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

[geko29]

What is stopping iBooks from having everything amazon does? I thought I remembered Amazon strong arming some things with publishers, but I couldn't say anything for certain....

The primary thing is the world's largest publisher (Random House) telling Uncle Steve to get bent when he said "it's the Agency model or you're not selling in iBooks". They basically said "Fine, then we won't sell in iBooks. You don't get to dictate our pricing model."

Ergo, Amazon has titles from Random House, where they pay the wholesale price that Random House sets for the book and then turn around and sell it for whatever they want (which is almost always less than books from Agency-model publishers), while Apple doesn't.

They also have vastly more indie books, because their large marketshare (somewhere in the neighborhood of 82%) makes them a much more attractive marketplace than iBooks.

 

[Crzyrio]

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

When you buy the tv, in order to keep it running you have to maintain it and for that you have to pay out of your own pocket instead of the broadcasting companies paying 30% of it to keep that specific tv running.

Similar in Apple's case except your not paying yearly maintenance, instead it is being taken out of the books you buy.
Apple is simply taking a cut of the profit in order to keep its system running. Would you rather pay a yearly fee so you can access the app store and ibooks?

The fact is, apple cant simply allow publishers to use their system for free, they are providing a service, they are providing publishers a huge market of people that otherwise they would not have access too. And with all things there is a cost to it.
And yes i know there is a developer fee, but there is also a fee to purchase your tv the first time does that mean that sony should provide free maintenance?

Yes 30% seems steep, but if publishers are providing a magazine on an ipad they are able to add more content that would justify increasing the price. They are saving their money on this 'expensive pap

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.

I would be defending any company if they announced the same procedure. Just because I use Apple products doesn't mean I'm a fanboy.

Someone had to develop that API for the apps. Someone has to provide storage and distribution for the apps. Someone has to provide the means for that application to have in-app subscriptions and a content delivery system to the app. That's Apple.

Learn how the system works? I understand how the system works. And if you don't like Apple's rules go play in Google's sandbox. I'm sure that they're much more willing to screw over consumers in the end. That's not where I want to be.

 

[geko29]

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.

You're partially right. It isn't difficult to code a website to play H.264 video. What is exceptionally difficult is to code a website to play H.264 video, while ALSO making it difficult to steal said video, without using a wrapper like Flash or Silverlight. HTML5, which can play H.264 just fine, has no provisions for content protection.

Netflix uses Silverlight on its website--but could just as easily have used Flash--both of which are incompatible with iOS. Therefore, in order to offer their service on iOS, they HAVE to do it in the form of an app, which functions as the DRM wrapper in this case. They are contractually prohibited by the content owners from making their site function in Mobile Safari, because they are required to protect the content, and it's impossible to do so in Mobile Safari (or any other mobile WebKit-based browser).

 

[chrishemley823]

What are your thoughts on Apple taking 30% of revenues from subscription services?

And taking 30% from all sales through the app and not allowing external links so users can purchase directly from the developer?

I can't help but hope this is a practical joke. Not only will this hurt the developers, but it could hurt consumers. What happens when Apple takes 30% of Netflix subscription payments? The profit margin is nearly nothing. They rely on massive amounts of people to make a decent profit, but if there's a 30% cut hindering it, the profit margin will be razor-thin, if any.

Hulu, Netflix, Amazon, etc aren't designed to take much lower than they already are. The prices have been optimized for profit AND at the price consumers are willing to pay. Raise prices, and you might be comfortably out of that price people will shell out for. Keep prices the same, and your profit is no longer optimized for this market.

What was Apple thinking when they enacted this policy? They made 50 billion in revenue last quarter without this ridiculous policy. Apple says they love their developers, but this is one way to screw them over severely. Why does this matter to me? My favorite apps may no longer be usable or in service for my iOS devices. What if Netflix decides to pull their services because they're losing a WHOPPING 30%?

The iPhone is a paperweight without apps, which are created by developers. So why screw the hell out of them, Apple?

 

[torbjoern]

I feel exactly the same way about this as I do about the fact that Apple wants tax amnesty. Despicable behaviour.

 

[faith4more]

Sinister

 

[racer1441]

I'm ok with it.

Apple has the platform, customers, and market. They deserve something for that.

 

[Dragonomicon]

This is not traditional distribution...

so the notion that Apple should be making the same margin as, say Barnes and Noble (@ about 30%), for distributing real world content that requires investment in bricks and mortar infrastructure, staff salaries, and inventory is ludicrous.

