicely.

not really...which is why there is still no "paid" Angry Birds on it. google is an advertising company, they dont make it easy to sell non-advertising-model apps.

 

[Mattie Num Nums]

I'm not terribly interested in analogies when we can plainly see (at least, those who really want to, can) the facts at hand, and the alternatives. The alternatives are paying some other gatekeeper instead of Apple, any of whom--this isn't supposition, remember, it's the current state of, you know, facts:

1. Will charge a higher "commission";
2. Will be more lax with your personal data;
3. Will demand more onerous concession of licensing rights from the content owner.

There's a reason that as soon as iBooks came around, Amazon panicked and most publishers came aboard as quickly as they good. There's a reason that as soon as the iTMS came around, Rhapsody lost any of the momentum it had gained (granted this one was also strongly affected by the symbiosis of the iPod ecosystem). Etc., etc.

You still haven't denied any of this. You've just ignored it. So, what exactly is your agenda?

I have no agenda. I have 190 shares of Apple stock that I earned as an employee over 4 years. My agenda is making sure consumers don't get screwed. Afterall, I am a consumer.

 

[Daveoc64]

There's a reason that as soon as iBooks came around, Amazon panicked and most publishers came aboard as quickly as they good.

This shows that you have absolutely no idea what you're talking about.

iBooks has been a complete failure.

The sales rates are abysmal, it has less content than other stores and the pricing is poor.

Amazon is reported to have a share of eBook sales as high as 90%. They have absolutely no need to panic.

 

[coleridge78]

This shows that you have absolutely no idea what you're talking about.

iBooks has been a complete failure.

The sales rates are abysmal, it has less content than other stores and the pricing is poor.

Amazon is reported to have a share of eBook sales as high as 90%. They have absolutely no need to panic.

Explain why you think that their current market shares are relevant?

I call it "panic" when a company moves away from abusing their monopoly position and cuts the amount they're skimming off the top by 57%. Once they brought themselves closer to being in-line with Apple's offer, inertia kept them in the lead. Amazon's shift is what is relevant, not the market shares. It demonstrates the point:

Apple's 30% cut is generous by industry standards, and their terms for both creators and consumers are less onerous than the demonstrated, existing alternatives.

Can you contradict that, or not?

 

[Joker Eh]

It sounds like it is choice superficially, but when you look closely at it, it's not. In-app purchase will always be more convenient than going outside the app, so this requirement will be unsustainable for music services and literary publishers. Book and magazine publishers, for example, don't have the kind of margins to fork over 30% to Apple. They will have to raise their prices by around 42% or leave the platform altogether.

Please, they save huge money from the printing and wasting of paper. Call it a Go Green app or what ever.

Who built the App Store? Who thought of it? Now music services and literary publishers want to piggy back on that for free? Please. You know what I call it fair, if I think of something and I create it, its money you want to use it, it is going to cost you, plain and simple. Where does Apple make a profit? The original app is free, so where is the money coming from?

Angry Birds seem to do alright with a $0.99 app store purchase!! I can list many apps and services that have made huge amounts of money from this 30-70 split and using the app store.

They don't like it go to an Andriod device. Simple they have choice.

 

[Deliverator007]

Short-sighted. There is always a struggle between creators, publishers, and distributors. The closer you are to the beginning of that list, the more coincidence there is between what is good for you and what is good for the consumer. If Amazon is not taking an extra "cartel cut", that means some combination of:

1. More money for the creator.
2. More money for the publisher.
3. More money for Apple.

Any and all of which correlate, more or less directly, to better things for me--the consumer. The idea that having extra middlemen, who have demonstrated themselves to be bad actors when it comes to anything other than following the short-term Walmart model, is a consumer win is so bats that there isn't even a word for it.

But in this case, Amazon is the one that is closer to the beginning of the list. Apple is the one taking the extra cartel cut. Apple is inserting itself as the second middle man, and adding their cost requirement on top of everybody else's costs. If they limited this simply to an increase in the price of in-app purchase, I might be ok with it. But they are also imposing a coercive price floor on outside of app purchases. I the consumer am paying more for a Kindle book no matter where I purchase it, even if I only read it on my Kindle.

That is categorically bad for me as a consumer because my Kindle book prices increased, neutral for the publisher and the creator, who will receive the same amount if the increase is solely contained in a price increase (or possibly receive less if they agree to eat a portion of Apple's cut), bad for Amazon, who will probably lose sales if they have to increase prices and/or eat a portion of Apple's cut (despite the fact that they invested the time and money to build the largest e-book catalog and the broadest e-book platform in the industry), and good only for Apple, who will receive 30% of in-app sales, plus experience an increase in iBook sales due to the increase in Kindle book prices (with respect to the smaller number of books in the iBooks catalog) or due to being able to both increase prices and still undercut their competitors.

