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

[rolphi]

If you are willing to pay 43% more for your content for the "work" that you believe that Apple does, then have at it. In my opinion, they got paid for their work when I gave them $600 for my iPad, and I am not willing to pay a 43% surcharge for me to access content on that iPad, just because Apple has now decided that they want more.

I would agree with you, except that I don't think prices are set that way. Price is determined by what people are willing to pay, and all of the other companies involved jockey to see what percentage they can take.

If the prices go up, and people continue to buy, then the content provider was leaving money on the table.

If the prices stay the same, but Apple gets their cut, then the content provider's margins are reduced.

Or the content provider cuts out some other middle man and deals directly with Apple, keeping prices the same and Apple gets their cut.

Or the prices go up, people stop buying, and then Apple renegotiates its rates with the content providers, and then the prices go back down.

Or the answer could be a any combination of those things. But at no time is the full itemized Value Added chain presented to the customer for them to pick and choose which part they think was "worth" the work they did. It's all about what they can get away with.

Either way, why should I have a personal opinion about this instance? This is happening for every good or service I have bought or will ever buy in my entire life.

So how do I download applications from Amazon for my iPhone?

Is the only "choice" I have the OS?

Why are these portable computers locked? I already paid Apple for my phone!!!

They are locked because you paid Apple for a locked portable computer. I'm sorry the product you want to buy doesn't exist, but that doesn't seem to be Apple's problem.

 

[Deliverator007]

the $600 for your iPad is small compared to the amount of money they spent on developing it and manufacturing it

You really think they don't turn a profit on the hardware sales? Have you seen their financial results lately? I assure you, Apple is in no way subsidizing my or anybody's purchase of an iPad. They are profiting handsomely.

 

[rolphi]

You are confusing vertical price fixing and horizontal price fixing. Bose headsets are the same price because the manufacturer requires this of its retailers, so the retailers don't undercut each other. This is generally ok. What Apple is doing may be closer to horizontal price fixing, which is multiple retailers agreeing not to undercut one another's prices, to maintain both of their profit margins. Horizontal price fixing is an antitrust violation.

Yes. I agree that the situations are not completely analagous. I do think though, that even though the analogy is not perfect, it still illustrates the point that companies dare to ask, I mean "tell", other companies what they can charge.

But to answer your point about horizontal price fixing, I'm not sure Apple is acting as a retailer in this instance. They are not conspiring with Amazon to say the price of an ebook has to be the same as the price in the iBook store.

I think a better analogy is a professional referral service, like 1-800-PLUMBER.

Let's say I call 1-800-PLUMBER and ask them to send over a certified plumber to my house. I pay 1-800-PLUMBER, and they handle my credit card.

The contracted plumber comes to my house and does the service. Then the plumber offers me a 50% discount from the 1-800-PLUMBER rates to hire him directly for another job. But 1-800-PLUMBER has a contract with the contractor that states that he cannot offer services this way.

Is 1-800-PLUMBER conspiring to fix plumber rates in this instance? It is certainly legal for a plumber to offer me services. But that contract between 1-800-PLUMBER and the contractor would never be questioned in an anti-trust way.

Thoughts?

 

[pundit]

Yes. I agree that the situations are not completely analagous. I do think though, that even though the analogy is not perfect, it still illustrates the point that companies dare to ask, I mean "tell", other companies what they can charge.

But to answer your point about horizontal price fixing, I'm not sure Apple is acting as a retailer in this instance. They are not conspiring with Amazon to say the price of an ebook has to be the same as the price in the iBook store.

I think a better analogy is a professional referral service, like 1-800-PLUMBER.

Let's say I call 1-800-PLUMBER and ask them to send over a certified plumber to my house. I pay 1-800-PLUMBER, and they handle my credit card.

The contracted plumber comes to my house and does the service. Then the plumber offers me a 50% discount from the 1-800-PLUMBER rates to hire him directly for another job. But 1-800-PLUMBER has a contract with the contractor that states that he cannot offer services this way.

Is 1-800-PLUMBER conspiring to fix plumber rates in this instance? It is certainly legal for a plumber to offer me services. But that contract between 1-800-PLUMBER and the contractor would never be questioned in an anti-trust way.

