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

[Stella]

I wish people would get off the 30% is soooo much kick. It's not. Get a clue, retailers and any distribution channel makes money when distributing and selling products and 30% is very common and fair.

But... the part that Apple will or should change is the part about having to offer the in-App price at the same or lower price. This is the part that publishers don't like and the anti-trust part as it's controlling prices.

If Apple changed that part, all would be good and let the buyer make up their mind as to where to buy.

You are referring to the classic distribution of physical items. This is digital - a new scenario - new distribution methods. Digital and physical distribution methods are NOT the same.

Apple want a 30% cut just because an application is hosted on their AppStore... essential for doing absolutely nothing. The publisher has already paid for the application to be hosted on the AppStore - why should Apple also take a cut of further purchases via that application? Why should any in app purchases be tied to Apple?

( Any other appstores that do the same as Apple, such as Google, are equally wrong , IMO )

 

[rwilliams]

It's just the opposite, actually. The publishers are fighting Apple because they want access to MORE of our private data, and Apple is fighting back.

The 30% outrage is a smokescreen. Publishers want to make money off your personal data and Apple is resisting.

Not that you would know this from the professional Apple haters.

Can you explain this in more detail? How are they trying to get access to more of our data? This sounds pretty interesting.

 

[alent1234]

You're right, iOS was not created specifically for Netflix but it was created for distributing media to a huge consumer base (Netflix included). Also, it's not a function of whether or not they deserve it. Apple realizes that there are many, many more people watching Netlfix via iOS devices than internet capable TVs and Blu-Ray players. Netflix wouldn't pay a penny to either of those manufacturers because it is insignificant relative to the number of people who use iOS devices. Netflix doesn't have to pay a penny to Apple either, for that matter, if they don't want to. They will simply no longer have access to one of the most effective means of distribution that is available to them. I'm not happy that Apple decided to do this because I fear the repercussions but on the other hand I find it hard to fault them.

except that netflix has already come out and said most people watch their streaming service on TV's and devices like boxee/x-box and PS3. the apple devices are a minority

 

[Mattie Num Nums]

Isn't google having issues with getting people to buy apps from their Android phones?

I look at it this way.

In the iOS culture buying apps is so cool and necessary because of how strapped down the OS is. With Android I haven't found a reason or need to buy an App. Angry Birds is free, Qik is free, and my phone does whatever I want it to do.

 

[Gen]

Wow, what a horrible decision by Apple.
I could understand the initial 30% for the app purchase - since it costs money to keep the app on the App Store, and approve it.

BUT, taking 30% for every subscription is evil - Apple is taking money away from content makers and the people that make the awesome apps possible; cheap prices, flexibility - Kindle for iOS.

If Apple allowed outside subscription alongside their subscription model - in-app purchasing - then I could see this being not evil. But they're not.

Take Rhapsody. They charge $10 a month for unlimited music streaming. $8 goes straight to the music industry - that leaves $2 for Rhapsody for providing such an awesome interface and service. Under this model Rhapsody would OWE APPLE AN ADDITIONAL $1 FOR EVERY SUBSCRIPTION.

EVIL.

 

[azentropy]

If netflix cost 8.99 for the service but the iOS steaming was an additional 99c and apple gets a cut of the 99c. or you can sign up on the netflix website for 9.98 and get iOS streaming and Netflix gets the whole cut. but in this way apple has a fair shot at earning something from Netflix instead of sitting idly by and earning nothing for their efforts to support apps like netflix streaming.

That is the approach I figured Netflix would take and mentioned in another forum.

 

[camelsnot]

3) Any marketplace that sells products gets a cut. Is 30% high? Sure. But Apple is managing the storage, the means of distribution, and a large amount of the development needed to deliver such services.

Apple isn't storing all of this data/content. Learn how this system actually works. What distribution, if publishers are using them to distribute? What development? They already had the framework laid out in their bloated iTunes anyways.

Don't paint a pretty picture just because you're a fanboy. It's flat out greed. Having the masses flock to Apple products should be enough. Even a smaller percentage would've been acceptable, but 30% is a lot. I think Apple really targeted this at their competitors like Rhapsody and Amazon. If they raise costs to do business with Apple, they raise their prices or bow out. All of their customers by default go to Apple. Apple can even then lower the cost of their e-content whereby forcing out competitors using their system.


Hopefully more publishers will pull out and Apple will need to rethink their greed. I think it's about time Apple was brought up on a fruitful anti-trust lawsuit. Hopefully the judges won't be swayed like in the EU, just because they love their iPhones and iPods and don't want to harm the company that makes their precious devices. *see conspiracies about EU/Apple relationship on the web*


Maybe the subscription model behind the walled garden isn't so magical and will be DOA. We can only hope.

