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You are here: MacNN Forums > Community > MacNN Lounge > Apple gets slammed by US federal judge for antitrust regarding ebook prices

Apple gets slammed by US federal judge for antitrust regarding ebook prices (Page 3)
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Jul 23, 2013, 04:42 PM
 
Originally Posted by OreoCookie View Post
True enough. Even the Wintel monopoly is crumbling after almost two decades of dominance.

Apple for one reason or another seems not to put much focus on India like they do with China, for instance. AFAI remember, they have had several China-centric WWDC sessions and at least part of the documentation has been translated to Chinese. Consequently, Apple is doing well in China.
India was notable because Apple entered there with the iPhone 5 and a large marketing campaign. So far they're not catching hold. Makes sense though. India is very poor and the cost of an iPhone is out of reach for many.
     
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Jul 24, 2013, 07:01 AM
 
I still do not see how this is Apple's fault. Are not all bookstores selling paperback books at the exact same price? A Stephen King paperback book is the same price at Barnes and Noble as it is as Waldenbooks. That same book is the same price online as an eBook at the iTunes store as well as the Google Play store. So how can people come to the conclusion that Apple wants to be a monopoly on eBooks when there's still Amazon and Google selling eBooks. And what about a monopoly in price fixing at the book stores? Same book, same price. I don't get it.
     
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Jul 24, 2013, 07:27 AM
 
Have you read the Thread?
     
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Jul 25, 2013, 10:40 AM
 
Yeah, it still doesn't explain why ebooks are the same price on the Google Play Store. If you want to destroy a monopoly, then undercut the prices. Something that Google could have done. Plus, it didn't explain why paperback books are the same price at Barnes and Noble as they are in Waldenbooks. So who's responsible for that monopoly and price fixing scheme? Hmmm?
     
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Jul 25, 2013, 10:55 AM
 
Originally Posted by ctt1wbw View Post
Yeah, it still doesn't explain why ebooks are the same price on the Google Play Store. If you want to destroy a monopoly, then undercut the prices. Something that Google could have done.
Oh, right.

If you want to compete, just undercut prices.

Especially if you have zero market presence.
It's just a matter of who runs out of money first. Go for broke.

And then, IF you survive long enough to have some market share, raise your prices to the point where you can actually start making money, and watch your customers stay faithful and happy.
     
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Jul 25, 2013, 07:42 PM
 
Originally Posted by ctt1wbw View Post
Yeah, it still doesn't explain why ebooks are the same price on the Google Play Store. If you want to destroy a monopoly, then undercut the prices. Something that Google could have done. Plus, it didn't explain why paperback books are the same price at Barnes and Noble as they are in Waldenbooks. So who's responsible for that monopoly and price fixing scheme? Hmmm?
Hardcopy books have different prices outside of the bookstore-only retail world. You can buy a book cheaper through Amazon or at Wal-Mart or Target than the list price, which is usually what places like B&N, Borders, and Waldenbooks sell books for (aside from the occasional 30% "deal").

I doubt that the publisher dictates to all retail outlets for their books what the price must be. In this particular case, the publishers WERE dictating the book prices. The seller was not.

Originally Posted by Spheric Harlot View Post
Oh, right.

If you want to compete, just undercut prices.

Especially if you have zero market presence.
It's just a matter of who runs out of money first. Go for broke.

And then, IF you survive long enough to have some market share, raise your prices to the point where you can actually start making money, and watch your customers stay faithful and happy.
You might try practicing responding to posts without trolling once in awhile. You don't have to be so sarcastic all the time.

In Google's case, they can afford to take a loss when trying to enter a new market. They have products that fail (Google Wave, anyone?), but they make so much money on the products that don't fail that taking particular risks in new markets is just part of the game they play.

@ctt1wbw: are Google Play's prices the same fixed prices that the publishers were forcing? My understanding was that some ebook prices were already starting to come down as a result of this judgement.
     
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Jul 26, 2013, 10:56 AM
 
Originally Posted by shifuimam View Post
In Google's case, they can afford to take a loss when trying to enter a new market. They have products that fail (Google Wave, anyone?), but they make so much money on the products that don't fail that taking particular risks in new markets is just part of the game they play.
How do you raise prices after you've spent a couple years losing money on trying to break into a market by undercutting prices?

Maybe Google realized, just as everybody else did, that trying to compete with Amazon on price is suicide. Amazon hasn't really made any money in its entire existence. Google could have blown part of its billion-dollar profits on carving out some of that market, but then what?

Maybe Google realized that Apple was trying to break open the Amazon stranglehold, and that they might have a chance at doing so, just long enough to get everybody onto the playing field.

Maybe Google realized that they might not have to lose money on the market if Apple was willing to play the fall guy.
     
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Jul 27, 2013, 11:49 PM
 
"Trust the Government. It worked for the Indians".
To know your Enemy, you must become your Enemy.”
Sun Tzu
     
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Jul 28, 2013, 11:42 AM
 
Originally Posted by shifuimam View Post
they make so much money on the products that don't fail that taking particular risks in new markets is just part of the game they play.
Google makes "so much money" only for its advertising. Their other products make a pittance, nothing, or are at a loss. Some are strategic, to build services and hooks to form platforms for advertising and or the data needed to charge higher rates (targeted ads based off of usage profiling).

Any of these things in a vacuum would be losers, unlike Apple where discrete businesses are profitable and successful.
     
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Aug 1, 2013, 10:08 AM
 
Okay, here's some screen grabs on a Stephen King book. iTunes vs the Google Play Store. Price fixing???


Under The Dome Google Play by ctt1wbw, on Flickr


Under The Dome Apple iTunes by ctt1wbw, on Flickr
     
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Aug 1, 2013, 10:11 AM
 
Originally Posted by Spheric Harlot View Post
Oh, right.

If you want to compete, just undercut prices.

Especially if you have zero market presence.
It's just a matter of who runs out of money first. Go for broke.

And then, IF you survive long enough to have some market share, raise your prices to the point where you can actually start making money, and watch your customers stay faithful and happy.
Isn't this what Asus is doing with the Nexus 7?
     
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Aug 1, 2013, 06:29 PM
 
I don't know, but I'm going to assume that Asus is not the one making a loss off the Nexus. It's Google-branded, no?

And there are rumblings that Google is considering divesting itself entirely of Android, because it's not doing anything for their bottom line except costing them money.
     
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Aug 2, 2013, 04:52 AM
 
Originally Posted by ctt1wbw View Post
Okay, here's some screen grabs on a Stephen King book. iTunes vs the Google Play Store. Price fixing???


Under The Dome Google Play by ctt1wbw, on Flickr


Under The Dome Apple iTunes by ctt1wbw, on Flickr
This is as it should be. You all have a choice now. It wouldn't have been like this if the DOJ didn't step in and break it up.
     
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Aug 2, 2013, 04:31 PM
 
Originally Posted by theothersteve View Post
This is as it should be. You all have a choice now. It wouldn't have been like this if the DOJ didn't step in and break it up.
So the price on the Google store couldn't have been set to be more than what the list price was on the iBookStore before the DOJ stepped in?

I find the proposals from the DOJ to be very unreasonable and quite frankly unfair. My response, If I were Apple, would be to just remove all the content in question from the iBook store and have the publishers release books as apps if they want. So the iBookstore would be just for self publishing or public domain titles. (If the cost of running the iBookstore runs higher than the profits it bring in (with Amazon allowed to further its monopoly by undercutting prices), why bother keeping it open for uncompetitive content?)
     
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Aug 3, 2013, 03:07 PM
 
Originally Posted by Hawkeye_a View Post
So the price on the Google store couldn't have been set to be more than what the list price was on the iBookStore before the DOJ stepped in?

I find the proposals from the DOJ to be very unreasonable and quite frankly unfair. My response, If I were Apple, would be to just remove all the content in question from the iBook store and have the publishers release books as apps if they want. So the iBookstore would be just for self publishing or public domain titles. (If the cost of running the iBookstore runs higher than the profits it bring in (with Amazon allowed to further its monopoly by undercutting prices), why bother keeping it open for uncompetitive content?)
Yes, the price of the book could have been set to more on the Google eBookstore before the DOJ stepped in, but the chances of that would were very unlikely and wouldn't last long...

1. Since publishers would be setting the prices, they'd have no incentive to have such different pricing from one major sales channel to another. Remember, Apple worked to force the agency model onto the entire industry... stripping away pricing control out of retailers' hands and putting it into the publishers' hands. This business model is valid and can work... but Apple went too far in forcing it industry wide through collusion. This effectively serves to eliminate competition and flatline prices by removing any ability of the retailers to price these products.
2. Apple actually had stipulations in its contract with publishers that made it difficult for them to sell at a HIGHER price elsewhere. This seems crazy but that's how tight and constrained Apple's contract was.

Your response should be for companies like Apple to play fair. All they do is champion developers and their platform... put out emotional commercials and vomit up a bunch of PR baloney... but at the same time they hold all of the data... they come out with Apps that they know are the hottest areas because of the data they have... and put developers out of business. They take a 30% cut of all of the revenues developers get in their Apps... and almost all of the Apps on Apple's App Store don't make any money.
     
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Aug 3, 2013, 03:33 PM
 
I thought I'd post a link to this article:

Apple calls the DoJ’s ebook remedy a draconian and punitive intrusion into its business.
Apple calls the DoJ's ebook remedy a draconian and punitive intrusion into its business - The Next Web

What's draconian Apple... what's an intrusion... is you and your anti-competitive, greedy business practices.

Apple says that the injunction the DOJ is seeking goes too far. That it'll "injure competition and consumers".

The DOJ wants to:

1. Monitor Apple's compliance when it comes to its contracts.
2. Allow eBookstores to link to their own Websites from their Apps.
3. Terminate its contracts with the 5 big publishers.

I wish their was a strongly worded forth remedy:

4. Potentially eliminate the 30% cut Apple takes from the sales of eBooks in Apps from competitors on iOS.

The fact that we might be able to link to our eBookstore from within our App on the iPad and iPhone is incredibly good news for us and you. It'll push price competition and you'll see more vendors selling things in Apps in this market on iOS. The fact that Apple took away the ability of eBook retailers to link to their online stores a few years back was a BS anticompetitive move in its own right... And some went out of business because Apple's 30% cut eliminated their ability to make enough money. Apple made the money, and everybody else suffered.