Thoughts?

That's a contractual obligation of an employee of a single entity, versus what is required by law to be independent decision between discrete businesses... not counting the monopoly aspect

to wit:

Tying one product into the sale of another can be considered abuse too, being restrictive of consumer choice and depriving competitors of outlets.

also

If a firm has a dominant position, then there is "a special responsibility not to allow its conduct to impair competition on the common market"

(Updated: clarified "obligation" and "requirement of law")

 

[rolphi]

That's a contractual obligation, versus what is required by law to be independent decision... not counting the monopoly aspect

To wit:

"Tying one product into the sale of another can be considered abuse too, being restrictive of consumer choice and depriving competitors of outlets."

also

"If a firm has a dominant position, then there is 'a special responsibility not to allow its conduct to impair competition on the common market'".

(I don't know how to do multiple layers of quoting.)

Tying what product to what product? Barnes and Noble won't put my crappy novel on their shelves because it sucks; they are not depriving me of an outlet.

And what market are you defining as the "common market" and who are their competitors? I don't believe "selling ebooks on iOS" is considered a market.

They are treating all vendors equally in this case, and are not directly competing with them, but setting up a contratural obligation in order to sell through the App Store.

 

[Chwisch87]

Here is the truth. Content providers are plain and simple going to have to raise prices. It would fall under anti-trust of those prices are affected across all platforms. Thats anti-competitive.

Just remember. At the end of the month, you still pay that fee. IF you buy it in the app store, YOU are paying apple 30%. 30% you wouldn't have to pay..

 

[Deliverator007]

Yes. I agree that the situations are not completely analagous. I do think though, that even though the analogy is not perfect, it still illustrates the point that companies dare to ask, I mean "tell", other companies what they can charge.

But to answer your point about horizontal price fixing, I'm not sure Apple is acting as a retailer in this instance. They are not conspiring with Amazon to say the price of an ebook has to be the same as the price in the iBook store.

I think a better analogy is a professional referral service, like 1-800-PLUMBER.

Let's say I call 1-800-PLUMBER and ask them to send over a certified plumber to my house. I pay 1-800-PLUMBER, and they handle my credit card.

The contracted plumber comes to my house and does the service. Then the plumber offers me a 50% discount from the 1-800-PLUMBER rates to hire him directly for another job. But 1-800-PLUMBER has a contract with the contractor that states that he cannot offer services this way.

Is 1-800-PLUMBER conspiring to fix plumber rates in this instance? It is certainly legal for a plumber to offer me services. But that contract between 1-800-PLUMBER and the contractor would never be questioned in an anti-trust way.

Thoughts?

Well, I think you may be right that Apple isn't really a retailer of Amazon's products. A closer analogy may be that they are proposing to be an eBay and a Paypal for content (and both of whom charge the seller for their services), but it's hard to find a real world analogy or precedent for the price fixing requirement. Think different indeed!

 

[pundit]

(I don't know how to do multiple layers of quoting.)

Tying what product to what product? Barnes and Noble won't put my crappy novel on their shelves because it sucks; they are not depriving me of an outlet.

And what market are you defining as the "common market" and who are their competitors? I don't believe "selling ebooks on iOS" is considered a market.

They are treating all vendors equally in this case, and are not directly competing with them, but setting up a contratural obligation in order to sell through the App Store.

Tying an ios subscription to a non ios subscription, and you'd be surprised what constitutes a market... if a browser within MS Windows is considered a market, the app store is easily considered a dominant monopoly within tablet computing.

I notice you say "ebooks on iOS" but this is clearly more than just ebooks, but about any paid ongoing content provision, notably where Apple doesn't distribute the content.

 

[rolphi]

Here is the truth. Content providers are plain and simple going to have to raise prices. It would fall under anti-trust of those prices are affected across all platforms. Thats anti-competitive.

Just remember. At the end of the month, you still pay that fee. IF you buy it in the app store, YOU are paying apple 30%. 30% you wouldn't have to pay..

I think you are conflating "I don't like it" with "that's anti-competitive".

