Kobo's sticking it to to Apple.

[Fbone]

This HTML5 doesn't sound very secure. Will this be another virus entry point?

[Kolenka]

Originally Posted by Harmon

I tend to agree with MP that Apple's behavior points toward their not really caring about ebooks. And I suspect that Apple is correctly reading their market.

<snip>

So I suspect that it really doesn't make much difference to Apple, nor probably to Amazon or Kobo or anyone else, if the customer has to go to an internet browser to purchase ebooks.

Well, the real problem is that Apple is caught between two of it's own philosophies here. On one side, they want the accounting to be simple and fair. Everyone who plays on the store is subject to the same cut. On the other, they don't want to encourage loopholes in their policies.

Apple takes 30% of app sales. Free apps are not subject to this (30% of 0 is 0). However, how about that app that is free but uses micro transactions or ads to profit? Should Apple be denied a cut for hosting the app just because the developer wants to profit differently? So take a cut from the in-app purchases, and provide iAds to encourage devs by giving them a bigger cut of the ad revenue.

Now, how about the app that is free, but uses an in-app purchase to go from a trial-like mode to a full version? How do I block them from bypassing the normal 30% cut? Make the in-app purchases 30% as well.

In the end you can follow this down to the more unreasonable conclusion that all sales of any digital content through the app itself are subject to the 30% cut. Even if I'm trying to create a "fair" ecosystem, I can easily wind up with a system that is unfair to a group of developers on the platform.

And for those people saying HTML5 is a double-edged sword... you have to remember Apple itself said that web apps were the "SDK" for the first iPhone. I can't imagine that they really care a ton about the HTML5 stuff as long as the app store keeps operating break even or better. Really, I think this is more of a case of trying to take "fairness" and "simplicity" to an unreasonable extreme. Sure as a developer I can remember Apple's rules for revenue sharing off the top of my head, but digital content middlemen such as Kobo/Sony/Amazon/etc are the ones feeling the squeeze. Publishers themselves aren't, app developers aren't. But that's possibly a problem all on its own, as middlemen happen to help standardize industries a little bit for us sometimes, like with eBooks.

Originally Posted by Fbone

This HTML5 doesn't sound very secure. Will this be another virus entry point?

No more than browsers are already. HTML5 builds on existing technologies that browsers already use, and add a few more that don't inherently have any extra access to the system. Chrome, Firefox, IE9, Safari, and probably a couple more already have some level of HTML5 support.

The big deal is that HTML5 provides local (sandboxed) storage for web apps, and richer features that give it some capabilities of Flash.

[Sil_liS]

Originally Posted by Kolenka

Apple takes 30% of app sales. Free apps are not subject to this (30% of 0 is 0). However, how about that app that is free but uses micro transactions or ads to profit? Should Apple be denied a cut for hosting the app just because the developer wants to profit differently? So take a cut from the in-app purchases, and provide iAds to encourage devs by giving them a bigger cut of the ad revenue.

It's 30% of what is sold through the app. And the problem is that with books the retailer (now called agent) gets 30%. If they give 30% to Apple they don't make any money, while they still have costs.

[wodin]

Originally Posted by Sil_liS

It's 30% of what is sold through the app. And the problem is that with books the retailer (now called agent) gets 30%. If they give 30% to Apple they don't make any money, while they still have costs.

Does that include advertising revenues?

[Kolenka]

Originally Posted by Sil_liS

It's 30% of what is sold through the app. And the problem is that with books the retailer (now called agent) gets 30%. If they give 30% to Apple they don't make any money, while they still have costs.

I won't dispute that this is the consequence of the situation. I didn't call it out explicitly. But what Kobo/Sony/Amazon see themselves as are retailers with nobody else in the chain after them.

It used to be that this was the situation: Publisher -> Distributor -> Retailer

With digital content the distributor goes away, so you get a mix of price changes, and the distributor's cut being split between the publisher and retailer. Or a piece of that cut winds up in Adobe's pocket for their DRM solution/etc.

With Apple in the mix as host/retailer of the app, you get a weird scenario like this: Publisher -> Retailer (Kobo/Sony/Amazon/B&N) -> Retailer (Apple). This isn't exactly a sane arrangement, considering the sort of cuts that Kobo and the like get. Retailers as middlemen make for poor business.

Most devs only see: Developer -> Retailer (Apple). Which is sane.

If every publisher had their own app, it would be: Publisher -> Retailer (Apple/Google/Microsoft/etc). But they'd cut out the book retailers in the process, including Amazon, plus fracture the market a bit. Just look at Viz, Marvel and Dark Horse all with their own apps, different ways to read their comics, and so on.

Apple's cut makes sense if we consider Apple an app retailer trying to deal with loopholes that would prevent them from being able to get their take. Does it really make sense that "Where To?" sales should pay for Amazon's Kindle app hosting (the paid apps subsidize the truly free apps)?

Honestly, if a developer would be allowed to provide an ipa on their own hosting and eschew the app store entirely, this would be a moot point and things would be fine. As it stands, your options are to sell through another retailer, or use HTML5. I don't agree with Apple's decision, but I can understand it. And I think Kobo's decision is the right one in the face of the situation, as trying to become a distributor in a market where publishers and retailers can talk directly is not a smart move in the long-run.

[Sil_liS]

Originally Posted by wodin

Does that include advertising revenues?

I honestly don't know.

[Kolenka]

Originally Posted by Sil_liS

I honestly don't know.

With agency pricing, it's kinda a moot point. Kobo's cut is 30% of revenue (much like self-published folk in the US on the Kindle and Nook). Advertising would be additional on top of that, but it certainly isn't enough to keep a company afloat that depends on book sales to survive.