When it comes to Apple's 30%, you all should be calling for this to be eliminated as well, with reasonable stipulations.

I can see it being reasonable Apple taking a 30% cut of the initial sale of an App. But why should Apple have such a large share of each and every dollar spent in an App when Apple is effectively bearing none of the costs associated with the development and maintenance of the App... or the costs associated with content and customers associated with that App.

Let's take eBooks. We bear all of the costs, outside of someone having issues with obtaining the App through Apple's App Store (App delivery support). Yes, Apple develops iOS and maintains it and bears that cost... but imagine if every App that's developed for OS X... every developer had to pay Apple 30% of every dime their business made with their software in OS X?

1. We host the books.
2. We develop and maintain our expensive, complex systems to host these books and deal with customers.
3. We pay all of the bandwidth. When you download or redownload a book within iOS Apps, we pay, not Apple.
4. We pay for the marketing to get consumers in the door.
5. We provide all of the customer support associated with the delivery of books, the user experience, or any other issue including payment.
6. We pay for syncing between online and other versions of our content stores with iOS Apps.

In other words, we're bearing 99% of the costs and Apple's taking 30% of every dime made in the App. We're not alone. Folks like Fab and others in the publishing industry who have to deal with Apple's 30% take is incredibly challenging and serves to severely limit competition. It's why, shortly after Apple removed the ability of folks like Amazon and Kobo to link online from within iOS Apps... the content disappeared. They don't sell anything in the Apps because with Apple's 30% cut, it's difficult to make any money at all.

All this does is line Apple's pockets and eliminate competition. Apple's greed and control is incredibly far reaching and I strongly feel that the DOJ's injunction is fair, just, and a huge win for Apple's competitors and consumers. It's hard to believe how greedy people and companies can be. In Apple's case... I have this image of Tony Montana at the end of Scarface and that globe that says, "The World is Yours." Apple, like other large companies... they just don't know when to stop.

For me Apple is more of an enemy than anything else. A year ago I was much more optimistic about them. Not anymore. This stuff... the tax havens... and some other stuff I won't mention... I guess I'm just ranting on here because this is anonymous and it feels good to vent. Maybe I'll move onto a shrink or something.
     
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Aug 3, 2013, 04:17 PM
 
     
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Aug 7, 2013, 06:09 PM
 
I like how Obama is more concerned with a potential ban on some shiny aluminum shit than the NSA spying on the people he's sworn to represent.
     
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Aug 8, 2013, 08:55 AM
 
The ban would have been the first ever on standards-essential patents. Apparently the administration doesn't want bans on standards-essential patents. A good thing they did stop this - if they hadn't, we would never have seen another mobile standard.
The new Mac Pro has up to 30 MB of cache inside the processor itself. That's more than the HD in my first Mac. Somehow I'm still running out of space.
     
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Aug 9, 2013, 05:52 PM
 
The beer is officially cracking.

The DOJ responded to Apple's request for a stay today and vehemently rejected all of Apple's arguments for a stay. In other words, the DOJ wants Apple punished, today.

We respectfully ask the Court to reject any attempt by Apple to stay injunctive relief in the law enforcement action. More than three-and-a half years after it entered into a price-fixing conspiracy with publishers, it is time for Apple to face the consequences for violating the antitrust laws. The public has a clear interest in ending Apple's harmful conduct and this is a factor weighing heavily against any delay Apple seeks.
     
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Aug 15, 2013, 05:13 PM
 
Originally Posted by theothersteve View Post
I wish their was a strongly worded forth remedy:

4. Potentially eliminate the 30% cut Apple takes from the sales of eBooks in Apps from competitors on iOS.

The fact that we might be able to link to our eBookstore from within our App on the iPad and iPhone is incredibly good news for us and you. It'll push price competition and you'll see more vendors selling things in Apps in this market on iOS. The fact that Apple took away the ability of eBook retailers to link to their online stores a few years back was a BS anticompetitive move in its own right... And some went out of business because Apple's 30% cut eliminated their ability to make enough money. Apple made the money, and everybody else suffered.

When it comes to Apple's 30%, you all should be calling for this to be eliminated as well, with reasonable stipulations.

I can see it being reasonable Apple taking a 30% cut of the initial sale of an App. But why should Apple have such a large share of each and every dollar spent in an App when Apple is effectively bearing none of the costs associated with the development and maintenance of the App... or the costs associated with content and customers associated with that App.

Let's take eBooks. We bear all of the costs, outside of someone having issues with obtaining the App through Apple's App Store (App delivery support). Yes, Apple develops iOS and maintains it and bears that cost... but imagine if every App that's developed for OS X... every developer had to pay Apple 30% of every dime their business made with their software in OS X?

1. We host the books.
2. We develop and maintain our expensive, complex systems to host these books and deal with customers.
3. We pay all of the bandwidth. When you download or redownload a book within iOS Apps, we pay, not Apple.
4. We pay for the marketing to get consumers in the door.
5. We provide all of the customer support associated with the delivery of books, the user experience, or any other issue including payment.
6. We pay for syncing between online and other versions of our content stores with iOS Apps.

In other words, we're bearing 99% of the costs and Apple's taking 30% of every dime made in the App. We're not alone. Folks like Fab and others in the publishing industry who have to deal with Apple's 30% take is incredibly challenging and serves to severely limit competition. It's why, shortly after Apple removed the ability of folks like Amazon and Kobo to link online from within iOS Apps... the content disappeared. They don't sell anything in the Apps because with Apple's 30% cut, it's difficult to make any money at all.

All this does is line Apple's pockets and eliminate competition. Apple's greed and control is incredibly far reaching and I strongly feel that the DOJ's injunction is fair, just, and a huge win for Apple's competitors and consumers. It's hard to believe how greedy people and companies can be. In Apple's case... I have this image of Tony Montana at the end of Scarface and that globe that says, "The World is Yours." Apple, like other large companies... they just don't know when to stop.

For me Apple is more of an enemy than anything else. A year ago I was much more optimistic about them. Not anymore. This stuff... the tax havens... and some other stuff I won't mention... I guess I'm just ranting on here because this is anonymous and it feels good to vent. Maybe I'll move onto a shrink or something.
Then the ebook distributors all make their app free in the store and make all their money on the books. $0 to Apple for their efforts to develop the platform, promote the platform, run the app store, etc.
     
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Aug 15, 2013, 05:39 PM
 
Originally Posted by mduell View Post
Then the ebook distributors all make their app free in the store and make all their money on the books. $0 to Apple for their efforts to develop the platform, promote the platform, run the app store, etc.
So then they should take a massive commission on everything sold? Millions and millions of dollars in some cases.

How is that right? Just like Apple doesn't give a rip about the amount of money WE spend on our platform, why should we and you care about their systems?

They make money on their devices and content (movies, music, etc.). Apple wants Apps on their devices because that's what keeps people on their platform. Without Apps, iOS is dead, and then so is Apple. In other words, without developers Apple's dead.

30% is way too high. Two eBook companies went out of business because of it, and Kobo has filed an Amicus supporting the government's position against Apple. I'm not alone in my assessment of this.

30% in perpetuity is not right or fair. It's anticompetitive and damaging to developers to the point where you can't run a proper business with Apple taking such a large chunk of every sale.

What it will do is push Web Apps and make more of us abandon iOS development.

In other words, it's not good for Apple.

What's next, OS X Apps? Should Apple take 30% of every dime every developer makes in OS X? 30% DESTROYS businesses. You can't make it.

I've been thinking of filing class action against them for this 30% issue... but Web Apps are likely the better road which we're exploring. I can tell Apple's competitors a secret though: dump or significantly reduce the 30% and developers will jump onto those platforms.
     
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Aug 15, 2013, 06:08 PM
 
@theothersteve
According to estimates by Horace Dediu the operating margins on the app store are in the 2 % region for apps, in line with Apple's claims that this business is run »a little over break-even«. If that is the case, Apple could not significantly reduce its 30 % cut without pulling the app store into the red.
Originally Posted by theothersteve View Post
So then they should take a massive commission on everything sold? Millions and millions of dollars in some cases.
The commission itself is neither immoral nor necessarily bad business. In the software industry they helped small players tremendously. If Apple were to drop its 30 % cut, many app vendors would simply make their app »free« and force the user to make an in app purchase to make it functional.
Originally Posted by theothersteve View Post
How is that right? Just like Apple doesn't give a rip about the amount of money WE spend on our platform, why should we and you care about their systems?
I reckon that you're right, Apple doesn't care about your platform (perhaps they don't even know you exist). But if I were in your shoes, I'd care about the vast user base iOS has -- especially given the fact that iOS users spend more money on average per user than Android users.

As a user I only care about the quality and the breadth of the selection.
Originally Posted by theothersteve View Post
30% is way too high. Two eBook companies went out of business because of it, and Kobo has filed an Amicus supporting the government's position against Apple. I'm not alone in my assessment of this.
Perhaps the fact that these two ebook companies went belly up is just an indication that their business model did not work? Right now, a lot of businesses are in flux: software, music, television, games -- and ebooks. Not every business model works. Barnes and Noble, for instance, tried to copy Amazon's strategy -- and lost, because they were unable to get by on Amazon's razor thin margins. This is also true on Apple's part, but I think it's very hard to argue that the app store is anything but a huge success.
Originally Posted by theothersteve View Post
30% in perpetuity is not right or fair. It's anticompetitive and damaging to developers to the point where you can't run a proper business with Apple taking such a large chunk of every sale. [...] What's next, OS X Apps? Should Apple take 30% of every dime every developer makes in OS X? 30% DESTROYS businesses. You can't make it.
At least in the software business that's not necessarily true, Apple's distribution has simplified everything tremendously for small(er) software developers. A friend of mine works for a small software company in Munich that has sold its software worldwide in Apple Stores (in shrink-wrapped boxes) well before the app store went online. To give you one example: just dealing with the taxes was a nightmare. And now they're selling more than ever.

For big players who already have a worldwide distribution system up and running, those 30 % are really just a tax, because Apple provides something they don't need. I think the app store has helped democratize the software scenery -- something that is not in the interest of the big vendors.

Again, perhaps the ebook business is different.
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Aug 15, 2013, 06:38 PM
 
Originally Posted by OreoCookie View Post
@theothersteve
According to estimates by Horace Dediu the operating margins on the app store are in the 2 % region for apps, in line with Apple's claims that this business is run »a little over break-even«. If that is the case, Apple could not significantly reduce its 30 % cut without pulling the app store into the red.

