I officially hate Apple February 16, 2011 | 08:22 am

So Apple announced it’s new rules for apps on their iPhones and iPads accessing paid content. The rules are pretty simple, albeit it evil:

  1. If you provide an app to view your paid content on the iPhone/iPad, you have to be able to register for the paid content via the app,
  2. If you register for the content from the app, Apple gets 30% of what you pay,
  3. The cost of registering via the app can not be higher than the cost of registering elsewhere.

So now, let’s look at the situation from, say, Amazon’s perspective. The online videos, music, ebooks, etc. they sell on line don’t have a 30% profit margin to give to Apple, so to pay the Apple extortion, they need to raise prices. But they can’t just whack the iPhone users- that violates rule 3. So they have to raise prices on everybody. In other words, even if I don’t own an Apple iPhone or iPad, I’m going to have to pay higher prices for my online content, to subsidize you iPhone/iPad users. You using an iPhone or iPad has now become my problem.

If the government as levied a, say, 10% tax on internet transactions, we’d all be up in arms. But Apple pulls the same damned stunt, and we’re all like “well, that’s OK then”? Spending money to provide for the common defense and promote the general welfare is bad, but subsidizing a greedy corporation is kosher?

Even if Apple backs away from this, I’m done with them. My philosophy is simple: Fuck Apple. And fuck all the black beret wearing “Think Different” drones who still support Apple.

  • Mo

    You got it slightly wrong. This is not about all paid content – it is only about subscriptions… I still think it is evil, though slightly less evil.

  • http://www.geoffreywiseman.ca/ Geoffrey Wiseman

    I’m going to wait to see how this plays out before getting too irritated with it either way. It seems unlikely that things can play out the way they’re currently being portrayed, and I’m willing to wait and see what actually happens once these companies stop jockeying for position.

    @Mo:
    It’s clearly not just about subscriptions, since the rejected Sony reader was not a subscription-based service.

  • Thomas

    Ok. You hate Apple. Bummer.

    Just out of curiosity, what do you think would be a fair price/percentage for companies to use Apple’s billing, customer service, etc. systems? And how much is the “shelf space” on the iTunes store worth? (When answering the last question, remember that folks like Coke, Proctor & Gamble, etc. have long paid grocery stores for the right to X many feet of shelf space.)

    I have no idea if 30% is the right number. But I’d bet that Wired, for example, spent far more than the $10/year I used to pay as a print subscriber to process my check, send me physical mail reminding me to pay the bill, etc.

    Separately, do you think that it is fair for Apple to demand that people who buy through their phones don’t have to wonder “gee, could I get a better deal if I hunted around for a coupon code?” How much is the time that users, collectively, save worth?

    We know that individual consumers have effectively no bargaining power, as this is an example of a Collective Action Problem, w.r.t. mass marketers. Separately from the other two issues, does Apple have a duty (and/or a right) to act as a “consumers union” in bargaining with sellers?

  • Corre

    @Thomas, credit card companies charge around 3% not 30% to process payments. If Apple is just a processor of payments, then 6-10% would be more inline with the market.

    The real question is rather Apple is using it’s dominance of the tablet market to create a monopoly on it’s App Store by forcing other distributors to either leave the App Store or give Apple their profits. Which would you choose as a distributor?

    Apple could not negotiate the content directly so they are doing this to force out other distributors, such as Zinio and Rhapsody. Since they rejected Sony’s reader app, as Geoffrey stated, it isn’t just about subscriptions, it’s about all content. Since this issue mainly effects distributors and not content providers, it does appear Apple is trying to create a monopoly within it’s App Store when they have allowed Zinio and Rhapsody for years now.

    If Apple had never allowed apps that could have a subscription outside of the app store, then the conversation would be different. Since they have allowed Zinio and Rhapsody (as examples), Apple is clearly trying to be anti-competitive.

    As far as Wired, they are a content provider. This won’t affect them as they are free to set whatever rates they want. I am sure it does cost them more then the $10 but they make their money on advertisers. Advertisers want subscription information and information about the subscriber, and most rates advertisers pay is based on that information. With this change, Wired won’t be in control of that information since each subscriber can opt-in or out of providing that information.