 

[tuna]

if you think about it, all of these subscription based apps are free on the App store. So Netflix, Hulu+, Kindle, etc, all get free advertising, user base, selling point for subscription (Hulu+ is only on iOS, it's free on computers!). So if these providers are selling a service outside of the app store and then offering the veiwer app for free they are cutting out Apple entirely.

If you think about it, Netflix, Hulu+, Kindle, etc, are all applications that add value to the iOS platform and taken together and in the context of the market, help Apple to sell as many devices as they do at the prices that they do. So Apple is getting free features and user base from these applications and they don't even have to pay Netflix? (do you get my point?)

If netflix cost 8.99 for the service but the iOS steaming was an additional 99c and apple gets a cut of the 99c. or you can sign up on the netflix website for 9.98 and get iOS streaming and Netflix gets the whole cut. but in this way apple has a fair shot at earning something from Netflix instead of sitting idly by and earning nothing for their efforts to support apps like netflix streaming.

That's a loophole that you have no reason to believe Apple will allow, considering that Apple has directly addressed the issue of loopholes (in terms of whether companies will be allowed to charge more for the subscription through Apple) and Apple said, 'no, they will be expected to offer the same product at the same or better price'.

 

[jhall527]

except that netflix has already come out and said most people watch their streaming service on TV's and devices like boxee/x-box and PS3. the apple devices are a minority

If that is the case, in that regard I stand corrected, I had never heard that and I remember hearing all sorts of stuff about the Apple TV having streamed more Netflix than anything else which aren't technically measuring the same thing, I guess (amount streamed vs. number of users).

 

[dashiel]

Definitely not an anti-trust issue. Discounting the fact there are other platforms and Apple does not have even close to market dominance. Secondly as others have pointed out Apple does not require the 30% cut if the customer comes from the "outside in" as it were.

As a developer, it’s an annoying move and is reducing my revenue, but as a consumer this is a complete win.

As a developer I have options:

1) Develop or adopt an e-commerce solution that handles credit card transactions and recurring charges.

2) Market my product in a way that encourages my potential customers to subscribe through my e-commerce system.

3) Incentivize purchase through my e-commerce system. Apple requires that the price be the same, but just like their hardware products sold through 3rd party outlets they can’t stop me from offering add-ons at free or at reduced cost. e.g. Subscribe to my Service X through the web site and you’ll get a free $10 iTunes gift certificate, or Subscribe to my Service X through the web site and you can download my other App Y for 50% off.

4) Revert to an ad-supported revenue stream.

All of these things however cost money and effort and as a developer I have to weigh whether or not the time/effort is more or less than the 30% I have to pay to Apple for their service. Truth be told, as a small developer Option 1 is simply going to be too much of a hassle. Companies like Netflix and Amazon who already have sophisticated marketing and e-commerce solutions may be less inclined to cough up the 30% and may instead look exploring options 2-4, they can probably also eat the cost of the 30%. Mid-size entities like Rhapsody, Rdio, etc… are probably the odd-man out; large enough to have their own e-commerce solution, but too small a user base to be okay with losing 30% per transaction.

One final thing to keep in mind. The vast majority of iPad/iPhone users are not the technically savvy nerds that we are. I the ratio of iTunes to Rhapsody/Rdio/Hulu/Netflix is vastly in favor of iTunes, ditto iBooks to Kindle/Nook/Google Books simply because most iPhone/iPad/iPod users don’t know how, or can’t be bothered to go to Web Site X, sign-up, enter their credit card information, download the app, sign in to the app and all the other flotsam. It may very well be that a completely in-app purchase event will see an increase in subscribers.

One last slightly unrelated though – I have a feeling this move forecasts the arrival of apps on AppleTV2. NBC, Discovery, AMC, et. al., a 30% cut is a lot less than they pay to cable and satellite operators right now.

 

[NebulaClash]

Can you explain this in more detail? How are they trying to get access to more of our data? This sounds pretty interesting.

Here's one story, but there have been many over the last year.

 

[wrldwzrd89]

Isn't google having issues with getting people to buy apps from their Android phones?

Spot-on. One of Google's Android Market problems is poor organization. That is only compounded by the perception of a vocal user group that Android devices are user-unfriendly, something Apple doesn't have to deal with.

On the other hand, Apple chose to create a walled garden. This approach, like anything else, has its upsides and downsides, and is in complete contrast to how Google handles things. I personally think that ease of use trumps openness any day, which is why I use iOS devices. However... I also think Apple may be going a little too far with their new subscription model. There will definitely be fallout from this - just like the Mac App Store opening - which we'll just have to wait and see.

