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Sunday, February 20, 2011

Apple wants more

Article from the BBC

This is just ridiculous.  Again, I am sure you have all heard about Apple's new subscription policy for apps on their ios devices.  They want to require any subscription-type content providers to put in subscription buttons right in their app, and it must be at or below the price offered by the provider elsewhere (ie their website).  That doesn't sound bad at all, right?  Convenient, even.  Except that Apple wants a cut of the subscription.  A whopping (and I mean WHOPPING) 30% of the subscription price.  I have seen countless articles about this, but I chose that article in particular because it goes into Apple's long run (evil?) intentions about controlling all digital media exchange that they can get their money-grubbing ihands onto.  And yes, when a company tries to charge 30% in this way, they deserve to be name called.

But that's not the big problem.  The problem is that, despite Apple's insistence to the contrary, this is an incredibly money-losing situation for lots of developers.  If you don't know how commerce works, a company that wants to sell something must first buy the thing they want to sell.  Whether its parts or wholesale food or paying reporters and journalists, they have to spend money.  Then they resell or sell a completed product for only a tiny margin more than they spent.  Figures like 6% or 9% more than they spent are generous.  It doesn't seem like much, but it is necessary to stay competitive, and those small margins over a lot of units comes to a hansom profit.  But Apple wants to take 30% of the revenue, which is of course several times more money than the company actually makes.  The example used in the article above cites Spotify as saying that as much as they would love a more convenient subscription service, they will be losing money on every subscription they sell through the app, and will of course pull out if their profits begin to fall.  Where will they go?

Android.  Google recently announced a very similar subscription service for Android apps, the main difference being that they only charge 10%.  This is still very high, but not nearly at the ridiculous prices Apple thinks they can get away with.  It is also reported to be much more publisher friendly.  Is Apple killing their own monopoly (which isn't even a monopoly, it only seems that way)?  Android already has a lead in smartphones, but Apple has a genuine monopoly on tablets.  Are they willing to push publishers of premium content (and therefore customers) away from their own product?

If it turns out to be so, then at least it wont be Apple's first epic failure...

8 comments:

  1. Well the AAPL stock (Apple's stock) has recently dropped quite a bit. It will probably turn around though. Nice blog. Following.

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  2. Apple simply do not deserve to take 30 per cent of subscription fees. That makes them little better than book publishers.

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  3. As an up an coming developer for Apple products this makes me want to abandon them altogether and move to android products.

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  4. Apple will get out of it IMO. A lot of people know nothing else but apple.

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  5. this is what I mean when I say steve jobs has done little good in his life. All he has done is created an evil corporate machine.

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  6. business is so ugly. quite depressing when the best thing about these smartphones is the ability for anyone with a skill to be able to sell there apps and they're trying to destroy "mom and pop" developers.

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