Hmmm so maybe microsoft or the PC builders should take a 30% cut on every program that is used on their platforms if you go with this logic. This does not help the consumer. The good content like Hulu and Kindle will have to pass the 30% on to the consumer or leave the apple platform. Margins are just to tight to pay 30% to Apple and have a business left.
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Apple's App Store Subscription Policies Raise Antitrust Issues as Content Providers F
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From a pragmatic point of view, my take is that a 30% cut is fine when you are talking about a direct relationship between a publisher and Apple. In many situations this is going to be less than what a publisher would have to pay to get their content to market via other channels like physical distribution. Plus they get the added benefit of Apple's very low friction approach to buying things.
Where a 30% cut causes real problems is when there is another middle-man in between Apple and the publisher. In this case there isn't a lot of room for the middle-man to make a decent profit. Unfortunately the middle-men often provide value to customers that Apple can't or won't provide. For example Amazon with Kindle is a middle-man but they provide more value than Apple because the books you buy can be used on many more devices. Similarly with Netflix, I bet the publishers wish that Netflix had never got going.
From a more philosophical point of view, I think this discussion fundamentally comes down to what iOS devices are. Are they content delivery platforms like the Kindle hardware? Or are they open platforms like Windows, OSX or Linux? At the moment iOS sits on the fence with aspects of both in it's make up.
Where a 30% cut causes real problems is when there is another middle-man in between Apple and the publisher. In this case there isn't a lot of room for the middle-man to make a decent profit. Unfortunately the middle-men often provide value to customers that Apple can't or won't provide. For example Amazon with Kindle is a middle-man but they provide more value than Apple because the books you buy can be used on many more devices. Similarly with Netflix, I bet the publishers wish that Netflix had never got going.
From a more philosophical point of view, I think this discussion fundamentally comes down to what iOS devices are. Are they content delivery platforms like the Kindle hardware? Or are they open platforms like Windows, OSX or Linux? At the moment iOS sits on the fence with aspects of both in it's make up.
and the timing couldn't be any better as google unwraps one pass. the window is appearing to have reached it's full length. if you continually make it hard for dev's/software to function in a manner that benefits both, then it will start to affect the software product itself, this is business after all from both sides
Let them keep their cut and pay their taxes. They shouldn't get any special tax breaks. Otherwise that would be hypocritical.
Exactly right! Services like Kindle and Netflix can't survive on iOS with a 30% tax imposed. It might seem desireable to Apple to drive them off, but I think that strategy will backfire in a big way.
I'm not sure if this has been discussed, but if Apple is doing this with the iPhone/iPod/iPad App Store what's to stop them from doing it to the Mac App Store?
Yes... the developer could always pull their apps from the store, but Apple is smart and they would probably wait until the Mac App Store is the go-to place for Mac programs. Then they could pull this stunt again, and it would put the developers in a very precarious position.
Finally, I can see one other thing happening: jailbreaking. It will become much more rampant if Apple isn't careful. Because if you piss of your user base the user base will go somewhere else. People will only take so much before they'll walk away.
The consumer doesn't need Apple; Apple needs the consumer.
Yes... the developer could always pull their apps from the store, but Apple is smart and they would probably wait until the Mac App Store is the go-to place for Mac programs. Then they could pull this stunt again, and it would put the developers in a very precarious position.
Finally, I can see one other thing happening: jailbreaking. It will become much more rampant if Apple isn't careful. Because if you piss of your user base the user base will go somewhere else. People will only take so much before they'll walk away.
The consumer doesn't need Apple; Apple needs the consumer.
Why, are the you majority shareholder of Netflix?
Then wtf do you care?
So their CEO only makes 3 million this year instead of 4. Cry me a river. They won't go out of business.
They should bend over and kiss Apple for providing them with access to over 100 million customers for nothing. Well, it's not nothing anymore. There's a fee.
If they actually felt they would lose money on the deal (absolutely frigging impossible) they could pull out entirely. Since that's a complete joke, they'll have to settle for making 30% less from the iOS market....