The commission itself is neither immoral nor necessarily bad business. In the software industry they helped small players tremendously. If Apple were to drop its 30 % cut, many app vendors would simply make their app »free« and force the user to make an in app purchase to make it functional.

I reckon that you're right, Apple doesn't care about your platform (perhaps they don't even know you exist). But if I were in your shoes, I'd care about the vast user base iOS has -- especially given the fact that iOS users spend more money on average per user than Android users.

As a user I only care about the quality and the breadth of the selection.

Perhaps the fact that these two ebook companies went belly up is just an indication that their business model did not work? Right now, a lot of businesses are in flux: software, music, television, games -- and ebooks. Not every business model works. Barnes and Noble, for instance, tried to copy Amazon's strategy -- and lost, because they were unable to get by on Amazon's razor thin margins. This is also true on Apple's part, but I think it's very hard to argue that the app store is anything but a huge success.

At least in the software business that's not necessarily true, Apple's distribution has simplified everything tremendously for small(er) software developers. A friend of mine works for a small software company in Munich that has sold its software worldwide in Apple Stores (in shrink-wrapped boxes) well before the app store went online. To give you one example: just dealing with the taxes was a nightmare. And now they're selling more than ever.

For big players who already have a worldwide distribution system up and running, those 30 % are really just a tax, because Apple provides something they don't need. I think the app store has helped democratize the software scenery -- something that is not in the interest of the big vendors.

Again, perhaps the ebook business is different.
1. First, go study Apple's quarterly earnings and draw your own conclusions about their App Store profits. That 2% is bullshit. The other thing is that Apple's 30% has kept many businesses out of selling in their Apps...
2. Obviously you know nothing of the eBook companies that went out of business. I'll explain. They were public about it. The CEO of one wrote an open letter and got a lot of media attention. The reason is because Apple changed its App Store policies and these businesses could no longer link to their sites. They very shortly went out of business because they couldn't afford to sell things in their Apps, like they had been doing, giving Apple 30% of every sale.
3. Making Apps free and doing In App purchases: So what's wrong with software developers having control over the software they built? Apple doesn't have to have an App Store. They do it because it's a conduit for people to find and download Apps, and they can control the quality. The argument here isn't about what would happen if software developers made their Apps free for initial download... it's about whether Apple should be entitled to a large commission on every dime an App makes AFTER the customer has used the App Store to download the App. The App Store is a DISTRIBUTION mechanism. The App Store and Apple have effectively nothing to do with the content of the App (products for sale) or the COGS associated thereof. Yet they're forcing a 30% commission on the revenues in the App.
4. Your Barnes & Noble comment. Barnes & Noble failed because of an incompetent CEO and the massive amount of money they lost on devices and software development. It's why they're getting out of doing their own devices. It's on the order of hundreds of millions of losses. This has nothing to do with low margins on selling digital goods.

Here's the reality.

My company bears 99% of the COGS for everything sold in our App. All Apple does is have a DISTRIBUTION platform. With us bearing 99% of the COGS, Apple is taking 30% of every sale. Apple legally and effectively has zero responsibility for our business and customers. They don't provide customer support for our business to our customers. They don't maintain or build our software. All they do is distribute an App in an App catalogue, like going to Google, searching for software, and downloading it. Google is a platform to distribute.

Imagine what would happen to commerce if Google took a 30% commission on everything sold on Websites when you arrived at the Web store from a link in Google's search results. How would you feel about that? How would businesses feel? Customers?

30%. It's impossible to do business like that because you can't make enough money with such a large levy on every sale.

It comes down to fair competition. Apple's iBookstore has its own team of people and they bear 100% of the COGS. Every sale of a book in Apple's iBookstore has ZERO levy on it. The competition? Apple bears virtually none of the COGS and takes 30% of every single sale in those Apps.

My argument is that it's unfair and anticompetitive for Apple to collect such large levies on revenues inside the software others built and own. Apple should be entitled to a commission on the initial sale of the App, however.
     
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Aug 15, 2013, 07:08 PM
 
Apple deals with local sales taxes and does the entire bookkeeping for worldwide distribution.

Do you know what the maximum revenue limits for each of the EU countries is per year, above which you owe sales tax? Did you know that if you hit that limit (which can be as low as low four-figure € amounts in a year), you can actually be held upon entry to that country (or any EU country) until you pay up, or actually get tagged for tax evasion?

I didn't either, but the guys at Rogue Amoeba did at one point, and actually stopped all sales to EU IP addresses until that got sorted and they were free to travel again.

Then there are probably hundreds, if not thousands, of local laws governing distribution of products, that affect imports and customs, and whether sales from overseas via a locally offered portal are deemed local or imported, or "mail-order", with a whole different set of mandatory refund laws and taxes and whatnot.

How much does it cost you to deal with all of that, as a developer? Apple's 30% cut is a HELL of a good deal, ESPECIALLY for the small developers who hardly stand a chance dealing with all that crap.


A question out of curiosity, though somewhat off-topic:
How does the iBook Store/do portals like yours deal with the book price fixing in Germany and other countries that is actually mandated by law (it was instituted in Germany after the war, to ensure that nobody could undercut even a small publisher, thus ensuring the continued existence of a free press, deemed a pillar of democracy)?
     
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Aug 15, 2013, 07:43 PM
 
Originally Posted by Spheric Harlot View Post
Apple deals with local sales taxes and does the entire bookkeeping for worldwide distribution.

Do you know what the maximum revenue limits for each of the EU countries is per year, above which you owe sales tax? Did you know that if you hit that limit (which can be as low as low four-figure € amounts in a year), you can actually be held upon entry to that country (or any EU country) until you pay up, or actually get tagged for tax evasion?

I didn't either, but the guys at Rogue Amoeba did at one point, and actually stopped all sales to EU IP addresses until that got sorted and they were free to travel again.

Then there are probably hundreds, if not thousands, of local laws governing distribution of products, that affect imports and customs, and whether sales from overseas via a locally offered portal are deemed local or imported, or "mail-order", with a whole different set of mandatory refund laws and taxes and whatnot.

How much does it cost you to deal with all of that, as a developer? Apple's 30% cut is a HELL of a good deal, ESPECIALLY for the small developers who hardly stand a chance dealing with all that crap.


A question out of curiosity, though somewhat off-topic:
How does the iBook Store/do portals like yours deal with the book price fixing in Germany and other countries that is actually mandated by law (it was instituted in Germany after the war, to ensure that nobody could undercut even a small publisher, thus ensuring the continued existence of a free press, deemed a pillar of democracy)?
First, about Apple and developers/companies not having to worry about multi-national business (tax, accounting, etc.). That's great that it 'might' help small businesses who don't know all of the laws, regulations of other countries... and who don't have systems to deal with this selling digital products.

But unless you post data showing that so many developers and companies are thriving not having to do this stuff themselves and relying on Apple... it's tea room talk.

For us, it's HARDER and more COSTLY to have Apple process our payments. Now we have to deal with the way they do things. Their analytics. Their reporting. Dealing with their CSVs. Parsing out that data to feed into our automatic check processing. We need people to deal with Apple's systems. It's the age old integration engineering question: just because something exists doesn't mean you don't roll your own. We rolled our own because... surprise, Apple isn't the only game in town. We are on the Web, like everyone else. We can't rely on Apple to process those payments on our Website... so we get forced into this double system.

We rolled our own tax handling and it took us about a month of development to do it. It's all tightly integrated into our systems with solid analytics and detailed reports.

And it's much simpler than you're making it out to be. We loaded tax tables for Canada and the US from province-to-province and state-to-state. We've also done it for a few countries in Europe. The user's billing address on their credit card is what triggers the tax rate from these tables and it gets applied to the total. We record this stuff in a database and the accounting is automated. No mystery. And when it comes to laws, we only charge tax to customers where the law says we have to.

Additionally, it's not like it's that easy to sell to people abroad... it's not just about tax, but about localization and marketing and other things. There's much more to selling multi-nationally that Apple can't and won't help you with.

Also, merchant account providers have gotten really good at ecommerce and support thereof. We've got multi-national tax support out of the box. We've got subscription support out of the box. And many other things.

So for us, Apple's 30% cut is NOT a hell of a deal. It's a burden and a money sucking business killer.

The bottom line is that people should have a CHOICE. We shouldn't be forced to use Apple's payment processing. It's an excuse for them to suck 30% out of businesses.
     
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Aug 15, 2013, 08:00 PM
 
Originally Posted by Spheric Harlot View Post
A question out of curiosity, though somewhat off-topic:
How does the iBook Store/do portals like yours deal with the book price fixing in Germany and other countries that is actually mandated by law (it was instituted in Germany after the war, to ensure that nobody could undercut even a small publisher, thus ensuring the continued existence of a free press, deemed a pillar of democracy)?
Forgot to address this question.

We're not really officially in Germany. But people from Germany can buy content from us. So because our business doesn't exist in Germany, it's very hard for them to mandate and regulate anything we do.

This is the beauty of the Web in that it smashes borders. I realize the bigger we get the more we're going to have to deal with it... which is why we have a lawyer and an accountant...

If Germany wants us to not have cheaper prices than smaller publishers, so be it. I could care less. I think it's so hard for them to regulate this that I'm not worried about it. I also think legally we're kinda of off the hook because at the end of the day, our agency model has the publisher setting the price, not us. It's the publishers responsibility.

We do have another innovative business model we're trying to get going. I wonder if any of you would be interested in providing feedback about this business model if I could PM you (confidential) the business model and cost to the consumer.
     