1. Amazon and Neflix are not content providers. They are re-sellers of content providers' works. Apparently their profits are sanctioned by divine providence and are above question.
2. You don't understand anti-trust. It seems insulting to say it this way, but it is the truth.
3. Content providers are not going to have to raise prices. If their costs go up, they usually like to raise prices, but since price is dictated by the market, they don't always get to. Why are their current prices okay, but if they raise them, it is because of evil Apple? Because that is the status quo? How did they calculate how much profit margin to take before, and why were all of those reasons valid, but this reason is suddenly not?
4. You assume that you wouldn't have to pay that 30% if it were not for Apple. That is not a valid assumption. Let's say you buy a t-shirt from China, and it costs you $8, $1 of which goes to the company that shipped it across the Pacific Ocean. And then, let's say that this company invents a magical device that transports the t-shirt across the ocean with magic, thus they no longer need to pay the shipping company. Do you think the price of your t-shirt will go down to $7? If you're happily paying $8 now, the t-shirt salesman will happily keep selling you the shirt at that price and take the $1 to his own bottom line. The presence or absence of that link in the supply chain doesn't change your price. It only changes which companies get which % of your money.

 

[quetzalcoatl]

I think you are conflating "I don't like it" with "that's anti-competitive".

1. Amazon and Neflix are not content providers. They are re-sellers of content providers' works. Apparently their profits are sanctioned by divine providence and are above question.
2. You don't understand anti-trust. It seems insulting to say it this way, but it is the truth.
3. Content providers are not going to have to raise prices. If their costs go up, they usually like to raise prices, but since price is dictated by the market, they don't always get to. Why are their current prices okay, but if they raise them, it is because of evil Apple? Because that is the status quo? How did they calculate how much profit margin to take before, and why were all of those reasons valid, but this reason is suddenly not?
4. You assume that you wouldn't have to pay that 30% if it were not for Apple. That is not a valid assumption. Let's say you buy a t-shirt from China, and it costs you $8, $1 of which goes to the company that shipped it across the Pacific Ocean. And then, let's say that this company invents a magical device that transports the t-shirt across the ocean with magic, thus they no longer need to pay the shipping company. Do you think the price of your t-shirt will go down to $7? If you're happily paying $8 now, the t-shirt salesman will happily keep selling you the shirt at that price and take the $1 to his own bottom line. The presence or absence of that link in the supply chain doesn't change your price. It only changes which companies get which % of your money.

I am only going to respond to point 1 from the ebook side. They are content providers that took the time to negotiate with the content makers to sell the products. And they have earned a share by doing so. What apple is trying to do is make it to where they do not have to go through the steps yet get a share as a content provider. And to make matters worse make it to where they only way to buy through the app is the way that they get the share. Currently Amazon has somewhere around 6X as many books avail as iBooks.
They also assume that anything bought through the app was a customer that they brought to the store. Does not matter that I have had an amazon account for 3X as long as I have had an iTunes. And the fact that I had many ebooks that I bought through amazon that I wanted to read on my android phone as well as my iPad. So amazon brought me to apple not the other way around. And now they want to take a share from amazon through an in app link. And that is what most people will use just because it is easy way. And people most often take the path of least resistance. If it was not a simple money grab they would atleast try to level the field and allow a buy it now from iTune and buy it now from amazon side by side. That would be customer choice. And they don't want choice.

 

[rolphi]

Tying an ios subscription to a non ios subscription, and you'd be surprised what constitutes a market... if a browser within MS Windows is considered a market, the app store is easily considered a dominant monopoly within tablet computing.

I notice you say "ebooks on iOS" but this is clearly more than just ebooks, but about any paid ongoing content provision, notably where Apple doesn't distribute the content.

That's not how tying is defined in this context. Tying is more like insisting a copier is sold with a contract to provide copier maintenance. Or selling a printer and not allowing 3rd party ink refillers.

In this case, we are still talking about what one very large for-profit company is trying to negotiate with other very large for-profit companies.

And also, if we have to bring the MS case into this, that Microsoft had 95% of the PC market at the time.

