Steve Jobs muddies Apple subscription waters further with ‘clarification’

As a customer, I am very wary about this change and I share the ‘bait and switch’ concern. First of all, not all iBooks content is availabel to me due to my country, so I will be very affronted if they pull apps I *can* use to try and promote the iBookstore, which I can’t. And while I can live without Netflix on the iPad (I can use my TV for that) I cannot live without Zinio—the experience reading it on the iPad versus the PC is not even comparable. If they force Zinio into this ridiculous scheme of theirs, they will not get a single extra cent for it from people like me because if I cannot read it on the iPad, I won’t read it at all—I’ll cancel my Zinio subscriptions instead.

In fact, I have two Zinio magazines I subscribe to which are up for renewal and I am not renewing them until I see how this shakes down. Zinio has already lost real money over this, from me, anyway…

How did Steve Jobs’ e-mail muddying things up? I thought it was exceptionally clear. This is especially tru ewith respect to Readability.

Readability became a publisher of sort when it decided to become an aggregator of published media, posts, columns, articles and it sells them as a subscription. If instapaper, Evernote, or anyone else tries to become active participants in distribution of content, their apps will be coming publishing apps. Dropbox can eventually enter in their service as well and the Dropbox app will too become a publishing app.

And yes, if Twitter or Facebook starts to charge for tweets/posts/articles, they’ll need to fork over 30% of their subscription revenues and it would be a pretty good biz for them and gladly give Apple its cut because they’re not even doing it now. As a matter of fact, all the above mentioned companies with apps should maybe think about getting into this business because it’s a revenue stream they currently do not have.

And there will not be any antitrust issues beyond preliminary probes – Readability needs to get a lawyer and he or she will tell them they’ve got no case. Basically, Readability tried to game the system and failed.

Bottomline: Publishers aren’t complaining about the 30% cut. Bloggers are. What publishers are not happy about is the opt-in part about subscribers sharing personal information so they can sell that information and spam their subscribers. Readability came up with a biz plan that doesn’t not work within the framework and going public in this manner is their last resort.

What’s not clear is what this means for Netflix, Hulu, and other music subscriptions. But I hope they are exempted. I’m sure Best Buy, Amazon, and the few other smart service providers who aren’t going around trying to trash Apple in public are trying to work things out with Apple.

An excellent post Paul.

This blog is an excellent summary of what is really involved:
http://www.roughlydrafted.com/2011/02/15/does-apple-deserve-a-30-cut-of-itunes-in-app-subscriptions/

That is if anyone really wants to do anything more than trash Apple as a personal hobby.

I never believed that Apple would be okay without getting a cut of business that transacts on the iPad (especially Kindle book sales), so I’ve just been waiting for this shoe to drop. I think this should have been expected.

My main issue with this Apple news is their ‘same price’ requirement. I feel they lose all consideration of being reasonable business partners (and possibly *legal* business partners, but IANAL) once they tell me what I’m allowed to charge for my product outside of their walls.

To follow the mall analogy that’s been out there: I’m fine with paying rent in the ‘Apple Mall’. I’m not fine with them telling me what I’m allowed to charge for my products outside of that mall. Anyone who does so is an Apple apologist, which is also quite a popular hobby as well, ;).

Also confusing is where to draw the line on what is ‘content’ and what is ‘SaaS’. As more and more products and services are ‘born digital’, that’s going to get much less clear. Even if Apple decides to not go after companies who get big SaaS dollars like Salesforce and Bloomberg right away (or smaller SaaS providers like Dropbox and Evernote), I’m quite sure they’ll be next as the $$$ there is huge. I’m guessing Salesforce and Bloomberg, among others, are building up their ‘HTML5 Web App’ divisions quickly.

I weep for Apple. Things have been going so well in so many ways, but they keep botching up matters with their app store. First, there were erratic exclusions like fart apps, which generally led to Apple backing down and allowing the app through after all the embarrassment had played out. They seemed to have learned little.

Now there’s this much more serious mess. They’ve blocked Readability, which is an adaptation of Instapaper, one of the most popular productivity apps on the planet. And if that wasn’t bad enough, their policies, whatever they actually are, seem to pose a threat to other blockbuster apps like NetFlix, Amazon’s Kindle apps and perhaps DropBox. It’s almost enough to make me wonder if Droid agents have secretly taken over key positions in Apple’s management.

Apple seems to be using a classic technique of warfare, corporate or military, FUD, but using it backwards. Instead of turning Fear, Uncertainty and Doubt on their opponents, they’re turning FUD on their friends. That makes no sense. When it comes to software APIs, I’ve been told that Apple gives developers clear directions years in advance when one is becoming obsolete and needs to be taken out of applications. But when it comes to app approval policies, Apple is fickle, constantly changing, and utterly unpredictable. Even after several days of fussing over this issue we still don’t know what Apple will and will not do in the future.

Good policy makers, like good tech writers, always define success by whether their audience understands what they’re saying. It’s been clear for several years that app developers and users don’t understand what Apple is saying about its app acceptance policies. That’s the root cause of all this fuss. And the fault is Apple’s and not theirs. If Apple has a clear policy and not just “let’s see what we can get away with,” then they need to make it public.

The closest I can come to making sense of moves like rejecting Readability, other than sheer greed, is that the consistency hobgoblin has taken over the app approval process. They obviously want to keep a 30% slice of the lucrative glossy magazine circulation to themselves. I don’t fault them for that and I’ve even pointed out that it’s probably a good deal for the publishers, since it gets rid of printing and mailing costs. Also, Apple’s 30% slice can easily be justified. It really is spending a lot of money creating a system these publishers can use.

