Thoughts on iOS Content Purchase

I’d like to take a moment to talk about Apple’s new policy on paid ‘content’ in iOS applications. If you don’t live in the Apple bubble I live in, let me explain: Esentially, all apps that allow users to comsume pay-for content (magazines, music, books etc.) must allow the user to buy access to that content in-app, using their iTunes account. For this, Apple will take 30% of the retail price of the content. Content can also be sold outside of the app, via whatever means you can think of (books on your web site, an newspaper subscription bought via a newsagent etc), but the in-app price - which includes Apple’s 30%, remember - must be identical to or less than the out-of-app price. An app also cannot promote that content can be bought outside of it, even if it is possible to do so (e.g. no linking to your web site to get the users to buy subscriptions there rather than using in-app purchase). The Apple press release I linked to earlier talks about subscriptions, but Apple has confirmed that the rules apply to all content, not just subscriptions - books too, for example.

You may argue that my opinion is clouded. I make book reading software, and license technology to other companies that make book reading software. Software like this, presuming Apple’s rules don’t change, is now essentially not economically viable for iOS devices (if you’re a iOS device owner, I hope you like iBooks). For the book publishing model that humanity seems to have settled on[1] there simply isn’t a 30% margin left to give Apple. I agree that I’m at the sharp end of this policy change, but I don’t think that’s what’s causing my disquiet over it.

Magnitude

First, the specifics of the new policy. Taking 30% of the sales of all content a device can consume is simply unreasonable. It’s superficially similar to the situation with apps sold through the App Store, where Apple takes 30% of the purchase price of every app sold, but with the App Store Apple is providing things: the software that people use to discover and browse apps; hosting of the apps; a fast, worldwide download service. It’s much more than just processing payment. With the new content rules though, Apple essentially wants the same 30% for doing much less. They provide payment processing, and they track purchases. Even the ‘tracking purchases’ part is of arguable utility because, since the app producer has to serve the content themselves, they will need to duplicate much of this functionality on their own systems too. For in-app content, nowhere near 30% of the cost of producing and selling the content is borne by Apple.

Secondly, regardless of how ‘fair’ the cut provided to Apple is, mandating a payment system is quite draconian. With content purchases, they’re not doing much more than an app developer can do by themselves - they’re simply not permitting them to.

Incidentally, I don’t even think that Apple is making the right business decision here. If people can’t listen to Spotify or Pandora, can’t read their Kindle or B&N books, will Apple’s hardware entice them? I genuinely believe that it’s in Apple’s long term interests to allow these services on iOS devices (and don’t belive the argument that they are ‘allowed’ now - Apple knows that services like this can’t survive 30% of their revenue being taken).

Integrity

Disregarding the unreasonable magnitude of the 30% cut, there’s another reason I find this change troubling.

The intent behind Apple’s policies always seemed consistent to me in the past. The policies themselves may have been opaque and sometimes confusing, and were often inconsistently and capriciously applied, but the intent behind them didn’t seem to change. I certaninly didn’t agree with all the policies, but they at least seemed reasonable. I could respect them. Apple seemed to have integrity. With this change though, that’s no longer true. Apple has simply changed the policy for what apps are allowed to do to one that’s not only different, it has a different intent behind it.

There are lots of companies - and lots of people - who have expended great effort in creating wonderful software over the past couple of years, software that Apple actively encouraged and helped them to create. Now, suddenly and unexpectedly, that software cannot be released because, as I’ve previously touched on, even if Apple’s payment system were adopted, to release the software would now be to choose to lose money.

Sentiment

Despite all this, I still love my Apple devices. I can’t help it. Apple produces the best things. I don’t think it would be exaggerating to say that current Apple hardware, in every major category - laptops, phones, and tablets - is the best in the world. The things Apple produces today are the most complex, yet, almost confoundingly, among the most elegant technology mankind has ever produced. The best pieces of technology mankind has ever produced. Not only are the devices better, they make me, as a developer, better. I make better things when I make them for Apple devices.

Using the tools Apple provides, I could make a great new book reading app. There are lots of people out there who could make great book reading apps. Except now they can’t. Great music apps. Except now they can’t. Apps that do wonderful, crazy things that we can’t imagine. Except now they can’t. This decision by Apple will set back the progress of technology.

“Just make these apps for other platforms,” you say! I wish that there were alternatives that were as good as iOS, but there just aren’t. Eveything else available - basically meaning Android at this point - is clunkier, less easy to use, less beautiful. Maybe HP’s (nee Palm’s) WebOS or Microsoft’s Windows Phone 7 will change that, but I’m skeptical. There’s too little ambition, too little vision, and too little attention to detail and consistency in the offerings other companies are producing. There might be technologically more advanced phones out there than the first 2007 iPhone now, but there’s still nothing that’s as consistent, easy, and pleasurable to use. For reasons that you could write a book about (and many have tried to), other companies can’t seem to produce things like today’s Apple can.

Doublethink

For years, I’ve helped to build ‘Apple things’. I’ve evangelised Apple things to my family and friends. I love my iPad. My MacBook Air is the best computer I’ve ever used. More than that though, I want to make the best things I can make, and that means making them for Apple platforms. At the same time, I don’t want to be responsible any more for what I fear the Apple ecosystem might turn into, and what that might turn the world of our future into. To employ a little hyperbole, I don’t want to wake up in 1984 knowing that, with however good intentions, I helped to build it.