    I am sure we will see many content providers sign up with Apple, especially ones who don’t need subscriber information for advertisers, or those testing the water. The distributors already in the app store are the ones that we will see issues. Just a few are:
    • Zinio
    • Amazon Kindle
    • Barnes & Noble Nook
    • Raphsody
    • Napster
    • SiriusXM Radio
    • Netflix
    • Hulu Plus
    • ComiXology

  • http://www.enzy.org Antony Jones

    We begin to see why I have, and will continue to use Linux for the foreseeable future.

    Sure, I understand that Linux is not free, and is probably one of the most expensive operating systems of all time, all things considered, but as an end user, I pay a small price in quality of third-party applications, and I get every single benefit that OS X provides (and in my personal opinion, more).

    As for the app-store, well, I barely paid for anything on there in my 3-years of iPhone ownership. On my Android phone, I’ve paid for quite a few applications, purely because it is ‘pretense free’.

    I don’t hate apple, and I have converted my entire family away from Microsoft’s crapware onto Apple’s products, but I don’t buy shelf-life or re-couping costs at all. Apple are money-driven and they know they will always have followers no matter what. It’s easy to see the difference between their ‘restrictions for usability/safety’ and ‘restrictions for profit’. The latter makes me angry.

  • Thomas

    @Corre – I still don’t know if 30% is the right number. I have no direct business experience with subscription-based services, other than as a consumer. Apple is providing more than payment processing services. I note that my question about the value of “shelf space” is still outstanding. You might have noted that when you search on the name of an app, you’ll often find a itunes.apple.com page ranking very, very high in the search results. Try the string weather app on google. I’ve never heard of Pocket Weather, but now I might give it a try. So, there’s some advertising value there.

    Maybe 10% is the right number. Maybe it’s 20%, maybe it’s 30%, maybe more and I think that we’ll find out.

    Apple currently dominates the tablet market because, as I write this, they provide tablets with the largest value to the greatest number of people at the lowest price. (Or is that a tautology?)

    This might change:

    At CES, a large number of tablets based on Android were introduced. I used an Android-based phone from Nov. 2009 until a short time ago and I think that the OS and the apps available on it got better over time. I used the “Android Market” for non-free apps exactly once and it was a failure. It seems that the developers of Angry Birds, for example, agree with my opinion that it wasn’t a viable distribution solution. Perhaps the apps available for Android will be good enough that people will switch away from Apple products.

    Apple controls 100% of the app distribution market for Apple tablets. (OK, 99% – enterprise apps can be self-certified and devs have a way to self-certify their apps in limited numbers for testing purposes.) Apple controls <100% of the app distribution market for tablets. Although I'm a lawyer, anti-trust law is not my speciality. That said, I'd guess that the market that the DOJ would care about is the "app distribution market for tablets" not the "app distribution market for Apple tablets" (so long as Apple is not somehow illegally preventing others from selling tablet computers, that is).

    You asked which would I choose as a distributor? My answer, choosing between paying and leaving, would depend on one simple question: can I find a better deal elsewhere?

    As for the Sony reader app, we don't yet know why that was rejected. (Or, really, if it was rejected or delayed. Yes, that sounds pedantic, but I note that the Google Voice app was delayed for some time but is now available.) I've seen media stories about it, but am unaware of either Sony or Apple stating that it was rejected due to pricing terms. Some of the other e-book apps got rejections because they used a private API to control backlighting on the device. FWIW, I own a Sony Reader and I own an iPad. It'd be nice to have access to the stuff I own for the former on the latter.

    @Antony Jones. You noted that Apple are money driven. (English? Australian? Just curious.) I'm unaware of anyone making tablet hardware that isn't. Actually, come to think of it, I'm unaware of a hardware (of any sort ) vendor that isn't.

  • http://enfranchisedmind.com/blog/posts/author/bhurt-aw/ Brian Hurt

    I note that they already charge a yearly fee both for the developer tools and for the right to publish apps. And that I have no problem with. If it costs you something to provide a service then you have the right (indeed, the need) to charge for that service. If something doesn’t cost you money, then no you don’t have the right to charge for it. It’s the exact same as charging people for you to not set fire to their stores. I don’t see what Apple’s cost is here. Not lost profits, cost. Money out of pocket. I’m losing serious profit opportunities from people not paying me to not set fire to their stores- on the other hand, it’s not costing me anything to not set fire to their stores. What’s a fair price to pay someone to not burn down your store?

