'iFlow Reader' iOS eBook Store Shutting Down

[MacRumors]

BeamItDown Software, the company behind the popular iFlow Reader eBook application and store for iPhone and iPad, has announced that it will be closing down as of May 31st, citing Apple's recent enforcement of policies forcing content providers to offer content via Apple's in app purchasing mechanism at the same prices offered elsewhere. With that mechanism resulting in Apple taking a 30% of revenue, BeamItDown Software has determined that it is not possible for small eBook sellers to operate profitably given the squeeze of in app purchasing requirements and the agency model increasingly used by publishers that fixes sales prices.The crux of the matter is that Apple is now requiring us, as well as all other ebook sellers, to give them 30% of the selling price of any ebook that we sell from our iOS app. Unfortunately, because of the "agency model" that has been adopted by the largest publishers, our gross margin on ebooks after paying the wholesaler is less than 30%, which means that we would have to take a loss on all ebooks sold. This is not a sustainable business model.BeamItDown goes on to describe the steps it took during the development and rollout of the iFlow Reader application as it sought to ensure that it was on the right side of Apple's terms and conditions at a cost of over a million dollars.We put our faith in Apple and they screwed us. This happened even though we went to great lengths to clear our plans with Apple because we did not want to make this substantial investment of time and money blindly. Apple's response to our detailed inquiries was to tell us that our plans did not infringe their rules in any way, which was true at the time, but there is one little catch. Apple can change the rules at any time and they did. Sadly they must have known full well that they were going to do this. Apple's iBooks was already in development when we talked to them and they certainly must have known that their future plans would doom us to failure no matter how good our product was. We never really had a chance.BeamItDown's closure at the end of the month means that users who purchased content through the company's store will need to ensure that their content is backed up and downloaded to their computers for viewing through alternative software should the iFlow Reader software cease functioning on future versions of iOS, as the application will no longer be updated.

Article Link: 'iFlow Reader' iOS eBook Store Shutting Down

 

[liphonearth]

Smells like teen class-action

I smell a class-action lawsuit.

With the volumes that iphone and ipad are now selling and have installed user base, and the fact that they also have a vehicle to sell the content that these users were forced-out of selling, this may well be considered an anti-trust/monopoly move.

I have a kindle and I have an iphone and ipad. The kindle app allows me to use the iOS device when in a pinch, but I prefer reading on the Kindle..

It will tick me off if Amazon is forced into the same corner, but it seems to me, that Apple, by this policy, is over-stepping.. and I'm normally an Apple fan.

T

 

[iSee]

Ouch. That's too bad.

I can't really say Apple is "wrong" though, at least not from a business perspective. What Apple did was squeeze a middleman off of their platform -- one that was in direct competition to itself. Apple is trying to be the one big middleman between content producers and content consumers -- they don't want to leave room for anyone else.

I smell a class-action lawsuit.

With the volumes that iphone and ipad are now selling and have installed user base, and the fact that they also have a vehicle to sell the content that these users were forced-out of selling, this may well be considered an anti-trust/monopoly move.

I have a kindle and I have an iphone and ipad. The kindle app allows me to use the iOS device when in a pinch, but I prefer reading on the Kindle..

It will tick me off if Amazon is forced into the same corner, but it seems to me, that Apple, by this policy, is over-stepping.. and I'm normally an Apple fan.

T

No, not monopolistic. E.g., the answer to just this one question should make that clear:

Can you buy books from the iBooks store on your Kindle?

 

[spazzcat]

So they couldn't be going out of business because they had a fail business model based on being the middle man? They only had a ~4,000 books? Forget where I read that info and their pricing was the same as the big players. Amazon has close to a million books and iBooks over 100,000 books.

 

[liphonearth]

No, not monopolistic. E.g., the answer to just this one question should make that clear:

Can you buy books from the iBooks store on your Kindle?

The Kindle is not made for with the same general expectation as an iOS device. It does one thing. That is an Apples and Oranges argument.

Can you buy Amazon books and iBooks on your mac? Yes. Would it be OK for Apple to take 30% of any of your purchases through your web browser on your computer or on your iphone or iPad?

Asking 30% of the purchase price of an app is one thing. 30% of all transactions on an iOS device thereafter is highway robbery, and the users of iOS are going to pay for it, either through higher prices or less choice. It is not in the best interest of Apple to enforce this model.