 

[coleridge78]

The big difference here is that when you purchase a Kindle book, Apple does not do ANYTHING for you -- Amazon pushes the book to your device using their own servers and infrastructure.

Apple is now trying to force everybody to use Apple's infrastructure to obtain the content and furthermore, they want to hide the customers from the developers and content owners - they will be selling their content to an anonymous entity, which certainly is not in their interest.

As usual, you're deliberately misrepresenting the issues.

Amazon is NOT a content owner. They are a predatory middleman who is destroying the content owners with their onerous distribution terms (funny how nobody has a problem with their 30% policy and terms, which are much more destructive--especially to small publishers--than Apple's).

Other examples? Netflix. Much as I like Netflix's service... another middleman. Not a content owner, much less a content creator.

The anti-apple zealots are ignoring the real meat of this (the fact that, for actual CONTENT CREATORS, Apple's 30% and their terms are one of if not the best deal around), predictably, in favor of getting suckered in by propaganda from some of the biggest wolves in sheep's clothing around (Amazon and Rhapsody and their ilk, nothing but middlemen who want to use Apple's platform--for free!--to cement their destructive middleman position).

 

[notabadname]

This is just part of the evolution of the relatively new digital era in media and its subsequent revenue splitting. This battle has to be fought, however it comes out. It is inevitable and the model will end up being adopted industry wide once all the standards and practices are established. Simple growing pains.

We just happen to have a ring-side seat.

 

[spazzcat]

You're right, iOS was not created specifically for Netflix but it was created for distributing media to a huge consumer base (Netflix included). Also, it's not a function of whether or not they deserve it. Apple realizes that there are many, many more people watching Netlfix via iOS devices than internet capable TVs and Blu-Ray players. Netflix wouldn't pay a penny to either of those manufacturers because it is insignificant relative to the number of people who use iOS devices. Netflix doesn't have to pay a penny to Apple either, for that matter, if they don't want to. They will simply no longer have access to one of the most effective means of distribution that is available to them. I'm not happy that Apple decided to do this because I fear the repercussions but on the other hand I find it hard to fault them.

Except I still don't think this effects Netflix because they currently do not try to sell you service througt their app. You have to be a customer already to use their app.

 

[rwilliams]

Wow, what a horrible decision by Apple.
I could understand the initial 30% for the app purchase - since it costs money to keep the app on the App Store, and approve it.

BUT, taking 30% for every subscription is evil - Apple is taking money away from content makers and the people that make the awesome apps possible; cheap prices, flexibility - Kindle for iOS.

If Apple allowed outside subscription alongside their subscription model - in-app purchasing - then I could see this being not evil. But they're not.

Take Rhapsody. They charge $10 a month for unlimited music streaming. $8 goes straight to the music industry - that leaves $2 for Rhapsody for providing such an awesome interface and service. Under this model Rhapsody would OWE APPLE AN ADDITIONAL $1 FOR EVERY SUBSCRIPTION.

EVIL.

I may be misunderstanding what you're saying, but Apple is still allowing you to sign up for services outside of the app. So you could still sign up for Rhapsody through their website and bypass Apple's 30% grab. But they're requiring people like Rhapsody to also give the option of signing up through the app itself. I would prefer to go directly to the provider and sign up there to keep Apple from taking 30%, but a lot of people would prefer the convenience of just doing it through the app.

 

[yg17]

if you think about it, all of these subscription based apps are free on the App store. So Netflix, Hulu+, Kindle, etc, all get free advertising, user base, selling point for subscription (Hulu+ is only on iOS, it's free on computers!). So if these providers are selling a service outside of the app store and then offering the veiwer app for free they are cutting out Apple entirely.

If netflix cost 8.99 for the service but the iOS steaming was an additional 99c and apple gets a cut of the 99c. or you can sign up on the netflix website for 9.98 and get iOS streaming and Netflix gets the whole cut. but in this way apple has a fair shot at earning something from Netflix instead of sitting idly by and earning nothing for their efforts to support apps like netflix streaming.

What efforts? The app itself? Netflix already paid to be a developer in the app store. Beyond that, Apple doesn't do jack squat to support Netflix streaming. They don't deserve anything extra because they're not doing anything.

As usual, you're deliberately misrepresenting the issues.

Amazon is NOT a content owner. They are a predatory middleman who is destroying the content owners with their onerous distribution terms (funny how nobody has a problem with their 30% policy and terms, which are much more destructive--especially to small publishers--than Apple's).

Other examples? Netflix. Much as I like Netflix's service... another middleman. Not a content owner, much less a content creator.

