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

so in your universe the internet is run on magic pixie dust, and not in buildings owned by people, staffed by people, powered by utilities, etc.. managing all of the customer subscriptions for millions of people on databases requires MASSIVE INFRASTRUCTURE of a major scale.

billing cc's is only one part.
 
Amazon made the move BEFORE iBooks was announced. I don't see how it can be reactionary.

It was a week before the official announcement, and long after everyone knew what was coming. Please.

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.

Wrong, wrong, wrong, wrong, wrong. Apple's model gets AMAZON nothing. Apple's model gets the PUBLISHER the same distribution cost (or less, in some circumstances) and access to orders of magnitude more devices.

Unfortunately it also gets them access to a pretty crappy reading application, but hopefully that will change.

Edit to add: you're also misrepresenting what Amazon offers. If you want them to take a 30% cut, you agree to a maximum price of 9.99, and at least a 20% discount over the lowest price in the market for the print version of the book. Otherwise, Amazon's cut is still 65%. So, you can give up 65%, or you can instead keep 70% and hope that it's 70% of a non-negative number.
 
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I think a lot of people are comparing Apple's 30% to a credit card's 2-3% and are forgetting to factor in a very important component - the per transaction cost of 20-30 cents. Now compare a $0.99 transaction in the App Store vs a $0.99 transaction via an Internet merchant account. It's practically the same, if not cheaper, in the App Store. Now, for bigger ticket items 30% is excessive - I'll give you that. Maybe Apple needs a tiered pricing structure where $1-$5 transactions are at 30% and that commission is reduced significantly as the price increases.
 
It was a week before the official announcement, and long after everyone knew what was coming. Please.

I don't believe that anyone knew what Apple's model would be with publishers.

Either way, it's rather moot to this discussion.



Wrong, wrong, wrong, wrong, wrong. Apple's model gets AMAZON nothing. Apple's model gets the PUBLISHER the same distribution cost (or less, in some circumstances) and access to orders of magnitude more devices.

You're working off the assumption that Amazon swallows the 30% that Apple takes.

It's wrong, wrong, wrong, wrong, wrong to make such an assumption.

I see no reason why Amazon would swallow that cost.

Unfortunately it also gets them access to a pretty crappy reading application, but hopefully that will change.

I don't see how you can argue this point. Kindle is largely the same as the iBooks app. It has way more features than iBooks does, but they are in no way intrusive.
 
Can content providers advertise a not-so-secret secret promo code (without giving links) to give people a 30% discount while purchasing from their website?

For example:

In the iOS app, display a notification that reads "Pay here at full price. Alternatively, go to our website to purchase the same content. Type in 'FxxxAPPLE' upon checkout and get 30% off!"

Exactly!
 
so in your universe the internet is run on magic pixie dust, and not in buildings owned by people, staffed by people, powered by utilities, etc.. managing all of the customer subscriptions for millions of people on databases requires MASSIVE INFRASTRUCTURE of a major scale.

billing cc's is only one part.

Sure, but there are companies out there that are doing everything you list PLUS:

Actually offering something to the people paying them 30%

Amazon handles the cost of delivering a book to virtually any country in the world over 3G using that 30%.
 
so in your universe the internet is run on magic pixie dust, and not in buildings owned by people, staffed by people, powered by utilities, etc.. managing all of the customer subscriptions for millions of people on databases requires MASSIVE INFRASTRUCTURE of a major scale.

billing cc's is only one part.

and yet all these free apps with subscriptions were OK last year to the bean counters. and there are a lot of professional apps there with expensive subscriptions to proprietary databases. will apple charge them as well? watch all these professionals move to android then
 
Not quite. I don't know book margins, but Amazon doesn't make books. It sells them. Apple is taking 30% of the cost, but that comes out of Amazon's profit, which is less than the sale price.

So, in your example:

With two ten dollar books, maybe only $5 each goes to Amazon. In a direct sale, Amazon is making $10 total for the two books, and they have to pay the other $10 to the publisher and author, etc. for the actual materials itself. This gives Amazon a 50% margin (this is just an example. I don't know Amazon's actual cost of goods sold).

With the 6 sold via iOS, Apple gets 30% of each sale. 30% of $10 is three dollars. That means Amazon is only netting $2 each book ($10 - $5 cost of goods - $3 apple slice). 2*6 = 12, or only 2 more dollars than the two they could have sold on their own. Meanwhile, they've had to spend resources to sell those books on Apple (building and maintaining an iOS app, paying the account executives who work with Apple, etc.). Your example ALSO assumes that they sell 4 additional books because of the Apple platform. I think it's more likely the only sell 2 additional ones.