If you are defining apps for tablet-based computers a market, we have to remember, as the anti-apple folks like to point out, that WebOS, Honeycomb, RIM, and probably Windows, are all planning to crash that party. If after 5 years, Apple still holds 95% of that market in 5 years, then we might see something. But in this "worst-case" scenario, Apple would be laughing all the way to the bank.

Remember how Google wasn't ruled a monopoly in mobile advertising because Apple was eventually going to join the market?

"Any paid ongoing content provision" on iOS does not constitute a market. That's like saying Disney has a monopoly on selling water in DisneyWorld. And, just like DisneyWorld is not the only place in the world for you to buy water, in the market of "content provision", Apple is far from a monopoly.

That isn't going to stop companies from trying to cast it as anti-trust. Let's all just agree that we are going to be reading a lot of coverage of this case directly from one of the sides DIRECTLY involved with the negotiation (publishers), and perhaps maybe they may not be so unbiased.

I am only going to respond to point 1 from the ebook side. They are content providers that took the time to negotiate with the content makers to sell the products. And they have earned a share by doing so.

Is that the crux of your concern? The idea that a company has to earn their share? That is a nice notion, but it's not how the world works. And unfortunately, consumers don't actually care enough to change their behavior becuase of this. They may complain, but they won't change. If Apple were a person, taking advantage of this could be considered "sociopathic". But they are not a person, so it is considered "good business". Doesn't mean we have to like it.

What apple is trying to do is make it to where they do not have to go through the steps yet get a share as a content provider. And to make matters worse make it to where they only way to buy through the app is the way that they get the share.

Yes, but that is not the only way to buy content. You could, for example, buy an Amazon book through your web browser on a PC, and it will sync to your iDevice. Apple doesn't see a penny.

Currently Amazon has somewhere around 6X as many books avail as iBooks.

Kudos to Amazon on their ability to negotiate with publishers.

They also assume that anything bought through the app was a customer that they brought to the store. Does not matter that I have had an amazon account for 3X as long as I have had an iTunes. And the fact that I had many ebooks that I bought through amazon that I wanted to read on my android phone as well as my iPad. So amazon brought me to apple not the other way around.

Certainly, that seems like an audacious claim by Apple. It's probably not true, but it sure seems like a great place to begin negotiations, doesn't it?

And now they want to take a share from amazon through an in app link. And that is what most people will use just because it is easy way. And people most often take the path of least resistance.

And here is the issue that no one seems to be discussing! If the big fear is that everyone is going to do this, doesn't that mean that it is 100% the most consumer friendly option, i.e. the one that every consumer really really wants? How is that bad for the consumer again? We know why it's bad for Amazon, but I'm not Amazon.

It's not fair! Apple are going to give consumers something that will use a lot!

If it was not a simple money grab they would atleast try to level the field and allow a buy it now from iTune and buy it now from amazon side by side. That would be customer choice. And they don't want choice.

They don't want choice for whom? They are insisting on choice. Are you arguing for Amazon or for consumers? Every way you look at this, consumers will have more choice than they have now. That's the big fear from publishers remember? That when faced with the choice, people will pick Apple's way over the old way.

And now Google is "only" going to charge 10%, and everyone is happy with this!

We went from 0% to Google or Apple to suddenly 10% is okay?

If I were a conspiracy theorist, I would say that Google and Apple are colluding to get 10% by playing good cop/bad cop. What if 10% was the plan all along, and this is the way they get it?

Is it just me?

 

[pundit]

I think you are conflating "I don't like it" with "that's anti-competitive".

1. Amazon and Neflix are not content providers. They are re-sellers of content providers' works. Apparently their profits are sanctioned by divine providence and are above question.

The thing which Amazon and Netflix aren't is a content producer you could legitimately call them either a provider or distributor, although the distinction of any of the three are completely irrelevant in anti-trust law. You can't use a dominant position to reduce competition or control pricing, regardless of the manner of business involved, or the profit motives of those involved.

3. Content providers are not going to have to raise prices. If their costs go up, they usually like to raise prices, but since price is dictated by the market, they don't always get to. Why are their current prices okay, but if they raise them, it is because of evil Apple? Because that is the status quo? How did they calculate how much profit margin to take before, and why were all of those reasons valid, but this reason is suddenly not?