[Sil_liS]

Originally Posted by Kolenka

With Apple in the mix as host/retailer of the app, you get a weird scenario like this: Publisher -> Retailer (Kobo/Sony/Amazon/B&N) -> Retailer (Apple). This isn't exactly a sane arrangement, considering the sort of cuts that Kobo and the like get. Retailers as middlemen make for poor business.

But this is exactly where the problem is. Kobo and the like don't get amazing cuts anymore. Because of the deal that Apple made with the publishers everybody gets 30% from the price of the ebook. When Apple decided to charge 30% of the price of every book sold through an app, it effectively cut all revenue going to kobo, amazon, b&n.

I understand that adding links to the chain means that everybody makes less money on a sale, but Apple could have simply refused to allow retailers to sell books through apps since the beginning. Now the same retailers have been going on zero revenues from these sales for a couple of months while hastily making preparations to move to web apps. The retailers like iflow couldn't cope with it because they didn't have other sources of revenue so they closed.

I can tell that you understand this, but you choose to say that Apple asks for a cut, when, in fact, it asks for ALL the revenue of the book retailers.

[murraypaul]

Originally Posted by Sil_liS

But this is exactly where the problem is. Kobo and the like don't get amazing cuts anymore. Because of the deal that Apple made with the publishers everybody gets 30% from the price of the ebook. When Apple decided to charge 30% of the price of every book sold through an app, it effectively cut all revenue going to kobo, amazon, b&n.

No, this would only have happened if they had moved to Apple's in-app purchasing system, which they didn't.

I understand that adding links to the chain means that everybody makes less money on a sale, but Apple could have simply refused to allow retailers to sell books through apps since the beginning. Now the same retailers have been going on zero revenues from these sales for a couple of months while hastily making preparations to move to web apps. The retailers like iflow couldn't cope with it because they didn't have other sources of revenue so they closed.

No, the revenue to Amazon and others has been completely unchanged for a couple of months.
If they had added in-app purchasing using the iTunes system, then Apple would have taken 30% and left them with nothing, but in fact Apple has received no revenue from their book sales, either in the last couple of months, or now.

[Kolenka]

Originally Posted by Sil_liS

Now the same retailers have been going on zero revenues from these sales for a couple of months while hastily making preparations to move to web apps.

Can you back up this "zero revenues" claim? Apple can't take a cut of a sale that doesn't go through them, and for that to happen, devs have to update their apps. Apple hasn't yanked apps that failed to comply by the deadline, and those that have updated did so by removing links to their store, so I'm not sure where this figure comes from.

Originally Posted by Sil_liS

I can tell that you understand this, but you choose to say that Apple asks for a cut, when, in fact, it asks for ALL the revenue of the book retailers.

Which in this case is semantics. The end result is the same either way. My whole point is that Apple in this case really can't write a good policy that is simple, fair, lacks major loopholes, and doesn't squeeze middlemen out of their platform. The problem is that now folks like Kobo are considered middlemen because of how the platform works.

They backpedaled on the "must be the same price or lower" restriction, and that the app must provide a way to buy content if it is available elsewhere (you just can't link to the elsewhere). So it is possible that these retailers can throw Apple's cut on top of their pricing, as long as their contracts with the publishers allow them to. But nobody would honestly believe that would fly. Almost nobody would pay it, so why bother offering it?

Yes, it sucks that this model simply doesn't work for retailers using various platforms to sell their digital wares unless they get an exception or loophole in the pricing structure. Yes it sucks that Apple doesn't have a policy that allows this to work. But I don't think a suitable compromise lies in the pricing policies directly, but rather making it possible for retailers to carry the burden of costs related to distributing their apps in exchange for leeway in the pricing policies.

[murraypaul]

Originally Posted by Kolenka

They backpedaled on the "must be the same price or lower" restriction, and that the app must provide a way to buy content if it is available elsewhere (you just can't link to the elsewhere). So it is possible that these retailers can throw Apple's cut on top of their pricing, as long as their contracts with the publishers allow them to. But nobody would honestly believe that would fly. Almost nobody would pay it, so why bother offering it?

I don't think that is the case, although I'm not 100%
They removed the requirement to offer content through in-app purchases if it was available elsewhere, but I don't think they removed the requirement that if it is available through in-app purchases that it must be the same price. So you can either not sell in-app, or sell in-app at the same price.

[Kolenka]

Originally Posted by murraypaul

I don't think that is the case, although I'm not 100%
They removed the requirement to offer content through in-app purchases if it was available elsewhere, but I don't think they removed the requirement that if it is available through in-app purchases that it must be the same price. So you can either not sell in-app, or sell in-app at the same price.

See the following article.

Apple Reverses Course On In-App Subscriptions

Originally Posted by MacRumors

Content providers are now also free to charge whatever price they wish. For example, they could offer in-app subscriptions with a premium to cover Apple's 30% cut for In-App Subscription payments.

But either way, it's not really a valid option when you need to increase the cost by ~43% to cover Apple's cut. (10$ books become 14.28$)

[wodin]

Originally Posted by Kolenka

See the following article.

Apple Reverses Course On In-App Subscriptions



But either way, it's not really a valid option when you need to increase the cost by ~43% to cover Apple's cut. (10$ books become 14.28$)

Or the in inapp link could say you can get a discount (let's say about 43%) if you visit their website.

[Kolenka]

Originally Posted by wodin

Or the in inapp link could say you can get a discount (let's say about 43%) if you visit their website.

The updated policy (as written in the article) explicitly disallows the use of a link inside the app. Plus the discount would be "30%". But the price hike to cover the 30% is 43% (70% of 14.28$ is ~10$). Gotta love percentages.

[tubemonkey]

Originally Posted by Harmon

I think that the impact on ebook apps is collateral damage.

Damage nonetheless. If I purchased books for my iPod, these changes would see me say adios to reading on the iPlatform.