Why are you people defending Apple?

http://techcrunch.com/2011/02/16/why-are-you-people-defending-apple/

by Andrex • 15 years ago

233 209 15 years ago

Bossman7• 15 years ago

And people wonder why I hate the walled approach Apple takes.

The article makes another great point about people not being able to leave iOS devices for a competitor because all their music, movies, apps, etc are in Apple's DRM format and won't transfer to other devices.

Apple deserves to have control over their own platform, but this is getting a little crazy. The extra fee wouldn't be so bad if developers could increase fees through apps to offset it, but Apple is forcing them into a horrible position. They can't say the reason for higher prices is Apple charging them. They have to eat that cost for the customer and aren't even allowed to post links to their site in the app anymore.

InclinedPlane2• 15 years ago

Now everyone should know, if they didn't before, why Apple is no Microsoft. Apple isn't content to create a platform, they want to own everything. They want a walled garden, they want captive users, they want to be able to demand exorbitant profit margins in perpetuity.

Mostly benign monarchies may seem very attractive at first glance, but over time abuse of power is inevitable and then it's too late.

coffeedrinker4• 15 years ago

I wonder how much content will end up simply as web apps and web sites and then it won't matter what platform the end user chooses.

I've changed my focus from iOS to web because of Apple's policies.

bonch• 15 years ago

Apple doesn't want to own everything. They're happy being the BMW of tech and generate massive profits.

Comparing this situation to monarchies and abuses of power is stupid. It's just an in-app subscription model for a mobile OS that nobody is being forced to use.

cletus• 15 years ago

What the article actually says is:

> Not to mention the fact that users have built up libraries of dozens of applications and DRM-laden content that won’t transfer between devices.

What you say is (emphasis added):

> The article makes another great point about people not being able to leave iOS devices for a competitor because all their music, movies, apps, etc are in Apple's DRM format and won't transfer to other devices.

Music is DRM-free on iTunes and has been for some time. TV shows and movies are another matter and have other issues (such as only one download), which is why I won't buy them from there.

But it's not Apple demanding DRM. It's the content producers, who are still until the woeful delusion that DRM prevents copying. In reality it simply annoys customers. The only reason music is DRM-free on iTunes is because Apple extracted that concession as part of a deal that gave the RIAA three pricing bands for songs ($0.69, $0.99 and $1.29, which basically means $1.29 for anything new) over the previous model, which was $0.99 for everything.

Bossman7• 15 years ago

I get what you mean, but it still locks you into Apple's devices. Also, Amazon is able to produce content without DRM. Mp3 format music, etc.

darren_2• 15 years ago

> all their music, movies, apps, etc are in Apple's DRM format and won't transfer to other devices.

Music on iOS devices isn't DRMed and hasn't been for some time. If your new device can't play m4a files this is a separate issue and you can transcode them just like if you had a pile of drm-free WMAs.

Apps are DRMed but even if they weren't it'd be irrelevant unless a WINE-analogue for iOS came about (and consider the time-scale this would take and performance issues, etc. UIKit is non-trivial). I can't move an Android app onto my iPhone either, despite its lack of DRM, and whether the blocker is legal or technical is irrelevant. The real problem isn't that a user can't move their 99c iOS whatever-app to their new android phone, it's that they can't find or don't know how to find or can't be bothered finding equivalent app(s) for their new phone. Leaving aside the whole question of relative top-tier application quality on the platforms.

Movies, I don't know the behaviour here. Do people collect big libraries of apple DRM-ed movies, enough to keep them stuck to a phone? TV episodes I could see, but those strike me as more disposable in any case.

What is the 'etc' in "music, movies, apps, etc"? It's not your photos. It's not your emails. It's not your calendars or your contacts. It's not even the data saved in your applications - there's a trivial API now for transferring files from an application to your desktop via iTunes; if you can't export the data from your favourite applications to transfer to a different platform, that's on the application developers, not Apple.

I suppose it could be your alarms, preferred weather cities and stocks app choices. Or your SMS database, which I bet most people don't even consider as something that should easily transfer from phone to phone (though obviously it should).

Bossman7• 15 years ago

Valid points. You're right. Maybe I went a bit overboard. But you can't deny that Apple is continuously trying to prevent people from using anything but their services and goods. I don't blame them for that. What I blame them for is pushing everyone else out just because they control enough of the market to do so.

> I suppose it could be your alarms, preferred weather cities and stocks app choices. Or your SMS database, which I bet most people don't even consider as something that should easily transfer from phone to phone (though obviously it should).

Absolutely. However, those things aren't huge. Different platforms have equivelants anyway. If I go from iOS to Android (or the other way around), I have plenty to take the place of those. Setting them up again may take a little time, but not much.

gst• 15 years ago

"I can't move an Android app onto my iPhone either, despite its lack of DRM, and whether the blocker is legal or technical is irrelevant."