But apparently for consistency sake, they’ve gone far beyond that. They’ve begun imposing the same rules on all publishing apps that involve some payment scheme, including Readability, which isn’t rolling in the money and is virtually (if not literally) a charitable organization. And worst of all, Apple offers no benefit to Readability users. It simply wants to claim 30% off the top. That doesn’t go over well.

When I was a little kid, I had trouble understanding the adage, “Consistency is the hobgoblin of little minds.” But after experiences like this one, I think I understand what it means. Some people cope with their fears of complexity by treating things that are different as if they were the same. Being consistent settles their minds. They don’t have to cope with the differences and the terrible necessity of making choices.

But an obsession with consistency isn’t going to solve Apple’s problems. Apple wants a walled garden midway between the Droid’s almost total lack of controls and the Amazon’s just-for-what-we-sell Kindle. That’s fine and it’s an approach I like. There’s plenty of room in the market between the total control and no control.

But Apple, one of the most lucrative corporations on the planet, is behaving like its consistency principle is driven solely by a desire to maximize profits. “I want to own the lucrative magazine market,” Apple is saying, “therefore I must reject Readability even though it’s unlikely to ever earn me a penny.”

That’s makes no sense. Apple should go after the lucrative magazine market by creating the best system imaginable and without using its app approval process to get any undue advantage over competitors in that particular market.

Apple needs set aside its obsessions with consistence and control and leave the great majority of what happens on iDevices to developers and users. Reject applications for being buggy, excessively ugly, or for having security holes. Users will love Apple for that. But leave the rest alone. Don’t try to winnow them with policies that either make no sense or that reveal Apple as greedy and grasping.

So either I’m an Apple fanboi, or I “trash Apple as a personal hobby.”

I wish our readers would make up their minds!

Apple is a secretive company so it is rather unclear if this is an opening gambit or a policy set in stone. Be very afraid though if the digital content offered is in direct competition with Apple itself, in music, ebooks etc.

Unpacking the logic in ebooks might go something like this. The main reason iBooks is such an underachiever is its lack of content. A large part of this is the absence of Random House. That publisher will never be enticed while iBook sales are pitiful. They will remain pitiful in the absense of Random House.

It’s Catch-22. With superior ebook stores offered on your own device you’re on your way to nowhere. To get any traction these need to be hobbled, or better yet be gone. Predict they will all be before too long.

From a business point of view it makes sense. We have already seen in the ereader wars how those who control device plus platform are in the ascendancy against the hardware only manufacturers. Very likely the same will happen in tablets.

Both Sony and Amazon are working on tablets and we can be pretty sure they will be locked down. ‘Open’ tablets will be available but will likely prove rather more expensive than the walled garden offerings since those could use content to subsidize the hardware.

This is all about iTunes and iBooks. They want to protect iTunes from rival music and video services (most notably streaming services) and they want to give iBooks a beachhead to help it become relevant.

I suspect iBooks is the bigger concern because the Kindle app is very, very popular. My guess is that Apple is looking forward to future where iOS depends on Amazon’s good graces. They’d rather establish iBooks as a viable alternative and be independent of Amazon (and everyone else). In my opinion, all the other apps we hear about are just getting caught in the crossfire – the way a lot of application frameworks got caught in the crossfire when Apple was fighting against Flash.

“Apple is a secretive company so it is rather unclear if this is an opening gambit or a policy set in stone. Be very afraid …”

Yes. Apple have a terrible track record of failure …

@ Howard

Perhaps I was obscure, english is not my home language. If you are a company offering music or ebooks through Apple then you should be afraid. Especially if you are more successful than Apple itself, as the Kindle app might well be.

Unlike others I don’t blame Apple for wanting to restrict rivals, it’s just sensible business practise and nothing personal. It is their platform after all and no one is forced to buy Apple products. After all both Amazon and B&N are – and will be – more restrictive and walled. Unfortunately some customers will not see it that way.

gous – I take your point now, and it is well made thanks you.

The truth is that the Publishers who are making the most noise are those who have demonstrated the most incompetence in developing their own business models as we enter the digital age. Apple has been pretty clear all along how it runs it’s licensing, and although there is claimed confusion I believe that the real issue here is the speed of development of these business models. Apple is no different to others in that it is in the middle of this fast changing environment.
It makes no sense to throw hands in the air and scream melodramatic warnings and attacking Apple. Each passing month brings further developments and I am certain that high level talks are taking place between all the parties.
As you say other devices are no different. Does the Kindle allow purchasing through iTunes ? B&N ? others ? Does Sony allow others to sell though it’s many devices ? There is a lot of nonsense written about Apple because Apple is the most successful and most innovative company on the planet right now.

To quote from the blog I recommend above:
“. . when Apple sells a subscription within iTunes (or within the app), Apple must also service the subscription, managing the delivery of new content and acting as a toll booth. So rather than acting as a virtual retail newsstand, Apple is acting more like FedEx, charging for each delivery, whether it’s a one time purchase of “War and Peace” or a regular delivery of “Readers Digest” or the beer of the month club.”

You say to be afraid. I say be patient. This will all sort itself out over the coming months. I also think that Jobs absence right now is not helping the situation.

“The closest I can come to making sense of moves like rejecting Readability, other than sheer greed, is that the consistency hobgoblin has taken over the app approval process. ”

This does seem to be what’s happening–that is, Apple has a very specific target in mind with this action, but they don’t want to come right out and say “yeah, Developer XYZ is pissing us off”, because then they’d get sued. So everyone loses.