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Aug 16, 2013, 06:04 AM
 
Originally Posted by theothersteve View Post
1. First, go study Apple's quarterly earnings and draw your own conclusions about their App Store profits. That 2% is bullshit. The other thing is that Apple's 30% has kept many businesses out of selling in their Apps...
Dediu is one of the most respected Apple analysts out there. You ask Spheric to support his opinion with data, so I'll ask you for the same: what evidence do you have that this number is »bullshit«? For many, many years also the iTunes Music Store was run almost at cost, so it's not surprising that Apple stuck to its 30 % cut. Essentially, they have established a simple rule that they take 30 % of all transactions going through their stores independently of what you sell. In the worst case, Apple will sell almost nothing via its iBook store.
Originally Posted by theothersteve View Post
2. Obviously you know nothing of the eBook companies that went out of business. I'll explain. They were public about it. The CEO of one wrote an open letter and got a lot of media attention. The reason is because Apple changed its App Store policies and these businesses could no longer link to their sites. They very shortly went out of business because they couldn't afford to sell things in their Apps, like they had been doing, giving Apple 30% of every sale.
That's quite presumptuous of you that »I know nothing«. I do remember when this rule was introduced (although most of the coverage predictably focussed on the animosities between Amazon and Apple).
Originally Posted by theothersteve View Post
3. Making Apps free and doing In App purchases: So what's wrong with software developers having control over the software they built? Apple doesn't have to have an App Store.
There is nothing wrong with that, also on Apple side, because they also get a 30 % cut from in-app purchases. I was just writing that app developers cannot use in-app purchases to avoid a 30 % cut on Apple's side. Makes perfect sense to me.
Originally Posted by theothersteve View Post
My company bears 99% of the COGS for everything sold in our App. All Apple does is have a DISTRIBUTION platform. With us bearing 99% of the COGS, Apple is taking 30% of every sale. Apple legally and effectively has zero responsibility for our business and customers. [...] All they do is distribute an App in an App catalogue, like going to Google, searching for software, and downloading it.
Precisely, »all« they do is put your app into their app catalog, Apple's walled garden, and handle the payments. Perhaps you're big enough so that the latter isn't necessary, I don't know, but again, this is a huge boon to smaller developers.
Originally Posted by theothersteve View Post
Imagine what would happen to commerce if Google took a 30% commission on everything sold on Websites when you arrived at the Web store from a link in Google's search results. How would you feel about that? How would businesses feel? Customers?
That's hardly the same thing, you're comparing Apples (sic!) to oranges here: Apple maintains an app catalog, handles the downloads of the apps and some of the content (music, for instance, but not podcasts, for instance) and handles the payments (including taxes). In your example, Google does nothing but suggest a link to you (via search or an ad).
Originally Posted by theothersteve View Post
My argument is that it's unfair and anticompetitive for Apple to collect such large levies on revenues inside the software others built and own. Apple should be entitled to a commission on the initial sale of the App, however.
How is that fair? You're still using Apple's infrastructure every time there is a transaction, right?
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Aug 16, 2013, 07:51 AM
 
Example: Kagi was the primary payment-processing service for independent software. They take 8% plus 75 cents per transaction. So on anything less than $7 total, that's 20% cut just for payment processing. They don't do the regional sales tax stuff AFAIK (like taking into account per-country tax free revenue maximums - that's all up to your own financial consultants, if you can afford one), and if you want into their Kagi marketplace distribution network, that's another 10% cut.
http://www.kagi.com/pricing/general

Apple's 30% flat is a real boon ESPECIALLY to smaller developers offering lower-priced content.

The ones complaining about Apple's cut were always the big names where economies of scale meant they already had full international legal and finances departments in place.
     
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Aug 16, 2013, 01:15 PM
 
Originally Posted by theothersteve View Post
So then they should take a massive commission on everything sold? Millions and millions of dollars in some cases.

How is that right? Just like Apple doesn't give a rip about the amount of money WE spend on our platform, why should we and you care about their systems?

They make money on their devices and content (movies, music, etc.). Apple wants Apps on their devices because that's what keeps people on their platform. Without Apps, iOS is dead, and then so is Apple. In other words, without developers Apple's dead.

30% is way too high. Two eBook companies went out of business because of it, and Kobo has filed an Amicus supporting the government's position against Apple. I'm not alone in my assessment of this.

30% in perpetuity is not right or fair. It's anticompetitive and damaging to developers to the point where you can't run a proper business with Apple taking such a large chunk of every sale.

What it will do is push Web Apps and make more of us abandon iOS development.

In other words, it's not good for Apple.

What's next, OS X Apps? Should Apple take 30% of every dime every developer makes in OS X? 30% DESTROYS businesses. You can't make it.

I've been thinking of filing class action against them for this 30% issue... but Web Apps are likely the better road which we're exploring. I can tell Apple's competitors a secret though: dump or significantly reduce the 30% and developers will jump onto those platforms.
It's Apple's platform. They designed it, they invested in it, they own it. If their current fee structure makes other ebook apps non-viable, that's an impact on their platform they're going to have to live with. You're welcome to go build for Android or Win8phone or whatever. But if you want Apple's platform, you have to pay Apple's fees.

Anticompetitive is irrelevant given how little of the smartphone market Apple has.
     
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Aug 16, 2013, 01:53 PM
 
Originally Posted by mduell View Post
Anticompetitive is irrelevant given how little of the smartphone market Apple has.
… and especially given how small their market share among ebooks is. I think Apple's significance in the market is overplayed, I think Amazon is the one that needs to be monitored much more closely for anti-competitive behavior.
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Aug 16, 2013, 04:08 PM
 
Originally Posted by OreoCookie View Post
… and especially given how small their market share among ebooks is. I think Apple's significance in the market is overplayed, I think Amazon is the one that needs to be monitored much more closely for anti-competitive behavior.
"I think", "I think"... a lot of you think but what do you know?

Apple's play in the eBook industry is NOT overplayed. Apple is a huge company that completely dominates smartphones and tablets. Apple is a company that has the money and power to enter a market and dominate and control it. To abuse its position. To snuff out competition. To essentially damage a market.

Before Apple came in with the iPad, you had your eInk Kindles. But eInk Readers have seen a massive decline over the past year and this will continue, with estimates that worldwide sales of eInk Readers will only be a handful of millions worldwide by 2017. The reason is because people are opting for convergent devices like multi-touch smartphones and tablets.

Looking at the age group of 20 somethings, this age group reads the majority of their eBooks on their smartphone and then multi-touch tablet.

Apple stood to gain a lot here by having as much control as possible. They have their devices that people are opting for as eReaders. And they have their power. And, they have the incentive to take on the market and try and dominate it. As Eddie Cue said in testimony, when they were researching the eBook market, they discovered that the publishing industry was bigger than music. Apple holds some 20% of the eBook market in the US, and this number has been climbing. The iBookstore could reach 100 million customers, and saw 100% growth YOY. They're aggressively expanding to new countries.

So Apple is multi-national. They're a threat to other players abroad. Again, Kobo filed an amicus last week supporting the DOJ in its punishment against Apple. This is a big step. Kobo is a Canadian company that competes with the iBookstore. If they piss Apple off Apple could make it harder for them to launch Apps and do business in iOS... like they screwed over Random House by blocking their Apps to pressure them into signing onto the iBookstore.

Being in this industry and having mouths to feed is probably the only way you're going to understand this stuff.
     
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Aug 16, 2013, 04:33 PM
 
@theothersteve
You have yet to provide evidence for your claim that Apple's margin on its app store is substantially larger that 1~2 %. If the margins are indeed that low, a 30 % cut is by all means justified because otherwise, the app store would operate at a loss.
Originally Posted by theothersteve View Post
"I think", "I think"... a lot of you think but what do you know?
It's common practice to indicate your opinions with phrases like »I think« or »in my opinion«. That doesn't mean my opinions are unsubstantiated.
Originally Posted by theothersteve View Post
Apple's play in the eBook industry is NOT overplayed. Apple is a huge company that completely dominates smartphones and tablets. Apple is a company that has the money and power to enter a market and dominate and control it. To abuse its position. To snuff out competition. To essentially damage a market.
Unless something has changed, Amazon still has majority share in the ebook market (between 50 and 60 % in the US).
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Aug 16, 2013, 04:36 PM
 
Originally Posted by OreoCookie View Post
Dediu is one of the most respected Apple analysts out there. You ask Spheric to support his opinion with data, so I'll ask you for the same: what evidence do you have that this number is »bullshit«? For many, many years also the iTunes Music Store was run almost at cost, so it's not surprising that Apple stuck to its 30 % cut. Essentially, they have established a simple rule that they take 30 % of all transactions going through their stores independently of what you sell. In the worst case, Apple will sell almost nothing via its iBook store.
You're trying to say multiple things here. Apple lumps different things into the App Store revenues. There is an absence of data to support either or. I don't believe it's a break even business. Sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories: $8,534 (2012 annual). It's up YOY. One of the reasons for the growth cited by Apple is "The strong results of the iTunes Store reflect growth of the App Store". Apple appears to say breakeven because they may be trying to thwart potential lawsuits on its 30% levy. When you really look at it, since when did Apple ever make something out to be so negative, like breakeven? Especially a flagship service.

Originally Posted by OreoCookie View Post
That's quite presumptuous of you that »I know nothing«. I do remember when this rule was introduced (although most of the coverage predictably focussed on the animosities between Amazon and Apple).
I didn't mean to say you know nothing period. But it was clear from your post that you didn't seem to know the companies in question. One of them I knew the founder. They spent months developing and $1 million, only to be in business for a few months when the no link bombshell hit. He got lots of media attention by CNN and others.

Originally Posted by OreoCookie View Post
Precisely, »all« they do is put your app into their app catalog, Apple's walled garden, and handle the payments. Perhaps you're big enough so that the latter isn't necessary, I don't know, but again, this is a huge boon to smaller developers.
All the App Store is is a catalogue. Yes, it has In-App purchases but it's not clear at all that everyone is better off with it. Everyone I know and our company is way worse off to the point of it damaging our business. You can get a wordpress payment plugin for $50 that it is more robust than some merchant accounts I've seen and it does international payment handling and tax handling with reports and analytics. I have no doubt some people have taken advantage of Apple's In-App purchases, but ecommerce is easy today. There's a lot of new companies with Silicon Valley backing that eliminate any development really at all and act as a layer between you and a merchant account. And the fees are very low. What the In-App purchase is is a 30% payment fee. It's insane. We pay around 1.9% for each transaction.

Originally Posted by OreoCookie View Post
That's hardly the same thing, you're comparing Apples (sic!) to oranges here: Apple maintains an app catalog, handles the downloads of the apps and some of the content (music, for instance, but not podcasts, for instance) and handles the payments (including taxes). In your example, Google does nothing but suggest a link to you (via search or an ad).