That's actually Apple's fault too. There is an Android runtime for iOS (http://www.xmlvm.org/android/). However, as far as I understand Apple's store rules, such a runtime must not be used for applications.

mkramlich2• 15 years ago

> and aren't even allowed to post links to their site in the app anymore.

whoa. first time I heard this. if this is true, it's probably straws[final+5] for me. goodbye native iOS app development, hello mobile multi-platform web apps and Android apps.

coffeedrinker4• 15 years ago

They are trying to force content producers to work exclusively with Apple.

I can up the cost to the end user _as long as I stay only with Apple_. Once I move my product to a second competing device, then it really hurts profit because the price has to stay the same.

Once they become the exclusive provider, then they continue to dominate the market, regardless of what other tablets and operating systems come along.

myhf• 15 years ago

Why does the price have to stay the same between platforms?

coffeedrinker4• 15 years ago

That is one of Apple's requirements. Whatever you sell somewhere else, it has to be the same price or cheaper at Apple.

You cannot charge more on iOS to compensate for Apple's 30% cut (which I think is rather high for subscriptions).

nooneelse• 15 years ago

Actually having the same content/product sold through both Apple and somewhere else is an interesting case. Between the two distribution channels, in which do you put your R&D or advertising dollar when channel Apple returns 30% less per customer gained there versus channel other?

ubernostrum• 15 years ago

Well.

First up, I suspect this policy won't last long; the most likely explanation for it that I can see is that Apple's trying to figure out what the market will bear. Which, you know, is something they tend to do fairly often with the iOS platform, and sometimes it works the first try and they stick to the policy, and sometimes it doesn't and they change it.

But as far as choosing where to focus money, I think Apple's banking on the fact that nobody else in the mobile space has the kind of integrated platform and distribution channel iOS has. There's a lot of attraction there, especially given that the alternatives (i.e., Android) not only aren't there yet, but aren't even close to getting there.

So right now, if I had to choose where to put my budget, I'd put it into iOS without a second thought; sure, Apple's going to get a cut, but the reduced overhead and relative ease (if I want broad exposure on Android, how many app stores do I have to market my content in? How many carriers do I have to sign deals with to get promoted? etc.), combined with an existing and known-to-be-loyal installed base for the platform, would suggest to me that I'm going to make up the difference pretty quickly.

adsr• 15 years ago

That's not how I read their ToS, they are forcing content providers to offer the same price as elsewhere.

They ban pop-up's or redirects outside.

Both of these are good for end users, and user experience. The 30% cut is only going to affect the providers, not the end users, (at least not directly). They are in turn offering a large user base to these providers, in essence acting like a distributor.

If this somehow leads to providers leaving, I'm sure that Apple will back off some of these rules.

jokermatt9992• 15 years ago

This articulated a lot of my issues with Apple better than I could. I tend to steer clear of TC, but I think this is the best article I've seen on this issue of the 30% cut.

neutronicus3• 15 years ago

"And finally, there’s the related notion that anyone who doesn’t like Apple’s rules can pick up and move to another platform, like Android. Which is ridiculous."

What? Ridiculous how? This claim is ridiculous.

Suck it up and use Android. You'll live. I did.

chc11• 15 years ago

Abandoning your users and moving to a platform where there's little money to be made is a questionable proposition for producers. And a lot of users will have second thoughts about moving to a platform they perceive to be distinctly inferior just because Apple are being dicks.

Also, as a reminder in case you live in a country where it isn't so: Contracts prevent most of Apple's customers from jumping platforms, and sunk costs in iOS apps tighten the lock-in.

neutronicus3• 15 years ago

> Abandoning your users and moving to a platform where there's no money to be made is a questionable proposition for producers. And a lot of users will have second thoughts about moving to a platform they perceive to be distinctly inferior just because Apple are being dicks.

It sounds like being on iOS as opposed to Android is worth money to you. That's what Apple thinks too.

Either prove them wrong or pay the piper.

drivebyacct2• 15 years ago

>there's no money to be made

Man, I can't read this thread. There is so much hyperbole. I should have recognized the type of people this headline and article would bring out.

edit: I don't understand your claim. Your wording wasn't problematic. As I read it before and read it now, you're implying that moving to Android results in "little money to be made". That's the part that I don't really understand I guess.

utx00• 15 years ago

until enough producers move.

zyb09• 15 years ago

Oh that's gonna change, no doubt. Produces can't ignore iOS, true, they'll suck it up for now, but the mobile market isn't gonna stay this way forever if Apple continues to behave this way.

I say 80% of all apps we do, we do now both for iOS and Android. While Android used to be a second class citizen a year or so ago - often just recieving a 'port' of the iPhone version (ok it runs, we're done) - now there's much more focus on making 'native' Android apps (no more Back-button in the navigation bar etc.). Android revenue is still behind iOS, but it's profitable and worth doing.

