Posts Tagged ‘agency model’

Apple seizes control of iOS purchase chain: enforces 30% cut for Apple by prohibiting sales-oriented links from apps to the Web

February 16th, 2011

Apple’s press release about its “new subscription services” seems at first innocuous, and the well-crafted quote1 from Steve Jobs has been widely reposted:
“when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.” Yet analysts reading between the lines have been less than pleased.

Bad for publishers

The problems for publishers? (See also “Steve Jobs to pubs: Our way or highway“)

  • Apple takes a 30% cut of all in-app purchases2
  • Apps may not bypass in-app purchase: apps may not link to an external website (such as Amazon)3 that allows customers to buy content or subscriptions.
  • Content available for purchase in the app cannot be cheaper elsewhere.
  • The customer’s demographic information resides with Apple, not with the publisher. Customers must opt-in to share their name, email, and zipcode with the publisher, though Apple will of course have this information.
  • Limited reaction time; changes will be finalized by June 30th.

Bad for customers?

And there are problems for customers, too.

  • Reduction of content available in apps (likely for the near-term).
  • More complex, clunky purchase workflows (possible).
    Publishers may sell material only outside of apps, from their own website, to avoid paying 30% to Apple. Will we see a proliferation of publisher-run stores?
  • Price increases to cover Apple’s commission (likely).
    If enacted, these must apply to all customers, not just iOS device users.
  • Increased lockdown of content in the future (probably).
    Apple already prevents some iBooks customers from reading books they bought and paid, using extra DRM affecting some jailbroken devices. Even though jailbreaking is explicitly legal in the United States. And even though carrier unlock and SIM-free phones are not available in the U.S.

More HTML5 apps?

The upside? Device-independent HTML5 apps may see wider adoption. HTML5 mobile apps work well on iOS, on other mobile platforms, and on laptops and desktops.

For ebooks, HTML5 means Ibis Reader and Book.ish. For publishers looking to break free of Apple, yet satisfy customers, Ibis Reader may be a particularly good choice: this year they are focusing on licensing Ibis Reader, as Liza Daly’s Threepress announced in a savvy and well-timed post, anticipating Apple’s announcement. Having been a beta tester of Ibis Reader, I can recommend it!

If you know of other HTML5 ebook apps, please leave them in the comments.

  1. “Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”

    - Steve Jobs at “Apple Launches Subscriptions on the App Store“ []

  2. Booksellers call this “the agency model“. []
  3. Apple has confirmed that Kindle’s “Shop in Kindle Store” must be removed. []

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Posted in books and reading, future of publishing, information ecosystem, iOS: iPad, iPhone, etc. | Comments (0)