Apple Trying To Run All Content Sales Through Its Own Sales System

from the that-might-not-go-over-so-well dept

Tue, Feb 1st 2011 4:05pm — Mike Masnick

Apple continues to make the iPhone/iPad app platform as obsessively controlled as possible. The latest are reports that Apple is starting to block other apps that sell content within their apps -- i.e., no more Kindle purchases on your iPad. The story is that Apple now wants all such purchases to go through Apple's cash register, so it gets a cut. Of course, that just seems like another opportunity for folks to seek out alternative solutions, such as via web apps, which Apple can't block. This seems like the sort of move that could backfire on Apple. It's no secret that the company likes to control such things, and to force everything through its own gateway and payment systems (where it gets to take a cut), but if it keeps doing things like that it's going to piss off an awful lot of potentially useful partners.

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Filed Under: apps, content, ipad, iphone, itunes, point of sales
Companies: apple

36 Comments

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Anonymous Coward, 1 Feb 2011 @ 4:11pm

Pissing off potentially useful partners
I wonder if Apple figures that its closed-system strategy has already pissed off all the people that it's going to, so everything from this point forward is pure profit. Like how Al Capone wasn't worried about law enforcement agencies getting pissed off about his latest round of bootlegging (not a great comparison, I know).
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rooben (profile), 1 Feb 2011 @ 4:26pm

Kindle doesn't do in-app purchases
There is no Kindle in-app purchasing on iOS, it is via Safari.
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umb231 (profile), 1 Feb 2011 @ 4:27pm

I'm wondering if they can get around this by having people buy content outside (for a PC reader), and then claiming they get a "free" copy for the apple app... but I'm assuming apple wouldn't fall for that that easily.
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rooben (profile), 1 Feb 2011 @ 4:32pm

Re: Kindle doesn't do in-app purchases
Read the article.
CNET is saying not just In-App purchases, but any purchase that can be downloaded on the device (so that could be books, VOD, who knows)
Now, THAT would really suck - so this would bring us back to 2003 where I could buy an app for my Treo, but then had to download it to my PC and sync it.
That kinda thing would make me want to look for another tablet (i love my iPad).
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Chris, 1 Feb 2011 @ 4:33pm

Apple content controls
All this because they blocked the Sony ereader app, there not going block kindle or anyone else. Apple stopped the Sony app because you could by content directly from it, kindle, nook and barnes n noble apps all direct you to there websites in safari for purchases. The apps there self only sync purchases with the iOS device. How many consumers do think care about Sonys terrible e-reader anyway.
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Anonymous Coward, 1 Feb 2011 @ 4:34pm

eh, shouldn't buy that DRM stuff anyway... right? right?

so... DRM bad, choice good... everyone in this situation is bad then?
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Chris Meadows (profile), 1 Feb 2011 @ 4:45pm

Technically, it's not that they want all content to be sold through in-app purchases. It's just that they want in-app purchases to be available if out-of-app purchases are. And in-app purchases would pay 30% to them.
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Anonymous Coward, 1 Feb 2011 @ 4:49pm

Is it any surprise that Andriod phones now outsell them like 2-1?
Well at least they have their intellectual snobbery to keep them warm at night. LOL
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Anonymous Coward, 1 Feb 2011 @ 4:53pm

And I am the monopoly ??
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Bas Grasmayer (profile), 1 Feb 2011 @ 5:03pm

I'm pretty sure this will have consequences for Apple in the EU.
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Jim D (profile), 1 Feb 2011 @ 5:15pm

Re: Kindle doesn't do in-app purchases
Yes, that's the point: Apple is saying that apps with content that can be purchased outside of the app itself, for use within the app, must also offer them for sale from within the application as well or risk banishment from the app store.
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Anonymous Coward, 1 Feb 2011 @ 5:48pm

Control of market
Why haven't anyone file antitrust lawsuit against them now? I'd think this is a severe manipulation of market (by forcing everyone to trade in their app store) using rules bonded on the device.
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Jeffrey, 1 Feb 2011 @ 6:18pm

Is it no surprise?
I am glad to be a PC user. :3

This is why I will never touch Apple products. Too locked down, and they treat their customers like idiots.
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AdamR (profile), 1 Feb 2011 @ 6:26pm

Re:
"Is it any surprise that Android phones now outsell them like 2-1?"

The only reason why Android based phones is out selling the iPhones is Apple decided long ago to sign exclusive deals with one carrier per region. In the US it's AT&T while Androids are available from AT&T, Verizon, T Mobile, Sprint, etc. Now that Verizon is getting the iPhone Android lead will shrink.
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Mark, 1 Feb 2011 @ 6:40pm

Build in the "Apple tax"?
As Jim D mentions, it appears that Apple will require that content sold *outside* of the App/AppStore also be available via the AppStore. I'm waiting to see if anyone has found language (or if Apple alters the language in the near future) in the AppStore TOS to prevent content sellers from making outside content available with a ~43% markup (to make the same amount of money after the 30% cut Apple takes). This, paired with a note that the price reflects Apple's AppStore requirement/cut of profits and it's available cheaper elsewhere would likely rally significant support against Apple.

x - x*.30 = 10 = x(.7)
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Nick Coghlan (profile), 1 Feb 2011 @ 6:42pm

Re: Control of market
Because antitrust laws are based on how you define the market. Yes, Apple are control freaks, but they don't dominate any reasonably defined market sufficiently to be realistically vulnerable to antitrust complaints.

