Hopefully every (re)seller on the planet is now aware that they should not attempt to build a marketplace on the IOS platform without getting a licence agreement with Apple.
I'm very interested in seeing how Netflix and the Kindle play out on the iPad though. If Apple gets too agressive in trying to lock down revenues, they may just end up driving people off their platform on to Google's.
Thank goodness for competition - can you imagine if the iPad was the only tablet option for the next couple years. At least this way, Apple will have to exercise some restraint.
Sorry for taking this off topic, but this is the perfect example of a comment where it would be very interesting to see how many hners that upvoted this opinion. I was one of them, since I believe it is a preferrable position to take. But it would be very interesting to see on what magnitude it resonates with the community as a whole.
Downvotes accepted as retribution for me going meta on this conversation.
Can't you avoid this by just always buying content via Amazon.com and then downloading it to your device, and avoiding actually shopping on the device? That's what I do.
I love the convenience of ebooks, but the ease of shenanigans in the distribution channel and the ability of a customer to lose an entire library's worth of books over business rules or technical issues distresses me.
When you read a paper book, you can be certain that the content in it is the same as when it was printed, and hasn't been edited or censored since you bought it. It can't be taken away from you by the publisher, except by physical force. You can resell it at will. Publishers and retailers who wants to try different pricing strategies can do so without facing the powerful control of Apple or Amazon.
I plan to keep on reading ebooks, but I'll buy the books I actually care about in physical form.
I don't like piracy and I will never, ever use any product crippled with DRM. Therefore I read only public domain e books, and they're plenty. If everyone did the same, we'd get rid of this nonsense quickly. Don't encourage them by buying DRM'd ebooks.
There are two components to this company: an eBook reading app, and a bookstore. They clearly took much more pride in the app, and that's where they have true value. With the store they are just middlemen, and though perhaps they could add value by helping people find they books they'd most enjoy, they don't seem to be innovating there. In the end their eBooks are just Adobe DRM protected ePubs.
So monetizing the middlemen part won't work, but aren't there any number of ways to monetize the reading app part? I, for one, wouldn't mind a flow-based reader. I've bought eBooks from a few places now, but also hate the page-turning interface.
This comes across as a stunt to try to change the agency model for book selling. Good luck on that, though, because now you need to convince both Apple and all the publishers to give them 20% again. But why would they do that? Extra middlemen are not going to offer 20% of value in a digital distribution chain.
As much as Apple is problematic here, the "90% of ebooks being controlled by 6 publishers who all fix prices and pricing rules" seem to be at least as big an issue as well.
I'd think there'd be an opp or two for someone to get in to publishing and selling just ebooks not owned by the big 6, but that market may be too small to try to nurture at this point.
I mean if I start selling ebooks in the corner at Starbucks they may tolerate that but when Starbucks gets into the ebook business there should be a huge red flag going off telling you that the rules will eventually change: either they'll disallow my ebook sales or demand a cut.
Another huge red flag is a business model based on buying egoods from a wholesaler and reselling them in another vendors shop.
Another question: why couldn't they continue as a reader app and a web app store run by a separate company?
(the store licenses the DRM to the reader company)
If the answer is that the business doesn't work without the legion of customers the app store brings to the door that's another red flag.
One word: disintermediation. iFlowReader was acting as an intermediary, selling a publisher's ebook to a reader and taking 50% of the revenue. Why should Random House pay someone 50% of the selling cost for doing an arbitrage play on a bunch of ones and zeros with no additional effort? Random House can cut out the middle man (who adds no value) and sell it themselves. It's a smart business move.
Now iFlowReader claims to offer a more compelling interface, so pivot and find a way to sell the reader software either to end-users who can import their already-purchased ebooks or license it to the publishers. Offer branded versions of the software to the publishers if it's that good and charge the publishers based on a percentage of the gross purchased through the software, which should be quite easy to track.
tl;dr : retailer's cut under agency model - platform provider's cut of in-app purchases = 0
The author attributes the agency model to Apple, which I think is understating the role of the publishers, who would have rejected it if it hadn't been very much in their own interests. Expecting the publishers to keep giving you outsized discounts[1] for no reason but inertia was a mistake. Even Amazon couldn't keep that gravy train rolling. The market was begging for a shaking and Apple shook.
[1]:Does this sound stable? "There is no comparison between the retailers’ costs and risks associated with physical books and those associated with ebooks. There is no economic justification to providing the same level of discounts. But that’s where we are." That's from April 2009. -- http://www.idealog.com/blog/ideas-triggered-by-amazon-buying...
>>>The author attributes the agency model to Apple
This is because it was Apple that devised the Agency Model and was the first to propose it to the Big Six publishers as a way of getting them on iOS. This led to Macmillan battling with Amazon one infamous weekend and had Amazon retaliate by removing all Buy buttons from Macmillan books. Amazon soon capitualted, other publishers -- except for Random -- piled on, moving to the Agency Model. When Random finally joined, all their books went up anywhere from $2 to over $7 in price.
