[NeilN]

And I repeat, Apple should be smacked and smacked hard for this. The iPad doesn't exist in a vacuum and content can be consumed on a variety of platforms. Why should Netflix pony up 30% if a subscriber watches a percentage of videos on their iPad?

 

[hugh]

Gino, sorry if it sounds like we're picking on you, I don't mean too.

Having made my apology upfront, the truth is I don't give a rats behind if Apple has been lax in enforcement or is changing the rules of the game.

As a consumer, I want to clearly know if I am going to continue to be able to continue to use these applications on the iPad and what, if any, additional costs I will have to incur.

In the last year, I have bought 8 magazine subscriptions, lots of books, a newspaper sub. Total cost is likely over $500. The thought of adding $150 a year to read it on an iPad is not thrilling me.

 

[BayStBoi]

Just because Apple pulls something from the App Store (or doesn't approve a new / updated application) doesn't mean those that have already purchased / downloaded a previous copy will suddenly lose access to what is currently on their device.

You wouldn't be able to download any additional / replacement copies of the app in the future, but what worked previously should continue to work in the future.

 

[Gino Cerullo]

No, I don't understand why Apple should get a cut of subscription/book costs if they don't provide anything.

But they are providing something. They are providing the platform that makes this all possible and that platform didn't just appear out of thin air. Apple invests a considerable amount of money and hard work (R&D) and infrastructure to make this all happen. And let's face it, if it wasn't for Apple showing the way all these upcoming Android tablets probably wouldn't be 'upcoming'.

You could argue that Microsoft has been doing tablets since 2000 but you have to be honest, it took Apple to show the market how to do it successfully. In all the 10+ years that Microsoft has been doing tablets OSs an eco-system of this scale never happened. It just didn't exist!

It hasn't been since the introduction of the iPhone 3+ years ago that this explosion of devices and services started to show up. Android that the Android eco-system is arriving on the coattails of Apple's R&D. There are a lot of companies making money with Android only because Apple is showing them how. Sure, Apple is learning things from Android but let's be honest the heavy lifting is being done by Apple. It's so lopsided it isn't funny and Apple isn't laughing, they are trying to stay ahead of the curve.

Fine, charge $0.99 for the app but even that is stretching it.

It's not Apple's place to dictating to the app developers what their business model should be. If the app developer wants to charge $0.99 for the app and include a free subscription/content, that's fine! But, if they want to charge a subscription or sell a book then they have to make that option available in the app as well.

Let me be clear! As far as I know, Apple isn't saying that the ONLY way to access ebooks or subscriptions is through in-app purchase. It's just that the option for in-app purchase must also be available. It's up to the customer if they want to do it in-app or from the developer's web site.

If the customer chooses to use the convenience of in-app purchase then Apple gets their cut, if not then Apple gets nothing.

For example, there's a great e-reader app called Stanza which has links to online bookstores. You can also add links to other virtual bookshelves (basically web pages with XML markup). Baen Books, one of the few publishers who have a clue, have had an online bookstore for about a decade (or more). They added a feature a couple years ago where each account had a Stanza-compatible bookshelf. You buy a book on the website and it automatically appears in Stanza, ready for downloading. In this case, why should get Apple get a cut? And if they move to enforce this, who would they charge? Stanza or Baen?

As for the Stanza/Baen situation, I don't know what the answers is to that. I'm sure they'll find a solution that either satisfies Apple, if they deem the Apple eco-system is important for their respective businesses, or they'll leave the Apple system behind.

 

[NeilN]

Hey, I *like* Apple products and I'm usually defending Apple but the argument that they created the platform carries no weight for me. Content providers aren't charged a fee by Microsoft/Apple to have their stuff on Windows/Mac OS. The in-app option with the extra 30% markup creates a barrier to entry that Android doesn't have and is going to bite Apple in the ass if they try to enforce it.

 

[Gino Cerullo]

Gino, sorry if it sounds like we're picking on you, I don't mean too.

No need to apologize Hugh and I don't feel like I'm being picked on. I'm merely sharing additional information as I'm learning about it and giving another point of view. Just like everyone else in these forums.

I sympathize with your uncertainty and, in the interest of providing another point of view, it could be said that the app developers are just as much to blame as Apple for not following Apple's terms from the beginning and now possibly having to change their business model/pricing to make up for it.

Do they not also deserve a certain amount of your outrage? Are they not also complicit in creating this uncertainty by not having followed Apple's terms from the beginning?

 

[Gino Cerullo]

Hey, I *like* Apple products and I'm usually defending Apple but the argument that they created the platform carries no weight for me. Content providers aren't charged a fee by Microsoft/Apple to have their stuff on Windows/Mac OS. The in-app option with the extra 30% markup creates a barrier to entry that Android doesn't have and is going to bite Apple in the ass if they try to enforce it.

You're correct but just because it isn't done on the desktop doesn't mean it shouldn't be done on these new platforms.

If we inform ourselves with how things should be done now by how they were done in the past then by that logic the wireless carriers would still be in control of what functions are available on our mobile phones; what apps we're allowed to buy; when and if we are allowed to updated our mobile operating systems etc., just because that is how it was done in the past. You aren't saying THAT are you?

You can be sure that Apple will enforce it and any proceeds will be used to keep the price of their devices down to better compete with Android, more so in the tablet market where they are not counting on carrier subsidies to hide the real cost of the device.

We are already seeing that Apple is being very aggressive in their tablet pricing compared to Android tablets. They know that the first thing people will see is the device's price when they go comparison shopping so if they can be at the same price or cheaper than Android tablets they can make up for it in app sales.