Any way you slice it this is a greedy move by Apple. Having a subscription to the Economist and the New Yorker brought me to the respective ipad apps for those publications, Apple is crazy to think that it is the other way around (that the app store generated our interest in content). Consumers are looking for access to content, the delivery of that content is almost incidental, and it certainly isn't worth 30% of the price that I pay to the Economist (which again, is doing all the work supplying the content I'm after). Even if you could convince me that Apple deserves some fee for its novel distribution platform, it should be a nominal fee at best, something akin to the 2-4% that credit cards charge for transaction fees.

 

[chrishemley823]

It should be a nominal fee at best, something akin to the 2-4% that credit cards charge for transaction fees.

Exactly what I was thinking. I get charged only 2.75% for accepting credit cards, not 30%.

 

[maflynn]

Excessive, and it may impact availability especially when google is only taking 10%

 

[Zcott]

As a consumer, great. Why should these online outlets camp for free on an entirely Apple-devised platform? Let's remember that we're talking here not about the little guy, but massive news and media outlets and publications.

 

[Gjeepguy]

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.

you are correct, Netflix will have to provide subscriptions through the app.

"However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app. "

Apple is marketing the app through their app store, so they should get some cut... what percentage will buy through the app vs sign up online?

 

[cav23j]

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.

i was just pointing out that 1 sale doesn't mean anything to Apple

 

[vrDrew]

So what?

Most of the whining seems to come from people who a) seem to have a pathological hatred (dare I say envy?) of Apple and b) seem to be the sort of people who, in the next breath, ramble on about how they have some sort of God-given right to an endless supply of free entertainment.

The fact of the matter is that Amazon's $9.99 price for best-selling e-books was inherently destructive. It would essentially have put free-standing (physical) book sellers out of business. And it would have slashed publisher revenues to the point that they would be unable to invest in new authors. Apple's model allows the publisher to set the price of their product.

To better understand the economics of e-books, and how and why Apple's model is better - I suggest people read Math of Publishing Meets the E-Book.

 

[StructAural]

Very greedy move by Apple.
Interesting that they have been attempting to hobble Spotify in the US too. Sounds like they're getting into the streaming industry too - just more expensively as is their need.

So they ban Flash on the platform forcing many content providers to write apps for iOS rather than just working through a web browser and now insert themselves between the content providers and the purchasers of their hardware like The Goodfellas.
Outrageous, this is a protection racket basically. We want 30% of your subscription turnover (not profit) if an iDevice is accessing it, even though we've sold the damn device and already made our profit on it. Oh and we'll use all your free apps and the fact that we sell free apps to market the iPhone thus getting more people to buy our products and then once safely ensconced in our monopolised ecosystem we'll change our agreement to properly shaft you.
Yeah I'd have the choice not to pay the gangsters for operating my shop but I'll have to leave town...
Apple tax, pay it when you buy the device, pay it when you buy an app, pay it when you get further content from somewhere else that has nothing to with Apple.
I remember when innnovation and creativity were the Apple buzzwords, not greed and control freakery. I get more embarrassed about being a 20 year mac-head every year.
I've watched a lot of iPhone owning friends switch to Android over the last year, I may have to do the same (once they sort out that audio latency), I can't be loyal to a brand that makes me angry so often. iOS is becoming very different to the Mac experience and I fear the Mac may be influenced by this money before everything else way of working (something that Apple have always said they have no interest in, just great products. Yeah right, like the fat bloke who says he hardly eats anything).

And as someone else pointed out, where does this stop, will my ticket buying apps have to give up 30% because I used their app instead of going to their website?

 

[Dragonomicon]

As a consumer, great. Why should these online outlets camp for free on an entirely Apple-devised platform? Let's remember that we're talking here not about the little guy, but massive news and media outlets and publications.

Let's also remember that Apple is not the little guy either, its a massive technology monolith so I don't really understand your point? Apple is not fighting for you. Its fighting for its bottom line, greedily. How can anyone here justify a 30% cut for a distribution platform that incurs essentially no cost (and yes, we know there are marginal costs associated with maintaining the app store but these are nowhere near what it costs to maintain a physical distribution network).

Bottom line, this is totally bogus for consumers and for publications (the ones doing the work to provide the content).

 

[GFLPraxis]

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?

Because Apple won't let them raise the prices for iOS users? I mean...let's say you're Amazon. You've already cut a deal to take a 30% cut from the books you sell and give 70% to the publishers. Now Apple demands a 30% cut of anything you sell through the iOS store. You have absolutely no reason to sell anything through iOS, unless you tack on an extra iOS tax for Apple to take. You can't even decide not to sell through iOS, since Apple specifies this in the rules!