How is that fair? You're still using Apple's infrastructure every time there is a transaction, right?
No, I'm not comparing Apples to oranges. Websites can be seen as Apps. Google's index can be seen as an App Store. Google maintains the Website catalog and spends significant resources every day on developing and maintaining it. Apple's App Store is one big index of links like Google's index. Select a link and be taken to the App's homepage just like selecting a link in Google's index and be taken to the homepage of a site. For OS X, you can go to Google, go to a site, and download software and pay the developer direct. Not with Apple's App Store. You must pay Apple and Apple skims the money.

Your argument is essentially that Apple should get 30% for every penny spent in your App because they process the payments. This is flawed because:

1. Apple enforces this rule of having to use their In-App payment processing, not us. Not everyone wants to use their payment processing probably for the same reasons I've listed and more. This is the equivalent of Google forcing anyone listed in their index to use their payment processing system and pay them a 30% fee for every penny spent on your Website when people get to the site from their index. So that OS X App you bought the other day from the developer's website... 30% goes to Google.
2. You're saying Apple should get 30% of every penny spent in people's App because they process the payments. So let's look at the real world of eCommerce. We process your payments as we have a merchant account with Moneris. eSelect and eCommerce. It's 1.9% per transaction. And less under $1.00. There are multiple companies that make it dead easy for anyone to work with Moneris or anyone else with low transaction fees. And then there's Paypal...

Let's add in Google Wallet. Google Wallet is quite compelling. Google's giving you as a business a huge framework and millions of pre-made user accounts to allow these folks to pay for goods in your Android App or online super easy and super quick. They can use their Gmail account, have all their payment methods linked to it, and it doesn't cost you really anything above the eCommerce merchant transaction fee.

Here's the bottom line:

"For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company [Apple] does not determine the selling price of the products and is not the primary obligor to the customer."

Apple's 30% transaction fee is complete bullshit.
( Last edited by theothersteve; Aug 16, 2013 at 04:52 PM. )
     
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Aug 16, 2013, 04:53 PM
 
Originally Posted by OreoCookie View Post
@theothersteve
You have yet to provide evidence for your claim that Apple's margin on its app store is substantially larger that 1~2 %. If the margins are indeed that low, a 30 % cut is by all means justified because otherwise, the app store would operate at a loss.

It's common practice to indicate your opinions with phrases like »I think« or »in my opinion«. That doesn't mean my opinions are unsubstantiated.

Unless something has changed, Amazon still has majority share in the ebook market (between 50 and 60 % in the US).
What are you saying? Who cares that Amazon has the majority share of the ebook market. It doesn't address anything I've said. Apple is a threat and has been a threat to the market because of their anticompetitive practices and general dominance. With 20% share they're the second largest eBook retailer in the US. It's a huge share. Kobo's been working at this eBook business for years and only has a handful percent marketshare.
     
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Aug 16, 2013, 04:57 PM
 
Originally Posted by mduell View Post
It's Apple's platform. They designed it, they invested in it, they own it. If their current fee structure makes other ebook apps non-viable, that's an impact on their platform they're going to have to live with. You're welcome to go build for Android or Win8phone or whatever. But if you want Apple's platform, you have to pay Apple's fees.

Anticompetitive is irrelevant given how little of the smartphone market Apple has.
Not buying it. Apple has a large share of money spent on Apps. Companies can build whatever they want. But they have to follow well established laws. If Apple is going into business, they're subject to the laws. Apple is making money from us and many others. They force everyone to use their ecommerce system. This may be deemed anti-competitive by the courts. I don't know. But the effects are anti-competitive, because if you want to compete with them say in eBook sales in an App, you simply can't, because they take 30% of every sale.
     
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Aug 16, 2013, 05:00 PM
 
Originally Posted by Spheric Harlot View Post
Example: Kagi was the primary payment-processing service for independent software. They take 8% plus 75 cents per transaction. So on anything less than $7 total, that's 20% cut just for payment processing. They don't do the regional sales tax stuff AFAIK (like taking into account per-country tax free revenue maximums - that's all up to your own financial consultants, if you can afford one), and if you want into their Kagi marketplace distribution network, that's another 10% cut.
Kagi — Pricing Pricing

Apple's 30% flat is a real boon ESPECIALLY to smaller developers offering lower-priced content.

The ones complaining about Apple's cut were always the big names where economies of scale meant they already had full international legal and finances departments in place.
LOL. Kagi...

Transaction fees for every legitimate merchant processor are around 2%. Paypal is probably the best example of how cheap and easy it is for anyone to sell anything online. For those with a little more technical know how (surprise, developers), you can get a real merchant account and pay tiny transaction fees.

Please stop.
     
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Aug 17, 2013, 07:10 AM
 
Originally Posted by theothersteve View Post
You're trying to say multiple things here. Apple lumps different things into the App Store revenues.
No, I'm not. If you followed the link I've provided, then you'd see that analysts split know full well how to split the different revenue streams. You're the one who is conflating the iTunes »Media« Store (which is making good money), iPod services and accessories with the App Store. There are also estimates on the cost incurred by Apple to run its online stores.

Again, can you provide information which backs up your story that Apple is making more than single-percentage-point margins in the App Store (not iTunes Store and App Store and other revenue sources combined)?
Originally Posted by theothersteve View Post
When you really look at it, since when did Apple ever make something out to be so negative, like breakeven? Especially a flagship service.
Quite often: every iOS update (with the exception of iPhone OS 2 update for iPod touch users) has been free. The iTunes Music Store did not generate profits for years either, and ditto for the App Store now. The purpose is to run these things at cost if possible, because they add value to the platform and generate more sustained sales of hardware devices -- which are the big money makers.
Originally Posted by theothersteve View Post
I didn't mean to say you know nothing period. But it was clear from your post that you didn't seem to know the companies in question. One of them I knew the founder. They spent months developing and $1 million, only to be in business for a few months when the no link bombshell hit. He got lots of media attention by CNN and others.
It seems very risky and naive to me to base your business model on a loophole in the App Store Terms of Service. It's quite obvious that Apple would never let that fly, whether it is justified or not.
Originally Posted by theothersteve View Post
All the App Store is is a catalogue. Yes, it has In-App purchases but it's not clear at all that everyone is better off with it.
I gave examples where companies are not better off with it (big companies who have their own distribution network in place). So yes, Apple provides services to developers which not everyone needs, and I'm sure there are other solutions which are a better fit for your or other businesses. But that's the cost of doing business in Apple's App Store. If you can't sustain a business there, you shouldn't do business there. And if you really, really want to do business there, you should find a business model that works.
Originally Posted by theothersteve View Post
No, I'm not comparing Apples to oranges. Websites can be seen as Apps. Google's index can be seen as an App Store.
Now you have completely lost me: web sites are not apps. And Google's index is not in any way shape or form an app catalog.

And the people who are clicking on links or the providers of the websites aren't Google's customers either, they're only Google's users. The ones footing the bill are the advertisers.
Originally Posted by theothersteve View Post
Your argument is essentially that Apple should get 30% for every penny spent in your App because they process the payments.
I'm not saying that payment processing is the only service Apple provides for their 30 % cut, but it's one of them. The most significant way in which you have it backwards is thinking that you are Apple's customer, you're not. Apple's customers are the ones buying ebooks, music, apps and software. The ones who have probably bought some piece of Apple hardware. In 2010, the iTunes Stores cost Apple about $1.3 billion to run, and they have grown strongly since.
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Aug 18, 2013, 05:10 AM
 
Originally Posted by OreoCookie View Post
No, I'm not. If you followed the link I've provided, then you'd see that analysts split know full well how to split the different revenue streams. You're the one who is conflating the iTunes »Media« Store (which is making good money), iPod services and accessories with the App Store. There are also estimates on the cost incurred by Apple to run its online stores.

Again, can you provide information which backs up your story that Apple is making more than single-percentage-point margins in the App Store (not iTunes Store and App Store and other revenue sources combined)?
Oh dear... here we go.

And a link from 2 years ago!

A poster said something to the effect that Apple's App Store was at or slightly above breakeven, and that the implication was that this justified Apple's 30% levy on any and all revenue of Apps. First, it is not a fact that Apple's App Store is at breakeven. I don't have the hard data, and neither does anyone else to my knowledge, including "Analysts". This is because of how vague Apple is with the way they report earnings in this case. Therefore, saying Apple's App Store is at breakeven as a fact is wrong. And even more wrong when trying to justify 30% levies. When you look at the 30%+ YOY growth of iTunes, one of the major reasons Apple cited was App Store growth.

Peter Oppenheimer stated years ago that the App Store was running slightly above break even and the media ran with it. To determine Apple's COGS just for the App Store to determine profits is complex. How much of the iTunes infrastructure is dedicated to it? What are these costs? Total labour costs to develop and maintain the App Store? Costs to QA Apps? And so on. Not happening. This kind of granular data isn't available.

A commenter on an article about Apple's iTunes business being profitable is exactly what myself and many of my associates believe is the real reason why Apple is so shifty with how they report their earnings within iTunes.

I've always doubted that their store was "break-even". Still do. Apple loves to twist numbers to make it look that way... I believe it was more a ploy to make it look less damaging to the small amounts that the artists [developers] get paid.

I would also add it's a way for them to mask how much money they're making off of people's software (Apps)... with the ultimate goal of protecting themselves against lawsuits from developers, authors, creators, etc. and to maximize profit.

On the other side, the App Store could be making no money or losing a lot of money. But that's too bad so sad. We're not here to pay for Apple's business. If it costs them too much money to have a bunch of Bachelor Degrees at a lavish office tower in California to vet every App for QA, that's their problem. It's up to them to work on reducing costs, just like it's up to us to reduce our costs. Apple doesn't care about our business and we don't care about theirs. Apple doesn't pay for our business... for any of the COGS... and we don't for them either. Yet they have a 30% stake in every penny made in our Apps on iOS even though they have nothing to do with the COGS associated with the Apps.

Apple's App Store and Apps is what keeps their devices selling. The App Store is a way to hook people into buying their hardware. And the iPhone is making up a huge portion of their revenue and profit... So they want developers to bust their butts and create software, which will help greedy Apple sell more devices because Apps are important to the continued success of iOS, and therefore their iOS devices. But Apple also wants to rape developers while they're at it.