If people don't like Apple's controlling nature, they can opt for friendlier ecosystems like Android or pure web apps.
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MicroSourcing, 1 Feb 2011 @ 7:19pm

That's one thing consumers need to keep in mind when buying Apple products: they want market control, and everything related to the product will have to be bought from Apple stores, which don't sell them cheap, by the way.
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Dohn Joe, 1 Feb 2011 @ 7:49pm

Here We Go Again...
Pissing off partners is what killed them the first time around!
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Frawgie, 1 Feb 2011 @ 9:27pm

Re: Control of market
Why file a lawsuit at all. They will hang themselves with their own greed-soaked ropes in due time.

Besides, there are other choices, just don't buy an i-device. get a droid, get a droid tablet, buy a nook or even a kindle.

As much as I would like to have an iPad, I just can't bring myself to put out the money for it. I would likely get more use out of the droid tablet and a droid (angry birds!)than I ever would out of the iPad or an iphone.
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Frawgie, 1 Feb 2011 @ 9:29pm

Re: Is it no surprise?
apparently you have not been on the other side of the phone in a tech support phone call :)

One of my favorite sayings and I don't know where it came from:

Even if you are average intelligence, half the of the people are below you.

But I agree on the Apple being locked down :)
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Anonymous Coward, 1 Feb 2011 @ 10:04pm

Forbiden fruit
After all God did tell Adam and Eve to not eat the apple. Are you a believer now?
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DazzaJ, 1 Feb 2011 @ 11:34pm

Yet another deal breaker
And apple still wonder why they can't get into real businesses and enterprises. There are far better alternatives than apple.
The smart money will be on Android and its OPEN structure.
The apple tax strikes again.
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Alphageek (profile), 2 Feb 2011 @ 12:10am

Not enough data yet...
It's a fuzzy situation with the comments from both SONY and Apple leaving lots of room for semantic interpretation. So until both of them come clean with a detailed picture of what's going on rather than quoting ambiguous statements in press releases we still don't know exactly what the situation is.

But a few points worth reviewing here:

@Anonymous Coward: re: "Why haven't anyone file antitrust lawsuit against them now? I'd think this is a severe manipulation of market (by forcing everyone to trade in their app store) using rules bonded on the device."

Because, despite the mindshare of the iPhone, it hold a trivially small proportion of the overall mobile phone market, and only a respectable part of the smartphone market ref. http://www.asymco.com/2011/02/01/the-iphone-share-17-25-of-smartphones-4-2-all-phones/

Antitrust is used when a company (or consortium) abuses it's dominant or monopolistic position to force others out of the market. In no stretch of the imagination could Apple be considered in a dominant position by our current standards of defining markets. Even if you are defining the market in terms of eReading devices Amazon tells us that they've sold millions of Kindles, plus all of the other competing devices, including Android devices.

Then there's the question of gatekeeping or curating a marketplace. Right now you can't buy iBooks, Barnes and Noble, Fictionwise, etc. on a Kindle. An outright ban could be considered even more prejudicial and closed than asking for a cut. Likewise you can't buy Kindle books on your SONY and so on.

Noting of course that there are a pile of other products where the manufacturer acts as the gatekeeper and takes a cut of everything offered for their platform. Think xBox, PS3, Wii, all of whom require that developers go through their sales and distribution channels.

The other side issue about the openness or lack thereof of a platform which is of particular interest to the very small segment of the population that reads Engadget, Techdirt, Slashdot etc. It's a philosophical issue. The overwhelming majority of the population (the "normals") just want something that works, is attractive, easy to use and obvious to discover, is reliable, has good after sales service etc. These are the important factors, not whether the underlying technology ascribes to some kind of openness.

And at the end of the day, it's just business - everyone's in the game trying to monetize as much of their product chain as they can. Witness all of the posturing last year with Amazon and the publishers where everyone tries to take home as much of the pie as they can get their hands on.

Is this particular case a _good_ business decision? I personally don't think so (at least not at the current rates), but from a "normal" user perspective, in app purchase is about as friction-free as it gets where the current Kindle style jump out to the web and purchase and then back to the app is kludgey and strange.

@ Anonymous Coward 2 "eh, shouldn't buy that DRM stuff anyway... right? right?"

That's where we should all be complaining. Which is why I buy all of my eBooks via Amazon and Kobo, strip the DRM and put them all into Calibre for reading in Stanza. This current morass of incompatible formats and platform/store/device specific DRM is a royal PITA. Shout out to Baen Books for selling in multiple formats and without DRM.
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techflaws.org (profile), 2 Feb 2011 @ 1:44am

Sony's response just cracking me up
�It�s the opposite of what we wanted to bring to the market,� Mr. Haber said. �We always wanted to bring the content to as many devices as possible, not one device to one store."