So, to run down your list, the real results are:

1. Same or less money for the creator.
2. Same or less money for the publisher.
3. More money for Apple.
4. Less money for consumers (since we now have to spend more).

 

[JRoDDz]

Umm tell you the truth even in retail 30% is a huge chunk. Most of the time retail has maybe a 10% market up over cost on most items. Often times less. That 10% has to cover all their over head.

I know in construction contracts 10% P&O (Profit and over head) is the standard amount. That means 10% of the cost plus overhead. That is really not much.

30% cut for apple is HUGE. Apple AT MOST should get a 5% cut.

Agreed. 30% for providing billing services? I think this is a bit much since that's all Apple is basically doing.

 

[mdelvecchio]

You do realize Apple mines your info to right?

apple does not sell your customer data.

 

[monoskier]

doesn't mention how easy finding the in-App link has to be

I haven't read through all the replies yet, so if this has been mentioned already, my bad.
As far as I can tell, Apple is only saying that if an App offers a link to purchase any additional content, then the App must also offer an in-App purchase through the App Store. Apple isn't saying that Apps must only use the App store for subscriptions/additional content.
Apple hasn't said anything about making in-App purchases as easy to find as external links. Why not just bury the in-App subscription link somewhere deep enough that the user has seen the developers preferred purchase method multiple times. Something like a screen for additional content that has the external link on that screen, plus a link to another screen (and maybe do this multiple times) that has the in-App purchase button.
That's what I'd try to do at least

 

[MacAddict1978]

No netflix on Android yet...maybe later this year...There are too many IOS users to ignore.....they will not pull out. The App Store makes too much money.

Netflix isn't making money from the App store. The app is a convenience to it's subscribers. They could pull out with no qualms. Such content providers like Netflix pulling out would also put pressure on Apple to do something with mobile Safari. Like make it so that you don't need an app to view web content.

 

[NebulaClash]

Amazing to see the response to the free market in action. Apple creates a new marketplace, sets its own rules as is its right, and suddenly the MacRumors board is flooded with talk about using the courts to stop Apple.

Folks, that's how free enterprise works. Either Apple has figured out this is the cut they need and that will work in the market, or Apple has made a mistake. If it's a mistake and they find publishers pulling out, Apple will change. Simple as that. That's how the free market works when you are setting prices. You either get it right or you adjust.

Funny how people love the free market until they see it in action.

 

[apolloa]

nope, you still fail -- just because the infrastructure was in place doesnt mean you get to use it for free! imagine if i tried moving into my retail business into the local Walmart and said i wont pay rent because, "You already have this big store built! What's the big deal!?"

while it's true the hard drive volume for non-hosted content will be less, the mere fact that the apps/content use said infrastructure for the rest is still a tangible cost. again: nothing is running on unicorn farts.

so is 30% for content as fair as 30% for hosting? perhaps not. but its not my -- or your -- business to decide that. thats apple's business, quite literally... they will adjust w/ the market.

I kinda know how the distribution would work with all these tiny little costs along the way from different companies that build up to get a book from Amazon's servers onto your iToy, but I was referring to the storage on Apples data centres hard drives.

Anyway I want to know whats up with your interest in Unicorn Farts?

 

[Michael CM1]

This is absurd. It makes sense for Apple to take 30% of the one-time sale of an app, since they provide hosting and bandwidth for the application binary. But to take 30% of in-app purchases, which are entirely hosted and served by the developer, not Apple, is ridiculous. This will squeeze Amazon Kindle off the iOS platform. 30% is all Amazon gets after the publishers take their 70% cut. If Apple takes that 30% instead, Amazon gets nothing, and has no reason to stay on iOS. Services like Netflix, Rhapsody, and Pandora will likely have to raise prices across the board (even for non-iOS customers) in order to offset the burden of this 30% tax. This is not good for consumers at all.

Bingo. Take the Kindle app. Apple hosts the app's software, so even if Apple required it to cost at least 99 cents, I would understand that. But once you start buying books from Amazon, how in the hell does that affect Apple? That's using Amazon servers. I could see Apple requiring in-app purchases for like a 3 percent cut like credit card processors do, but 30 percent is ridiculous.

If Apple sticks with this model, you're going to see big-name developers bail and you will see customers bail. Then Apple will have an "ah-ha!" moment and do something most of us think is fair. Yeah, yeah, it's Apple's platform. Cry me a river. I'm an Apple customer, and it's ridiculous to mess up the content to this extent because you apparently can only use one fraction in your operating system.

 

[Daveoc64]

Once they brought themselves closer to being in-line with Apple's offer, inertia kept them in the lead.

Amazon made the move BEFORE iBooks was announced. I don't see how it can be reactionary.

Apple's 30% cut is generous by industry standards, and their terms for both creators and consumers are less onerous than the demonstrated, existing alternatives.