Originally Posted by OreoCookie View Post
Quite often: every iOS update (with the exception of iPhone OS 2 update for iPod touch users) has been free. The iTunes Music Store did not generate profits for years either, and ditto for the App Store now. The purpose is to run these things at cost if possible, because they add value to the platform and generate more sustained sales of hardware devices -- which are the big money makers.
Here you go saying things like the iTunes Music Store did not generate profits for years, and neither has the App Store. You haven't posted any data to support this. Nobody knows, to my knowledge, other than a few folks at Apple, Apple's actual COGS for the App Store and the total revenue. Therefore, it's not the case that you can say Apple's App Store isn't profitable.

Originally Posted by OreoCookie View Post
It seems very risky and naive to me to base your business model on a loophole in the App Store Terms of Service. It's quite obvious that Apple would never let that fly, whether it is justified or not.
It wasn't based on a loophole. They had other sales channels. What it did was hurt their business because they had to stop selling books inside their App and they spent so much money to develop it. The term "loophole" is very negative. Loophole here could mean that it's a piece of fair, competitive policy left in Apple's App Store contract that they forgot to take out of the draft version...

Originally Posted by OreoCookie View Post
I gave examples where companies are not better off with it (big companies who have their own distribution network in place). So yes, Apple provides services to developers which not everyone needs, and I'm sure there are other solutions which are a better fit for your or other businesses. But that's the cost of doing business in Apple's App Store. If you can't sustain a business there, you shouldn't do business there. And if you really, really want to do business there, you should find a business model that works.
Are you a business person, or an Apple fan, or both? If both, try and bend yourself more toward the business aspect of this. If Apple is acting anti-competitively, they could be prosecuted for it, regardless of the oversimplification of "It's Apple's! They can do what they want! Suck it up". That's not how commerce and law work. As soon as a company or a person charges monetary units for a product or service in developed societies, a host of rules, laws, and regulations apply. You can't do whatever you want. It just doesn't work that way.

Ask Apple about eBooks...

And the solution of finding a business model that works with Apple's App Store to subvert their 30%?... well, the business model of selling a product to someone and charging their credit card isn't something that is easily replicated with anything else. It's the bedrock and core of how products and services are acquired by consumers. To suggest this business model would need to be changed to work with Apple's App Store is absurd and not a solution at all. I can see it now...

"Hey, buy a Ford subscription on our Website... and you can get unlimited Ford trucks. Just head over to the Ford App once you've paid for your subscription online and order whatever Ford models are listed. We're doing this instead of selling you trucks per unit in our App to thwart Apple's 30% levy. You might be wondering what you'll do with your subscription. One guy wrote and told us he got 1000 trucks in 1 week through his Ford subscription. He then sold the trucks per unit by posting the vehicles for sale on Craigslist. He then retired in Hawaii. He was only 16."

But wait, there's more. Want to introduce a credit system and not deal with money in your App? Apple has snuffed any hope of anyone being able to do this either.

Originally Posted by OreoCookie View Post
Now you have completely lost me: web sites are not apps. And Google's index is not in any way shape or form an app catalog.

And the people who are clicking on links or the providers of the websites aren't Google's customers either, they're only Google's users. The ones footing the bill are the advertisers.
It's an analogy and a good one at that.

First, Websites are not Apps? Websites ARE technically Apps. And the term "Web Apps" has taken over. Websites include not only markup language (HTML/CSS), but scripting languages like JavaScript. Websites can have large, complex backend databases and be dynamic. They also include a user interface and help the user achieve a particular goal.

In reality, there are Apps for iOS that are HTML5/CSS3. "Websites". Ours is an example. Our store and user library are done in HTML5/CSS running on nodejs. We use Web languages and JavaScript as it's write once run on everything. With responsive Web design and media queries, we easily take care of tablets and smartphones. So when you're in our App on the iPad, and you're gesturing around the store... you're looking at a "Webpage". You're looking at the same thing a user sees online.

Anyway, this is academic.

Google's Website index and Apple's App index are the same. They're a repository of links accessible by keywords by the user. The user searches by keywords to find things in the index. When the user selects a search result, they're taken to a relevant page. These pages are also resolved online. Apple's App Store has template homepages for each App.

Google's index and Websites and Apple's App index and Apps are much more similar than dissimilar. One difference is that Apple's search algorithm sucks.

And Websites are just like Apps. Lots of examples of Apps and Websites doing... functioning... achieving the same goal for a user... in the exact same way. And looking the same too.

Fab.com and the Fab App is an example. One of many.

Originally Posted by OreoCookie View Post
I'm not saying that payment processing is the only service Apple provides for their 30 % cut, but it's one of them. The most significant way in which you have it backwards is thinking that you are Apple's customer, you're not. Apple's customers are the ones buying ebooks, music, apps and software. The ones who have probably bought some piece of Apple hardware. In 2010, the iTunes Stores cost Apple about $1.3 billion to run, and they have grown strongly since.
Oh god... no, I don't think I'm Apple's customer. You said that. You said I thought that. I never did. I'm an Apple Developer.

The only thing that's backwards is Apple thinking they own 30% of my business...
     
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Aug 18, 2013, 07:58 AM
 
They don't. You're obviously free to take your business anywhere you like, to any conditions you yourself are willing to set, if you find people to go along with those conditions.

I don't quite understand why you believe that Apple owes you a platform upon which to conduct your business for free.


The relevant link breaking down categories sold via Apple's distribution network is from March 2013, btw.

So long, break-even | asymco
     
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Aug 18, 2013, 01:43 PM
 
Originally Posted by Spheric Harlot View Post
They don't. You're obviously free to take your business anywhere you like, to any conditions you yourself are willing to set, if you find people to go along with those conditions.

I don't quite understand why you believe that Apple owes you a platform upon which to conduct your business for free.


The relevant link breaking down categories sold via Apple's distribution network is from March 2013, btw.

So long, break-even | asymco
Apple's platform is not free. They take 30% from the sale of an App on their App Store. I have no problem with this. It's a commission like any retail store. You box your software, put it into retail stores, and those retail stores take a commission on the initial sale of the App. Apple created and App Store and Mac App Store to REPLACE this physical commerce with a virtual one. BUT, those retail stores with the boxed software do not collect 30% of the rest of your revenues from the App, if any. Once the initial sale is done, they're out of the picture.

Not Apple. The analogy is exactly the same. The App Store is a virtual retail store and catalogue to find and buy Apps. Except Apple takes 30% of your revenues from inside the App in perpetuity, not just a commission on the initial sale.

If everyone had your attitude of saying that "If you don't like it, take your business elsewhere", we'd never have a fair business environment because people would ignore anti-competitive behaviour and illegal business practices. The consumer gets hurt and markets get damaged. The eBook case refers.

In this case, you, the consumer, are being hurt by this because nobody can sell anything inside an App without paying Apple 30%. And this 30% commission makes it either extremely difficult to make any money or impossible. Some of the biggest brands don't sell anything inside Apps because of this. And then you, the consumer, lose out because it snuffs out competition. The eBook business is one example.
     
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Aug 18, 2013, 05:55 PM
 
I think what "theothersteve" is failing to realize is Apple genuinely doesn't want other people's stores on their store.

Right now their approach is to be the middle man in sales. They sit between the customer and the publisher (who already sits between the author and the middle man). So you already have two middle men.

What Steve seems to be arguing here is that there should be three middle men, meaning that authors have an even smaller share of whatever money gets made. Or rather that the middle man who created the whole platform he wants to distribute on should bugger off and leave all that money for him.

Now I plan on being a software developer soon. (Making a game with a few friends) Eventually we MAY offer in app purchases. (Maybe?) If that happens, I'm selling non-phsyical items, heck one might even be a book within the game. Should Apple get a cut? If you didn't have to pay them a fee for sales within iOS apps, then I wouldn't either? Correct?

OK but if me and the guys I'm making this game with are smart enough to make a game, we're probably also smart enough to see that if we have to pay a cut on upfront sales but not on in app purchases, we should just make everything past the first level an in app purchase and pocket all the money.

And there is your problem.

Now might it be nice for Apple to offer Amazon and everyone else a 10% commission and then they get to keep 20% with the rest going to the publisher? Sure that would be nice. But the problem is as soon as they start doing that, then they're giving free money to every body who wants to make a store, where as the people who worked their ass off actually creating SOMETHING other than a store are paying a higher percentage. Which doesn't seem fair.

So essentially, find a way to deal with Apple's 30% like everyone else making money on iOS. Or don't. But don't expect Apple to welcome in a competitor to disrupt a revenue stream of their's, with open arms, because it's not going to happen.
     
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Aug 18, 2013, 11:56 PM
 
Originally Posted by Salty View Post
I think what "theothersteve" is failing to realize is Apple genuinely doesn't want other people's stores on their store.
I don't fail to realize this. This is what I'm saying all along. It drives their thinking on rules and business around iOS. A more accurate statement: Apple doesn't want other people's stores available on iOS, especially ones that compete with their own business. This is anti-competitive. But whether it's anti-competitive in a way that the courts would find illegal is another large question I don't have an answer to. Other than the fact that we've looked into this... our lawyer, who's a corporate lawyer... concluded on a cursory look that forcing every developer to use their payment processing system where Apple collects 30%... and the actual 30% itself being quite high... could be deemed illegal in some countries... although this seems to have gone unchallenged.

In Canada, these in-perpetuity schemes are murky when it comes to the Corporations Act. I know Apple has good lawyers and has done their research... but it doesn't mean this arrangement... and the things they do like stamping out token payment systems and everything else to keep collecting 30%... couldn't be deemed illegal in a class action. But I digress.

Originally Posted by Salty View Post
What Steve seems to be arguing here is that there should be three middle men, meaning that authors have an even smaller share of whatever money gets made. Or rather that the middle man who created the whole platform he wants to distribute on should bugger off and leave all that money for him.
No way. I'm not arguing there should be three middle men. I'm saying there should only be 2. Us and the authors/publishers. Who created the platform? WE DID, not Apple. You're mistaking software/technology, for an operating system and an App Catalogue. The App Store doesn't host our books. The App Store/iOS doesn't manage our users accounts. The App Store/iOS didn't invent our eReader. The App Store/iOS didn't build our self-publishing system. The App Store/iOS didn't invent our ISBN procurement system. The App Store/iOS doesn't answer customer support requests. It doesn't maintain our systems. It doesn't develop features. The App Store/iOS didn't do anything for us other than be an index where our App was located via keyword search for download onto someone's device. Which itself isn't even needed at all, but Apple wants to control quality of Apps. Apple's desktop OS is free from this draconian environment where anyone is free to go onto Google, look for software, and download it to their computer.