That one coming from Sony! You just can't make up stuff like this.
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Anonymous Coward, 2 Feb 2011 @ 4:30am

Re: Is it no surprise?
my mac runs BSD and i've been using ported linux as well as newly crafted open source programs on OSX since 1.0 (which sucked, a lot, btw. 1.1 was at least stable...)

iPhone =\= all of Apple
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Chronno S. Trigger (profile), 2 Feb 2011 @ 5:23am

Re: Re:
We get to see if that argument, that I've heard a thousand times now, comes true on the 10th. Even if it does, I don't think it will cut Android sales. For the past few months iPhone sales have been steady while Android has been rising and Rim has been falling. If any sales are going to fall further, it's Rim's.
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ethorad (profile), 2 Feb 2011 @ 5:25am

Re: Pissing off potentially useful partners
Another comparison is eBay. They tried to force everyone to use their own inhouse payment system a few years back, and that didn't go down too well ...
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Anonymous Coward, 2 Feb 2011 @ 7:04am

To compare the iPhone to Android is bogus, because Android is a platform sold on many phones, while the iPhone all goes to Apple.

Personally, I have an Android.
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Hephaestus (profile), 2 Feb 2011 @ 7:19am

Re: Re: Is it no surprise?
"apparently you have not been on the other side of the phone in a tech support phone call "

A Guy calls up tech support ... can't get his computer to work. The tech support guy says now move the mouse around. The guy answers I don't see a mouse, and whats foot pedal for?
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Hephaestus (profile), 2 Feb 2011 @ 7:20am

Re: Here We Go Again...
History always repeats itself.
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Chris Rhodes (profile), 2 Feb 2011 @ 7:27am

Re: Re:
I think there will be a spike in iPhone sales as people who wanted an iPhone but really like Verizon will snap them up, but overall, I'd expect most sales to take the form of a steady leeching of customers to Verizon from AT&T as peoples' current contracts expire (while this represents a temporary increase in phone sales, it isn't an increase of the customer base, just a shift).

Meanwhile, Android will keep selling huge numbers of devices from multiple manufacturers on every network out there. They aren't going to slow down at all.
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leichter (profile), 2 Feb 2011 @ 9:00am

Is it legitimate for Apple to do something like this? There's plenty of precedent. Apple views their store as ... like a store. Try going into a Walmart, setting up a booth, and selling books or CD's or whatever. You want to sell at Walmart? You use their system: You deliver stuff wholesale, they get it out to consumers. Start an auction on Ebay, then make side deals with people to sell stuff without Ebay getting its cut, and they'll close your account (and perhaps go after you if for what you owed) if they find out. A real estate agent gets paid even if you find a customer yourself. (I bought my first house based on a newspaper ad. The seller was pissed that he had to pay the broker, who had absolutely nothing to do with the sale, his 3% - but the contract with the broker required it and is quite enforceable.) In a way, Apple is being more open here than Walmart would be: It's as if Walmart said "sure, set up your booth - but you also have to let us sell your books/CD's at the same time."

Is it a good idea for Apple to do this? We'll see. Sony and Amazon and Barnes and Noble are certainly pissed about it, but realistically, if you're an Apple customer, this is unlikely to hurt you - and in fact it probably makes it more convenient for you. (The only way you as a consumer get hurt is if Sony and Amazon and B&N decide to drop their apps entirely. That seems unlikely - Apple didn't make this move until it was offering a market so large that they would find it difficult to walk away. But Amazon in particular is no pushover - they'll certainly bargain hard. We have certainly not heard the last word on how this will actually work.)

��-- Jerry
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Robert P (profile), 2 Feb 2011 @ 10:05am

Re: Re:
That's part of it, the other part is that iPhones are sold by one company where android is just a platform and is sold by lots of different manufacturers. A real comparison would be do to something like comparing iPhone sales to a Motorola Droid or Samsung Epic or HTC EVO. It's a no brainer than android platform would be outselling iPhones.
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Christopher (profile), 2 Feb 2011 @ 3:58pm

Re: Apple content controls
It shouldn't matter whether you can buy content directly from the app or not, that should be left up to the customer whether they want to do that or not, it should NOT be via an edict from Apple.
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Jakomi Mathews, 2 Feb 2011 @ 8:50pm

Why Apple Will FAIL
We all know Apple with Steve 'Dictator' Jobs at the helm are control freaks. We also know that history has proven open systems ALWAYS win over closed ecosystems. The irony being the CEO who should realise this Steve Jobs - is they same CEO at the helm who already lost the battle once. Obviously Steve is an ignorant leaner...

Checkout an interesting analysis on this topic here: http://www.themusicvoid.com/2011/02/why-apple-will-fail-unless-it-changes-course/
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tina pierce, 5 Feb 2011 @ 6:36pm

Apple is already dead.
We have already reached the point where the only people buying Apple products are "insane fanatics", "fashion queens", and "tech retards".

And that's fine with me, I can now tell if someone is worth communicating with just by looking at their hand.

For that I am thankfull Apple exists.
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