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

[fat phil]

Sorry, won't teach marketing 101 here. But your electricity and internet connection is not a channel, period.

There is no such thing as "defending Apple" on this issue. Apple has the right to set their price. Publishers/developers have the right to walk away. You can argue that publishers SHOULD walk way, but there is no point to attack or defend Apple's business decisions.

If you want, you can also short AAPL if you think this will damage Apple's business (and stocks).

For me, I am just saying that if I were the publisher, I would consider it a good deal, comparing to the cost to distribute my content with other means. That's looking at it from publisher point of view.

From consumer point of view, we will have to wait and see if the publishers stick around or walk away.

Ok that sits better with me. I'm not in agreement with the costs being better - it absolutely will be that way for some publishers, especially those with poor backends currently in place.

Distribution - Apple don't serve the content to the user, the publisher does. Apple supply the credentials handling, which is nothing compared to the cost of creating and serving data. Sure, your mileage may vary because some publishers are indeed well off, but how is this one-size-fits-all solution good for everyone?

As for Apple allowing external subscriptions, they're sure on the side of the customer getting all the choices up front:
"you may not provide links in your apps which allow the customer to purchase content or subscriptions outside of the app."

 

[i hate phones]

I agree Apple shouldn't get screwed by "free" apps that developers are making money off of from in app purchases.

I'd be ok with Apple taking a 30% cut on in app purchases/subscriptions for added convenience if they weren't FORCING you to sell them in app. (ie let netflix keep doing its thing. requiring you to already be a customer to use the app)

I don't think I agree with in app having to be the "best or equal price" convenience sometimes comes at a cost.

Like others have said People are arguing over different things. Content owners/Publishers vs Service Providers. Apples Policy seems more than fair to me when talking about newspapers, magazines etc. similar to how apps and ibooks work. I'm assuming the magazine app is free and you're paying for the subscription which I totally think Apple deserves the 30% of. I don't agree they deserve it when talking about service providers. Do they deserve something? sure but cost for them should be little more than a credit card fee. 5-10% max. To lump these two together just doesn't make any sense to me.

 

[Deliverator007]

That is because all these companies chose to exploit the app system and offer free apps for things that were not free.

I am not sure why people think Apple ever intended that.

"Exploit the app system"? Do you really, honestly think that poor Apple has been victimized by the nasty old content providers? Apple is a hardware provider. The original iPhone was not the Jesus phone that people hoped, because it had limited content. It turned into the Jesus phone with the 3G, because that was when Apple opened up the platform to third party content. Apple embraced all of these content providers, because it helped them sell loads of iPhones and loads of iPads. Now that they are developing their own content channels (e.g., iBooks, maybe streaming audio soon), they don't need these third party content providers so much. If they have decided that they don't think iOS needs those third party content providers so much anymore, and want to squeeze them for more revenues, then that is their business decision. But I want to have some of whatever you are smoking if you really think that Apple is the victim here, and that they are somehow seeking justice with their new subscription policy against the dastardly e-book and streaming music and video providers.

 

[147798]

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."

Dead on.

In terms of the likely outcomes listed above. 1 won't happen (Apple knows this). 3 is not worth the fight, and not likely to win. #2 is the most likely. And #4 won't happen unless WE MAKE A STINK TO APPLE.

We need to tell Apple "Hell no!!!!"

 

[geko29]

Amazon sells 2 books at 10.00 out side the app. Let's say they keep 60% in profit or 12 bucks

Right there your argument is FAIL. Apple ALREADY set the margin that Amazon is allowed to make on eBook sales (except from Random House, who told Apple to get bent) at 30%, by mandating the Agency model. Now how much does Apple want? That's right, 30%.

now if all 6 can buy the book in app 6x10=60
60%=36
amazon makes 18 bucks
Apple make 18 bucks

Correction:

Amazon makes ZERO bucks
Apple makes 18 bucks

 

[johnqh]

Right there your argument is FAIL. Apple ALREADY set the margin that Amazon is allowed to make on eBook sales (except from Random House, who told Apple to get bent) at 30%, by mandating the Agency model. Now how much does Apple want? That's right, 30%.


Correction:

Amazon makes ZERO bucks
Apple makes 18 bucks

So.... tell me again, why is it OK for Amazon to charge 30%, but not Apple?

 

[Rocketman]

But WHAT advertising???? Exactly what advertising does Apple do for ANYONE'S App?????

I can tell you exactly.