    And the coke/pepsi analogy is flawed, as it misses clause number three. The correct analogy would be if coke and pepsi told the supermarket that they couldn’t sell off-brand soda for less than coke or pepsi. Oh, and you also have to charge people who buy tea, coffee, or milk more too. Revoke clause number three, and now I no longer care- yeah, people buying Apple products pay more, so what else is new? Don’t like the Apple surcharge? Don’t buy Apple. Don’t like the Coke/Pepsi surcharge? Don’t buy them. The way Apple has set things up, I no longer have the right to not buy their products.

  • Tracy

    It’s not just about subscriptions. Wait. It is also about being the content provider and control. It’s going to be interesting to see if Apple can pull it off.

  • virtualeyes

    Same deal here, dropped Apple a couple of years ago (fed up with McDonald’s Linux, I mean OSX); bought an equivalent Macbook Pro PC laptop for 1/2 the price; installed latest Fedora distro with Compiz and voila, worlds happier.

    “It just works”? (yah, right!)
    iTunes? Thanks for the hand cuffs
    Finder? Unbelievable P.O.S
    Spinning beach ball? Nice!
    Window manager? No (real) maximize; manually drag windows; no snap to grid

    With Linux I have HD multi-monitor, skype, chrome, VMware, VPN, etc., etc. I miss not one thing from OSX ;–)

    Free from that weasel, Jobs….

  • donewithapple

    Steve Jobs’ legacy – sweatshops:

    Apple is making $1,000,000,000 in profit each month – guess how:

    Why Apple says it can’t build an
    iPhone in the US

    http://www.msnbc.msn.com/id/46091572/ns/business-us_business/t/why-apple-says-it-cant-build-iphone-us/#.TyCkvfmyWsq

    Apple executives say that going overseas, at this point, is their only option.
    One former executive described how the company relied upon a Chinese factory to
    revamp iPhone manufacturing just weeks before the device was due on shelves.
    Apple had redesigned the iPhone’s screen at the last minute, forcing an
    assembly line overhaul. New screens began arriving at the plant near midnight.

    A foreman immediately roused 8,000 workers inside the company’s dormitories,
    according to the executive. Each employee was given a biscuit and a cup of tea,
    guided to a workstation and within half an hour started a 12-hour shift fitting
    glass screens into beveled frames. Within 96 hours, the plant was producing
    over 10,000 iPhones a day.

    “The speed and flexibility is breathtaking,” the executive said. “There’s no
    American plant that can match that.”

     

     

    Apple made $400,000 per employee last year.

     

    You’d think there might
    be some extra in there to pay people
    a living wage, that allows them to live in something other than dormitories,
    and consume more than tea and biscuits.   

  • Joreill21

    Steve Jobs’ legacy – sweatshops:

    Apple is making $1,000,000,000 in profit each month – guess how:

    Why Apple says it can’t build an
    iPhone in the US

    http://www.msnbc.msn.com/id/46091572/ns/business-us_business/t/why-apple-says-it-cant-build-iphone-us/#.TyCkvfmyWsq

    Apple executives say that going overseas, at this point, is their only option.
    One former executive described how the company relied upon a Chinese factory to
    revamp iPhone manufacturing just weeks before the device was due on shelves.
    Apple had redesigned the iPhone’s screen at the last minute, forcing an
    assembly line overhaul. New screens began arriving at the plant near midnight.

    A foreman immediately roused 8,000 workers inside the company’s dormitories,
    according to the executive. Each employee was given a biscuit and a cup of tea,
    guided to a workstation and within half an hour started a 12-hour shift fitting
    glass screens into beveled frames. Within 96 hours, the plant was producing
    over 10,000 iPhones a day.

    “The speed and flexibility is breathtaking,” the executive said. “There’s no
    American plant that can match that.”

     

     

    Apple made $400,000 per employee last year.

     

    You’d think there might
    be some extra in there to pay people
    a living wage, that allows them to live in something other than dormitories,
    and consume more than tea and biscuits.   

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