The anti-apple zealots are ignoring the real meat of this (the fact that, for actual CONTENT CREATORS, Apple's 30% and their terms are one of if not the best deal around), predictably, in favor of getting suckered in by propaganda from some of the biggest wolves in sheep's clothing around (Amazon and Rhapsody and their ilk, nothing but middlemen who want to use Apple's platform--for free!--to cement their destructive middleman position).

Should Netflix give Samsung and Sony, who manufactured my TV and Blu-ray player, a cut of my monthly fee because they're using their products to deliver content to me? Because that's basically what you're proposing here.

 

[RollTide1017]

I guess this means ESPN The Magizine app will be going away. I doubt ESPN is willing to give Apple 30% for every ESPN Insider that subscribes through the app.

If Kindle, Nook, Nook for Kids, Netflix, Zinio and many more apps end up leaving iOS then I guess I'll have to look at Android or WP7. I'll probably end up selling my iPad as well and looking at Android tablets. If I can't use those apps on Apple devices then those devices are pretty much worthless too me. Bad move by Apple, they have over stepped there bounds IMO.

Imagine the outrage if Microsoft did this with Windows and took a 30% cut from everything developed and purchased through a Windows Application on a PC. If this was MS, the fires of the world would be raining down on them today yet, we have some people here actually backing Apple on this... crazy.

 

[krye]

Of course they should pay. This is Apple's store. These guys think they can use Apple's tools, etc to put a free app in the store and then make millions on the side. That's BS. If you use Apple's tools, free marketing in the form of the app store, then you owe Apple a royalty. Simple as that. I am an iOS developer and I have no problem handng over my 30% to Apple. The money I make in the app store with the 30% royalty is waaaaay more than I would make if I tried to sell my app on my own. Just ask all those millionaires out their that put their app in the Mac App store how well their apps are doing. A lot of people made more money in 2 weeks than they made in a year doing it themselves.

 

[NebulaClash]

As a developer, it’s an annoying move and is reducing my revenue, but as a consumer this is a complete win.

I enjoyed your entire post, but I wanted to highlight this sentence. It amazes me how easily folks can be swayed by business rhetoric. This is a struggle between business behemoths, not consumers, but they want consumers to jump on their side so they publish lots of stories about how awful Apple is being, etc. Sure enough, people come on to this site and regurgitate what they read about Apple being evil.

Meanwhile they don't think about how Apple is trying to help the consumer. Which is what they are. They are being manipulated into fighting against their own self-interests.

I don't know all the details about how such business deals work, so I'm reserving my opinion for now. But I do know propaganda when I see it, and I get tired of the industry that puts out their quarterly Apple outrage just because that is what they do.

 

[mdatwood]

Question.

Why don't the devs and content providers explain to the customer in the app that the purchase of any medium must be done at www dot si dot com.

Because Apple will reject the app. If possible I would like content providers to make it clear on in-app purchases that there is another Apple Tax item of 30% added. Let customers force Apple in a different direction.

In general I think Apple is seriously overplaying their iOS position. Content makes the platform. If they push out Amazon, NF, Hulu, etc... then customers *will* go elsewhere. I don't care how great iOS or the Apple hardware might be if I can't access content. No Kindle, no NF, no Hulu is going to equal no iOS device for a lot of people.

The best thing these companies could do is pull their apps and then make a huge note on their websites explaining that Apple is pushing them to do this. Make sure to point out that Apple is wanting to add a 30% charge to the customer and that the content companies didn't feel it was fair to raise their prices. At the end link to some Android hardware that works well with their apps.

 

[spazzcat]

...

If Apple allowed outside subscription alongside their subscription model - in-app purchasing - then I could see this being not evil. But they're not.

...

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

 

[tuna]

As a developer, it’s an annoying move and is reducing my revenue, but as a consumer this is a complete win.

EXPLAIN THAT. Subscription services would have to raise prices by 43% in order to break even with the new Apple tax. Some portion of this will obviously be passed on to the consumer.

Revert to an ad-supported revenue stream.

This move sets a dangerous precedent that one day Apple is going to pull the rug out from under the third party ad platforms and announce that, "all advertising will now have to cut apple in for 30%"

 

[JonHimself]

Here's a thought that I've put together based on reading a bunch of posts about this - could this move end up with more content CREATORS/OWNERS offering content through Apple's itunes store?
If comapnies like Netflix, Rhapsody, Amazon etc are unable to maintain a profit because a second middleman is introduced and taking a cut (eg Amazon takes a cut from publishers but pays a cut to Apple) and end up pulling their apps from the App Store, that means less content is being sold. If less content is being sold, the CREATORS/OWNERS might be pushed into selling their content through Apple in order to get it back on the App Store.
Thoughts?

 

[namfan]

Same rules as credit cards

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.