This is largely true but irrelevant to whether Apple is engaging in monopolistic action. The only determinate to this is the ipso facto result of the rules the company imposes.

4. You assume that you wouldn't have to pay that 30% if it were not for Apple. That is not a valid assumption. Let's say you buy a t-shirt from China, and it costs you $8, $1 of which goes to the company that shipped it across the Pacific Ocean. And then, let's say that this company invents a magical device that transports the t-shirt across the ocean with magic, thus they no longer need to pay the shipping company. Do you think the price of your t-shirt will go down to $7? If you're happily paying $8 now, the t-shirt salesman will happily keep selling you the shirt at that price and take the $1 to his own bottom line. The presence or absence of that link in the supply chain doesn't change your price. It only changes which companies get which % of your money.

Heres the issue with your example; there is an existing chain of production and supply with regard to netflix. The issue is with Apple trying to insert itself into the chain demanding a percentage of the whole cost, including the production net cost. A common example of a group which inserts itself into the supply chain in this manner is the Mob.

If everything was equal then Apple could do this, and Netflix could choose, or not choose to abide by those rules... and perhaps, indeed, Netflix WILL choose to abandon iOS, yet everything is not equal because almost every corporation in the U.S. is subject to the Sherman and Clayton Act.

Apples dilemma resides in their requiring that a company ties their in-app subscription price (which they require) to their outside subscription price, and mandating a cut therein. A company negating a company (or group of companies) profitability in their dominant market is an anti-competitive action and is in direct violation of the Sherman act.

That said I don't think that Apple wants the nuclear option; if anything Apple needs content distributors on their platform to fulfill its advertised 'magical' function of media consumption device.

The VoD isn't a big market comparatively to Video subscription, rental or physical sale, netting less than 10% of a films domestic run, and split between hotels, on demand and media sites. Apple doesn't have a golden goose with itunes. People simply prefer to either buy the dvd or rent via cable or satellite, or failing that, frequently rent from redbox or netflix.

What I think will happen is Apple and the distribution companies will negotiate a compromise: $1 iOS subscription addons, that are subject to the $.3 surcharge, and the existing subscription which is not.

If that doesn't happen, Apple and numerous content companies will part ways.

Netflix et al survived just fine prior to the ipad. Apple will survive just fine, but the ipad's halo from these apps, will disappear

That's not how tying is defined in this context. Tying is more like insisting a copier is sold with a contract to provide copier maintenance. Or selling a printer and not allowing 3rd party ink refillers.

except the rule specifically requires the same or better price on two different offers on THEIR platform along with a required subscription in app (and absence of link to the original offer)

In this case, we are still talking about what one very large for-profit company is trying to negotiate with other very large for-profit companies.

And also, if we have to bring the MS case into this, that Microsoft had 95% of the PC market at the time.

Ipad is.. what.. 85% of the tablet market and has a walled garden ecosystem. Its MORE closed than MS.

If you are defining apps for tablet-based computers a market, we have to remember, as the anti-apple folks like to point out, that WebOS, Honeycomb, RIM, and probably Windows, are all planning to crash that party. If after 5 years, Apple still holds 95% of that market in 5 years, then we might see something. But in this "worst-case" scenario, Apple would be laughing all the way to the bank.

Remember how Google wasn't ruled a monopoly in mobile advertising because Apple was eventually going to join the market?

Wasn't there a deal with a mobile advertising agency being ACTIVELY pursued at the time that was dropped?

"Any paid ongoing content provision" on iOS does not constitute a market. That's like saying Disney has a monopoly on selling water in DisneyWorld. And, just like DisneyWorld is not the only place in the world for you to buy water, in the market of "content provision", Apple is far from a monopoly.

It depends on the definition of market... but then itunes is 83% of the app market, even if you include phones. A corporation doesn't have to win in U.S. court, it can argue and win in E.U. court (and Apple folded in an E.U. anti-trust measure regarding itunes in the E.U. already.)

And now Google is "only" going to charge 10%, and everyone is happy with this!