Apple is providing a form of "promotion" which has elements of ecosystem, hardware, policies, and margins that work as a whole. It's true you have to pay a fee 30% as a seller to use it, as well if you are an end user device owner, perhaps $100 a month or so.

Developers sell a product and the discount is the fine point we are discussing here. Apple is bringing willing eyes to your product just as surely as if they ran a TV spot, a print ad, a radio spot, or a blimp. They just use an ecosystem approach.

When you go to Disneyland to their "walled garden area" you pay like $50 a head to see that. But what you see there is cool, magical, surprising, beautiful, and tasty. Apple is no different. They have built a soft area for you to enjoy if you follow their rules. Don't like the rules? Go to somebody else's garden, desert, or wasteland.

If Google or Amazon does its typical thing, they will clone Apple and underprice them. But just because Knott's Berry Farm has a $10 admission price war, Disneyland need not follow because they are effectively different, despite their similarities.

Apple is getting the dominant position on that hill, that's all.

Like it or lump it.

Rocketman

 

[i hate phones]

So.... tell me again, why is it OK for Amazon to charge 30%, but not Apple?

i think the point is its ok for apple to charge 30% when its providing something similiar to amazon for example in iBooks. It's not ok for apple to charge 30% for being the "credit card" used to purchase a good through Amazon's service. there's a difference.

 

[johnqh]

i think the point is its ok for apple to charge 30% when its providing something similiar to amazon for example in iBooks. It's not ok for apple to charge 30% for being the "credit card" used to purchase a good through Amazon's service. there's a difference.

Why not? That 30% has been the case since day 1.

And a lot of ebook publishers (smaller ones) has always depended on IAP and happily paid that 30%.

 

[quetzalcoatl]

I think this is part people don't understand, and I maybe wrong myself, Netflix, Pandora, etc, do not have links in their app to buy stuff, so they will to be effected this action. Apple is requiring Amazon to change their link to their website to buy book, which is pain, to an in app buy button. Which is an improvement for user in terms of it's a lot easier to buy a book. Apple is taking a the risk on the transaction, they should get paid for this risk and their fees for doing the transaction. Now the questions is should they get 30% or something smaller like 10%...

How is using a button in the app to buy book any differnt from being redircted to amazons site to buy the book. You will still have to find the book then buy it. I have been a long time customer on amazon and all my info is there and I have one click buying on. So which is easier finding the book and hitting a button from itunes to buy the book or amazon to buy the book? Problem is they will not allow amazon to have the button to buy from them.
It is away for apple to hinder competition. Amazon currently has somewhere around 6X the amount of books as iBooks. And they did the work to get them not apple. And because there is no way to purchase from amazon under the new rules from within the app they are trying to take the customer from amazon and make them their customer. Because under their logic anything bought from within the app they brought the customer to the seller.

 

[i hate phones]

I can tell you exactly.

Apple is providing a form of "promotion" which has elements of ecosystem, hardware, policies, and margins that work as a whole. It's true you have to pay a fee 30% as a seller to use it, as well if you are an end user device owner, perhaps $100 a month or so.

Developers sell a product and the discount is the fine point we are discussing here. Apple is bringing willing eyes to your product just as surely as if they ran a TV spot, a print ad, a radio spot, or a blimp. They just use an ecosystem approach.

When you go to Disneyland to their "walled garden area" you pay like $50 a head to see that. But what you see there is cool, magical, surprising, beautiful, and tasty. Apple is no different. They have built a soft area for you to enjoy if you follow their rules. Don't like the rules? Go to somebody else's garden, desert, or wasteland.

If Google or Amazon does its typical thing, they will clone Apple and underprice them. But just because Knott's Berry Farm has a $10 admission price war, Disneyland need not follow because they are effectively different, despite their similarities.

Apple is getting the dominant position on that hill, that's all.

Like it or lump it.

Rocketman

I think what you're saying by your analagy is us as consumers should pay more to buy something through apple then through amazon or android. not the developers or content providers

 

[i hate phones]

Why not? That 30% has been the case since day 1.

And a lot of ebook publishers (smaller ones) has always depended on IAP and happily paid that 30%.

exactly. amazon is not a publisher. I think its fine that apple gets 30% from books and even magazine subscriptions. taking it from a service provider is different. Should they get something? yes but more equivelant to what a credit card company gets. Apple is cutting overhead costs for publishers of book and magazines and the such. What costs are they cutting for Amazon? Just another outlet for them the provide the service they are already providing and to handle the payments there for yes they deserve a small cut but not 30%

 

[Deliverator007]

I can tell you exactly.