I'd have no problem with the 30% cut if publishers had the option to not use it.

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

Psystar was talking about Macs, though.

Still, antitrust is stupid, Apple has competitors.

 

[monoskier]

...
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?

...
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.

I for one think this is still speculative. The guidelines (from what I've been able to see at least) are open to interpretation, and different Apple quotes lead to different conclusions.
I work for a company who is facing a similar scenario to what alvindarkness asked. The apps under development have no purchasing/subscription options within them, but our webpage does, and of course we'd like to have a link to our webpage in the app.
Anyways, I contacted Apple yesterday for clarification on this (if we'd be subjected to the Apple Tax) and am awaiting a reply. I'll post when/if I ever get clarification.

When you buy the tv, in order to keep it running you have to maintain it and for that you have to pay out of your own pocket instead of the broadcasting companies paying 30% of it to keep that specific tv running.

Similar in Apple's case except your not paying yearly maintenance, instead it is being taken out of the books you buy.
Apple is simply taking a cut of the profit in order to keep its system running. Would you rather pay a yearly fee so you can access the app store and ibooks?

The fact is, apple cant simply allow publishers to use their system for free, they are providing a service, they are providing publishers a huge market of people that otherwise they would not have access too. And with all things there is a cost to it.
And yes i know there is a developer fee, but there is also a fee to purchase your tv the first time does that mean that sony should provide free maintenance?p

Perhaps a better analogy for Ries would be Apple charging 30% for anything we buy online using using Safari. We are still using Apple's product to purchase something, and Apple has a cost to maintain Safari. Unless we JB, we're stuck using Safari and thus have no other options for web purchases on our iphones

 

[alex2792]

Dumb move that will backfire massively once all the new honeycomb tablets flood the market. Without kindle,netflix,pandora, and a slew of other apps that will be pulled due to this policy iPad is nothing more than a nice looking paperweight that can't even browse the entire web due to lack of flash. A few years from now when iPad has less than 20% marketshare and android market becomes the primary app/media distribution channel Apple will be kicking themselves for letting greed get the best of them.

Sent from my SCH-I800 using Tapatalk

 

[ehoui]

I understand 30% for app distribution: investment in the App Store, curating the submissions, payment processing, statistics tracking, etc. I don't see the same value being offered (other than just "platform access") for content distribution. I speculate that this pricing model is all about simplicity (and short term profits for Apple) and will likely change in the near future to be more competitive. Is there something Apple is doing for content other than making the application available to use it?

To better understand the economics of e-books, and how and why Apple's model is better - I suggest people read Math of Publishing Meets the E-Book.

vrDrew -- interesting, thank you. So while Apple only takes 30%, that's on a smaller price (average of $13 versus $26), instead of 50% on the higher average price. I still think Apple will (and can) come down from this if they want to be competitive -- uninformed speculation on my part, but there you go...

 

[clyde2801]

They already take a 3rd of apps, movies, ebooks and songs, don't they? The market will either accept it, or it won't.



Still seems slimy, like record producers...

 

[The Phazer]

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.

Apple already had to change app store policies to get an EU anti-competition investigation on the app store shut down.

http://www.cultofmac.com/eu-ends-apple-flash-antitrust-investigation/60689

It would appear the EU disagree with you.

Phazer

 

[McWatt]

As a consumer, great. Why should these online outlets camp for free on an entirely Apple-devised platform?

That's a great point. Everyone needs to remember that this content is going on a device that was created by Apple, and not the developers. For that matter, I would like to see Apple get 30% of the cost of people's internet service, because that is also being used on an Apple device. Furthermore, all these web pages are getting off scot-free. Why should a web page be able to be accessed from an Apple device, but not have to pay its fair share? They should have to give 30% of their advertising revenue to Apple as well. As a consumer, this just makes me angry. Why should the money I spend on content go entirely to the person who created and distributed that content? What about the person who I paid hundreds of dollars to in order to buy the device it is displayed on? What do they get out of it?

 

[miamijim]

As long as I get the product I want I don't give a monkeys where the money goes.. as long as it's not funding something like tribal genocide in Africa why should I care.

 

[gwangung]

Since I don't know the financing of other distribution methods in detail, I don't have an opinion.

I only know

A) Certain other distribution methods have cuts of 50 to 60 percent. In these areas, Apple has a substantial advantage.

B) Anybody who says

How can anyone here justify a 30% cut for a distribution platform that incurs essentially no cost

has flunked Econ 101 and doesn't know a damn thing about economics. If that 30% cut is LOWER than other methods, then it justifies itself.