iFlow reader another casualty thanks to the Agency 5 and Apple

[RainingLemur]

From the article:
"Sadly, the America that we thought we were working in turned out to be a totalitarian regime and the dictator decided that he wanted all of what we had."

[tompe]

Originally Posted by egarbacz

Tom, in the new model iFlow had to sell for $20 and they received $6 from the publisher, then Apple required 30% of the retail price, which is $6, so they made nothing. The issue is less with the publishers and more with Apple, they recently added the 30% cut of any sale, even books purchased from the iFlow website.

Really. So the publisher gets 70%? I thought that Apples cut was on the sum that was payed by the customer and that the publisher than maybe got 40%.

But even in the non-agency model according to your interpretation Apple will take $4.50 from the $5 so they earn only $0.5. So why does the agency model matter? I really do not think your interpretation is correct.

[DMB]

The link in the OP tells you how to hang on to your books.

[egarbacz]

This is the quote from the article:

Apple changed the rules and put us out of business. They now want 30% of the sale price of any books, which they know full well, is all of our profits and more. What sounds like a reasonable demand when packaged by Apple's extraordinary public relations department is essentially an eviction notice to all ebook sellers on iOS.

This information is consistent with speculation on other threads here and other blogs. Apple wants 30% of the sale price of books, since the pubs only give a 30% cut to the retailers it is impossible for anyone other than Apple to make a profit selling ebooks for iOS devices.

[Andrew H.]

Originally Posted by tompe

But even in the non-agency model according to your interpretation Apple will take $4.50 from the $5 so they earn only $0.5. So why does the agency model matter? I really do not think your interpretation is correct.

This is a good point. Apple taking 30% of the sales price - agency or non-agency - is going to be a big blow to any business, and may well have doomed them, regardless.

But it's not clear that this would be the case. In the agency model, the publisher keeps 70%, Apple keeps 30%, and there is 0% left over for iFlow.

In the wholesale model, the publisher gets 50%, Apple gets 30%, and there is, theoretically, 20% left over for iFlow. In the case of hardbacks, especially if you are competing with Amazon, you may have to discount to move the books, in which case the 20% would likely not be enough. But in the case of paperbacks, which are not discounted as much, this might give enough room to survive. I.e., they pay $4 for an $8 paperback; Apple gets $2.40 and they keep $1.60. That leaves 20%, which is decent, when you keep in mind that Amazon - which is doing well for a bookseller - has a profit margin of less than 5%. (Obviously the 20% is revenue, not profit, but even if they spent 75% of the revenue on costs, they'd still make 5% profit, or 40c per book).

And since revenues are almost entirely fixed (Apple picks up the credit card transaction fees, for example), this is a reasonable business model if they can do enough volume.

[RockdaMan]

Originally Posted by Ron.

microsoft should demand 30% of all itunes sales :P

http://en.wikipedia.org/wiki/United_States_v._Microsoft

[rdfry]

yup the Amazon and B&N apps will be removed at the end of the month also. Good luck to all you Apple lovers.

[kacir]

I think it is perfectly OK from Apple to ask for 30% of anything you sell through them.
What is not OK, is to force you to sell through their store if you have an app.
What is a downright GANGSTERous move is changing rules dramatically after your "business partners" invested heavily in your platform.

When I watched the presentation that Steve Jobs gave when introducing iPad2, I was deeply disturbed when he was bragging how many users with CreditCards were registered in his app and iTunes stores and how big an asset those CC wielding users were.

I am *not*going to become one of those users.

[wallcraft]

Originally Posted by rdfry

yup the Amazon and B&N apps will be removed at the end of the month also.

There have been reports that they will simply remove access to their stores from the apps. You will still be able to buy from the device via the web, but the app won't take you there. This would not work for iFlow, because their store was effectively iDevice only.

[fjtorres]

Originally Posted by wallcraft

There have been reports that they will simply remove access to their stores from the apps. You will still be able to buy from the device via the web, but the app won't take you there. This would not work for iFlow, because their store was effectively iDevice only.

Amazon and B&N have enough visibility and mindshare their sales won't suffer by relying on web-based sales to serve their iOS customers. Other ebookstores, though...

A big loser in all this is Adobe since the generic ebookstores that are the most exposed to foreclosure are all based on ADEPT epub. Considering Apple and Adobe are already at odds over other issues Adobe can't be happy to see their "standard" undercut like this.

[tubemonkey]

Originally Posted by kacir

I am *not*going to become one of those users.

I'm a big user of iTunes (apps, podcasts, radio) and I don't have a credit card on file.

Steve gives me everything I need for free

[CWatkinsNash]

Originally Posted by tubemonkey

I'm a big user of iTunes (apps, podcasts, radio) and I don't have a credit card on file.

Steve gives me everything I need for free

I was just getting ready to post the same thing. When I do buy something from iTunes (very rare) I get a giftcard from elsewhere. I just use it for my music and some video though because my only iThing is an iPod Classic.

[toddos]

Originally Posted by fjtorres

Amazon and B&N have enough visibility and mindshare their sales won't suffer by relying on web-based sales to serve their iOS customers. Other ebookstores, though...

A big loser in all this is Adobe since the generic ebookstores that are the most exposed to foreclosure are all based on ADEPT epub. Considering Apple and Adobe are already at odds over other issues Adobe can't be happy to see their "standard" undercut like this.

Other readers (Bluefire) have gotten around this by not selling books in-app but redirecting to web sites for sales (Bluefire uses affiliate codes with third-party bookstores). iFlow's business model was probably not the best idea in the first place, implementing their own book store. They would've been better off going the same route as Bluefire, implementing ADEPT and affiliating themselves with multiple book sellers. That way they're not selling books in-app and thus don't run afoul of Apple's 30% royalty requirement.

I mentioned in a thread on the Apple forum here, but while I was never a fan of iFlow's reader, it seems like they gave up on this too easily. There are plenty of other options, like the previously-mentioned web-based bookstore idea, removing in-app book purchasing, adding ads, going premium for the app, porting to other platforms, etc. I'm sad to see them go as every ereader loss weakens the ecosystem, but at the same time I'm glad I was never a customer of theirs if they give up this easily.

[RockdaMan]

Originally Posted by toddos

it seems like they gave up on this too easily.

[=X=]

Originally Posted by tubemonkey

I'm a big user of iTunes (apps, podcasts, radio) and I don't have a credit card on file.

Steve gives me everything I need for free

How do you setup your iPod w/o requiring a credit card?