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

[pundit]

Couple of thoughts. Morality is meaningless... its all business. Apple can set whatever App Store rules they wish. Amazon, Hulu, Netflix, Rhapsody, Comcast(yes, even Comcast) et al can take their toys and go elsewhere.

There is an argument to be made that there is a possible antitrust action possible... which does have merit, but isn't clearcut... specifically telling a partner that they have to price something on one website the same as another website is textbook anti-competitive pricing, but I'll leave that to the lawyers to argue.

What I do know is this: Hulu, Netflix, Amazon and so on existed just fine before the app store, and the app store isn't what makes or breaks their business... if that were the case, they'd be kissing Steve Jobs ass... and they ain't.

Personally I have Netflix on the Ipad... and I haven't used the app that much tbh. I use it while waiting now and then but a PS3 connected to a plasma and a 7.1 is a much much better way to watch TV and movies... plus the PS3 is a DLNA player so I can stream regular Hulu etc etc via PlayOn.

If the Netflix app disappeared from the App Store I wouldn't be angry at Netflix. I'd be mildly miffed at Apple for not working out a deal that was profitable... but I'd just go about watching on PS3, PC and a netbook should I feel the need... and when the next round of 3.0 Androids come out, probably check those out too.. maybe a 7" tablet, since 10" tablets aren't ideal for genuinely portable situations.

Now... Netflix, Hulu etc etc don't need Apple if the marketplace has become unprofitable (and yes.. 30% of the entire portion of a content distributors subscription makes the marketplace for ANY c-d unprofitable.) Does Apple need Netflix et al? Kinda.

The entire premise of the Ipad is a content consumption device and people are very happy with subscription based content... especially from a video standpoint. Apple is a bit player in video next to Netflix and Cable subs.

Can Apple be all things content to all people? I doubt it... its tough doing everything well at once. If VoD was so simple everyone would be doing it, but there are more cautionary tales than success stories, and Netflix is a juggernaut.

I mentioned Comcast above because Comcast, also, has an app pushing video based on a subscription, except its not a $10 sub.. its a $90-100 ish sub for a decent package... and I expect Comcast to tell Apple to bite them, post haste.

Now... what will happen? Either a mass exodus of content apps, leaving the app store somewhat barren of its "magic, or there will be a deal where an ios subscription is in addition to a regular subscription... say a buck, and Apple gets $.30 and the provider gets $.7

I don't expect any of the big players folding to Apple. The people that are okay with this are mainly the newspaper guys and smaller publishers.

 

[Synergie]

NICE. I've been waiting for the Fandango App to allow in app purchasing of movie tickets. Apple totally deserves a 30% cut of that when that happens.

So will you be happy when your movie tickets not only cost 43% more in-app to buy, but now they also cost 43% more if you buy them outside the app too??

 

[MacAddict1978]

Steve Jobs said "People don't read anymore..."

while not forcing yes. But that does not change the fact that Apple is abusing its raw size and power by forcing others out of the market. They are abusing their power in App store to force more sell of iBooks (new product) and other service that they control.
It is also preventing others from competting. A company of Apple raw size and power has different rules it is required to follow because it is being anti competitive. Other wise known as anti trust laws.

When apple started all this, they weren't in competing businesses. Someone said Wal-Mart wouldn't let Target sell in their store. This is more like buying the store brand. Apple already allowed this content in the store, allowed it's users access to it, and then came out with their own branded content like iBooks. This really does force Amazon out of the App store. That 30% IS their profit. Apple knows this. They should just say, we are going to drop apps that compete with our existing businesses and wish our former partners well. It would be more honest and direct than this bunkus. I agree Apple has that right... just don't jerk people around. Alternatively, Amazon could remove the ability to purchase books from the App and that could solve the problem.

Does anyone not remember Steve Jobs saying, "People don't read anymore. Apple has no interest in ebooks." And then surprise... Amazon was selling books! Apple decided they could do it better. (Yet to be seen.)

 

[Jcoz]

When apple started all this, they weren't in competing businesses. Someone said Wal-Mart wouldn't let Target sell in their store. This is more like buying the store brand. Apple already allowed this content in the store, allowed it's users access to it, and then came out with their own branded content like iBooks. This really does force Amazon out of the App store. That 30% IS their profit. Apple knows this. They should just say, we are going to drop apps that compete with our existing businesses and wish our former partners well. It would be more honest and direct than this bunkus. I agree Apple has that right... just don't jerk people around. Alternatively, Amazon could remove the ability to purchase books from the App and that could solve the problem.

Does anyone not remember Steve Jobs saying, "People don't read anymore. Apple has no interest in ebooks." And then surprise... Amazon was selling books! Apple decided they could do it better. (Yet to be seen.)

I'm an apple guy, but I'm very on edge with the waters apple is dabbling in with their want for control. I dont want to be an ad whore for google, but apple is teetering on the edge of that value comparison in my mind, with the next 4 months of decisions they make regarding their content providers....

I hope they are making the correct ones.