Since Android is growing already at a much faster rate than iOS and the whole tablet & smartphone business is only expected to get bigger anyway, you gotta wonder where we'll be in say - 5 years from now? Which will be the next Windows, the OS with 90% market share, that everybody is gonna develop for? Well it could've been iOS, but I don't think that's going to happen anymore.

codeglomeration• 15 years ago

He was referring to the fact that once you've made significant investments in a platform + applications + DRM content, it's not really straightforward to move to another platform, especially because you cannot transfer the content you already paid for.

Also let's not forget about early termination fees from carriers, or getting another subscription just to get another phone.

For some people moving to another platform can be a significant expense. And for most people it's not really clear what else you might be missing on the other platform, that you were accustomed to using now.

jkincaid• 15 years ago

I did suck it up and switched to Android. It isn't painless. I now like Android better than iOS, but you need to change your muscle memory and learn where various options are. And all of the apps and content you purchased on iOS are no longer accessible, which is the real pain-point.

These things weren't difficult for me, but they're a pretty big hurdle for 'normal' people. If Amazon pulls the Kindle app, a user is probably more likely to "just switch" to iBooks as opposed to a different platform that supports Kindle. Which is apparently what Apple is counting on.

enneff• 15 years ago

Oh, come on. None of these things even existed a few years ago. People are consumers and will adjust to whatever is the newer, better tech.

d5tryr3• 15 years ago

'normal' people?

Normal people is a pointless term. You may as well just say people.

Saying 'These things weren't difficult for me, but they're a pretty big hurdle for people.' would sound horrible and arrogant, but at least it would be honest.

You, and the author of this article, shouldn't use such a lazy and condescending phrase.

Matt_Cutts• 15 years ago

I've gotten to see a bunch of people switching from iOS to Android, plus a bunch of people upgrading from a feature phone to Android. If Android is the first smartphone you see, it seems natural to you. If you're used to iOS, it's harder to switch. It took me 3-4 weeks before Android felt natural and the iPhone felt alien to me.

fpgeek4• 15 years ago

Depends on how many books these normal people have in their Kindle libraries. 15 or more and buying a Kindle seems the obvious choice.

profitbaron2• 15 years ago

Not everyone is tech-friendly and acceptable to new technology they see some things, as intrusive etc which is why certain platforms couldn't have existed in the earlier stages of the Internet etc hence, they are less likely to move over to a new platform because they are familiar with it and know where everything is.

raganwald• 15 years ago

People used to say that about Windows and OS X. And indeed, many of the people who are allowed to choose for themselves have chosen to suck it up and replace Windows machines with OS X machines.

So yes, move to Android and stop being such miserable worms. Ditching an iPhone is not like ditching $5,000 worth of IBM PC-XT, especially because Apple have sync'd all your contacts, emails, and other personal data with your computer.

GHFigs• 15 years ago

I’m sure this post will invite a throng of Apple advocates to poke holes in my logic

...as if that were not transparently the intent of an article entitled "Why are you people defending Apple?"

davidu6• 15 years ago

Comments all removed.

The parent asked why I defend apple and I laid out my argument. Clearly people cared enough to respond and react. And yet I'm being downvoted for sharing my perspective just because it might be contrarian?

Maybe that's /not/ why I'm being downvoted, but that's what it feels like to me. So no thanks. I'm content to keep my opinions to myself.

chc11• 15 years ago

You defend Apple because Apple is good at generating profits for large, entrenched industries at the expense of users? That's an unusual stance.

Also, which industries are you thinking of where the employees do not use some Google service or another every day? Even industries where I hear people constantly cursing Google often get a lot of value from their offerings.

daleharvey• 15 years ago

Apart from some of those examples being incredibly tenuous (personal computing), and the concept of defending companies position on one thing because you like its decisions elsewhere being kinda scary.

But Google has had that impact on the entire web, both by providing visibility and a revenue stream via advertising.

davidu6• 15 years ago

Comments all removed.

Prolorn• 15 years ago

We can laud the achievements Apple has accomplished without refraining from criticism where they fall short. Furthermore, even taking what you say for granted, these past achievements do not validate the approach Apple is taking today with their new in-app subscriptions policy.

davidu6• 15 years ago

Comments all removed.

zppx• 15 years ago

That is a false dichotomy, Apple vs. Google. I think it's a poor way of trying to make sense of the situation. Keep in mind that the word "Google" is not even cited in the link.

There's no need to defend every one of Apple's decisions, sometimes people do stuff that sucks, or even brings Google to the discussion just to defend Apple.

EDIT: That said, your points were good, I liked the articulation of your comment, I upvoted you.

davidu6• 15 years ago

Comments all removed.

doron• 15 years ago

Google is bad for business?? this is an utterly bizarre statement.

HTC seems to be doing well for itself tooling their machines with Google android.

Consider the potential revenue business generates from Adwords. Or freeing small businesses from having to run and manage their own email systems.

My favorite example is the benefit a myriad of startups gained from having access to Google API's like maps, and the benefit business gets from being easily found on a map, a bar for instance is a business too, i find them with Google maps.