Can you contradict that, or not?

Yes. Amazon's 30% (for books) cut gets Publishers A LOT of a value. That 30% covers all of the costs of storing, distributing and selling their books.

With Apple's IAP model, it doesn't get them anything. Apple is taking 30% to do virtually nothing. Amazon is taking 30% to cover tangible costs and make a small profit.

I would have no problem with Apple taking 30% if they were actually hosting the content or doing something tangible for that 30% - but they aren't.

 

[Deliverator007]

Amazing to see the response to the free market in action. Apple creates a new marketplace, sets its own rules as is its right, and suddenly the MacRumors board is flooded with talk about using the courts to stop Apple.

Folks, that's how free enterprise works. Either Apple has figured out this is the cut they need and that will work in the market, or Apple has made a mistake. If it's a mistake and they find publishers pulling out, Apple will change. Simple as that. That's how the free market works when you are setting prices. You either get it right or you adjust.

Funny how people love the free market until they see it in action.

Actually, many more posters have mentioned switching to Android than have mentioned using the courts. It will be interesting to see if that in fact happens, because you are right, that is exactly how the free markets work. It's how Apple lost to Wintel twenty years ago.

 

[Spoony]

Please, they save huge money from the printing and wasting of paper. Call it a Go Green app or what ever.

Who built the App Store? Who thought of it? Now music services and literary publishers want to piggy back on that for free? Please. You know what I call it fair, if I think of something and I create it, its money you want to use it, it is going to cost you, plain and simple. Where does Apple make a profit? The original app is free, so where is the money coming from?

Angry Birds seem to do alright with a $0.99 app store purchase!! I can list many apps and services that have made huge amounts of money from this 30-70 split and using the app store.

They don't like it go to an Andriod device. Simple they have choice.

I think people are also mad about the bait and switch. Ios became popular b/c of the apps and now that there is a huge user base apple is changing things to now charge a fee.

but.... bait and switch is the most widely business tactic ever. When cable Television first came out you had to pay for it. People were shocked to "pay" for TV but the catch was. No commercials and all these awesome channels!! whooo.. Everyone signs up and now they depend on having those channels. Guess what. Lets jam commercials all over every channell to make more money. You pay the company for access to the channell and then they jam ads all over it. We suck you in and then we charge you. Everyone gets used to it and figures well i guess that's the way it is and it becomes standard.

Been happening forever.

 

[florio]

This is absurd. It makes sense for Apple to take 30% of the one-time sale of an app, since they provide hosting and bandwidth for the application binary. But to take 30% of in-app purchases, which are entirely hosted and served by the developer, not Apple, is ridiculous. This will squeeze Amazon Kindle off the iOS platform. 30% is all Amazon gets after the publishers take their 70% cut. If Apple takes that 30% instead, Amazon gets nothing, and has no reason to stay on iOS. Services like Netflix, Rhapsody, and Pandora will likely have to raise prices across the board (even for non-iOS customers) in order to offset the burden of this 30% tax. This is not good for consumers at all.

Here is the thing about the whole netflix and rhapsody debate... While I agree that Apple's new policy is a bit discriminatory and hurts some subscription services more than others, there are ways around it.

I am not perfectly versed in the developer agreement, but here is how netflix and other subscription based models could work.

1. Netflix. $7.99 for a Monthly subscription but does not include service to an iOS device. For a $0.99 subscription fee, this app subscribes to a mobile version of the service, based on an already set-up account full subscription. This is fair and perfectly plausible. The Netflix app is only for Mobile subscriptions and is not the same service as the home "Apple TV" version. Therefore it could be considered a separate entity. Is this doable or am i missing something here. Noone is really buying Netflix for Mobile use. It's really just an extension. Considering Netflix is such a large part of Apple TV and probably a big reason for Apple TV hardware sales, perhaps Apple already considered this as a viable option.

2. As far as magazines go. All resellers, bookstores, 7-11s, gas stations take a cut of sales. I don't disagree with this 30% cut.

3. Apple does not have a monopoly on phones and while it does have pricing power and the ability to force its developers, that doesn't mean it should be facing antitrust. They generally have forced the hands of media companies for the benefit of the consumer. Look at the piece meal 99cent song prices. Anti trust issues generally stem from negative effects to consumers... this is not the case here. Apple is forcing the hands of its content providers (developers too) to give the customer more choice. Why would that even catch on the radar of the government?

Wal-mart squeezes its vendors... is someone yelling anti-trust over there? That argument is ridiculous. I'm just a small business owner. I really don;t know much about it, but it seems to me to be common sense. When you compare this to what Microsoft did, this is nothing.


Am I way off base here?