We spent 2 years researching and developing... programming our technology. It was incredibly difficult and cost well over $1 million. We pay for ALL of the costs associated with our store and customers and assume all of the risk. Apple isn't responsible for anything we sell. We are responsible for everything. We're a developer creating software for an operating system called iOS. What we contribute is having good content available for Apple iOS device customers. I find our iOS Apps innovative and potentially great for competition. But we can't compete with the iBookstore because Apple takes 30% of every sale, which eliminates our ability to make any money on things sold inside the App. We simply can't charge more for stuff sold in there because the industry has already broken free of large publishers and the self-publishing revolution has hit. And I advocate for lower commissions on eBook sales so authors can earn a living.

Originally Posted by Salty View Post
Now I plan on being a software developer soon. (Making a game with a few friends) Eventually we MAY offer in app purchases. (Maybe?) If that happens, I'm selling non-phsyical items, heck one might even be a book within the game. Should Apple get a cut? If you didn't have to pay them a fee for sales within iOS apps, then I wouldn't either? Correct?

OK but if me and the guys I'm making this game with are smart enough to make a game, we're probably also smart enough to see that if we have to pay a cut on upfront sales but not on in app purchases, we should just make everything past the first level an in app purchase and pocket all the money.

And there is your problem.
This isn't my problem. You're looking at this wrong. Apple shouldn't be entitled to any of your revenues inside your App if you use your own In-App purchase system. They should only be entitled to the initial sale of your App where people must use an Apple ID to obtain your App. Apple should give you a choice to use their In-App purchase option or your own. They give you no choice. I actually never said the In-App purchase and 30% was bad period... I think it can work for some developers who don't want to worry about ecommerce and all that. But not having a choice destroys competition because it forces everyone to pay Apple 30% and use their crap financial and analytics reporting and etc.

Again, all the App Store is an App catalogue. An index of software programs. It's a replacement for physical boxed software on retail shelves. We have an OS X App and I love OS X right now because of how free it is. We have a publish option in our desktop program and it requires that you have a paid publishing package. Apple, the greedy bastards, would collect 30% on that revenue as well and force us to use an In-App purchase if this iOS bullshit trickles over to it. All that would happen is the price would go up, and Apple's piggy bank would inflate even more. Apple pays not a dime for our self-publishing system. It's 150,000 lines of code and a complex server architecture that took some PhDs to invent and a year of labour across several people. And we pay to maintain it. Imagine if Google steps in and says that if someone came to our site from Google to buy our program for OS X that they collect 30% on the sale... would you all be condoning it? Or would you be saying the Google is evil thing? I'm guessing the latter.

If Apple takes 30% of every dime made in our self-publishing system... they'd actually be making more money than us. Yet we bear ALL of the costs and ALL of the responsibilities to the end customer. Your answer, "well then, make MORE profit." Ha! We may make 50% profit, which is excellent and above industry standards. When you have someone make 10% more than you for doing nothing... it's bullshit.

Originally Posted by Salty View Post
Now might it be nice for Apple to offer Amazon and everyone else a 10% commission and then they get to keep 20% with the rest going to the publisher? Sure that would be nice. But the problem is as soon as they start doing that, then they're giving free money to every body who wants to make a store, where as the people who worked their ass off actually creating SOMETHING other than a store are paying a higher percentage. Which doesn't seem fair.
Apple should only offer In-App purchasing as an option. It's not clear everyone would use their own system. But the reality is you keep thinking Apple has the right to collect 30% of all of the revenue inside YOUR software where they pay for none of the costs associated with COGS. It's a transaction fee that's an industry standard 2%. Apple's is 30%. This is insane. Apple's App Store is just an index like Google's index. iOS is an operating system.

And our App in this case is primarily not a store, but a user library and eReader. The Store is there to support your reading... if you want to grab a few books... just hit up the store in the App. But the App is geared as an eReader... it's easy to oversimplify this.

The bottom line is Apple is overextending itself because they're greedy and anti-competitive. They've taken an index of iOS Apps and infected each one like a virus with their 30% tax. In other words, Apple doesn't have to take 30% of each sale in Apps to be successful. They make the majority of their revenues and profits from the iPhone and iPad. They've taken an index and gone too far... and nobody should think Apple has some god given right to make 30% off of any developer's code. Meaning who cares if every App on the App Store is initially free with In-App purchases. As long as the selection is good, nobody cares. You've already done Apple a service if you make a great App available on iOS, as it keeps people buying iOS devices. The collection of 30% In-every-App© is based on greed.

Originally Posted by Salty View Post
So essentially, find a way to deal with Apple's 30% like everyone else making money on iOS. Or don't. But don't expect Apple to welcome in a competitor to disrupt a revenue stream of their's, with open arms, because it's not going to happen.
Well, my friend, I'm lucky right now in that I've got the DOJ on my side. And if the online linking as part of the injunction takes hold, us in the eBook industry won't be paying Apple's 30% head tax... and you the consumer will be enriched with more selection and competition in eBooks on your iOS device.
( Last edited by theothersteve; Aug 19, 2013 at 02:14 AM. )
     
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Aug 19, 2013, 12:20 AM
 
But that's the thing, you are using Apple created software, you're running it on iOS. That's made by Apple. Hopefully if your app isn't garbage you wrote it native in Xcode. (Though everyone and their dog these days seems to think that a web page within an app is close enough to be good)

I'm not saying the store you created isn't a great product. Though quite frankly if it's a store ... it's probably not. And I imagine your reader has many ways of ... displaying a book. (I imagine it might even be able to do so upside down? Or with different backgrounds?)

The problem here is, I'm not really going to root for another guy who decided to try and make money off of other people's creativity ... again. Publishers already do that but they at least provide essential services to authors. The Record labels ... kinda sorta but mostly don't do that for musicians.

To me it seems like you took a look at an already over crowded market and decided that somebody owed you a living because you chose to create a store. But here's the thing, there's already more than enough places to buy stuff.

Does your company actually do anything to make books better? Do you offer services to good writers who need a critical eye? Do you do anything that would replace a good agent or publisher?

Apple came in and made an awesome mobile computing device that happened to feature a built in book store that made it brain dead simple to access books both from major authors and eventually they opened it up for little known authors and independents. What exactly is your app supposed to do that makes for a better reading experience than that?
     
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Aug 19, 2013, 02:04 AM
 
Originally Posted by Salty View Post
But that's the thing, you are using Apple created software, you're running it on iOS. That's made by Apple. Hopefully if your app isn't garbage you wrote it native in Xcode. (Though everyone and their dog these days seems to think that a web page within an app is close enough to be good)
What do you mean we're using Apple created software? We created the software for an operating system, just like Windows and Mac developers have been doing for decades. I don't get what you're saying.

Originally Posted by Salty View Post
I'm not saying the store you created isn't a great product. Though quite frankly if it's a store ... it's probably not. And I imagine your reader has many ways of ... displaying a book. (I imagine it might even be able to do so upside down? Or with different backgrounds?)

The problem here is, I'm not really going to root for another guy who decided to try and make money off of other people's creativity ... again. Publishers already do that but they at least provide essential services to authors. The Record labels ... kinda sorta but mostly don't do that for musicians.
We're making money off of other people's creativity? What does that mean? We created software for an operating system. We own that software because WE created it. We went to school and got degrees in design and computer science to be able to properly create this stuff. Apple didn't create it for us. We spent all the money. All the blood, sweat, and tears to do it. We own the technology. We have patents. Not Apple. We did what many before us have done on the desktop. You're not making sense.

And when it comes to essential services to authors, nobody in the world offers more than our platform. More on this in a minute.

Originally Posted by Salty View Post
To me it seems like you took a look at an already over crowded market and decided that somebody owed you a living because you chose to create a store. But here's the thing, there's already more than enough places to buy stuff.
I've been in the business for years. The eBook industry has just been getting going over the last few years. It's not over crowded. Rather, the power is totally centralized. It needs to be cleaned up and innovated... which is what the DOJ is on a mission to do. New players and new business models are needed to increase competition. I don't think anyone owes us a living. I think what anyone else thinks: the market should be fair and competitive.

Originally Posted by Salty View Post
Does your company actually do anything to make books better? Do you offer services to good writers who need a critical eye? Do you do anything that would replace a good agent or publisher?
Now you're going way off the central point here. It was about the issue with Apple's 30% tax and how that could be viewed as anti-competitive in that it reduces and eliminates competition hurting the consumer. And now you're talking about whether our products or services are good for the industry.

But since you asked, our entire mission has been to make eBooks better... to make distribution better... to make the reading experience better... where the cost to do so approaches zero. With our platform, you can create amazing looking eBooks with interactivity and then quickly publish it to multiple sales channels. You get one central control panel that shows you analytics and revenue stuff across all channels. You can change the price, other metadata... and it propagates across all sales channels.

We also are the only ones in the world to have a real competitor to Apple's iBooks Author. It's a breathe of fresh air for the industry because iBooks Author is itself another manifestation of Apple's greed and control. Anything and everything you produce with it CANNOT be published to any other retail channel but Apple's iBookstore. In other words, Apple owns the file, and indirectly the content. So you have to use other software and methods to create the eBook for other platforms.

Ours is based on an open format and anyone can use it to create whatever eBooks they want and publish to whoever they want. People in the industry are welcoming it with huge, open arms.

Originally Posted by Salty View Post
Apple came in and made an awesome mobile computing device that happened to feature a built in book store that made it brain dead simple to access books both from major authors and eventually they opened it up for little known authors and independents. What exactly is your app supposed to do that makes for a better reading experience than that?
Because I must remain anonymous and you can appreciate that I can't really address this in its entirety... but what we've done with our eReader is promote open standards and offer what we think is a more compelling reading experience. From navigation, to UI, to features, and so forth. It makes Apple's iBooks Reader look like a drupy eyed armless child. I might PM you for testing purposes under an NDA if you'd like to see more.
     
