Wednesday, February 16, 2011

Apple's iOS is nothing without the Apps

Do you know the story of the fisherman who pulls a goldfish out of the sea? It offers him a wish if he will throw it back. The fisherman asks for a loaf of bread. He goes back to his wife who berates him and sends him back over and over, each time asking for and receiving more and more and more from the fish. The sea is each time more stormy, the fish more crabby, and the wife more greedy, until her final wish to be made ruler over the sun and the moon is too much even for the fish. This time when the fisherman returns home, he finds that the palaces and wealth earlier given by the fish are gone, and they have returned to their initial, miserable existence. I thought of this story today as I bombarded my poor Twitter followers with my outrage over Apple's statement yesterday, and I finally decided it would be better in a coherent post than in highly-edited mini-bites.

First, Apple's statement says two important things.

1: If you have an app, and you sell anything for it anywhere, you MUST offer those same things at the same price in-app. (In-app is Apple-speak for using their API and giving them 30%.)

Here's the direct Apple quote: "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."

So, if you sell ebooks on your website and giveaway or sell an app that reads those ebooks, you MUST offer in-app purchases of those ebooks.

There are some that are saying that as long as you don't link from the app, then you're OK. That's not what this says. It says if you sell content elsewhere, you must sell it in-app through Apple.

The one thing that it doesn't say is how this policy affects those of us who generate content but do not sell or give away apps. Me, for example. I assume Apple is not requiring itself to sell my book in-app, despite the fact that it can be purchased and loaded into its iBooks app.

To take that scenario further, what about if someone besides Amazon developed a Kindle-book-reading app? They, presumably, would not have to offer Kindle books in-app. That doesn't facilitate the buying experience for readers, but it keeps Apple out of Amazon's pocket.

2: You may not offer links from your app to your website.

The direct Apple quote: "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."

Now, maybe you could interpret this to mean that links to parts of your web site that aren't direct sales are OK, but honestly, I wouldn't want to be relying on Apple's largesse on this point.

Me? I think Apple has gone too far. They are acting as if they, and they alone created this big happy universe populated with hundreds of millions of credit cards just waiting to be charged and that app developers are just interloping goldminers trying to cash in.

But iOS is nothing without the apps. What would you have? Mail? the phone that didn't work until Verizon finally offered coverage? Safari? The clock? Oh yeah, the gyroscope, ooh!

Apple owes more to its developers than a capricious change of policy whenever it feels like it. Not to mention to its users who didn't expect that a large number of apps on which they relied, for which they actually bought the device, would suddenly stop working... or cost 30% more.

More reading:
Apple Statement: Apple Launches Subscriptions on the App Store
Apple's Big Subscription Bet: Briliant, Brazen Or Batsh*t Crazy?
Apple is actually asking for 10% of SaaS mobile revenue
Does Apple really want to have a "no links to your local bookstore" rule?
Apple's New Subscription Model is Evil
Apple's Subscription Rules Raise Possible Antitrust Issues
Apple's New Subscription Rules Could Kill Streaming Music Services
Why Apple's Change of Subscription Service Rules Will Backfire, For The Users
Rhapsody won't bow to Apple's subscription policy


  1. Liz, rant on! I'm right there with you.

    What if I want to sell a PDF file that I designed to be read in GoodReader? GoodReader doesn't know I exist. Will this mean GoodReader has to limit what content can be viewed through the app just so Apple can collect its 30%?

    Just as bad - does this mean I have to pay extra for Pandora just because I MIGHT want to listen to it on my iPad?

    This is truly outrageous and as much as I love my iPad, it's the apps that make it useful. If those apps leave Apple, it could push me to another tablet.

  2. Apple's execs seem to think it's still 2001, and they apparently believe that today's ebook publishers are as dependent on Apple as the music industry was back then. A decade ago, the music industry was over a barrel. Thanks to pirating, sales were plummeting. It desperately needed the complex and popular iTunes-to-iPods music distribution scheme that Apple completely controlled. Then, Apple could dictate terms, including their 30% take.

    But the publishing industry has had ten years to learn the new technology. Amazon, B&N and Sony have their own store-to-ereader systems that are, in many ways, better than what Apple offers. Apple is bring much less to the bargaining table and yet it thinks it can exert the same degree of control and extract the same 30% share. The very nature of its threat shows just how poor its position is. All it can do is threaten to yank competing apps off iDevices.