 

[mdelvecchio]

Take into account that the store and land Walmart is on is also leased from a 3rd party. Just something not to forget. Also, your analogy doesn't really fit this issue at hand here. The issue at hand here is Walmart charges you 100 dollars to develop your products (lets call them Product A) to sell in Walmart. You gladly pay the 100 bucks and give 30% of all profits to Walmart on items sold through Walmart. You also have a Product A store down the street. Walmart is now telling you if you want to continue to sell here we take 30% across the board. Whether you sold the product here or not. I may have missed a few things but thats kind of the general issue the way i see it.

(ok forget the $100 developer application fee -- that's nothing and a joke. if you cant spend $100 youre not in the game...you will spend a lot more to sell in Walmart)

no. the correct analogy is, you sell Product A in Walmart which they charge a 30% mark-up for. then, you also sell Product B in another store, but you have your customers come into Walmart to pick it up, via delivery men who come in via the stock room's back doors and give it to the customer at the front of the store. and Walmart is saying -- "Uh, dude? If you're gonna sell to people in our store, you gotta pay us for it."

not that crazy.

 

[mb2008]

Netflix are perfectly within their right to not put a subscribe link within their app (do they now?) and therefore not pay Apple anything. Only when, like I said, they want to let people subscribe from the app do they have to use the Apple subscription method.

They can continue to drive people towards their website, their own subscription and billing platform, and continue to do their own authentication within the app if they want to and pay Apple nothing.

But if they want to put subscriptions in the app, they have to use the Apple way.

No, if the app uses ANY paid subscription content, the ability to buy the subscription in-app must be offered, and at a "best-price" level. Since the Netflix delivers paid-for content, they must offer a subscription in-app. Apple has already stated that e-books are included under this policy, and Rhapsody apparently believes it applies to music services, so I'm thinking Netflix is screwed, too.

 

[Mattie Num Nums]

Amazon made the move BEFORE iBooks was announced. I don't see how it can be reactionary.



Yes. Amazon's 30% (for books) cut gets Publishers A LOT of a value. That 30% covers all of the costs of storing, distributing and selling their books.

With Apple's IAP model, it doesn't get them anything. Apple is taking 30% to do virtually nothing. Amazon is taking 30% to cover tangible costs and make a small profit.

I would have no problem with Apple taking 30% if they were actually hosting the content.

Pretty much what I have been saying but he/she says I am wrong. Whatever. Look at all his/her prior posts. Apple Revolutionary 100%.

 

[MacAddict1978]

Angry birds is a far cry from a subscription. They don't release a new version of angry birds once a week, and it's a very simple app. Do you really think development on angry birds cost lots of money? A 15 year old could have made that app.

Apple is selling content oriented devices. Without content, they aren't attractive to the user. I'm not dropping $500+ on an iPad to flick angry birds. If they drive away the media that makes the device worth while, while Google offers a 10% deal to everyone and has tons of media and content, where am I going to go?

Things change. The iTunes store can easily become the next K-Mart. Remember K-Mart? Used to be the largest, best discounter in the country? Began to lose market share to competitors that undercut them (Wal-Mart, Target) and offered more selection?

Apple can't have a 1 sized fits all model. http://news.cnet.com/8301-17938_105-20032217-1.html THey need to match Google.

Please, they save huge money from the printing and wasting of paper. Call it a Go Green app or what ever.

Who built the App Store? Who thought of it? Now music services and literary publishers want to piggy back on that for free? Please. You know what I call it fair, if I think of something and I create it, its money you want to use it, it is going to cost you, plain and simple. Where does Apple make a profit? The original app is free, so where is the money coming from?

Angry Birds seem to do alright with a $0.99 app store purchase!! I can list many apps and services that have made huge amounts of money from this 30-70 split and using the app store.

They don't like it go to an Andriod device. Simple they have choice.

 

[tigres]

In any case; looks like Cydia could become even bigger

 

[Piggie]

Amazing to see the response to the free market in action. Apple creates a new marketplace, sets its own rules as is its right, and suddenly the MacRumors board is flooded with talk about using the courts to stop Apple.

Folks, that's how free enterprise works. Either Apple has figured out this is the cut they need and that will work in the market, or Apple has made a mistake. If it's a mistake and they find publishers pulling out, Apple will change. Simple as that. That's how the free market works when you are setting prices. You either get it right or you adjust.

Funny how people love the free market until they see it in action.

The problem is, potentially it's very bad for the consumer, you and me.

Say I sell my item via Apple and it's $10 on my web site to buy some in app data.
I can't do this anymore as I have to allow the data to be sold in app. Meaning Apple with want a 30% cut.

I can't afford this, so the only way to cover my loss it to increase the price of the app store version.
But Apple does not allow this, as they are telling me I can't charge one price there and another price on my web site, so perhaps my only option is to increase the price of my item for sale on my web site also by the same amount.

Now everyone, even those with no Apple products will have to pay more for my item, due to Apple's policy.