Saturday, March 5, 2011

Apple: App Subscription policies MIGHT not affect Amazon's ebook app


 That image at the left is by Asa Mathat, All Things Digital, and is the photo used at the Business Insider article, although the image is much larger there.  It's in candid-portrait style, which tends to focus on expressiveness, taken from the ATD conference last year and startling for the force felt from that face.

I dropped by the The Kindle Chronicles Friday Podcast site to see what Len Edgerly had for this week, as all recent weekly podcasts are available there for listening.  In addition to the podcast that includes news, Kindle tips, reader-comments, and the main interview of the week, Len has a text summary of each podcast's info with links to specific news and tips mentioned in the podcast.

  While there, I saw that Len has highlighted an important Business Insider article by Jay Yarrow that I'd missed, written February 28.  It's of special interest to me because on February 24, I'd written a blog article titled, Why Kindle books will be readable & sync'd on Apple devices no matter what, in which I mentioned the known Kindle-for-Web "solution" (but one must be On the Net to read the book), and I repeated the caution that all actual Apple statements re the 70/30% revenue split had referred to Subscription apps, and not one-off e-book reader apps yet.

  Amazon does have subscriptions offered in a Kindle app but not for Apple devices, only for Android.  Obviously they've never made a doable deal with Apple for an app involving subscriptions.

  The February 1st quote from Apple media representative Trudy Muller about the rejection of the Sony e-reader app was in connection with Sony having an e-book purchasing-option inside their app, to buy a book from Sony of course, using a transaction outside that app while not offering iDevice customers the option of buying that book within the app (from Apple) instead.

  Obviously, Amazon and other booksellers would also need to comply with any such new enforcement of such a rule, before the July 1 deadline for legacy apps to comply.  That's been a point of real concern, but taking over has been the certainty expressed in many columns that this involved Apple taking 30% of the sales transaction (100% of the competitor bookseller's profit).

  However, it's not clear what type of buying-option had been included in Sony's app, rejected by Apple.  Sony hasn't clarified that either.  Most of all there has been no mention (yet) of a 70/30% split in statements about the one-off ebook-reader app.  You'd think Sony would have commented on or complained about that specifically.

  Applying the 70/30% subscription-revenue rule to e-book one-time purchases would mean Apple was bent on grabbing 100% of the bookseller's 30% share of a sale.

  If Apple did do this, that would imply they actually want all online bookseller apps Off their devices (this is certainly possible now that they have Random House in their iBook Store finally), and no sane bookseller would bring their book-sales app to Apple then, since it would be like 'tribute' paid to overlords.

  Who would put a lemonade stand in a mall just to spend the day selling lemonade so that the mall owner would get 100% of the profits?

  But, as I've said often, the only Apple-representative quotes since February, mentioning the now infamous 70/30 revenue split, have been specifically about Subscription apps rather than one-off book sales, at this point -- even if Apple has general rules about revenue-sharing in their November-updated guidelines for Apple-app Developers.

  Since this topic concerns many of us, here is what Business Insider's Yarrow reports about a meeting between Berstein analyst Toni Sacconaghi and Apple execs during that week.
  The article's headline is "Maybe Apple's New App Subscription Rule Won't Hammer Amazon."  Excerpts:
' Apple's new in-app subscription policy might not affect Amazon after all.

Berstein analyst Toni Sacconaghi met with Apple execs last week and pressed them on how the new subscription policy would affect Netflix and Amazon.

Eddy Cue, Apple's Internet services boss, wouldn't comment on either company, but said, the announcement only applied to subscriptions.

Well, Amazon Kindle books aren't subscriptions, so they shouldn't be affected, no?

We've been pressing on Amazon trying to get a comment and the company is just ignoring us.  But, we think there's a chance that it's just not going to be affected by Apple.

Why?  Beyond Cue's comment, we've heard from a source that Netflix would not be affected by Apple's new policy.  We're not sure of the exact reason why, but it now seems reasonable to think it's because Netflix isn't a publishing business.

Don't forget Steve Jobs reportedly said in an email, "We created subscriptions for publishing apps, not SaaS ["software as a service"] apps." (Amazon, for the most part, isn't a publishing company.)

Another reason for Netflix to be exempted: Apple needs Netflix to make Apple TV a success, and keep iPad owners happy... '

Yarrow then speculates on the lack of comment by Apple re Netflix and Amazon and also on the silence from those companies on Apple's recent moves and reminds us that no one knows what will happen on all of this.  I'll repeat that Apple would suffer more from the Kindle app not being available on the iDevices since they WILL be on all the new Android devices and a real pull for consumers trying to decide on tablets in 2011.

But the statement by Apple's Eddy Cue is somewhat encouraging and a sign of sanity.  Signs are only signs though.

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  1. These remarks suggest that, although it won't say so openly, Apple doesn't actually intend to behave like an intolerable bully when the result would do it more harm than benefit. (i.e. their customers can 'be damned' if their numbers aren't too large).

    That may be true and, if so, it leaves giant, popular services like Amazon and Netflix safe, but not the smaller players. And if Sony's stumbling moves into ebook distribution are too small for Apple to respect, then much smaller game developers who'd like a subscription model may be in big trouble. Using Apple's own muddled language, it would be easy to say that games are more like publishing than a service.

    At any rate, as a consumer I'm not reassured by news that Apple may be restrained by any pain it may suffer. It's my pain that I care about. I've paid quite a bit for the Apple products I use, and I don't like to hear Apple claiming that matters for nothing, that their often overpriced products were really loss-leaders and that it has the right to collect 30% of the income from some ill-defined category of transactions, simply because those transactions are using IOS. Sorry Apple, if you want a share of those transactions, you need to compete openly for them, not use app approval as a club to crush competition.

    Apple seems trying to replay its game with music distributors circa 2002. It seems to be targeting what it sees as relatively weak industries, book and magazine publishing, as they're going through major changes. But Apple execs have blundered badly. They are too late. Those industries were already making the transition without help from Apple, They don't need Steve Jobs as Savior. They just need him to keeps his hands out of their pockets.

    When it comes to books, Amazon and B&N, along with Kobo, Smashwords and others, have come up with effective ways to provide the public with digital books to digital gadgets. There's no need for Apple except as a platform for some of those apps much like the Droid and Windows. If Apple wants to join that game-in-progress, it needs to behave and show respect for both its competitors (who have better products) and the public at large.

  2. Michael, I agree with your points for the most part.

    However, if they reject Sony's ereader app on the basis of outside-app buying begun inside the app while not providing an in-app purchase via Apple, I think there's a law that they'd need to apply that to all e-bookstores.

    It's just that it's not likely they'd be insisting on the 70-30 split in the one-off e-book reseller case, as many had thought, since that would leave the reseller/developer 0% profit.

    I wonder what B&N, Amazon, or Sony would consider a bearable percentage. 3%? 5%?

    Or will the book resellers just not offer outside-app buying within the Apple app anymore?

    How much is it worth to have a customer on an iPad or iPhone/iPod be brought via Safari to the exact Amazon (or BN, Sony) book they were looking at in the Apple app?


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