It's anti-trust territory. The fact that they once allowed it and then stopped it will only strengthen the case against them.

iFlow should be able to remove the purchase capability and sell through the web, but the way the police NOW reads, if you can buy it through the web, you must sell it through the APP (I believe for the same price) which forces people to add a commission for Apple if they want to participate on the platform. Its an inequity that is too steep and is predatory toward competitors who were doing business in another market (not computer hardware sales) prior to Apple getting into the book selling market.

Kindle's iOS and MacOS readers do not have sales capability and I agree that if they did Apple could require a commission (although it should be much less than 30%) To require, however, that the app does have sales capability so that they can make a commission forces people to sell through iOS which is in itself manipulative and predatory.

Mark my words, there will be a class-action suit if this stands.

Let the consumer decide should be the motto of the free market. This is taking the choice (of where to buy books) away from the consumer and will encourage gouging on the part of publishers.

I'm an Apple fan, but I think they are over-reaching in this case.

 

[liphonearth]

So they couldn't be going out of business because they had a fail business model based on being the middle man? They only had a ~4,000 books? Forget where I read that info and their pricing was the same as the big players. Amazon has close to a million books and iBooks over 100,000 books.

That very well may be the case. They might be doing this for a lawsuit of their own.

If Amazon is forced to do this, though, fecal matter will hit the rotating blades. If they aren't, iFlow will have grounds for their own lawsuit.

 

[Stibble]

Apple becomes Microsoft....who will become Apple ?

 

[2 Replies]

Said it before and I'l say it again,
Apple's forcing of everyone to use THEIR store mechanism with their taking a SIZABLE chunk of the profits (such as the 30% called out here) is an EXTREME conflict of interest and is VERY MUCH a monopolistic practice.

The shutting down of this alternative store is just more evidence to that end.

As an iOS device owner and a stock-holder... I am VERY displeased.
Cometition is a GOOD thing Apple, and forcing everyone to adhere to your facist rules and regulations is doing nothing to further competitiveness, foster creative competition or drive the cutting edge of technology, ...but it is all about GREED.

 

[BC2009]

Asking 30% of the purchase price of an app is one thing. 30% of all transactions on an iOS device thereafter is highway robbery, and the users of iOS are going to pay for it, either through higher prices or less choice. It is not in the best interest of Apple to enforce this model.

It's anti-trust territory. The fact that they once allowed it and then stopped it will only strengthen the case against them.

It is not highway robbery, nor is it likely in anti-trust territory. Game consoles such as Wii, PlayStation and XBOX have been doing this sort of thing for years. In fact they take a much bigger cut and that is the reason Sony can sell that PS3 Blu-Ray player for such a low price -- they make their money on the games and the content you can purchase through the device.

The thing is that some folks viewed the iOS devices as computers since Apple was a computer company (until they dropped "Computer" form their name), but Apple wanted to position iOS devices as application consoles. The line is certainly blurry, but there is plenty of precedent showing that Apple is being far less greedy than their predecessors in the "console" arena.

What really stinks for these guys is going to great lengths to play by Apple's rules and then having those rules change in a way that destroys your ability to do business. It's never a good idea to all your eggs in one basket.

Apple wants to put a tax on everything coming through iOS. And in case your are paying attention, Google made the Chrome browser and Chrome OS so they can one day put a tax on everything served to you via the web. Everybody wants to be the "middle man" because that is where the money is. The problem with being a small middle man is that you eventually get squeezed out. If you are a small player, it is sometimes better to be a content producer than a middle man unless you have a great niche and maybe some patents to protect your business model.

 

[saxofunk]

It's sad

Apple's new business model to ride on the backs of others' work is dissapointing. They are cutting away any chance for small scale developers of iOS and now Mac Apps to try and make very much money from their apps. Perhaps it will be decided eventually that this is anti-competitive practice, but I fear that until congress steps in, nothing is going to change.

 

[Small White Car]

As an iOS device owner and a stock-holder... I am VERY displeased.
Cometition is a GOOD thing Apple, and forcing everyone to adhere to your facist rules and regulations is doing nothing to further competitiveness, foster creative competition or drive the cutting edge of technology, ...but it is all about GREED.

lol Yeah. And Walmart gets a cut of everything sold in Walmart.

What facists!