You also dont seem to qualify having the most advanced search engine in the world a benefit for businesses, talk about a tremendous impact on the entire ecosystem.

I could go on, with ease. but i think you might get the point, your view of business benefit is too narrow, your sharp dichotomy between business and consumers is false as well, businesses are consumers of other businesses too.

mcantelon• 15 years ago

>Google has not had this kind of impact on anything short of SEO consultants. Very few industries have trusted Google and ended up satisfied with the outcome.

You've never heard of Google Ads, I suppose.

The idea that Apple's gouging is somehow a boon is completely shortsighted. Android's Market offers a much more lucrative path to the future plus it's possible to create verticals in Android that don't rely on a centrally planned store for approval and distribution. Mobile is young and my guess is these verticals are going to be big. Apple's store won't scale in the long term.

greendestiny3• 15 years ago

I see almost entirely positive points on your comments? In fact this comment is still at 10.

For myself I agree with the good points you raised about Apple, but this article and all these comments are much more about the specific issue at hand. I feel like you're not seeing the context in quite the same way as other commenters myself included.

Considering you didn't mention compulsory In-App price matching at all, you actually haven't defended Apple over this issue in these comments at all. It just kind of reads like you didn't read the article and are just responding to the headline.

chc11• 15 years ago

Re: Removing your comments:

Yeah, some people seem to be very downvote-happy. Sorry. I appreciated hearing your opinion, though I did think it was very weird. Weird is interesting.

Just remember that with as many users as HN has nowadays, there will always be some people who feel the need to downvote anything they disagree with. I've found that, in general, it's not the same people you're talking to.

I think the best policy is to ignore the downvotes unless they're accompanied by a comment with a good reason why, because jerks who downvote frivolously are not worth your time.

dannyr• 15 years ago

davidu owns operate OpenDNS which competes with Google DNS.

http://blog.opendns.com/2009/12/03/opendns-google-dns/

linuxhansl2• 15 years ago

Why did you remove the comments? Now all we see is some changed comment that was downvoted before you changed it.

Yes, people do not understand the purpose of voting. It's not to express agreement or disagreement but rather to rate the validity of the points made in the comment.

Anyway. I did disagree with you, but I upvoted your comment and I would have liked to continue the argument. Now I can't because you removed your comments.

greendestiny3• 15 years ago

All of his comments in this thread except one were positive at the time he removed them. This is some kind of hissy fit.

lotusleaf19872• 15 years ago

Zach said it best yesterday: http://news.ycombinator.com/item?id=2224469

Of course Rhapsody can't sell their stuff for a 30% margin. It's not their own stuff!

They're trying to be the last link in a chain of 90/10 (or more) splits. They repackage record labels' repackaging of artists' content. Do you think the artists would find 30% economically untenable?

The App Store is 70/30 because Apple can take things straight from content producer to customer. When the Apple takes the place of publishing, distribution, inventory, sales, payments and shipping, there's real value for that 30%.

When all someone wants out of Apple is merely to process the payment and send things down the pipe, gee, who do they think they are? But that's not what Apple is actually holding themselves out as. Apple doesn't want to be in that kind of commodity market anyway. Seems reasonable to me.

imichael• 15 years ago

So ideally they publish music from the artists directly, eliminating the other intermediaries and effectively making them the... the... the record label.

danik• 15 years ago

Another Apple Records? Isn't that a trademark issue? hehe...

cmoscoso• 15 years ago

For iDevices, yes.

statictype8• 15 years ago

This was already addressed in the article. iBooks has a significantly smaller variety of books than Amazon. By becoming the sole gatekeeper for content, Apple is ruling out larger distributers. Users don't gain from this. Only Apple.

Pooter4• 15 years ago

Or, you know, it's a way to get content providers to sell through Apple. If there's a 30% premium to get on iOS through Amazon, a way around that is to just sell through iBooks.

We'll see how it shakes out. Maybe it'll be like the "nothing but objective-c" thing. People freak out too much about this kind of stuff.

stcredzero• 15 years ago

By becoming the sole gatekeeper for content, Apple is ruling out larger distributers. Users don't gain from this. Only Apple.

You mean users lose out on the larger distributers. I know I'm going to get voted down for this, but I think an ecosystem of small and independent players producing content might actually be beneficial to users in the long run.

Apple is doing the distribution, so what purpose do the large distributors have? The only things that the customer needs are discovery and tastemakers. Distribution isn't so much a problem in the age of the internet.

mechanical_fish2• 15 years ago

iBooks has a significantly smaller variety of books than Amazon.

But will this be true for long, now that this particular shoe has dropped?

Apple's primary target here is probably Amazon. A company which, incidentally, is no stranger to the art of using a powerful distribution network, an existing customer base, and a DRM-locked e-reader platform as a lever to demand big shares of revenue:

http://www.jeremyrossmedia.com/2010/02/21/word-kindle-70-30-...

