Apple Screws the Pooch Pt 2
by Joel Naoum - February 2nd, 2011
It was either ‘Apple Jumps the Shark’ or ‘Apple Screws the Pooch’. But which do you prefer – the scary apple or the adorable puppy?
This is the second part of a two-part article. To read the first part, click here.
Here’s where Apple made even me suspicious. In its clarification yesterday, Apple said that it isn’t only in-app transactions that it is forcing onto its system, but any transaction. To use Apple’s own words:
We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.
This great big steaming pile of crap basically means that any platform that wants to make an app for the iPad or iPhone to sell and/or read books has to at the very least give their customers an option to buy books through the Apple-sanctioned method – which gives Apple 30% of the profit. And it’s not just the profit. It’s the transaction – which means Apple can leverage the data collected (who bought the book, when they bought the book, how often they buy books and from which apps) to optimise their own book store – and they get that information for doing absolutely nothing. There’s also a massive doubling up of energy and effort here: Amazon, Google, Kobo, Overdrive and every other book reading app that offers a store already has a store. Apple skimming 30% off the top is nothing but pure greed. And if they stick with it, they will fail. And here is why.
Those who know me well (or know me at all) are probably acquainted with my pile of Apple gadgets and my willingness to justify spending vast amounts of money on the latest and greatest from Cupertino. That’s because despite every anti-competitive, backwards-thinking, mean-spirited thing they do on the iTunes or App stores they still make pretty things. Very pretty things. In fact, they make billions of dollars from selling pretty things for exorbitant prices. Just a small example of this: it was announced today that despite having only having 4% of the global smartphone market share, Apple still makes 50% of the profit from sales of the iPhone. That means there are a lot of people out there who are willing to spend a lot of money on Apple hardware.
And that’s because they make good hardware. It was the reason the iTunes store and the App Store were created. To sell more hardware. Apple may have revolutionised music sales, and made a killing doing it, but they did it by selling iPods – not by selling music. If they try and take complete control of ebooks on iOS (the iPhone and iPad operating system) in this way, then all it will mean is that ebooks will fail on iOS. Books are not like music. There are already quite a few established sellers of ebooks with more market share than Apple. And books are already too expensive, and too unprofitable for Apple to skim yet another 30% off the top.
So Apple have screwed the pooch. What are they going to do about it? The views on this story seems to be entirely negative. Will they try to spin it into something positive for consumers? Or will the famed Apple marketing machine fail? Only time will tell, but unless Apple rolls over on this issue it will be a bad thing for books in general.