Apple is providing a form of "promotion" which has elements of ecosystem, hardware, policies, and margins that work as a whole. It's true you have to pay a fee 30% as a seller to use it, as well if you are an end user device owner, perhaps $100 a month or so.

Developers sell a product and the discount is the fine point we are discussing here. Apple is bringing willing eyes to your product just as surely as if they ran a TV spot, a print ad, a radio spot, or a blimp. They just use an ecosystem approach.

When you go to Disneyland to their "walled garden area" you pay like $50 a head to see that. But what you see there is cool, magical, surprising, beautiful, and tasty. Apple is no different. They have built a soft area for you to enjoy if you follow their rules. Don't like the rules? Go to somebody else's garden, desert, or wasteland.

If Google or Amazon does its typical thing, they will clone Apple and underprice them. But just because Knott's Berry Farm has a $10 admission price war, Disneyland need not follow because they are effectively different, despite their similarities.

Apple is getting the dominant position on that hill, that's all.

Like it or lump it.

Rocketman

Ahhh, but the underpricing can make all the difference. Betamax was better than VHS, and the Mac was better than the Wintel machine, but both ultimately lost out to a lower priced, more open platform.

 

[MagnusVonMagnum]

Anti-Trust violations? Apple??? Pshaw! Surely, they jest!

 

[quetzalcoatl]

You are still allowed to have an outside subscription, you just can't have a link next to the buy now button in your app....

And that gives apple the advantage because most people will just click the button within the app. And then apple takes the 30%. It has nothing to do with apple bring the person to the product it is the fact that people for the most part take the path of least resistance.

 

[cav23j]

never mind the fact that often time those 30% cut apple demands out of gross revene is less than they are getting threw what they sell. So selling threw the app would be a loss.

For example Amazon who has to pay for the servers houses all the books ect would be getting 0% for anything sold threw the kindle app since 30% is their cut of the price.

Why would Amazon have ANY and I mean ANY motivation to do that. I could more see some big players like Amazon, netflex and so on saying screw you to Apple and playing hard ball. Follow by a lovely law suit for anti trust against apple.

Remember you do not have to be a monopoly to get busted for anti trust. Just be large enough player to abuse you power. Apple huge size can and will be used against it here.

some reports are saying it wont apply to Netflix

 

[tatonka]

So.... tell me again, why is it OK for Amazon to charge 30%, but not Apple?

Because Amazon is providing a service for that fee. Apple is forcing an artificial service on everyone in the app store charging them for something they didn't even want to buy from them in the first place.
Amazon already has a subscription and billing service in place there is no reason why they should have to pay Apple for the exact same service that nobody asked for again.

Amazon is doing all the negotiations with the content owner, they host the entire data plus pay for the traffic, employ people to convert and check the media, handle the customer complaints, handle all the payments.

Apple handles the payment, handles billing problems with the customer.

T.

 

[quetzalcoatl]

I understand that, and to some extent agree, but at the same time, if Amazon is taking a cut of sales from books that they're selling in their store, as a general statement, is it not reasonable for Apple to take a cut for sales that Amazon sells on their platform? Sure it doesn't cost Apple anything (or does it? I don't think anyone really knows and we're just assuming) but, at least from Apple's perspective, there are people who own iPads that may not have ever made purchases from Amazon but because of the iPad and the Kindle store are giving Amazon money. Why not get a cut of that?

And how about all those people that went to the iPad because at the time it was that or a netbook and wanted something that could read all the media that I had already purchased for my computer and phone.
I am sure there are many more like me than like those that I bolded.

 

[pmjoe]

Publishers of existing App Store applications have until June 30th to comply with Apple's new policies.

Well, then these companies have 4+ months to stick notices in their apps telling their users to buy Android, Windows Mobile, etc. phones.

 

[Deliverator007]

So.... tell me again, why is it OK for Amazon to charge 30%, but not Apple?

For me as a consumer, its OK for Amazon to charge 30% on Kindle book sales and for Apple to charge 30% for iBook sales. However, it is bad for me as a consumer for Apple to tack on an a 30% charge on Kindle book sales because either (a) Kindle book prices will rise, not just for iOS use but everywhere else as well, which in addition will give Apple to ability to raise prices on iBooks as well, or (b) Amazon will pull out of iOS, in which case I will not have as many e-books available on my iOS devices, and which will also give iBooks at least some ability to raise prices, since the primary e-book competitor will no longer be resident on iOS. Again, I'm not saying that Apple has any legal or moral obligation not to do this, but i do see it as something that is bad for me as an owner of multiple iOS devices, since my e-book prices will rise and/or my e-book selection will narrow.