The real problem with this idea, and why Amazon and Netflix won't do it is this whole process reduces their profit margin. Margins directly translate into stock price (look up price earnings ratio). Amazon, a public company, could see their margins slashed if sales really shot off on the Apple platform, if Apple gets 30%, even if their total sales went up (i.e. if their margins on two $10 books was 50%, their new margin in the made-up-example above would be 12/16, or 20%). Lower margin business have lower P/E ratios. Even if sales goes up, if their margins go down enough, their stock will fall, and they'll have less ability to go to the public markets for growth capital, and some investor will rise up and try to win control of the company to take it in a different direction.

I can't say this clearly enough -- THIRTY PERCENT WILL NOT HAPPEN. Amazon, Hulu, Netflix will all walk. This is not Apple trying to make more money, this is Apple pushing these folks off their platform. Period. It's a punitive, ridiculous amount, and there is no way these other companies will pay it. An original content producer might pay it (because Apple then becomes their channel instead of Amazon), but not an existing reseller/channel player like AMZ.

People are defending Apple as if they are sticking up for the consumer. They are not (in this case). They are trying to lock down their platform for their content channels, and scare away the other channel players. This is about less choice. It's a logical move by Apple, but I would submit they are mis-playing their hand. The iPhone and iPad are not dominant ENOUGH to make this move. I think they will get burned, and they will back-track from this for the the near term.

Best post so far IMO. Sums it up. Apples good old control freak nature, simple as. Drive your competitors off your platform.
And Also in the UK Kindle books are actually very reasonably priced IMO.

Does no one remember when Apple stated it wanted to be the number one in a chosen tech market? It pretty much said it'll never do it with computers, and it wasn't thinking of mobile phones, it then launched the iPad and opened a whole new market....... and it dominates it and it wants to only offer APPLE services to you on it.
It WANTS to be number one in tablets.

Anyway as I've said IMO as this will affect the european markets I won't be surprised to see Apple in court over this. And Amazon doesn't need iOS, hell I don't read books and I WANT a Kindle..... Kindle is the iTunes of books and Apple is peed cause of this, it threatens that number one position.
 
and yet all these free apps with subscriptions were OK last year to the bean counters. and there are a lot of professional apps there with expensive subscriptions to proprietary databases. will apple charge them as well? watch all these professionals move to android then

I can think of some already off the top of my head... some of the medical apps. Subscription for those services can run in the hundreds each.
 
I don't believe that anyone knew what Apple's model would be with publishers.

Either way, it's rather moot to this discussion.

Nobody knew, but everyone "knew" that it would be the same 30% as the App Store, and they were right. And it is not remotely moot.


You're working off the assumption that Amazon swallows the 30% that Apple takes.

It's wrong, wrong, wrong, wrong, wrong to make such an assumption.

I see no reason why Amazon would swallow that cost.

Neither do I, which is precisely the point. They would either try to pass it on or pull out of iOS, neither of which are tenable for the 19 people who have an iOS device for each person who has a Kindle--nor for the publishers trying to reach those people.

I don't see how you can argue this point. Kindle is largely the same as the iBooks app. It has way more features than iBooks does, but they are in no way intrusive.

I think the Kindle app is better than iBooks by a long shot. I said exactly that. But while that's relevant to the question of "who is going to win", it's not relevant to the central point, which is that the outrage is totally ridiculous because Apple is offering content owners a better deal than they get from other alternatives *in the context of* distribution costs and licensing (such as Amazon).
 
Sure, but there are companies out there that are doing everything you list PLUS:

Actually offering something to the people paying them 30%

Amazon handles the cost of delivering a book to virtually any country in the world over 3G using that 30%.

Wrong I'm afraid, from Amazon's terms and conditions:

How is my revenue share calculated?
Revenue share is calculated as (revenue - delivery costs) x 70%. Delivery costs apply if we deliver content via a paid distribution method, such as over Whispernet. When Amazon includes delivery, the cost is $0.15/megabyte (MB) in the US and UK sales from Amazon.com, £0.10/MB for sales from Amazon.co.uk and $0.99/MB in the rest of the world. We calculate the delivery cost by multiplying total megabytes sent by paid delivery by the cost per megabyte above. Delivery costs are therefore dependent upon customer location, how they chose to download and the file size.