This is no different. "But it's their own separate bookstore!" Yeah? You think those McDonalds in Walmarts pays Walmart to be there? You'd better believe it. You don't want to pay Walmart? Build your McDonalds outside in the parking lot.

You wanna run a bookstore and not pay Apple? Build your own device. That's what Amazon did and they seem to be doing well, so you can't claim it's impossible.

EDIT: Mind you, I don't think Apple's making the best choice here. I'd do it differently than they are. But they're doing the exact same thing thousands of other companies do. To call it evil or facist or illegal is really silly. It's perfectly normal.

 

[ciTiger]

This was bound to happen sooner or later, let's see how this plays out...

 

[xxundrclssherox]

iBooks is a JOKE

If this really does kill off Kindle, Nook, and CourseSmart, I'm going Android!
I bought my iPad as an e-reader for Textbooks, and if CourseSmart makes textbooks unavailable for iPad I'm DEFINITELY selling mine and getting an Android Tablet. This is absolute crap, I can't believe that Apple has gotten so greedy over the past few years. Jailbreaking will go completely mainstream after all these companies decide to leave, I would pay extra for a Kindle App through Cydia if that's what it takes to get more than the craptastic iBooks store. iTunes is okay, App Store is fine, but making iBooks the only e-reader app on iPad will definitely kill this.

I see either a lawsuit or a drop in iPad sales, or people buying them, noticing no Kindle store or Nook store and returning it. The major difference between Kindle, Nook, etc and iPad is the iPad costs $499 MINIMUM, compared to Kindle's sub $200 price and Nook Color's sub $300 price(and that's with Android!). I'm not excited about this move, if this is Jobs idea I can't wait for him to leave, maybe we'll get someone that TRULY cares about his customer base, not someone that says he cares and then asks us to throw money at all our Apple Product.

Straight up Monopolistic, Apple will face Antitrust legislation eventually just like Microsoft did, they're becoming who they were fighting in the first place. Enough is enough.

 

[swarmster]

I have to say, I'm really confused by what exactly the problem was, and their bitter little message didn't really clarify.

Did iFlow sell books online? Why? Do they have any other target devices? If you have to match prices of your other venues, why not just get rid of the web store? Did anyone even use it?

Alternatively, why not get rid of the IAP option? Let users access their purchased books, but go through the web to buy more. Like Amazon.

Are they even complaining about the 30%, or is it the competition from iBooks? They bring up iBooks as if they wouldn't have even bothered if they knew it was coming.

It also kind of sounds like it's the book publishers that raised rates on them? And the new agreements the publishers are offering are not something iFlow can afford? I'm not sure what this has to do with Apple.

It's hard to get a handle on who did what here, and the vitriol isn't helping.

 

[rdowns]

So what? They have a flawed business model. Their words will come back to haunt them if they sue.

We put our faith in Apple and they screwed us. This happened even though we went to great lengths to clear our plans with Apple because we did not want to make this substantial investment of time and money blindly. Apple's response to our detailed inquiries was to tell us that our plans did not infringe their rules in any way, which was true at the time, but there is one little catch. Apple can change the rules at any time and they did. Sadly they must have known full well that they were going to do this. Apple's iBooks was already in development when we talked to them and they certainly must have known that their future plans would doom us to failure no matter how good our product was. We never really had a chance.

 

[Madmic23]

Like I've said before, this is exactly the same as if Microsoft were to force Apple to give them 30% of every song sold on iTunes on a Windows PC using a "Windows Payment System."

Doesn't make much sense, does it?

 

[xxundrclssherox]

30% is a LOT

lol Yeah. And Walmart gets a cut of everything sold in Walmart.

What facists!

This is no different. "But it's their own separate bookstore!" Yeah? You think those McDonalds in Walmarts pays Walmart to be there? You'd better believe it. You don't want to pay Walmart? Build your McDonalds outside in the parking lot.
[/I]

The difference between Walmart charging others and Apple is Walmart doesn't charge an entire 30%! This is an overwhelming cut, and will either lead to $20 books or a huge loss of competition.

We as consumers need to speak out about this, or do something. Jailbreaking the iPhone/iPod touch led to the app store in the first place, we can do something about this too

 

[swarmster]

The difference between Walmart charging others and Apple is Walmart doesn't charge an entire 30%! This is an overwhelming cut, and will either lead to $20 books or a huge loss of competition.