 

[JohnnyCanuck]

I own a Nook, a Kindle, a Blackberry, two Win 7 PC's, a Linux PC, and an Android tablet.

There are Kobo, Amazon, B&N, and Sony Reader apps for all (except for a Sony Reader app for my Blackberry). I can buy an ebook at Amazon, Kobo, B&N, Sony, or any other store that sells in epub format and read it on all those devices through those apps (the B&N Android app allows epub imports). Now, Apple comes along and says that if I own an iPad I cannot read the Amazon book that I bought for my Kindle on my iPad because I bought it from Amazon. No one else imposes this restriction. My Amazon purchase can be read on any platform I wish using Kindle hardware or software ... except Apple, even though there is an approved Amazon app.

Why on earth would I ever consider buying an iPad? Why, given this restriction (and I've only highlighted the ebook issue ... but it applies elsewhere), would anyone?

At least they made Google very happy!

 

[beanagee1]

We are an Apple family with too man ipods, iphone, MacBook and iMac. I was thinking about buying the next version of the iPad. I will stay away and look for an Android instead.

 

[99semaj]

The BBC reports that a groundswell of opposition is coming from European publishers, and at least one government (BE) is launching an investigation.

http://www.bbc.co.uk/news/technology-12391899

 

[NeilN]

Apple Launches Subscriptions on the App Store

Terms announced: http://www.apple.com/pr/library/2011/02/15appstore.html

“All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app...

They're nuts for trying to effectively dictate prices for non-iOS customers.

 

[ScaryBob]

IMHO, a 30% commission is much too high. It will effectively increase prices 40% for electronic subscriptions acquired outside of Apple apps. (Assuming that publishers decide not to absorb the costs.) It could also push up prices for conventional publishing if Apple insists on receiving a commission on newspaper sales that include a "free" electronic subscription. I hope publishers fight back by charging 40% more for iOS subscriptions and make it clear why.

 

[Gino Cerullo]

NeilN, how are they dictating the price for non-iOS customers? Please explain.

The developer of the app is free to set the subscription price at whatever they want. For obvious reasons the price has to be the same (or better) both in-app as it is outside the app.

Apple only makes their 30% if the customer chooses to subscribe in the app. They make nothing otherwise, especially in the case of a free app even though they incur the overhead of the app store.

 

[hugh]

I'm not sure I understand the press release so I think we are going to have to see how this gets applied.

FWIW, I'm glad Apple has published this and I hope the practical aspects of the issue get resolved very soon.

My guess is it will crush Zinio.

Going forward, if it means more cash out of my pocket for my magazine and newpaper subscriptions, then I will likely look at buying a WebOS or Android tablet.

 

[hugh]

The developer of the app is free to set the subscription price at whatever they want. For obvious reasons the price has to be the same (or better) both in-app as it is outside the app.

Gino,

That is a major problem.

What if Time Magazine wants $52 a year after commission to sell digitally. So on Apple store it would be priced at about $75 a year to consumers.

Now what if the Android market wants a 10% commission. Can Time sell a yearly sub for $58 on the Android Market?

My guess is Apple would not allow it and if that is the case then what Apple was doing (if I understand correctly) would be an illegal restraint of trade.

(p.s. I agree that Apple should be compensated somehow)

 

[NeilN]

@Gino, let's take Zinio as an example. It charges $24 for a National Geographic subscription which I can read basically anywhere - Windows, Mac OS, Linux, iPad. Now Apple is coming in and saying hey, you need to offer that sub in-app and we get 30%. That's probably close to Zinio's gross margin so they'll have to raise the in-app price. Ooops, can't do that without raising the outside website price which affects everyone.

 

[hugh]

NeilN, you can't have two intermediaries so unfortunately, Zinio will be history. FWIW, I think all app stores are eventually going to start charging commissions.

An App store is a retailer. It needs to make money. The real problem is you can't buy iPad apps from another retailer.

Longer term, I can see the anti-trust folks in Europe and North America forcing Apple to open up its hardware to other retailers.

 

[audacity]

This is a wonderful opportunity for Andriod, webOS and Blackberry tablets. They could court Amazon to their platform (and to drop iOS) by not having a policy similar to the one Apple just announced, and it would be a major selling point for those platforms for customers who would otherwise select an iPad.

 

[Gino Cerullo]

ScaryBob, you forget that the electronic model eliminates the huge overhead that publishers incur for printing and distribution of the physical media. That's where most of the costs are in the publishing industry. You don't think that they are going to pass all that savings on to you do you? Apple's feels their platform adds value and they want to be paid for it. Think of it this way, some of that overhead is being shifted to the new delivery model.

Also, publishers can't fight back by charging more for the in-app purchase compared to what they charge outside the app. It has to be the same or better. Their only recourse is to not participate in Apple's ecosystem. If they can survive then they can stay in business. If not, then Apple has a point. Their eco-system has value and they want to be paid for that value.

Would you expect the owner of a popular shopping mall not to charge rent. Sure a store could choose to locate outside the mall but if most people choose the convenience of the mall shopping experience then that mall location has value and the mall owner has a right to charge for it.

Now suppose a store has many locations, some inside malls and some outside. Some popular malls charge more rent than other less popular malls. Are you going to say that the higher rent malls unfairly influence the prices of the merchandise in the locations of the lower rent malls? It might be true but that's the cost of doing business.

 

[NeilN]

hugh, I have a real problem with this. I can go down to my local Future Shop (or online store) and buy a copy of a Blu-Ray software player. That is the end of any connection I have with the store or the software manufacturer. I can play as many movies as I want and both these entities won't get a single dime more.

If Apple wants to be compensated then they should specify a mimimum price for subscription based apps.