The thing is, I just dont fully understand why they are squeezing their grip so tightly on a business that hardly adds anything to their bottom line, relatively speaking.

 

[bmastudent]

So will you be happy when your movie tickets not only cost 43% more in-app to buy, but now they also cost 43% more if you buy them outside the app too??

I think they should get a 30% cut if I buy something through the ebay app too...

Are there apps where you can buy stocks at a click of a touch screen button? They should! I think Apple would totally deserve a 30% cut of that too!

 

[pundit]

also if you do your taxes on the Ipad... 30% extra should go to Apple. Call it the "Apple Tax".

 

[bmastudent]

Merchants complain about the same rules with using credit cards; i.e. you must charge the same amount (or better) to people paying with credit cards vs. other methods.

The big difference is the credit cards charge ~3% vs 30% for Apple.

That's a steep percentage. Very few salespeople make such a high commission.

You're allowed to pay cash at merchants. You're not allowed to use any other form of payment at the app store besides the apple credit card with 30% interest regardless of whether you pay it off every month!

 

[MacAddict1978]

The K-Mart example is referring to the echo-system, not devices. And hey, it's relevant. They were number 1 and look at them now because of arrogance. And yes, you have a very crippled browser on your iPad. The reason there are dedicated Netflix and other video apps is because the iPad can't otherwise play them. When half your apps go bye bye on your iPad, let's see how much of a fan boy you are then. And Google made it's own phone to... hey, to launch a whole new platform and echo system. Yeah, that's working out so poorly for them isn't it? Considering based on numbers alone by this time next year Android will have more apps and users than Apple. This is exactly what got Apple in trouble with the PC market years ago. I think Apple has the best user experience around. I also think communism looks great on paper, but in practice not so much. 15 million iPads... lets see how many Android tablets have been sold this time next year. Google wasn't the first company to make an OS to run on lots of hardware with varied performance... there was this little company. I think they were called Microsoft. They had a less quality user experience, but lots of choice. Don't think that worked out for them either. Google might end up the same failure.

I hate the extremism fan boys of any kind lay out because it's not realistic. Companies make mistakes and do stupid things all the time. Doesn't mean you don't love the company. I love Apple. I don't love the direction they're going. Competition is good. Debate is good. Apple very well might do an about face. We'll see.

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.

 

[johnqh]

When apple started all this, they weren't in competing businesses. Someone said Wal-Mart wouldn't let Target sell in their store. This is more like buying the store brand. Apple already allowed this content in the store, allowed it's users access to it, and then came out with their own branded content like iBooks. This really does force Amazon out of the App store. That 30% IS their profit. Apple knows this. They should just say, we are going to drop apps that compete with our existing businesses and wish our former partners well. It would be more honest and direct than this bunkus. I agree Apple has that right... just don't jerk people around. Alternatively, Amazon could remove the ability to purchase books from the App and that could solve the problem.

Does anyone not remember Steve Jobs saying, "People don't read anymore. Apple has no interest in ebooks." And then surprise... Amazon was selling books! Apple decided they could do it better. (Yet to be seen.)

Actually, Apple had guidelines to reject apps which compete against built-in functionalities. Remember Google Voice?

Well, guess what? People complained, probably the same people who are complaining now.

 

[Synergie]

I think they should get a 30% cut if I buy something through the ebay app too...

Are there apps where you can buy stocks at a click of a touch screen button? They should! I think Apple would totally deserve a 30% cut of that too!

Really think about the implications of this for a moment....

Your 10.00 movie ticket could now end up costing you 14.30 even if you go straight to the theatre and buy the ticket there! That sure cuts into the popcorn and drink budget! How about you buy tickets for a 4 person family... two adults and 2 kids. Now you are paying an extra 17.20 ... even if you buy all 4 of your tickets directly from the theatre! That's just to go to ONE movie!

And the above is what could happen if these companies are forces to recover the loss!

 

[johnqh]

So will you be happy when your movie tickets not only cost 43% more in-app to buy, but now they also cost 43% more if you buy them outside the app too??

Nothing prevent Fandango from using a mobile optimized website and have their own payment system on the site.

And in this case (unlike Kindle app), the app doesn't offer any additional functionality than a mobile website anyway.

What makes me wonder is eBay.... I am going to bet that the licensing agreement will be modified to give exceptions to auction websites.

 

[marksman]

So will you be happy when your movie tickets not only cost 43% more in-app to buy, but now they also cost 43% more if you buy them outside the app too??

So many people in this thread fail at business and numbers.

I am not even sure how most of you can afford Apple products with the ignorance of basic business shown in these threads.

 

[johnqh]

The reason there are dedicated Netflix and other video apps is because the iPad can't otherwise play them.

Sorry, that's simply not true. It is not difficult to code a website to play H.264 video (which the app uses).

The real reason is that the app generates way more eyeballs. When was the last time you hear about any news about a mobile website? Yet, an app gets attention.

 

[pundit]

yup.. single transactions don't mandate pricing beyond ios... just subscriptions do.