According to this article, and the Stross piece linked therein, Amazon's standard deal is that they take seventy percent. Their "generous" deal for self-publishers is that they take a mere 30%... but the publisher must give Amazon the right to set the price as Amazon sees fit.

Makes Apple's 30% cut look pretty good, actually. But, of course, if you're a print publisher you pretty much have to have a deal with Amazon, so I expect there are a lot of negotiations going on right now.

potatolicious3• 15 years ago

Your argument only works in the context of someone like Rhapsody, who is a pretty bare-bones wrapper on top of content.

But consider services like last.fm, Netflix, or Pandora - where there is a significant value-add on top of merely distributing content. They are providing consumers a valuable service but yet also cannot afford the steep cut that Apple is now demanding.

The "they're distributors and deserve to get cut out" argument is a fallacy, because some distributors actually do provide consumer value - and they're all getting taken to the cleaners with Apple's new move.

Besides, a diverse crop of distributors competing with each other is a far better situation to be in than exchanging all of that for a monolithic monopoly of another distributor. Make no mistake, this isn't some populist uprising where the producers make their work available to the consumer and bypass the middleman - the middleman still exists, it's now Apple, and now Apple has all the cards.

loewenskind2• 15 years ago

If last.fm, etc. are providing so much value why are their margins so thin? Are they providing value less than 30% of the cost of the base product?

akashs2• 15 years ago

I think you're grossly underestimating how much 30% of revenues means. Let's look at how this could actually affect you. Lets forget for a second that Amazon is even part of this issue. Let's stick to straight software development, what HN knows best. Let's look at the profit margins of some of the best software companies: http://www.google.com/finance?catid=us-54399928&sort=ANI...

Look at what percentage of revenue that net income is, and count how many are above 30%. Now, isn't it a bit more difficult to make money on a product if your 30% margin is gone? Sure, Apple deserves some money for payment processing and distribution, maybe something for acquiring a new customer but certainly not 30% of all revenue.

Yes, you may say you can just raise price, right? Well, to compensate you would have to raise price over 40%. Meanwhile, the customers have already demonstrated the prices they are willing to bear, so that doesn't quite work.

So now, if you've started a business of developing iOS apps, you're severely hampered by this 30% revenue cut you're giving to Apple. The small guys will probably deal with it because they won't know better, but think of it this way: Apple has just taxed 30% of the value you have created for your users. That's 30% of your income.

You can argue this is a retail model and they should get a margin the same way you do if you sell something through Best Buy, but it becomes anticompetitive when they've blocked off any option you have to sell directly to a customer or through any other channel. The companies on that list do very little business through retail, and they would suffer if they had to give up 30%. Moreover, Apple's own margins would take a hit if they had to sell everything through a retail partner.

(Also don't get why it matters that Rhapsody, Netflix, Amazon don't create content. Apple doesn't create most of the stuff that goes into an iPhone, but that doesn't mean they don't add value and shouldn't be able to make money)

sethg3• 15 years ago

But most of those companies are not dependent on direct-to-consumer sales for their revenue. You’re never going to see “Oracle Database, Standard Edition One—$6,000” on the App Store directory. I suspect that even Microsoft gets most of its software revenue from either OEM deals or big-business hundred-seat license packs, rather than from over-the-counter sales.

JamieEi2• 15 years ago

I disagree with the last part. Apple desperately wants to be in the commodity payment processing business. They want a cut of every transaction that takes place on a cell phone, which someday soon may be almost every transaction in the consumer economy. Normally the transaction processing business is a small slice of a huge pie. Apple's plan is to take a huge slice of a huge pie. Obviously it's in no one else's interest to give them all this extra pie, so Apple figures it will abuse it's market position to force everyone to go along.

It's pure evil, but that really shouldn't surprise anyone at this point.

aj700• 15 years ago

Uhh, it's an ingrained reflex from my teens.

Because they're not Microsoft.

It's just the leftover bitterness of Amiga Persecution Complex. Billg killed the Amiga

...or so it is widely believed, especially in Europe.

ThomPete2• 15 years ago

Google is the one who undercuts entire industries by making products in the field free and Apple gets the blame for charging people to get access to paying customers.

What a funny ass backwards world we live in.

rauljara• 15 years ago

If the basic argument is that apple's margin are too high, I agree completely. They are a massively profitable company; they don't need to be charging what they're charging.

If the argument is that there is something immoral about them charging people for use of their subscription service, I call bullshit. Until incredibly recently, they had no subscription service. Now they are offering the _option_ to use a subscription service. If you find the fees are too high, you are not obliged to take part in it. I think the real reason this upsets so many is that it clearly is worth it for many developers to take part in it, just like it clearly is worth it to let apple take their 30% cut for everything else sold on the app store. People are riled because they don't want to have to pay apple this fee, but hard cold business logic demands that they should, because it is profitable to do so (or less unprofitable than not doing so). It wouldn't be threatening at all if you felt like you could afford to just walk away from the ecosystem apple's built.

Which seems to indicate they are adding value.