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Aug 19, 2013, 07:36 PM
 
Originally Posted by theothersteve View Post
Apple's 30% transaction fee is complete bullshit.
Originally Posted by theothersteve View Post
Not buying it. Apple has a large share of money spent on Apps. Companies can build whatever they want. But they have to follow well established laws. If Apple is going into business, they're subject to the laws. Apple is making money from us and many others. They force everyone to use their ecommerce system. This may be deemed anti-competitive by the courts. I don't know. But the effects are anti-competitive, because if you want to compete with them say in eBook sales in an App, you simply can't, because they take 30% of every sale.
Stop writing for their platform! Make your big ebook app for openmoko or whatever free/Free/open/Open platform you want.

Hmm, can't find a lot of openmoko users willing to pay for content? Gee, I guess Apple is bringing something valuable to the table.

Originally Posted by theothersteve View Post
Apple's platform is not free. They take 30% from the sale of an App on their App Store. I have no problem with this. It's a commission like any retail store. You box your software, put it into retail stores, and those retail stores take a commission on the initial sale of the App. Apple created and App Store and Mac App Store to REPLACE this physical commerce with a virtual one. BUT, those retail stores with the boxed software do not collect 30% of the rest of your revenues from the App, if any. Once the initial sale is done, they're out of the picture.

Not Apple. The analogy is exactly the same. The App Store is a virtual retail store and catalogue to find and buy Apps. Except Apple takes 30% of your revenues from inside the App in perpetuity, not just a commission on the initial sale.
If they didn't take the commission on in-app sales, everyone would price their apps at $0 and cut Apple out of the deal entirely. This is completely obvious and it's already happening with the tremendous popularity of ad-supports apps where Apple gets nada unless you're using Apple's ad network.
     
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Aug 19, 2013, 09:44 PM
 
Originally Posted by mduell View Post
Stop writing for their platform! Make your big ebook app for openmoko or whatever free/Free/open/Open platform you want.

Hmm, can't find a lot of openmoko users willing to pay for content? Gee, I guess Apple is bringing something valuable to the table.

If they didn't take the commission on in-app sales, everyone would price their apps at $0 and cut Apple out of the deal entirely. This is completely obvious and it's already happening with the tremendous popularity of ad-supports apps where Apple gets nada unless you're using Apple's ad network.
Since when is Apple entitled to make a dime off of developer's code? Folks like you just go along with this stuff. For decades we've been developing for the desktop and haven't had to pay Apple or Microsoft 30% of all of our software's revenues. Because its insane. Never in the history of retail has any of this perpetuity BS ever occurred.

When you look at the multiple sources that cite that over 50% of Apple developers make NO MONEY... estimates are as high as 90%...

Are you an Apple fan or are you a businessman? Screw Apple. Apple's a business. I don't care about them because they don't care about me. I have discussed how their aggressive, vehement pursuit of a 30% stake in every dime made inside every iOS App is potentially anti-competitive and illegal. They change their policies whenever someone finds a way to get around their 30%. They are aggressive at stopping anyone from making any money inside their App without them collecting 30% from it.

You're not understanding why this is bad. It's bad because Apple doesn't have anything to do with the cost of doing business for that App and that in some cases, it destroys competition. It's all on you. The risk. The responsibility to the customer. The money and time spent developing the technology. The maintenance.

The App Store is a virtual retail shelf meant to replace boxed software. That's it. You pay for it and Apple, the store, processes your payment. They take a commission on the sale like any retail outlet would for your boxed software. Except Apple sits in your kitchen and like the mafia, skims 30% off of every dime made in your App AFTER its left the retail store. Yet they have virtually ZERO responsibility for it and your customers and no financial output. You pay for everything.

They introduced this 30% monopoly on people's software. Tough luck for them if everyone offers their App for free on the App Store and then makes money inside the App. Nobody ever said Apple was entitled to make any money off of other people's intellectual property. If Apple doesn't like it, they should stop developing iOS or stop providing an App Store.

What makes Apple the relatively large chunk of their money is the iPhone and iPad... the App Store is a hook to get you to keep buying their devices. By developing software for Apple, you do them a service by choosing their platform to develop for. Without software, Apple has no platform. Good old Jobs begging Adobe and other developers to develop software for the Mac OS and OS X... Now they're pissing on the same people that got them here. Their greed is never-ending.

OS X, on the other hand... doesn't have any of this stuff.
     
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Aug 20, 2013, 02:14 AM
 
Since when are people selling through somebody else's distribution network, accessing somebody else's customers, entitled to make the rules on what they get for free?

Honestly, we get your point. And it makes perfect sense, as do your examples.

But for every example and analogy, there is an equally valid counter-example.

Digital distribution has changed the way the market works, and Apple is not going to create rules at the whim of developers who wish to use the new paths, but at old-market conditions.

Fact of life.

Your point has been made; thank you for clarifying.

Incidentally, boxed software did not really offer the equivalent of in-app purchases. The only cases where software was distributed in a physical form for free to offer further "purchases" were things like AOL CDs. And you BET they had to pay every store and every magazine good money for distributing their "free" software.
With Apple, you don't. 30% flat fee on in-app purchases and subscriptions though. Simple.

That's not going to change unless some judge decides it, but frankly, I don't see why.
     
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Aug 20, 2013, 05:00 AM
 
Originally Posted by Spheric Harlot View Post
Since when are people selling through somebody else's distribution network, accessing somebody else's customers, entitled to make the rules on what they get for free?

Honestly, we get your point. And it makes perfect sense, as do your examples.

But for every example and analogy, there is an equally valid counter-example.

Digital distribution has changed the way the market works, and Apple is not going to create rules at the whim of developers who wish to use the new paths, but at old-market conditions.

Fact of life.

Your point has been made; thank you for clarifying.

Incidentally, boxed software did not really offer the equivalent of in-app purchases. The only cases where software was distributed in a physical form for free to offer further "purchases" were things like AOL CDs. And you BET they had to pay every store and every magazine good money for distributing their "free" software.
With Apple, you don't. 30% flat fee on in-app purchases and subscriptions though. Simple.

That's not going to change unless some judge decides it, but frankly, I don't see why.
We pay 1.9% to our payment processor for credit card purchases and for subscriptions. In fact, this is how the world operates under low transaction fees. Apple can take their 30% and stick it up their...

A golden number in business to hit for profit is 33%. It's very hard to make money in life. It's very hard to hit this as a business. It's hard to be profitable. You've got every hand in your pocket. Taxes. Insurance. Lawyer fees. Accountants. Travel... And a bunch of extraneous crap that sucks your profits up. So you work so hard to make a profit and bear all of the responsibilities. You manage to get yourself to 33%. Then, Apple steps in and says pay up, like the IRS. You then give up 30% of your earnings AFTER you've already given them a 30% cut of the cost of your App, if any... and what are you left with? 3% profit.

Come on... you're smarter than what you're posting. You know how such a high transaction fee destroys profit and businesses.

What are we getting for free? What is it? Do you want to pay our bills? Do you want to be the person shelling out millions of cold hard cash to create technology with no guarantee that you'll make any money? Do you want to be responsible for everything and have some axxhole dipping into your pocket skimming money from you that bears none of the COGS? That has legally absolved themselves of any responsibility to your end customers for whatever your App is selling? Do you want to be used and abused to develop software for someone's platform only to have them take 30% of your earnings in perpetuity?

Let me explain it even clearer: Apple doesn't make the rules. The government does. They just got rolled in the eBook case: Apple is a convicted colluder, engaging in anti-competitive, illegal business practices. Apple has a layer of psychopathy that everyone should be concerned about. No business should have so much power. Competition is required for healthy societies. Apple has demonstrated that they're greed is more important than anything else. That they'll lie, manipulate, and break the law to control markets.

It's not the programmers or designers at Apple infusing all this anti-competitive, draconian BS into the mix. It's the execs of course. It's that layer of psychopathy. Blowhards like Eddie Cue who blocked Apps from Random House to blackmail them into signing their iBookstore agreement. Apple is no longer Apple to me. They're a bloodsucking leech.

Is our business a bust without selling on iOS? No. Did we build our business around iOS? No. I'm not so selfish as to just be talking about myself. I'm speaking for an entire generation of people and companies. And consumers. It turns out that with the DOJ injunction, those of us in the eBook game might be able to link to our online stores and therefore process the payments ourselves. This will eliminate Apple's 30% ownership in our business and increase competition for consumers. You win. We win. Apple wins because their platform can grow and expand and attract more people through interesting brands and new software.

If this happens with the DOJ injunction, every developer should have this choice. It won't be fair that it's just us.

I'm not alone in this either... Kobo filing amicus supporting punishment against Apple publicly is a huge step for a company with iOS Apps. And the chatter about this 30% has begun to swell with lawsuits already in play in some foreign countries. We'll see what the next 5 years is like... maybe I'll see you all in court.

We must continue the groundswell here on behalf of Flattr and urge a rigorous Department of Justice review of this anticompetitive behaviour. I affirm the comments of one YCombinator contributor, who laments:

…monopolies cause problems with deincentivization of innovation, uncompetitive behaviour, poorer outcomes for consumers and often higher prices. Apple are beginning to show all these signs. I would suggest that given enough instances of incidents like these that the US DOJ would be within their rights to start another anti-trust case.
( Last edited by theothersteve; Aug 20, 2013 at 05:54 AM. )
     
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Aug 20, 2013, 07:38 AM
 
My impression was that whoever owns the store makes the rules.

I pay for the shelf space, the personnel, the curation, the storage, the delivery, and the billing, and I get to decide what I stock my store with, and I talk to the distributors/manufacturers of the products I wish to sell and see if they're willing to accept my terms.

If they aren't, either we negotiate some more, or they walk away, or I walk away. If either of us walk away, I risk not having enough products to sell, and my store failing. If I compromise too much, I may stand to lose money in the long term.

The App Store currently does not seem to lack products to sell, so they must be doing something right.

You ask what you get for free from Apple.
As it looks, if you're building a book store and distributing it via the App Store, you're using Apple's own infrastructure to market a competitor to their own service at their own customers.
Apple even allows this, but they set the same conditions as for everybody else. What do you expect?
Why are you building an App at all?

To phrase it bluntly:
If your earnings after the 30% cut aren't high enough, charge more, or charge less and sell more, or make a more compelling product, or don't distribute through the platform.

Also, since you've argued that web apps are in fact just apps, what's stopping you from just marketing through a web app, and allowing people to download ePub files to read in the iBooks reader?

The fact that you're building an app for iOS with the intent on distributing it through the App Store must mean that you see some benefit to doing so. What is it?
     
 
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