    Does Apple really want to outrage millions of its customers? Do they want to face the large class action dispute that will almost certainly follow? Apple has advertised all the apps their devices run. That makes them liable if they yank some of the most popular for reasons that have nothing to do with user benefits.

    In the end, Apple's behavior makes no sense. From figures I have seen, the iBookstore is running in distant third place behind Amazon and B&N. A Number 3 simply does not tell Numbers 1 and 2 what they can and cannot do. In the short term, all they'll do is help Amazon sell more Kindles. In the long term, they'll be forced to back down.

    So relax Liz. This is a good illustration of 'the worse, the better.' It's a policy so poorly thought out that in the end Apple's likely to not only back down, they're likely to get burned and learn a little much needed humility. Who knows, they might even make a serious effort to make the iPad competitive as an ereader with the Kindle.

  3. Google has just announced a 10% plan called "One Pass." Is that better for self-publishing authors and regular publishers? There is always a choice.

    As well, one can buy a non-DRM's ePub and read it in Ibis Reader, an HTML 5 eReader that is beyond the reach of Apple or any other hardware manufacturer. Is that better?

  4. With Google announcing they will seek to only take 10%, instead of the 70% Apple ask for, is there the potential for content creators to promote Android further knowing they will make more money off of the sales? Also, what do Kindle charge? Finally, will this prevent the trip the Amazon Kindle iOS app does where it redirects to a webpage when attempting to purchase a book through the app?

  5. @flowney and @New Buffalo: I am still looking at Google's new One Pass system, but at first glance, it seems to be much more open than Apple's system and a lot less costly to publishers.

    Yes, you can use other ereaders to sideload EPUBs. IbisReader can read non-DRMd stuff, and Bluefire can read Adobe DRM'd books, and there are other choices as well.

    I think web apps that circumvent Apple's approval process altogether are probably the way to go. Until they start restricting where you can go and what you can do with Safari. Never say never, but I'd be pretty surprised to see them do that.

    And yes, Apple's new policy prevents Amazon from redirecting people to their web site "in order to purchase content". Since I can't imagine any page on Amazon not letting you buy stuff, that pretty much means that Amazon's Kindle App is prohibited from linking to Amazon at all. I doubt Amazon will stand for it. I wouldn't.

  6. I see that the US Justice Dept. is looking at Apple for anti-trust violations.

  7. I don't see many rational people arguing that tapping into Apple's ecosystem shouldn't incur any cost beyond the entry fees so it's simply a matter of degree where 30% is seen as too much and 10% is seen as tolerable. So it all boils down to the value of access to certain markets. Right now, Apple has a more valuable market to offer. It might even be worth 30% to some. That, of course, could change.

    Publishers can choose to ignore Apple and, apparently, some have decided to do just that. It won't take long for the accountants among us to figure out what the opportunity cost of ignoring Apple actually is. Comparing that to the 30% cut, the players in this game will know whether they bet poorly or wisely.

    Personally, I'd be happier with what's left if pay a 90% cut on a billion dollars ($100,000,000) in sales than 10% on a million ($900,000). A smaller slice from a bigger pie can be better than a bigger slice from a smaller pie.

  8. @flowney: I think what bothers me the most is that this system is imposed on all. If it's such a boon to users, then apps should *want* to use it, would choose to use it. But Apple shouldn't be able to control or take a percentage of everything that's sold on an iPad. Luckily they can't. Until they censor Safari.

  9. I've been debating for a while as to what ereader device to go for, with IPad2 due in April, I've had alot of go workers pushing for it, but with the way Apple is becoming more restrictive, and as you mentioned Liz so reliant on Apps to function I am more app to go with an Android Tablet, or with a Color Nook with the latest Honeycomb (Android 3.0). how to: incase folks are interested in options.

  10. Not exactly sure what all this means. Can someone please clarify? I have a publication I converted for my client that will be by them (it is an alumni trade publication for a department of a university). This will be distributed for free, and there will be links to resources and cited works throughout. I don't think there should be any problems with it. I would like it to be read by any epub reader including ibooks for the iPad.

    But, what if I want to do my own magazine or book and I direct someone back to my site as a resource or for another related publication I am selling, say another book I write or someone else's book that can be obtained through me? I don't think I'm getting the complete picture from the article as to what the situation is and how it affects us.

  11. @Lisa. For now, this only affects apps, not ebooks. That said, there are certain rules about what you can and cannot include in ebooks. For example, you're not allowed to link to a more complete version of the book, or to Apple's competitors (really!). You can check the rules in the Publisher's Guide in iTunes Connect.


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