We went from 0% to Google or Apple to suddenly 10% is okay?

If I were a conspiracy theorist, I would say that Google and Apple are colluding to get 10% by playing good cop/bad cop. What if 10% was the plan all along, and this is the way they get it?

Is it just me?

Google is charging 10% in app subscription for a specific service, and not requiring pricing or limitations outside of this app in any way, shape or form.

 

[quetzalcoatl]

Yes, but that is not the only way to buy content. You could, for example, buy an Amazon book through your web browser on a PC, and it will sync to your iDevice. Apple doesn't see a penny.


Kudos to Amazon on their ability to negotiate with publishers.

And if they pull the app which I think is something that could happen. It is well know that amazon gets 30% off ebooks. And with most new ebooks the publisher sets the price so they are getting exactly what they want from the deal. Do you really think that amazon will give up its entire margin to apple to keep the app? Meaning you could not do it because you won't have the app to read it on.

How is that bad for the consumer again? We know why it's bad for Amazon, but I'm not Amazon.

Because of the margins how do you think amazon keeps the books on apple products if they choose to? They must raise the cost for everyone and how is that good for consumers? That is if they can come up with a way and publishers will allow it since they set the price for most new releases.

They don't want choice for whom? They are insisting on choice. Are you arguing for Amazon or for consumers? Every way you look at this, consumers will have more choice than they have now. That's the big fear from publishers remember? That when faced with the choice, people will pick Apple's way over the old way.

They do not want choices for consumers. As I said it will either raise the price or they will leave the market hurting those that want it. Giving cosumers fewer choices. And it is not a matter of picking apples way over the old way. How many people use the kindle app to buy right now? And under the new policy you could not buy it the old way you could only buy it the apple way within the app because they are not allowed to have the link there like they did before.

 

[k995]

I think you are conflating "I don't like it" with "that's anti-competitive".

1. Amazon and Neflix are not content providers. They are re-sellers of content providers' works. Apparently their profits are sanctioned by divine providence and are above question.

No, but if they suddenly would demand a 30% increase on the services already offered free before, you would see the same complaints.

2. You don't understand anti-trust. It seems insulting to say it this way, but it is the truth.

I would say the entire apple eco system is antitrust , its main goal is to lock you in so you will stick with apple and not having to reinvest money into another platform to buy the same apps/magazines.

3. Content providers are not going to have to raise prices. If their costs go up, they usually like to raise prices, but since price is dictated by the market, they don't always get to. Why are their current prices okay, but if they raise them, it is because of evil Apple? Because that is the status quo? How did they calculate how much profit margin to take before, and why were all of those reasons valid, but this reason is suddenly not?

You dont seem to understand what apple wants:

Content providers who offer in app sales or who use the app to provide content that is sold outside apple eco system are forbidden certain things.

Most important are: they cant ask more on the apple platform and if they sell outside apple eco system and use an apple app they also must provide the possibility to sell it trough apple.

This results in the reality that people using apple apps will have the possibility to either buy in the app they are already using or outside, price will be the same but no doubt it will be easier in app.

The downside for the content provider of course is a 30% loss off revenue that goes straight to apple everytime someone does this.

And no that doesnt mean he has to increase prices, but loosing 30% in revenue will bankrupt most of them. They will have no other option to increase prices , and dont forget 30% to apple means 40+% increase to retain the same revenue.

4. You assume that you wouldn't have to pay that 30% if it were not for Apple. That is not a valid assumption. Let's say you buy a t-shirt from China, and it costs you $8, $1 of which goes to the company that shipped it across the Pacific Ocean. And then, let's say that this company invents a magical device that transports the t-shirt across the ocean with magic, thus they no longer need to pay the shipping company. Do you think the price of your t-shirt will go down to $7? If you're happily paying $8 now, the t-shirt salesman will happily keep selling you the shirt at that price and take the $1 to his own bottom line. The presence or absence of that link in the supply chain doesn't change your price. It only changes which companies get which % of your money.

Your example doesnt make sense.

We are talking about content, not fysical things.