I've never used the app, but I'm not seeing why their apparently unique approach to eBooks couldn't run on WebOS, Meego, or Android. I assume there's a good reason, since you don't throw away years of work easily, but I'd love to hear what that reason is.
People in these parts honestly believe Android is a hospitable business environment, but if your business involves selling things, you have to content yourself with a tiny fraction of iOS's revenue potential. That's why these guys aren't pivoting. Their business wouldn't have existed in 2011 without iOS.
I'm curious about that too. What limitations does Android have that make pivoting hard to do? Why weren't they working on both an Android and iOS app, no to mention WebOS and WP7. It does seem there are a lot of options out there, so there must be a very good reason not to have utilized those platforms. Does iOS provide some APIs that make this type of online purchasing model so much easier than other platforms that it's not even worth investing in something else?
I think the lesson here is never build a business on another companies platform unless you have rock solid licenses guaranteeing they won't change the rules like this. Same thing for Twitter or Facebook. They can put you out of business if they choose to and it's not wise to give another company a kill switch for your investment.
Following your advice no one could develop anything for iOS. Or Android. Or WebOS. Or any other computing platform. Every platforms vendor could change the rules your depends on.
This is exactly the reason that I haven't bought an iPad 2- I intend to use it for the netflix and kindle apps, and I'm not sure if they're still going to be there in 6 months. For a $500 device, the risk was just too high. I got a kindle instead, and I just use my laptop for netflix...
Apple needs to realize that their greed may kill their platform. Nobody would buy an iOS device with no killer apps - especially when android is getting better every day. As an iOS developer, I fully expect the platform to go the way of the dinosaurs.
I wonder why so many publishers and resellers insist on building only native apps. With the current technology you could invest in a web app that is cross platform. DRM can be cracked and it's just an annoyance to people who want to pay for content.
However, if you insist on developing commercial apps on the IOS platform than you have to realize that sooner or later Apple will want a cut. In business their is no free lunch, people/companies always want something in return.
A Massachusetts court has denied Google's efforts to dismiss a hot-button lawsuit that accuses the company of unfairly using its Android operating system to strong-arm mobile handset makers into using Google location services rather than those of rival Skyhook.
The suit specifically claims that Andy Rubin, who oversees Google's Android project, told Motorola co-CEO Sanjay Jha that if Motorola didn't drop Skyhook from its phones, Google would remove official Android support from the devices. This would mean the devices could not use proprietary Google apps or the Android name. The suit says that whereas Google paints Android as open source, Google still maintains exclusive oversight of the OS.
This may be even worse if entirely factual, because Google doing the exact opposite of what it claims to be.
The link's plenty interesting, but next time please try to avoid editorializing in the title. A "vig" is the cut taken by a loan shark or bookie and has strong connotations of crime and dishonesty (at least in the US). Apple's not breaking any laws here (right?) so calling it a "vig" is pretty far off base.
I think it actually conveys the tone of the article well, but yea, it does kind of border on libelous. I don't think the article goes as far as calling it a vig, but it is clear the iFlow team is understandably angry.
I'm not sure how much money they have made over the time before Apple imposed a 30% fee on book sales and the like, but I fail to see why they couldn't port their app to another platform. You know, instead of kicking the sand around and calling it quits.
Badmouthing iOS platform and appstore policies wont help.
They knew the risk when the appstore was launched, the only exit strategy was acquisition by a established publisher or seller, which did not materialize.
Apple is a thought leader, Android and others just copy their policies, so expecting the margins on other platform is not viable on longer term.
If I was CEO of iFlowReader I would retune the business models for current realities, tying up with self book publisher like lulu, xlibris, who can offer 50% margins on ebook sales.
Out of curiosity, why can't they have it as a reader of books that you download on your computer and transfer over via iTunes/any local area network. I admit this is not what they wanted most likely, but they could look into developing applications for Android devices and such as well that allowed royalty-free purchase in an application. As an iOS developer myself, I believe this would bypass the restriction, but I don't know for sure.
The problem is that this is not the model that is the most hip. What an iDevice user wants is one click purchase to download system. Apple knows this and knows that requiring such would defeat their competition.
The biggest problem I see with this is Apple won't even allow them to raise prices. So they are knowingly taking them out of the business when they take their 30% cut. If they are going to charge 30% for this, they might as well allow them to raise prices to remain profitable.
Why aren't these service companies switching to a HTML5 web app though? Wouldn't that allow them to continue their business untouched by Apple?
You're talking about a company that named itself using Apple's product naming convention. They went all-in on the iOS model. They probably hired strictly ObjC programmers, they probably have no business experience with the web either. I'm not saying they couldn't switch, it just doesn't sound like this is the company with the chops to easily do so.