...which will be completely reversed by the growth of the iOS market in 2011 anyway.
Only two things will come of this (well maybe a third depending on #1 or 2):
1. We will see a hike in prices of ALL digital media, across ALL platforms (since Apple decided to specify that the app store price has to be equal to or lower than outside) and to make up the loss content providers will need to hike prices on their content across the board = BAD FOR CONSUMER;
2. Content providers pull out of iOS all together since they won't raise all of their prices across the board, affecting customers who don't even have iOS devices. This means less content for us on our iPhones and iPads, and what we do have is limited and all through Apple (iBooks, iTunes etc) = BAD FOR CONSUMER;
3. Dependng on the more likely #2 outcome.... if content providers pull their apps from iOS all together, it will surely reflect in new sales, as without the content, an iPhone or iPad becomes very stale very quickly. Less sales will result in Apple having to re-look their current policy on App Store apps... of course, by then it could be too late and the content providers could just tell Apple to piss off.
I can't see this working out in the long run, and no matter what happens it looks like we as the customer will lose out!
If #1 happens, it won't matter what platform you are using... even if you jump ship to Android, the ebooks, etc will still cost more!
How can Apple legally forcibly dictate a raise in prices of all didgtal media, across platforms it doesn't even have anything to do with?? I don't see how this is legal!! And if it is, this world is seriously messed up!
1. We will see a hike in prices of ALL digital media, across ALL platforms (since Apple decided to specify that the app store price has to be equal to or lower than outside) and to make up the loss content providers will need to hike prices on their content across the board = BAD FOR CONSUMER;
2. Content providers pull out of iOS all together since they won't raise all of their prices across the board, affecting customers who don't even have iOS devices. This means less content for us on our iPhones and iPads, and what we do have is limited and all through Apple (iBooks, iTunes etc) = BAD FOR CONSUMER;
3. Dependng on the more likely #2 outcome.... if content providers pull their apps from iOS all together, it will surely reflect in new sales, as without the content, an iPhone or iPad becomes very stale very quickly. Less sales will result in Apple having to re-look their current policy on App Store apps... of course, by then it could be too late and the content providers could just tell Apple to piss off.
I can't see this working out in the long run, and no matter what happens it looks like we as the customer will lose out!
If #1 happens, it won't matter what platform you are using... even if you jump ship to Android, the ebooks, etc will still cost more!How can Apple legally forcibly dictate a raise in prices of all didgtal media, across platforms it doesn't even have anything to do with?? I don't see how this is legal!! And if it is, this world is seriously messed up!
But it demonstrably isn't. Paying Apple the 30% eliminates one of the smallest parts of the delivery cost--the credit card processing fee. The providers still have to handle archival, retreival, account management, delivery, and bandwidth charges. Those don't go away just because Apple is taking its pound of flesh.
One analogy would be a supplier that has its own warehouse and distribution system, and uses, say, FedEx as its delivery provider. They have to pay for all that upkeep, maintenance, and stocking, as well as paying FedEx (or Level3/akamai, in reality) for delivering their wares.
Along comes UPS and says "Hey, a lot of your customers are my customers too. So you have to pay me a fee for every package that you have FedEx deliver to this customer, equivalent to what I would charge if I maintained your warehouse and distribution center for you, and delivered the packages to them. Only, I'm not going to do any of that. I'm just going to invoice your customers and email them a tracking number." So now, you still have to cover all your expenses and pay FedEx to deliver to your customers, PLUS pay this exorbitant "service charge" to UPS for doing essentially nothing.
I doubt very much that content providers will sit by and cave to Apple's request for the very simple reason that people that use iDevices are a small fraction of the overall user base. Content providers will not want to piss off the masses, so they'll simply pull their apps if Apple won't negotiate instead of raising prices across the board.
Cool story. I have an MSF and am a CFA.
The reason why some distribution channels eat up more than 30% is often because those distributors have invested decades and incredible costs in their development. Additionally, physical distribution is enormously expensive and you, clearly, don't understand how that correlates to their (distributors') larger slice of the pie.