Now, as to whether the value added == 30%, I direct you to the first paragraph. But what's the motivation to create such a wonderfully easy to use ecosystem if you can't derive a profit off it?

adam_albrecht• 15 years ago

From what I can tell, there is no option - any type of outside subscription or content that can be accessed through an iOS app must also be offered as an app store subscription or in-app purchase (with the 30% cut). This means that books on the Kindle app, subscriptions through Rdio or Rhapsody, and many other low-margin products and services will be subjected to Apple's ridiculous 30% take.

whatusername3• 15 years ago

To me the issue is the fact that if you have any form of subscription service -- then you MUST use the IOS service and you MUST pay apple their 30%.

Apple's service looks worthwhile and valid for certain use cases. But to insist that it must be used for any IOS Native app that has a monthly fee is a draconian change.

Reasonably Serious Case: I've been looking at building an app for my wife to offer to her fitness bootcamp clients.. By my understanding of the new rules - I need to allow people to sign-up / renew contracts from within the app. And give Apple 30% of the $200 or so fee.

halostatue4• 15 years ago

I suspect that your analysis is completely wrong. IANAL, and all.

1. Apple disallows in-app purchases for physical goods; presumably this would include services that are provided in the physical world instead of wholly electronically.

2. Apps have to be (minimally) useful to people without requiring a for-pay subscription.

3. These new rules would only kick in if you offered content (or possibly services; this is the SaaS question still unanswered, but it probably only applies to content as delivered content—that is, it seems to me to not apply to rental content, e.g., Netflix or Hulu) to people that is dependent on a subscription fee or a one-time fee.

As an example, let's say your wife's app were to have two news feeds about her fitness bootcamps (regular and premium). If all of her fitness bootcamp clients (the people who pay $200) are given access codes to the premium feed subscription, she may be required to offer in-app purchase of access to the premium news feed to people who are not or cannot be her physical customer at a price equivalent to or less than what she charges for the physical customers to have access to that feed.

All you'd have to do to comply is provide access to the premium news feed as an in-app purchase for $200 or less and let Apple take 30% of that. They're not getting anything for her fitness bootcamp services.

statictype8• 15 years ago

Now they are offering the _option_ to use a subscription service.

Wrong. Please don't misunderstand this new policy as something that is in addition to the existing rules.

The Kindle App currently in the app store (which doesn't offer in-app purchase or subscription) is now probably in violation of the app store guidelines in light of these new terms. They have forced companies that offer any subscription service outside the store to also offer it in the store and with a hefty 30% commission.

mryall2• 15 years ago

Yeah, this confused me a lot. The press release [1] says quite clearly:

> Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

It's that last clause which clearly states that apps like the the current Kindle app, which includes a "Buy Books" link at the top, will no longer be allowed.

This will be a massive shock to the nascent content-based app market on iOS. I can see only two possibilities for developers of these existing apps: primary producers of content who can afford to wear the extra 30% will just lose on their margin; or apps reduce the price of content on iOS so the Apple cut isn't as big. Neither option will be particularly palatable to most producers. Many might avoid the platform entirely.

But over the long term, I suspect this will have a positive disruptive effect in the iOS content market. Smaller producers who can build a business model around the 30% cut by Apple (similar to app developers) will have a better chance at maintaining a healthy margin.

[1] http://www.apple.com/pr/library/2011/02/15appstore.html

halostatue4• 15 years ago

It's both.

It's something in addition to the existing rules (a new feature; recurring subscriptions) and a change to the existing rules (content provided externally from the app store must now also be provided internally to the app store and give Apple their 30% cut).

I don't care much about the former; I don't like the latter.

It's also not yet clear whether this applies to any subscription service or merely content subscription services. Even within the concept of content subscription services, it's not clear whether this applies only to downloadable content (a la The Daily or Amazon Kindle) or streaming "rental"-type content (a la Netflix or Hulu).

Apple will need to clarify those positions, but I believe that this probably applies to downloadable content only. I do not believe that it applies to services (e.g., Dropbox or Salesforce, etc.) or to rental services (e.g., Hulu or Netflix).

This rule change badly hurts reseller-distributors (Amazon Kindle, Amazon Audible, B&N, Kobo, etc.); they don't have 30% of margin to give up and they can't afford to raise the price on everything 30%+ across the board just so they can stay in the iOS game. This is (to me) clearly anticompetitive and probably is just at the edge of antitrust-legal.

This rule change does not (immediately, if ever) hurt content owner-distributors (newspapers, magazines, major publishers). I say "(immediately, if ever)" because this is access to an additional stream of income, although it's at a fairly high premium. Apple's 30% may be a fairly low customer acquisition cost, though. The newspaper that it might hurt a little is the WSJ as (IIRC) it doesn't give access to all content unless you're already a WSJ subscriber. They will probably be required to implement in-app purchase to a WSJ-app subscription for an update very soon.

zach• 15 years ago

I agree this is a reasonable although surprising interpretation, as I posted yesterday:

http://zachbaker.com/apple-releases-new-rules-for-subscripti...