The interesting thing about the whole situation is that there is literally nothing that Apple can do in these rules to prevent publishers jumping ship to Google's OnePass: its solely browser based, doesn't need flash and handles gestures in HTML. Smart move by Google.

 

[pundit]

Sorry, that's simply not true. It is not difficult to code a website to play H.264 video (which the app uses).

The real reason is that the app generates way more eyeballs. When was the last time you hear about any news about a mobile website? Yet, an app gets attention.

This is NOT true. H.264 doesn't handle DRM as of now. Netflix, Hulu, Amazon VoD et al requires DRM.

Android on snapdragon will have supported DRM and will have Netflix etc.

http://www.tomsguide.com/us/snapdragon-android-qualcomm-streaming-drm,news-10145.html

 

[johnqh]

This is NOT true. H.264 doesn't handle DRM as of now. Netflix, Hulu, Amazon VoD et al requires DRM.

Android on snapdragon will have supported DRM and will have Netflix etc.

http://www.tomsguide.com/us/snapdragon-android-qualcomm-streaming-drm,news-10145.html

I stand corrected.

Yet, there is no evidence that Android can play Netflix by using Flash (the post I replied to). Can it?

 

[pundit]

I stand corrected.

Yet, there is no evidence that Android can play Netflix by using Flash (the post I replied to). Can it?

A full implementation of 10.1 would, but this hasn't happened (yet...) and even if it did, Netflix, like hulu blocks standard android devices at a browser level.

What you'd have to do is, like PlayOn (which has had a cat and mouse game with hulu since forever,) emulate a virtual machine with browser and then you could use netflix, hulu, etc on gingerbread... which would have performance issues

If you use something like ustream, you can use netflix now, while you wait for the official app.

 

[Squeak825]

If I am reading this whole thing correct, this will effectively kill having any type of schools textbooks on the device (especially K-12).

You can't allow everyone to purchase the books in-app (think Teachers Editions), and textbook publishers cannot afford a 30% cut off the top, especially with the way some states fund for textbooks.

The only real way to do it before was to create a free app with ability to access the book via a username/password that is given after paying for it outside the app.

But if Apple is going to require in-app purchase as well in these instances, the textbook publishers most likely will not be able to offer them at all.

Less of a problem for College books, but 30% is still a huge cut that most likely is not acceptable.

 

[pundit]

If I am reading this whole thing correct, this will effectively kill having any type of schools textbooks on the device (especially K-12).

You can't allow everyone to purchase the books in-app (think Teachers Editions), and textbook publishers cannot afford a 30% cut off the top, especially with the way some states fund for textbooks.

The only real way to do it before was to create a free app with ability to access the book via a username/password that is given after paying for it outside the app.

But if Apple is going to require in-app purchase as well in these instances, the textbook publishers most likely will not be able to offer them at all.

Less of a problem for College books, but 30% is still a huge cut that most likely is not acceptable.

Naw... the google solution is web based, and works around the 30% issue. 3rd party app store books, however, notsomuch.

 

[Squeak825]

Naw... the google solution is web based, and works around the 30% issue. 3rd party app store books, however, notsomuch.

How does the Google solution work for the iPad?

 

[rolphi]

So will you be happy when your movie tickets not only cost 43% more in-app to buy, but now they also cost 43% more if you buy them outside the app too??

I'm curious as to why you are so strongly defending every other middle-man in the chain from movie production to your eyeballs? Is that because it is the status quo?

Movie gets produced, then a distributor buys it and advertises it, then they pay someone to make prints, then the movie theater takes a cut, and the credit card processor, and the rent on the movie theater building...

They are all adding X% of the price of things, but that's okay because....?

 

[pundit]

How does the Google solution work for the iPad?

Textbook publisher publishes to HTML with small standard HTML code extension.
Publisher signs with google for 10% (and has option to advertise and deal with payment systems elsewhere too.)
Google handles marketplace, payments, subs.

The Ipad has a browser and can reach google. Its just standard tech, and it never touches the app store.

http://googleblog.blogspot.com/2011/02/simple-way-for-publishers-to-manage.html

 

[johnqh]

Textbook publisher publishes to HTML with small standard HTML code extension.
Publisher signs with google for 10% (and has option to advertise and deal with payment systems elsewhere too.)
Google handles marketplace, payments, subs.

The Ipad has a browser and can reach google. Its just standard tech, and it never touches the app store.

http://googleblog.blogspot.com/2011/02/simple-way-for-publishers-to-manage.html

Interesting...different philosophies.

When people buy ebooks, they want it to be available offline.

So, with Google, the content is online?

 

[CQd44]

About the netflix blocking android thing:

Some android browsers can spoof the user agent. Wouldn't this allow netflix to work?

 

[pundit]

Interesting...different philosophies.

When people buy ebooks, they want it to be available offline.

So, with Google, the content is online?

Cloud based yes, but not necessarily internet based. Theoretically for something like a campus you might license the content on a server, so you never need to leave the campus WAN.