How can I estimate my delivery costs?
Delivery costs are dependent on the Kindle file sizes. Kindle file sizes vary depending on the number of articles and images that are included in the file. The file size for a typical newspaper with 100 articles and 15 to 20 images ranges between 0.5 and 1MB. The file size will also vary depending on the resolution of the images. The file size for a typical magazine publication with 30 articles and 20 to 25 images ranges between 1 and 1.5MB. You can estimate the file size for your publication by downloading the Kindle files after you have added your publication through KPP.
For example, the delivery cost of a newspaper that delivers 9.0MB/month via paid delivery methods is $1.35. If the publication costs $9.99/month, then a publisher would earn $6.05 for each subscription.
 
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber. Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?

PS. The psystar morons already tried the same argument. Verdict: argument FAILED.

You should go easy on the Kool Aid!

There's always a bigger picture and a tail-end to these things. The tail end in this case lies with the end user. The "Paying Customer".

This has nothing to do with sharing money with Apple. It has everything to do with taking more money from customers to bridge the gap. And if you think that's "fine" then you'll not mind if your gas and electricity bills go up 46% next month either?

I agree that Apple's service warrants a tariff, however 30% for a recurring usage of an app that is already on the user's handset is math from another planet. Where does the subscription content come from in most cases? From the publisher's own servers. They're paying for their own upkeep - not Apple.

More reasonable would be 12%, maybe 20% absolute max. Anything more is penny pinching, and when you're turning over as much dosh as Apple is, it's pretty galling.
 
Some of these comments are ridiculous.

First of all, this is anticompetitive. Apple is forcing companies to offer everything outside the AppStore, inside the AppStore for the same price.

Don't you guys see this? Who cares if they get 100% of outside sales. Many of them DO NOT WANT to "get" to sell inside the AppStore as they are already doing quite well without it (Netflix, for instance). But the new rules force them to sell inside the AppStore even if they don't want to. If people start joining from the AppStore, even if they don't want them to, then they won't be making any money and will be forced out of iOS, which is bad for everyone. Then what do they do? Raise their prices 43% across the board, which again, is bad for everyone.

There are four possible outcomes here:

1. Service providers raise rates roughly 43% across the board
2. Service providers abandon iOS as their primary market usage is HDTV owners or some other market (NetFlix)
3. Service providers join together in a lawsuit against Apple (Amazon, Netflix, Hulu (backed by major networks), Pandora, Rhapsody and publication companies are much bigger than Psystar vs Apple. To even make comparisons to that case is ludicrous.
4. Apple backs down

Only one of the above scenarios is good for everyone in general. Is Apple honestly hurting for cash? Hell no. This is about them trying to come up with a viable way to rid their AppStore of companies that compete with them as they launch new and improved services later this year and into the future.

Ask my friends, ask my family. I'm the biggest Apple lover around. But this right here is bad for everyone. I can almost guarantee that this is one of those AppStore policies that, like many others, will be overturned by this summer once all these major Apps start dropping like flies.

I started my NetFlix subscription years ago. How did I find out about it? Where did they offer me a free subscription? xBox 360. Not even Microsoft is evil enough to have taken 30% of my subscription from them. To quote a saying from my mom, Apple is getting "too big for their britches."
 
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.

Apple has been this way it entire existence, I have heard these arguments in the past, macs are closed systems, bla bla bla. They are now the largest tech company in the world. Why do people say Apple has to act like Google or Microsoft?

You have a browser on the iPad, I have never been hindered on reading content because I didn't have an app. 15 million iPad owners are not wrong, how many Android tablets? And didn't Google try to make its own phone? What happened?

Your K-Mart makes me laugh. Apple has one phone and one phone only its iOS is only on one phone, their phone. Android is on so many devices you don't know where to turn, and you have no idea if you will ever get an update to the OS because your phone manufacturer does not want to release it to you.

I think Apple knows what they are doing and how they want to control the entire user experience, which by they way has made them what they are today. :cool:
 
Edit to add: you're also misrepresenting what Amazon offers. If you want them to take a 30% cut, you agree to a maximum price of 9.99, and at least a 20% discount over the lowest price in the market for the print version of the book. Otherwise, Amazon's cut is still 65%. So, you can give up 65%, or you can instead keep 70% and hope that it's 70% of a non-negative number.

This was true until Steve screwed it up. For most of the large publishers, Amazon must offer e-books at the publisher-set price, which is the same as the iBooks price. Amazon makes more money on best-sellers in this case, but they were so unhappy about it they refused to sell e-books from some of the publishers for weeks.
 
Can content providers advertise a not-so-secret secret promo code (without giving links) to give people a 30% discount while purchasing from their website?

For example:

In the iOS app, display a notification that reads "Pay here at full price. Alternatively, go to our website to purchase the same content. Type in 'FxxxAPPLE' upon checkout and get 30% off!"