As a consumer I want less people between me and the actual producer of the work so another intermediary going out of business bothers me not at all.
My ideal world is that I buy a novel direct from an author, perhaps paying a small commission to a single intermediary. Author to publisher to iFlow to Apple to me isn't efficient.
Yes there is an issue here with how Apple and the publishers behave but there is also a significant issue with how much value iFlow were adding in exchange for their cut. A slightly different (maybe better) reader simply isn't worth the 30% they seem to be planning on.
As a consumer why would you care about the route content takes from producer to consumer? The only thing that matters is the content and how you consume it. If iFlow offered a better way to consume it then you should be happy to get it from them, and sad that you can no longer.
I really don't see where 'efficiency' comes into it?
Because the Agency price-fixing model has led to eBooks not being priced by market forces but by a cartel that supplies over 90% of the existing market.
I found it interesting (perhaps ironic), that that blog post, from a company who is in the ebook business, whose very domain is "iflowreader.com", doesn't flow the text to a narrow browser. It was unreadable on my handset due to the horizontal scrolling required, and I got horizontal scrollbars when I resized the PC browser to smaller than its width.
Correct me if I'm wrong, but couldn't they do what Amazon does and just redirect the user to Safari for purchasing books? I suppose that's a very small inconvenience compared to iBooks' direct purchase, but I find it worth the tradeoff to have my purchases available on more devices.
This "loophole" was closed by Apple during the last round if App Store approval rule changes back in December of last year. The Kindle app seemingly gets a pass, but a number of other applications have been rejected since then.
[+] [-] ghshephard|15 years ago|reply
I'm very interested in seeing how Netflix and the Kindle play out on the iPad though. If Apple gets too agressive in trying to lock down revenues, they may just end up driving people off their platform on to Google's.
Thank goodness for competition - can you imagine if the iPad was the only tablet option for the next couple years. At least this way, Apple will have to exercise some restraint.
[+] [-] martinkallstrom|15 years ago|reply
Downvotes accepted as retribution for me going meta on this conversation.
[+] [-] api|15 years ago|reply
[+] [-] rrrazdan|15 years ago|reply
[+] [-] astrodust|15 years ago|reply
[+] [-] alanhooker70|15 years ago|reply
[+] [-] ekanna|15 years ago|reply
[+] [-] jaysonelliot|15 years ago|reply
When you read a paper book, you can be certain that the content in it is the same as when it was printed, and hasn't been edited or censored since you bought it. It can't be taken away from you by the publisher, except by physical force. You can resell it at will. Publishers and retailers who wants to try different pricing strategies can do so without facing the powerful control of Apple or Amazon.
I plan to keep on reading ebooks, but I'll buy the books I actually care about in physical form.
[+] [-] danilocampos|15 years ago|reply
[+] [-] wazoox|15 years ago|reply
[+] [-] epistasis|15 years ago|reply
So monetizing the middlemen part won't work, but aren't there any number of ways to monetize the reading app part? I, for one, wouldn't mind a flow-based reader. I've bought eBooks from a few places now, but also hate the page-turning interface.
This comes across as a stunt to try to change the agency model for book selling. Good luck on that, though, because now you need to convince both Apple and all the publishers to give them 20% again. But why would they do that? Extra middlemen are not going to offer 20% of value in a digital distribution chain.
[+] [-] 83457|15 years ago|reply
[+] [-] mgkimsal|15 years ago|reply
I'd think there'd be an opp or two for someone to get in to publishing and selling just ebooks not owned by the big 6, but that market may be too small to try to nurture at this point.
[+] [-] Steko|15 years ago|reply
I mean if I start selling ebooks in the corner at Starbucks they may tolerate that but when Starbucks gets into the ebook business there should be a huge red flag going off telling you that the rules will eventually change: either they'll disallow my ebook sales or demand a cut.
Another huge red flag is a business model based on buying egoods from a wholesaler and reselling them in another vendors shop.
Another question: why couldn't they continue as a reader app and a web app store run by a separate company? (the store licenses the DRM to the reader company) If the answer is that the business doesn't work without the legion of customers the app store brings to the door that's another red flag.
[+] [-] biot|15 years ago|reply
Now iFlowReader claims to offer a more compelling interface, so pivot and find a way to sell the reader software either to end-users who can import their already-purchased ebooks or license it to the publishers. Offer branded versions of the software to the publishers if it's that good and charge the publishers based on a percentage of the gross purchased through the software, which should be quite easy to track.
[+] [-] KaeseEs|15 years ago|reply
[+] [-] GHFigs|15 years ago|reply
The author attributes the agency model to Apple, which I think is understating the role of the publishers, who would have rejected it if it hadn't been very much in their own interests. Expecting the publishers to keep giving you outsized discounts[1] for no reason but inertia was a mistake. Even Amazon couldn't keep that gravy train rolling. The market was begging for a shaking and Apple shook.