 

[jaduffy108]

It seems that it will take an anti-trust lawsuit to make Apple make a decision that will be beneficial to them.

They are unfortunately focusing on the small 20-30% of SW and content sales as a profit source, instead of making a minimal profit here and expanding the eco-system.

I agreed with the curated nature of the App Store initially, because it was a completely new concept users had never been exposed to before. However, most users are comfortable with the idea of buying apps for their phone, and Apple needs to loosen its restrictions. A great start would be allowing the installation of 3rd party app stores, which may not have the restrictions Apple's does.

I completely agree. Arrogance came close to destroying Apple in the 90's and it looks like Steve and Co. haven't learned that lesson. Google is going to capitalize on this in a MASSIVE way. Conde Nast and others I predict will tell Apple to go to hell. The quality of the Google platform (Honeycomb) and their fast growing market share will seal the deal. As an example, *I* am not so sure I'll buy the iPad 2 now...I may have just convinced myself to go Google. (Motorola Xoom)

 

[Piggie]

But say I go to Disney Land and I pay $5 for a Coke, yes it's overpriced as I'm in Disneyland.

However, does Disneyland then insist that all other places that sell coke outside of Disneyland must sell Coke for at least $5 also?

 

[johnqh]

For me as a consumer, its OK for Amazon to charge 30% on Kindle book sales and for Apple to charge 30% for iBook sales. However, it is bad for me as a consumer for Apple to tack on an a 30% charge on Kindle book sales because either (a) Kindle book prices will rise, not just for iOS use but everywhere else as well, which in addition will give Apple to ability to raise prices on iBooks as well, or (b) Amazon will pull out of iOS, in which case I will not have as many e-books available on my iOS devices, and which will also give iBooks at least some ability to raise prices, since the primary e-book competitor will no longer be resident on iOS. Again, I'm not saying that Apple has any legal or moral obligation not to do this, but i do see it as something that is bad for me as an owner of multiple iOS devices, since my e-book prices will rise and/or my e-book selection will narrow.

Here is the real world.

Your T-shirt costs 20 cents to make in a Chinese factory.
The Chinese company sells it at 50 cents each to a Chinese distributor.
The distributor sell it at $1 to an US distributor.
The US distributor sells it at $3 to Walmart.
Walmart sells to you at $8.

My point is, money is money, there is no morality in money. You cannot say "you can make 30% if you do this, but only 20% if you do that." The market decides how much each can get. It is up to the source and the destination to decide whether to make sense to push the product through a chain. If it doesn't make sense for the source, they simply withdraw the product. If it doesn't make sense for the destination (consumer), you don't buy.

That's all the control everyone has, as the content provider, or as consumer. It is perfect fine to say "I will take my app off App Store", or "I won't buy an iPhone or iPad", but it is not your or my business to tell Apple what to do.

 

[Piggie]

I completely agree. Arrogance came close to destroying Apple in the 90's and it looks like Steve and Co. haven't learned that lesson. Google is going to capitalize on this in a MASSIVE way. Conde Nast and others I predict will tell Apple to go to hell. The quality of the Google platform (Honeycomb) and their fast growing market share will seal the deal. As an example, *I* am not so sure I'll buy the iPad 2 now...I may have just convinced myself to go Google. (Motorola Xoom)

I take it you are aware of this from Google?

http://www.bbc.co.uk/news/technology-12489318

10% not 30%

 

[Piggie]

Here is the real world.

Your T-shirt costs 20 cents to make in a Chinese factory.
The Chinese company sells it at 50 cents each to a Chinese distributor.
The distributor sell it at $1 to an US distributor.
The US distributor sells it at $3 to Walmart.
Walmart sells to you at $8.

My point is, money is money, there is no morality in money. You cannot say "you can make 30% if you do this, but only 20% if you do that." The market decides how much each can get. It is up to the source and the destination to decide whether to make sense to push the product through a chain. If it doesn't make sense for the source, they simply withdraw the product. If it doesn't make sense for the destination (consumer), you don't buy.

That's all the control everyone has, as the content provider, or as consumer. It is perfect fine to say "I will take my app off App Store", or "I won't buy an iPhone or iPad", but it is not your or my business to tell Apple what to do.

So why's it's Apple's business to tell Amazon what price they have to sell books for on their store? Apple are trying to dictate what someone else is allowed to sell their items for on their store.