It doesnt cost apple 30% besides that you ALREADY paid for the shirt (=ipad) or the transport (=app) now you have to pay because you wear it.

 

[GulGnu]

My two cents:

1: It is ridiculous to "define a market" when that market is just emerging. Antitrust only makes sense in rigid markets with high barriers to entry. Even though Apple has a large share right now, it´s obvious that competitors are emerging left and right.

Related to that:

2: If Apple won´t budge on this my next tablet will be likely be a non-iOS one (most likely Android, as that is an open system, and my next phone, well, you get the gist), despite me being quite fond of Apple´s design prowess.

I am prepared to pay extra for Apple´s curation and management of the App Store. I´m not prepared to pay significantly more for Apple holding external services hostage (Read: I use Kindle).

 

[christian_k]

Fail. 30% of ones revenue is significant for anybody.

Don't bend over so deep for Apple.

Its even 40% if your target audience is in other locations (Europe).

Christian

 

[AaronEdwards]

the $600 for your iPad is small compared to the amount of money they spent on developing and manufacturing it

If that would be true, then every other manufacturer of tablets would be making huge losses, since as often pointed out, Apple makes a huge profit om hardware sales.

Hiking the price of the product 43% won't help to retain the same profit, since the consumers can't just hike their spending by 43%.

The consumers will instead end up buying fewer products.

 

[yg17]

People are idiots.

What do you think the markup on Windows 7 is at Best Buy compared to what Best Buy pays for it.

Hell, Windows 7 Pro is $299 at Best Buy yet Amazon sells the same product for $259 or 15% right there and they are still making money.

30% is nothing for the work that Apple does.

Apple doesn't have to lift a finger or spend a penny for Amazon, Netflix or Rhapsody to be able to get content to your iOS device.

 

[Ries]

Imagine sony demanding a 30% cut for showing broadcasts on thier televison sets.

 

[alvindarkness]

I have a question that I hope someone can answer. There is a local bakery here that sells their stuff over the web. Basically you choose what you want delivered to you and on what days of the week. For example on each Monday I get a fresh loaf of bread and some danish's delivered to my door at 6 in the morning. Its a reoccurring bill and continuous service.

If they made an iOS app to handle orders and show updated menus etc, would they need to give apple 30% or does this not fall under the new guidelines?

 

[Gjeepguy]

It seems like it is really only going to affect people you subscribe through the app... not the other way around.

For example Netflix....

If they allow you to subscribe directly through the app, Apple is going to take 30% of those who subscribe that way.

If you subscribe directly through Netflix, and just use it through the app, Netflix still gets 100%.

It doesnt seem like apple is forcing Netflix to provide in app subscription purchasing, just if they do, apple wants 30%.

 

[geko29]

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.

Maybe they think that because Apple advertised the **** out of it....or did you miss all the keynotes where they invited executives of Pandora, Netflix, etc. etc. up on stage to promote their "free apps that access things that are not free". They did that, because these services add value to the platform, at almost zero cost to Apple.

 

[Gjeepguy]

Option 1: Netflix adds in app subscription. Only people who subscribe through the app give 30% to Apple. Existing customers and new customers who sign up via the web or phone give 100% to Netflix. All customers are able to use the App for viewing Netflix movies.

Option 2: Netflix doesn't add in app subscription. All new customers must sign up via the web or phone. Apple gets no money, but Netflix still can provide the App for viewing Netflix movies.

 

[geko29]

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

Because Amazon is housing and delivering the product, and providing ancillary services (the ability to download on non-apple devices, content syncing between devices, hosting reviews, managing updates, etc). Apple literally does NOTHING except process the payment.

So the one who does all the work gets nothing, while the one that does the job that others currently do for 2.5% gets 30%, and that's somehow fair?

 

[yetanotherdave]

Option 2: Netflix doesn't add in app subscription. All new customers must sign up via the web or phone. Apple gets no money, but Netflix still can provide the App for viewing Netflix movies.

Apple forbids this. If you offer the subscription outside the app store, you must offer it in app, or they remove the app. That's what's really annoying everyone, they are focing companies hands.

When the apps start disappearing, iOS as a platform loses way more value than that 30% in lost customers.