Apple has really confused myself and a lot of folks with this ambiguity.

1010011010• 15 years ago

Apple is still better than Microsoft.

radley2• 15 years ago

It's clear that changed over the past few years, starting soon after dropping "Computers" from their name...

cfontes• 15 years ago

Apple is just like a religion or sport team to some ppl... no matter what happens they stay on their side, I hate ppl that take things as a religion.

BUT...

I don't disagree with apple in this one though, they own the infra and without them there would be no place to sell the stuff so you should pay.

elehack2• 15 years ago

They own the infrastructure, but they do not own the device. The customer does. They bought it.

Apple comes along and says that anything you want to use on the device you bought and paid for needs to go through their infrastructure. That's where it becomes a huge problem. Not that they're charging for using their services, but because they're charging to let people do things with their property.

linuxhansl2• 15 years ago

EXACTLY.

That is exactly why I only run Linux based machines and my phone is a Nexus S.

When buy Apple hardware the transaction is more equivalent to a lease rather then a purchase.

superuser2• 15 years ago

They're charging to let people do things through the iTunes store.

Find me an example of them going after someone who liberated themselves from the iTunes store - Cydia still exists. Last I checked, there aren't any.

statictype8• 15 years ago

This.

More than the actual policy, what disturbs me is the number of people blindly defending it saying it's in the best interest of the users.

It is not.

This new subscription mechanism will effectively boot all newspaper/book/music subscription services off the App Store. This is great only if you're one of those people that believes every piece of technology you ever use should only be made by Apple.

The only entity that benefits from this scheme is AAPL

46Bit• 15 years ago

I'm looking forward to Antitrust.

sethg3• 15 years ago

If I understand correctly, antitrust concerns would only kick in if Apple uses its monopoly power to screw its competitors. For example, if iOS apps were required to sell content for less at the App Store than through competing channels, then Amazon et al. could rightfully cry foul.

But screwing your customers is not an antitrust violation: it’s capitalism as usual. :-)

fpgeek4• 15 years ago

Given the impact of these new policies on music streaming services like Rhapsody et al and Apple's dominant share in the digital music and digital music player markets, I think antitrust will become part of the story sooner rather than later. Especially if Apple launches their own streaming service (as has been rumored).

Synaesthesia2• 15 years ago

Antitrust is about barriers to entry - the market is still wide open for anyone to compete with Apple.

radley2• 15 years ago

Apple's new subscription model will cost more for end-users on all platforms. The new terms mean ~50% subscription price hikes across the board. Services can't reduce costs, and they aren't going to give away their profit.

Ironically, it also creates incentives for competing platforms because the profit will be 2-5x greater than on iOS.

hughw• 15 years ago

Interesting to contrast Google Apps Marketplace: It charges 20% of "the total amount your customer ends up paying you for your application and related add-ons", specifically including recurring revenue but also excluding sales of items like books (unsure how they would classify e-books for this purpose).

http://developer.googleapps.com/marketplace/fees

20% off the top line for all revenue from a customer they acquire for you. Seems like a bargain for a one-time sale; seems costly in the out years when it's you, not Google, putting all the work into retaining the customer.

Not complaining. Just contributing a data point from a similar effort in a slightly different space.

jon_hendry3• 15 years ago

I'm waiting for Apple to apply a per-MB charge for all data you access on iOS via WiFi or 3G that doesn't come from Apple.

marze• 15 years ago

I imagine the decision at Apple went something like this:

We can always go from 30% to 10% later, and all publicity is good publicity, so go for it.

profitbaron2• 15 years ago

Additionally, it will also make the lower margin appear reasonable to developers etc, meaning Apple have given themselves a new revenue stream AND developers aren't that annoyed as they currently are at this 30% rate.

bane3• 15 years ago

I suspect that, like most outrageous things Apple does

1) that we'll all have a big fight

2) Apple will continue with what they're doing for a while while we all get enraged and a bunch of us and the consumers jump platforms.

3) After months of fighting, Apple will relent and put a saner policy in place.

4) All will be right in the world

5) Wash, rinse, repeat.

More likely than not, Apple is probably doing what they do best which is to feel out the upper ceiling of the market, do a credible job of defeating their competition, find out where a comfortable profit can be made, then screw up any path to bigger market share because the margins (and the ability to control the ecosystem) aren't there.

nevster• 15 years ago

The biggest complainers in all this will be companies like rhapsody who are middlemen.

EGreg• 15 years ago

I see this as a steady development towards a new era, away from copyright and patents and towards distribution-driven innovation.

Look at Netflix, Apple and Google. They are discovering this model but just like the internet, I think the future will reveal itself over the next few years. People will pay for easy distribution and one-click purchasing. Some distribution networks will have a monthly fee for unlimited downloads. Others will have pay-per-download.

