[RockdaMan]

Apple's move exposes a long-flawed business model at most media companies, one that Apple has clearly decided will not be its burden.

>snip<

When the iPad was first announced, media firms hoped it would provide a new vehicle for which they could charge users realistic fees -- basically relying on Apple to give them a platform where they could avoid their old mistakes. Book retailers thought they could get a free ride on iOS devices to build their sales base; the same goes for streaming media providers. Why they all thought Apple wouldn't change for that privilege escapes me.

Still, it's true that Apple is overreaching. A one-size-fits-all pricing policy of 30 percent for any digital content ignores the reality on the ground. The economics of different media segments vary. Charging developers 30 percent of an app's price was reasonable -- it costs far more to establish a presence in a retail store. The music and video industries swallowed Apple's charge because their retail sales were declining (and they pay more to retailers than Apple wanted) in favor of unpaid pirate downloads -- but they did persuade Apple to raise its initial prices, so both they and Apple netted more per sale.

>snip<

For sales of a single-copy book, magazine issue, video rental, and the like, a 30 percent commission is probably fair. A book publisher gives a retail bookstore 50 percent or so for a physical book, after all, as do magazine publishers for their newsstand sales.

You can argue it both ways on magazine and newspaper subscriptions. Thirty percent is a huge portion relative to the usual new-subscriber bounties, and it's a much higher rate than what the printing and mailing typically costs (10 to 20 percent, based on audience size) for a print subscription. Plus, the digital production is not cheap -- it's costlier than print design and layout because of all the custom coding required -- and Apple's model doesn't account for that.

On the other hand, smaller publishers in particular face daunting costs to attract and service readers, so the Apple model likely skews in their favor -- just as the app store model favors small developers over large ones. And for publishers of all sizes, the iPad represents its best hope for new revenue.

>snip<

let's not forget Google's very media-unfriendly moves, such as its trying to corner the market on old books and its scraping of others' content in search results. There are two devils for media firms to dance with, not just Apple.

http://www.pcworld.com/article/22018..._the_cart.html