The electronic distribution of content is not a good analogy and there is no reason why apple should be making 30%. Period.
This would be one thing if they came out with this policy from the very beginning. But now they come out with it as these subscription apps have built up a healthy iOS user base. At the end of the day, an iPad is a monitor for content.
If this policy stays its going to end up with the EU or the justice department or both. Mostly likely the EU...
Apple can either keep their 30% luxury tax and allow competing application stores, or it can get rid of it all and keep its application store monopoly.
A simple way to defeat this is to force allowing competing application stores and to say that apple cannot dictate price... Thats the anti-trust element of this. Apple is dictating price on EVERY platform. According to these rules, even if someone didn't use an iOS device, netflix could not charge a lower price.
Also... not getting an iPad... and might not buy another iOS device either.
Edit. -
This is also like saying wal-mart should get 30% of the over the life subscription revenue because someone originally bought a magazine in that store and then subscribed to it.. and then wal-mart saying you can't charge a lesser price at target. This would never fly...
I give this policy just a few weeks before apple backs off.
If this policy stays its going to end up with the EU or the justice department or both. Mostly likely the EU...
Apple can either keep their 30% luxury tax and allow competing application stores, or it can get rid of it all and keep its application store monopoly.
A simple way to defeat this is to force allowing competing application stores and to say that apple cannot dictate price... Thats the anti-trust element of this. Apple is dictating price on EVERY platform. According to these rules, even if someone didn't use an iOS device, netflix could not charge a lower price.
Also... not getting an iPad... and might not buy another iOS device either.
Edit. -
This is also like saying wal-mart should get 30% of the over the life subscription revenue because someone originally bought a magazine in that store and then subscribed to it.. and then wal-mart saying you can't charge a lesser price at target. This would never fly...
I give this policy just a few weeks before apple backs off.
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I'd agree that Apple is making a mistake here. Although I can certainly see their reasoning behind the 30% number and encouraging in-app purchases.
The problem with apps like Netflix/Kindle/etc in iOS is that they are profit generators for their companies. But who pays for their distribution? Apple. The ability to post these apps for free is making it possible for Amazon to offload their distribution costs of the iOS app itself onto Apple while taking 100% of the revenue from those iOS users. That's something that as a business would rub me the wrong way. This is the same with ad-supported apps not using iAd. Apple pays to host it, but doesn't see one lick of revenue from the app being monetized to cover those costs.
The other problem is that simple rules are the only way to avoid loopholes. As you clutter the rules with exceptions, differences, etc, you make it possible for people to abuse those differences to improve their revenues at the expense of yours. So Apple is using the 30% rule to basically make it impossible to avoid paying for getting into the store, no matter how you monetize the app.
If I set in-app purchases at a lower percentage than app sales, people will just make their apps all trials with an in-app "unlock". If I set subscriptions at a lower percentage, expect to see a lot more people use subscriptions as a way to sell ad-free versions. This loophole they are trying to close is specifically app makers who are releasing free apps and trying to monetize them some other way (ads, in-app purchases, subscriptions, etc). By cutting the big guys a break, it encourages all other developers to go the same route to maximize their own revenues.
So yeah, I can see what they are trying to do here and why. Doesn't mean it will work that well. Each market is too different to place a blanket cut on them. E-books in particular are one area where a blanket 30% is excessive for recouping the cost of hosting the apps/etc. Although for something like Netflix, I'd expect they would be able to jack up the price for mobile streaming and give Apple a cut of that. So instead of 8$/month for a streaming only account, maybe pay 8+X$/month for streaming + mobile. Apple gets a cut of that, and Netflix allows you to buy the streaming + mobile subscription from the app. This is something like what Rdio already does, where you pay more for mobile access.
So you have conflicting concepts coming together and trying to sort themselves out, and Apple is understandably not happy with the idea of someone being able to use Apple as a free hosting provider when they make buckets of money off the app through services and ads. They are trying to be even-handed to not show favoritism to large companies/etc. They are also trying to not produce loopholes in their policies to be exploited. The reality of what comes out is pretty different than the intentions behind it.