So it's no different than when a band has an album out and prefer you buy it from them knowing they get more money that way than through iTunes or another store.

Except in this case you're more willing to let a corporation sell your personal information like a whore.
 
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.
...just because some content is hosted elsewhere (publisher) doesnt mean you dont still incur infrastructure costs when selling your non-hosted content via iTunes and the App Store. the data centers that retain and manage all of these data for 160 million users are not free or cheap.

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

its absurdism to help illustrate the point -- everything is more complicated and expensive than you think it is. i work with major data centers and its absurd to think "hosting the app" is all there is.
 
I started my NetFlix subscription years ago. How did I find out about it? Where did they offer me a free subscription? xBox 360. Not even Microsoft is evil enough to have taken 30% of my subscription from them. To quote a saying from my mom, Apple is getting "too big for their britches."

Yeah I have my XBOX but you have to be a Gold member which costs you what now days $60 a year, and I am sure Netflix paid something to MS, or MS would offer other video services on there.
 
How does this even affect Netflix? Your monthly subscription to them must already be established to even use it. I can't find anywhere on the actual app (iphone at least) to do any account management. There is no external link to collect money from the app, so no in app option needs to exist either for Apple to collect 30% of.
 
Sure, but there are companies out there that are doing everything you list PLUS:

Actually offering something to the people paying them 30%

Amazon handles the cost of delivering a book to virtually any country in the world over 3G using that 30%.

the other companies are not the gold-machine that the iTunes/AppStore eco system is. if they were -- we'd be discussing them, not this.

apple's system offers value to developers and publishers. had it not, they wouldnt be here. thats the way value works.
 
How does this even affect Netflix? Your monthly subscription to them must already be established to even use it. I can't find anywhere on the actual app (iphone at least) to do any account management. There is no external link to collect money from the app, so no in app option needs to exist either for Apple to collect 30% of.

Some people are interpreting the rules to mean that if an App makes use of a subscription (obtained outside of the App - e.g. on a web site) then it MUST ALSO offer the ability to get the same subscription using IAP.
 
and yet all these free apps with subscriptions were OK last year to the bean counters. and there are a lot of professional apps there with expensive subscriptions to proprietary databases. will apple charge them as well? watch all these professionals move to android then

so you think they get to freeload on the infrastructure because the loophole (free app, paid content) wasnt closed until now? interesting.

yes, we will watch them all movie to android, where all the great apps are.... (you cant even buy an ad-free version of Angry Birds on android)
 
Wrong I'm afraid, from Amazon's terms and conditions:

How is my revenue share calculated?
Revenue share is calculated as (revenue - delivery costs) x 70%. Delivery costs apply if we deliver content via a paid distribution method, such as over Whispernet. When Amazon includes delivery, the cost is $0.15/megabyte (MB) in the US and UK sales from Amazon.com, £0.10/MB for sales from Amazon.co.uk and $0.99/MB in the rest of the world. We calculate the delivery cost by multiplying total megabytes sent by paid delivery by the cost per megabyte above. Delivery costs are therefore dependent upon customer location, how they chose to download and the file size.

How can I estimate my delivery costs?
Delivery costs are dependent on the Kindle file sizes. Kindle file sizes vary depending on the number of articles and images that are included in the file. The file size for a typical newspaper with 100 articles and 15 to 20 images ranges between 0.5 and 1MB. The file size will also vary depending on the resolution of the images. The file size for a typical magazine publication with 30 articles and 20 to 25 images ranges between 1 and 1.5MB. You can estimate the file size for your publication by downloading the Kindle files after you have added your publication through KPP.
For example, the delivery cost of a newspaper that delivers 9.0MB/month via paid delivery methods is $1.35. If the publication costs $9.99/month, then a publisher would earn $6.05 for each subscription.

You are ignoring the point that Amazon built out the Kindle suite of programs and apps, Amazon built and maintains the WhisperSync distribution platforms, Amazon spent the time and money to compiled the largest e-book catalog in the industry, and Amazon has by far the best review database for reading content of any e-book seller. If Apple processes an in-app e-book purchase, it handles the billing only. It did not market the content, it does not do the order fulfillment, it does not synchronize across devices. Amazon does all of the heavy lifting, and Apple does none. I am sure Amazon would be happier allowing iOS devices to directly download the Kindle app, rather than have to go through the app store. Apple wants 30% because it wants 30%. However, it isn't providing 30% of value that Amazon now doesn't have to pay to somebody else. And on top of that, it want to set a price floor for transactions that don't even involve Apple at all.
 
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