So I’m torn. Should I make the best things I can, on devices I enjoy using, or turn to another platform, giving up the benefits of Apple’s platforms that I enjoy so much for a perhaps misplaced feeling of freedom? Should I continue to enthuse to friends and family about the best technology our species has ever come up with, or dourly make their lives worse, at least in the short term, by advising against it?

Maybe in a week or two these things will shake themselves out and things will look more reasonable. I’m sure I’ll be able to rationalise away some of my current angst. That worries me too though. Perhaps some day I’ll wake up in 1984, not even realising I helped to build it.


[1] You might argue that it’s not the best one we could have come up with, that it has too many middle-men, and I might actually agree with you, but that’s arguing against reality at the moment.


13 Comments

…le’s payment system were adopted, to release the software would now be to choose to lose money. -James Montgomerie, Feb. 16, 2011 Filed under:


…w all posts in apple" rel="category tag">apple Jamie Montgomerie has written a well-thought out post on Apple’s new iOS content purchase model, from the viewpoint of a developer (Jamie develops …


If you want Apple to change their policy, the best course of action is to leave the platform, and lobby others to do the same. They won’t back down until the big content providers rebel.


First, this is the most thoughtful article that I have seen so far and puts into words what I have been feeling about this policy change. I am a long time fan of all things Apple, but this extortionist move by Apple has shaken me.

Second I would say to Mr. Jobs - Hubris

Third, I think that the availability of content at a fair price will ultimately win out over fancy technology. I really like my iPad, but I like the content, fairly priced from zinio, amazon, etc more. I would move to another platform in a heart beat if I have to chose. Hopefully, mr. Jobs will not force his customers to make such a choice.


My God. Right on.


Really found this to be a well written and thoughtful piece of online reading.

I can certainly identify with the angst felt by a developer on the platform.

I am building applications for a non-Apple mobile platform and even I felt the sting of the announcement, just by proxy.

Open Hardware vs. Draconian Control

Only one shall survive to thrive.


…s Apple’s ballsy move 16 Feb 2011 If you’re not living in the Apple Bubble, you can boost your knowledge about Apple’s latest ballsy move. In a nutshell, Apple now wants 30% of everything you purcha…


Apple is giving them access to their customers, over 15m on iPad.

My business example:

Say for every 1 "insert name of popular tablet alt here", Apple sells 6 iPads.

Say 10 customers out of 100 buys a subscription.

Say "insert name of popular tablet alt here" is only taking a 10% cut.

Say subscription in this made up example is .99.

.891 x 10 = $8.91 vs .693 x 10 = $6.93 (but wait)

iPad has 6x more customers per 100 (generous right now)

$6.93 x 6 = $41.58

Whatever, cry, Murdoch isn’t. Amazon isn’t, they have their own product; whatever they can get from Apple is icing on the proverbial cake.


I’m still not sure I understand Apple’s position on books. If all Amazon has to do is remove the buy button, I don’t see any great hardship for Amazon. All the button does is open Safari to the amazon.com website to the Kindle page. I never use it. It is easier to just bookmark amazon.com.

If the Kindle app stays the same minus a buy button, this is another tempest in a teapot. If Apple truly requires a buy button linked to in-app payments then that is another matter altogether.

So which is it?


…8217;ve missed the news on Apple and their new subscription service, you should read the following: http://www.blog.montgomerie.net/thoughts-on-ios-content-purchase. What Apple is doing is pretty lame, considering until now everyone has had to deal with the fact t…


@James: The current stance is that the ‘buy’ button must be removed, and users must be able to purchase the content in-app using Apple’s system.

We will see if this is in fact what Apple enforces (although even if they don’t enforce it isn’t that also a crazy situation - hoping a company will not enforce its stated policies?)


@BC: Of course there are some businesses that can afford 30% of their highly profitable revenue being taken. For those already making less than 30% profit on the revenue though it doesn’t matter what the volume of sales is - they’re still losing money on every sale if they’re paying 30% to Apple. Selling more might increase revenue, but it also just compounds the losses! Books, music (sales and subscription) and many other virtual goods and services are like this.


A VERY good read. Regarding your dilemma, I would say it is not you who should stop producing content for Apple devices, but the consumers demanding that they can fill their device with content from any source. The convenience of something like the Kindle store is the ability to purchase something on any device and then use it on any device. If Apple is getting in the way of that, the consumer should step up.

But, would/will they if it comes to that?


Businesses like Last.fm ¬


@BC: Yes, exactly - although there are other many models that fall into the same category (of not having 30% to spare).


Apple have changed their mind before under pressure. We all know that apple want to be able to take a slice of all transactions on their devices, if a web browser vendor could get away with taking a percentage of every web purchase made using their browser they would. They don’t because there are alternatives that are easy to migrate to. Apple have tried this because they can. They have complete control over the platform. Granted they also have the best implementation too at the moment, but that may not always be the case.

People are fickle and will migrate with relatively little pushing, developers will follow or loose revenue.

The question is, is this enough of a reason for people to migrate?

If not, you’re ok. If it is, time to retool.


@Carwyn

The question is, is this enough of a reason for people to migrate? If not, you’re ok. If it is, time to retool.

It might be the other way around (i.e. if it’s reason for people to migrate, it’s not time to retool, because Apple will relent).


…ary 16th, 2011 | Author: | Filed under: | Tags: Jamie Montgomerie has written a well-thought out post on Apple’s new iOS content purchase model, from the viewpoint of a developer (Jamie develops…