The problem with apps like Netflix/Kindle/etc in iOS is that they are profit generators for their companies. But who pays for their distribution? Apple. The ability to post these apps for free is making it possible for Amazon to offload their distribution costs of the iOS app itself onto Apple while taking 100% of the revenue from those iOS users. That's something that as a business would rub me the wrong way. This is the same with ad-supported apps not using iAd. Apple pays to host it, but doesn't see one lick of revenue from the app being monetized to cover those costs.
The other problem is that simple rules are the only way to avoid loopholes. As you clutter the rules with exceptions, differences, etc, you make it possible for people to abuse those differences to improve their revenues at the expense of yours. So Apple is using the 30% rule to basically make it impossible to avoid paying for getting into the store, no matter how you monetize the app.
If I set in-app purchases at a lower percentage than app sales, people will just make their apps all trials with an in-app "unlock". If I set subscriptions at a lower percentage, expect to see a lot more people use subscriptions as a way to sell ad-free versions. This loophole they are trying to close is specifically app makers who are releasing free apps and trying to monetize them some other way (ads, in-app purchases, subscriptions, etc). By cutting the big guys a break, it encourages all other developers to go the same route to maximize their own revenues.
So yeah, I can see what they are trying to do here and why. Doesn't mean it will work that well. Each market is too different to place a blanket cut on them. E-books in particular are one area where a blanket 30% is excessive for recouping the cost of hosting the apps/etc. Although for something like Netflix, I'd expect they would be able to jack up the price for mobile streaming and give Apple a cut of that. So instead of 8$/month for a streaming only account, maybe pay 8+X$/month for streaming + mobile. Apple gets a cut of that, and Netflix allows you to buy the streaming + mobile subscription from the app. This is something like what Rdio already does, where you pay more for mobile access.
So you have conflicting concepts coming together and trying to sort themselves out, and Apple is understandably not happy with the idea of someone being able to use Apple as a free hosting provider when they make buckets of money off the app through services and ads. They are trying to be even-handed to not show favoritism to large companies/etc. They are also trying to not produce loopholes in their policies to be exploited. The reality of what comes out is pretty different than the intentions behind it.
Apple stores and distributes the apps that you download from the App Store. The 30% doesn't just cover the credit card processing fee. It covers the buildings/equipment upkeep that Apple uses to make sure iTunes/App Store are always up.
Your analogy doesn't hold up either. It's more like UPS saying hey Fedex I'm gonna deliver these boxes to you cause I know who your customers are, but you can deliver them the rest of the way. Oh, and Don't bill us for it.
-j
I think most people who have been commenting on this policy don't fully understand it. It only applies to in-app purchases. Exactly the same content can be payed for externally - and then viewed on the iPad - and 0% will go to Apple. They are only raking in the 30% when people use the convenience of in-app purchases. 30% might well be a bit heavy but it is Apple's prerogative to charge what they deem appropriate for this convenience. It is fair in a sense because if Apple is bringing in new subscribers who have found a publication via the AppStore then of course they deserve a cut. But existing subscribers can carry on paying monthly or whatever on their credit cards/direct debit and then Apple will take zero cut.
We understand it. The clincher is Apple requiring the same or better price to be offered in the App as the content provider offers outside. So it can kill the business model of these content providers where margins are small. As many may not be able to absorb the 30% so would have to raise prices inside and outside of Apple world ultimately hurting the consumer or they may just leave ios again hurting those that bought an ios device.
So what happens if the apps do get pulled? What about those of us with it already on our iPhone? I already have Kobo, and don't intend on deleting it Since I already have the app, I should be able to still access my kobo account and download my books even after June 30 right? So even if Kobo does pull out of iOS....
Since I already have the app, I should be able to still access my kobo account and download my books even after June 30 right? So even if Kobo does pull out of iOS....If it isn't easy to obtain and relatively cheap, I won't buy it. Simple as that.
There is plenty options out there and they are all free and ready to "battle" for my money.
Oh yeah, how awful... Apple take 30% and the developer gets the rest. Big deal.