We as consumers need to speak out about this, or do something. Jailbreaking the iPhone/iPod touch led to the app store in the first place, we can do something about this too

You're right, Wal-Mart only takes 27.1% on average.

http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=wmt

Target, though, charges 30.9%. So maybe you should picket there?

http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=TGT

 

[Small White Car]

It's hard to get a handle on who did what here, and the vitriol isn't helping.

Basically the old, old model was this:

Author -> Publisher -> Store
(Store meaning a real-world brick store.)

All 3 of those got a cut of the price.

The 'Author' and 'Publisher' part havn't changed. But what is 'Store?' It used to something like 'Borders.' Then it was http://www.Amazon.com along with the postman.

What is it now?

Well, at first it's something like Amazon on the Kindle or Apple on the iPad. Ok, that's fine. But then what about iFlow?

They see it like this:
Author -> Publisher -> iFlow

Apple sees them like this:
Author -> Publisher -> iFlow -> Apple

In other words, iFlow wants to replace Apple in the chain and Apple says "Uh uh. You're free to come in and play WITH us, but we're not losing our cut."

iFlow says "Well, it's too crowded now. We can't make money with four people in the pool."

And Apple says "Tough cookies. We never told you to come get in the pool with us, did we?"

That's the basic idea. SOMEONE is gonna act as the store. The question is, who? Apple says that if it's not them you really should be selling on non-Apple devices.

The secret here is that Apple sees, long term, it looking like this:
Author -> Apple
and
Author -> Amazon
and
Author -> Google

That's their master plan. They're trying to cut 3 down to 2. They're sure as heck not interested in turning it into four. That's backwards from their perspective.

 

[foobarbaz]

Hey content industry: Get rid of DRM and you can keep 100%.

Let software makers compete with software makers and content sellers compete with content sellers. No more having to use the app that comes with the content.

 

[peetyrd]

lol Yeah. And Walmart gets a cut of everything sold in Walmart.

What facists!

This is no different. "But it's their own separate bookstore!" Yeah? You think those McDonalds in Walmarts pays Walmart to be there? You'd better believe it. You don't want to pay Walmart? Build your McDonalds outside in the parking lot.

You wanna run a bookstore and not pay Apple? Build your own device. That's what Amazon did and they seem to be doing well, so you can't claim it's impossible.

EDIT: Mind you, I don't think Apple's making the best choice here. I'd do it differently than they are. But they're doing the exact same thing thousands of other companies do. To call it evil or facist or illegal is really silly. It's perfectly normal.

How about this example. Airport space is very expensive. Have you ever been to a Mcdonalds at an airport? Theres no dollar menu and all the food is twice as expensive. What if the airport told Mcdonalds that they had to have a dollar menu and charge the same as every other Mcdonalds outside of the airport? It wouldnt be profitable. Apple should let the developers charge what ever they want for their apps.

 

[Small White Car]

How about this example. Airport space is very expensive. Have you ever been to a Mcdonalds at an airport? Theres no dollar menu and all the food is twice as expensive. What if the airport told Mcdonalds that they had to have a dollar menu and charge the same as every other Mcdonalds outside of the airport? It wouldnt be profitable. Apple should let the developers charge what ever they want for their apps.

Another great example. Exactly right.

 

[swarmster]

Basically the old, old model was this:

That doesn't really answer my question. I understand that Apple charges for people to sell stuff through their store (IAP pretty clearly goes through their store). What I don't understand is iFlow seems to be acting like this has never been the case?

If they've found out their business model was poor, why not raise prices, or do like Amazon does and sell books outside of the reader app?

What changed in this situation that is making them so angry?

 

[OllyW]

What changed in this situation that is making them so angry?

Click this link from the first post.

 

[peetyrd]

That doesn't really answer my question. I understand that Apple charges for people to sell stuff through their store (IAP pretty clearly goes through their store). What I don't understand is iFlow seems to be acting like this has never been the case?

If they've found out their business model was poor, why not raise prices, or do like Amazon does and sell books outside of the reader app?

What changed in this situation that is making them so angry?

The problem is the sellers cant raise prices. Read the original article. The sellers have to sell at the same price in the app store as they sell everywhere else. Apple says its now against their policy. Basically, apple is telling the sellers how much they can sell their content for. That is RIDICULOUS.