[1]:Does this sound stable? "There is no comparison between the retailers’ costs and risks associated with physical books and those associated with ebooks. There is no economic justification to providing the same level of discounts. But that’s where we are." That's from April 2009. -- http://www.idealog.com/blog/ideas-triggered-by-amazon-buying...
[+] [-] mikecane|15 years ago|reply
This is because it was Apple that devised the Agency Model and was the first to propose it to the Big Six publishers as a way of getting them on iOS. This led to Macmillan battling with Amazon one infamous weekend and had Amazon retaliate by removing all Buy buttons from Macmillan books. Amazon soon capitualted, other publishers -- except for Random -- piled on, moving to the Agency Model. When Random finally joined, all their books went up anywhere from $2 to over $7 in price.
[+] [-] tsuraan|15 years ago|reply
[+] [-] irons|15 years ago|reply
People in these parts honestly believe Android is a hospitable business environment, but if your business involves selling things, you have to content yourself with a tiny fraction of iOS's revenue potential. That's why these guys aren't pivoting. Their business wouldn't have existed in 2011 without iOS.
[+] [-] Osiris|15 years ago|reply
[+] [-] daimyoyo|15 years ago|reply
[+] [-] biafra|15 years ago|reply
[+] [-] ssebro|15 years ago|reply
[+] [-] ssebro|15 years ago|reply
[+] [-] inkaudio|15 years ago|reply
However, if you insist on developing commercial apps on the IOS platform than you have to realize that sooner or later Apple will want a cut. In business their is no free lunch, people/companies always want something in return.
Google is no different, see: http://www.theregister.co.uk/2011/05/05/google_skyhook_case_...
A Massachusetts court has denied Google's efforts to dismiss a hot-button lawsuit that accuses the company of unfairly using its Android operating system to strong-arm mobile handset makers into using Google location services rather than those of rival Skyhook.
The suit specifically claims that Andy Rubin, who oversees Google's Android project, told Motorola co-CEO Sanjay Jha that if Motorola didn't drop Skyhook from its phones, Google would remove official Android support from the devices. This would mean the devices could not use proprietary Google apps or the Android name. The suit says that whereas Google paints Android as open source, Google still maintains exclusive oversight of the OS.
This may be even worse if entirely factual, because Google doing the exact opposite of what it claims to be.
[+] [-] jacobian|15 years ago|reply
[+] [-] jrwoodruff|15 years ago|reply
[+] [-] robert_nsu|15 years ago|reply
[+] [-] kleptco|15 years ago|reply
Why would anyone who has paid any attention to Apple, depend on their goodwill?
[+] [-] senthilnayagam|15 years ago|reply
They knew the risk when the appstore was launched, the only exit strategy was acquisition by a established publisher or seller, which did not materialize.
Apple is a thought leader, Android and others just copy their policies, so expecting the margins on other platform is not viable on longer term.
If I was CEO of iFlowReader I would retune the business models for current realities, tying up with self book publisher like lulu, xlibris, who can offer 50% margins on ebook sales.
[+] [-] axxl|15 years ago|reply
[+] [-] virmundi|15 years ago|reply
[+] [-] nextparadigms|15 years ago|reply
Why aren't these service companies switching to a HTML5 web app though? Wouldn't that allow them to continue their business untouched by Apple?
[+] [-] MatthewPhillips|15 years ago|reply
You're talking about a company that named itself using Apple's product naming convention. They went all-in on the iOS model. They probably hired strictly ObjC programmers, they probably have no business experience with the web either. I'm not saying they couldn't switch, it just doesn't sound like this is the company with the chops to easily do so.
[+] [-] Tyrannosaurs|15 years ago|reply
As a consumer I want less people between me and the actual producer of the work so another intermediary going out of business bothers me not at all.
My ideal world is that I buy a novel direct from an author, perhaps paying a small commission to a single intermediary. Author to publisher to iFlow to Apple to me isn't efficient.
Yes there is an issue here with how Apple and the publishers behave but there is also a significant issue with how much value iFlow were adding in exchange for their cut. A slightly different (maybe better) reader simply isn't worth the 30% they seem to be planning on.
[+] [-] asknemo|15 years ago|reply
[+] [-] user24|15 years ago|reply
I really don't see where 'efficiency' comes into it?
[+] [-] mikecane|15 years ago|reply
Because the Agency price-fixing model has led to eBooks not being priced by market forces but by a cartel that supplies over 90% of the existing market.
[+] [-] smackfu|15 years ago|reply
[+] [-] michaelcampbell|15 years ago|reply
[+] [-] richcollins|15 years ago|reply
[+] [-] 9999|15 years ago|reply
[+] [-] rcoder|15 years ago|reply