Here's the good news: rather than relying on a government-enforced monopoly (copyright, patents, etc.) to make sure that the publishers and innovators get paid, we will rely on direct-to-consumer distribution networks, which compete with one another for publishers and users on things like ease of use and selection.

In a way this is the Cable TV model. Eventually, I think everyone will move to a monthly subscription model for nearly unlimited downloads, like Netflix. That's because when torrent clients (or usenet or whatever else decentralized distribution network there will be) become as easy to use as the centralized ones (and decentralized always wins in the end), it will be just as easy and convenient to get a pirated movie as it is to get it on iTunes. But movies are expensive to make. That's why in the future, I think people will pay monthly fees instead of paying per item.

At the end of the day, there will be a huge number of people subscribed to Netflix-like distribution networks just like there are people subscribed to the internet, and generating "positive externalities" for the cheapskates that get free content through decentralized means. But the system will work. Content creators will flourish!

reedF211• 15 years ago

I'm completely disgusted by Apple's behaviour on this topic. Apple should be ashamed of itself for gouging developers. This is like if someone has a bakery in Des Moines, IA and then wants to expand to New York, and the city of New York insists that the price of cake the bakery charges be the same or lower than the price in Des Moines where the rent and operation costs are a fraction of what they are in NYC. This kind of monopolistic behavior by Apple is worse than Microsoft at its worst in the 90s and the early 2000s.

rahoulb• 15 years ago

It's not worse than Microsoft.

Apple does not have a monopoly in mobile devices. Apple is acting as a distributor and asking for a cut for being that distributor. There are other equally viable distributors - web apps, Android, maybe even WP7.

I'm sure the Angry Birds or Pixelmator people don't begrudge Apple taking a cut for giving them a massive amount of marketing and promotion - as well as an ultra-simple way of receiving payment (still a major stumbling block in the online world).

The key thing is how they enforce the external restrictions. It does make sense to say you need to offer the same terms externally as inside the App Store - to the consumer. The problem is that this can appear totally unreasonable to the developer. It all depends on enforcement - if they go after 30% of Highrise revenue because 37Signals have a native client we will know things are wrong.

wmeredith• 15 years ago

Except, uh, without the monopoly.

olalonde• 15 years ago

[...] my colleague MG Siegler did a thorough piece talking about why this makes sense for Apple and users [...]

How surprising...

Cadsby• 15 years ago

I'm not saying I agree with Apple's new policies, but I don't remember seeing any outrage when Amazon was taking a whopping 70% of ebook sales, while simaltenously instituting a most favored nation clause which made it impossible for publishers to sell their books cheaper via any other distribution channel.

Unfortunately Apple brings out the fanboy in some, while also bringing out the rabid anti-Apple sentiment in others. I wish the hyper emotion would get toned down on both sides.

speleding2• 15 years ago

30% is not as much as people think it is. I've been involved in billing systems that do recurring billing and it is actually surprisingly hard, a lot harder than one-off payments. Just a few examples:

* Credit cards on file get stolen or expire all the time.

* People forget to cancel in time and do charge backs which you then have to resolve in some other way.

* People e-mail customer support a lot more than for regular payments ("I want cancel, and please refund last x month too"). Support is expensive

* Apple operates in a lot of countries where credit card penetration is very low and other payment methods are required.

... and then they handle the entire operation of the app store, and they need to make a profit somewhere. When the iPhone just came out Apple claimed they were not making any money on the app store and I think that's entirely believable. Margins will have gone up as scale increased but now that they have added recurring billing those margins will be lower again.

brown9-2• 15 years ago

This is a completely subjective judgment. You don't think 30% is too much for these services.

speleding2• 15 years ago

Double faux pas: It's not subjective, because I provide quantitative arguments (Apple not making money on the app store initially) and facts (recurring billing is much more expensive than regular billing, which is common knowledge to billing experts). Also note that I did NOT say 30% wasn't too much, I said it's not as much as people think.

api• 15 years ago

Apple can do this because they have a monopoly on good design. Almost nobody outside Cupertino understands that design, user interface, and user experience matter.

nevinera• 15 years ago

Shame on you people for having opinions that don't match mine.

azar1• 15 years ago

YOU PEOPLE!? What's that supposed to mean?

epo• 15 years ago

More anti-Apple whining and double standards. Funny how when people commit theft by avoiding paying for recorded content like music and films the claim is that the world has changed and the studios and record companies should adapt their business models.

Apple's marketplace, Apple's T&Cs. If you can't do business using Apple's marketplace change your business model or change your marketplace. If enough people do the latter then Apple will have fewer quality suppliers.

Spyckie• 15 years ago

Won't this just make consumers hurt at the end? The most reasonable option as a developer is just to mark up the prices by 30% and then say if you want it the normal price, too bad - Apple needs its cut.

juddlyon• 15 years ago

I don't know or care about all the particulars. This feels like pure greed, not some cool strategic play.

In other news: this is the first decent thing I've read on TC in six months!

Why are you people defending Apple?

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