Wednesday, February 16, 2011

Seven and A Half Cents . . .

Used here under the fair use doctrine for commentary purposes.

Add this to the number of reasons I’m neither in a hurry to get a tablet computer nor for Uncharted to get too deeply into the mobile app business:

Apple’s going evil.

Situation No. 1: Nobody in the publishing industry right now is paying anybody 30 percent of their subscription revenue to an outside party to distribute their goods. This is why newspapers, for example, handle their own bulk delivery and contract out individual delivery to children. So for Apple to tell publishers that they want 30 percent of “all sales” generated through mobile apps via Apple just to say hello is a bit of a shock.

Seven and a half cents may not mean a thing in this world, but 30 percent, now, that’s something worth woofing over.

And, per CNN, some folks are woofing:
Online music provider Rhapsody, which currently makes its streaming service available on Apple's iPhones and iPads, fired off a scathing statement to several tech blogs.

"Our philosophy is simple too -- an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple ... is economically untenable," the company said. "We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."
Apple’s also souring the e-book market, per CNN:
Earlier this month, the company spooked e-reader makers when it refused to greenlight Sony's Reader app. Sony's sin: It routed users who wished to buy books through a Web app, which cut Apple out of the revenue stream.
CNET writes that it’s as yet unclear how companies such as Barnes and Noble, Amazon, and Netflix will react to Apple’s cash grab:
For iPad-centric publications like the recently launched The Daily, Apple's 30 percent is baked into the business plan. But this probably doesn't work for many content sellers that can't afford to have those percentages skimmed off sales. Whether there's a viable workaround for companies or whether this is a negotiating tactic by Apple is unclear. But eventually this may develop into a game of chicken, with companies threatening to pull their apps from the App Store and initiate legal action while Apple continues to flex its muscles and demand what it feels is its proper due for creating a huge market. According to law professors interviewed for a Wall Street Journal article, Apple's new subscription service could draw antitrust scrutiny.
So if, for example, Uncharted were to create a mobile app – which we’re working on – that included the option to buy books, photographs, swag and gear, then Apple gets a 30 percent cut of all the sales we make. And if we decide we’re better off simply using our app to provide links to our web site for purchases, Apple can shut our app down.

Folks, this would be like Microsoft getting a cut from all the companies we buy stuff from via the internet, simply because we’re using a Windows-based PC to do our shopping. Nobody would be happy with that, right?

Yes, Apple is doing a wonderful thing by creating an app-based market where companies can reach out to people and offer them things for sale. But Apple, not content with selling the hardware and making a healthy profit off of it, now wants to dip its fingers in other pots of money, simply because it has the muscle to do so. This smacks of the horizontal or vertical integration many industries indulged in more than a century ago, leading to the trust-busting of Teddy Roosevelt.

Apple, the publishers you’re trying to woo have figured it out.

No comments: