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Developer Blames Apple For Ruining eBook Business
An anonymous reader writes "A bookseller and app developer has blamed Apple for writing its final chapter, claiming the iPad maker had pushed it out of business. 'Apple has made it completely impossible for anyone but Apple to make a profit selling contemporary ebooks on any iOS device,' BeamItDown said. 'We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game.' The company blamed Apple's decision to impose a 30% commission on books sold through apps for the unhappy ending."
Well, that's why you don't put all of your apples in one basket (pun intended).
"We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game.â
I think I see your problem right there...
"I have altered the deal. Pray I do not alter it further."
Putting all your eggs in one basket is a poor business decision, and now you are reaping the rewards of that decision. Apple is not solely to blame here.
Apple went out begging third party hardware developers to build to CHiRP (PReP) machines so it would run Mac OS8 and then reversed course denying them Mac OS-9 license. Some things never change with Apple. My first computer was an Apple ][+, I doubt I will ever own anything Apple related again.
His eBook goes to (Chapter) 11?
Why, without your clothes, you're naked, Miss Dudley!
True, but would you really expect Apple to explicitly say "you are not allow to make any profit selling books on our platform"? From TFA:
* You must sell books from major publishers at the same price as Apple does.
* Those publishers must give you exactly 30% commission.
* iOS booksellers have to give 30% of their revenue to Apple.
Hence enforced 0% profit margin. I don't think you can blame them for thinking that Apple would never go quite *that* far. Of course they should have diversified to Android *anyway*...
"We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game."
Sounds like they ruined their own business by making bad decisions. If Apple is being short-sighted by killing off the providers of content users put on Apple devices, then those providers are just as short-sighted by assuming Apple would be considerate of their interests.
Oh wait, this isn't from a content originator, this isn't the authors guild, this is another middle man.
I have some buggy whip makers who want to talk with you.
https://www.iflowreader.com/Closing.aspx
iFlow says that five of them spent nearly a year and a half of our lives and over a million dollars in cash and sweat equity developing the iFlowReader app with its unique AutoScrolling approach but all of it now has gone to waste. "We put our faith in Apple and they screwed us. This happened even though we went to great lengths to clear our plans with Apple because we did not want to make this substantial investment of time and money blindly. Apple's response to our detailed inquiries was to tell us that our plans did not infringe their rules in any way, which was true at the time, but there is one little catch. Apple can change the rules at any time and they did. Sadly they must have known full well that they were going to do this. Apple's iBooks was already in development when we talked to them and they certainly must have known that their future plans would doom us to failure no matter how good our product was. We never really had a chance."
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Oh dear God. My last boss wasted a day of our lives and a wodge of money paying some muppet to teach us that pseudo-psycho babble. Even worse than that bloody fish thing from a few years earlier (because after all, creating great software is just like trying to sell fish isn't it?).
So you get around things like this by signing contracts and service level agreements. If you don't have one of those or, more likely when dealing with Apple, you can't get one of those, then you probably shouldn't bother using their service, or at least be prepared when those goalposts move. Eggs in multiple baskets, the smallest fraction of those eggs in Apple, etc.
Get a lawyer, get it signed. This is business.
Apple is your mom when they tell you how to develop an application, distribute it and how much you can charge for it (oh and btw - it will cost more than Apple's offerings because you have to give 30% to them) plus how much you can charge for content on it (again - another 30%).
If they change the rules - your out of the house.
Apple is worse than your mother - Apple is like some sort of crime lord.
While I do not feel bad for the guy, all he is doing is issuing a warning to other companies that are considering doing business with Apple or on IOS devices. This particular business made a bad decision that a little bit of observation of past behavior would have told them would end in tears. However, the point he is making is that Apple encouraged them to develop this market and business strategy, while Apple was already planning to cut the supports out from under it if the business was successful. Apple basically encouraged another business to take the risk of developing a market that Apple intended to steal if it worked out.
The truth is that all men having power ought to be mistrusted. James Madison
That iPad thing may change soon, when the new rules come into effect in June/July, the Kindle app will no longer be allowed to link to the Kindle store for purchases.
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$17 via iBooks? Yeah right!
Their may be a grammatical error, misspeling, or evn a typo in this post.
Seriously, building an entire business around one iPhone/iPad app and in app sales of content that can be had anywhere? You pretty much were doomed to fail from the start before Apple changed the rules.
You are also an idiot for NOT expecting Apple to make that change. Why on Earth would Apple leave a blindingly large loophole in the system that allowed you to sell services which funnel through Apple and as such require Apple to support them (which costs money) and without you making any contribution to the system? If you thought at any point Apple was going to let you charge for in app purchases without ever taking a cut, you're an idiot. Theres no other way to state it, you're simply too stupid to run a business on that alone.
Finally, the most important thing to point out here ...
If you've made all that investment and got a bunch of software, hardware, and book licenses ... WHY ARE YOU NOT SELLING BOOKS FOR ANDROID, BLACKBERRY AND WINDOWS MOBILE/PHONE?!
Yes, caps were required, because thats the obvious thing to do, and once again, you're a complete fucking moron for not doing it.
Instead you said 'OMG WE FAILED BECAUSE OF APPLE!!!'. If you take off the word because, and everything after it, the sentence is true.
You failed, and you did it to yourself. Go back to sucking on mommies teet for safety, you don't belong in the business world, no one is going to carry your weight for you.
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I probably shouldn't respond to somebody who's handle is 'countertrolling', but...
If you've read any of the information on this subject, you'd know that the contract with Apple requires that you price eBooks the same as what Apple sells them for. So raising the price is not an option.
Now you can easily self publish any book you want. What margins do a writer make right now?
From what I gather it is at MOST 15% of the NET profits, so a $25.00 book may only make you as a writer $2 at most after all the "Costs" of selling are added up.
So, if you sell the book yourself through Apple, you get to keep 70% of your profit, doing some simple math that turns out to be $17.50.
Now who is the evil company, publishers who give you $2 on your $25 book or Apple who gives you $17.50?
They invested significantly in Apple, had a *slightly* profitable business going. Then Apple effectively goes into "price-fixing" anything on the iOS platform, saying no-one can charge more then they do. As well, anything purchased on an iOS device will have to sacrifice %30 on the altar of Jobs. So:
1: a business starts up an app on [insert iOS device here]
2: business starts raking in profits
3: Apple notices, develops it's own app, as well as negotiating lower prices for itself.
4: Apple prices other business right out of it's market, due to %30 fee that affects everyone but Apple.
5: Profit
No ??????, it's pretty much cut and dry, and especially so now that Apple controls all the data mining from their iOS. This alone allows them to choose their battles, because they can see where the money flows. They can choose to try to take %30 of the profit, or all of it.
Actually, even before eBooks, it cost so little to print a book that it was hardly an issue of cost. It costs pennies to print a book. The price you pay for books, even now, goes to other things (cover artist, author, publisher, marketers, etc). Going digital really doesn't save publishers any significant amount of money.
Give a man a fire and he'll be warm for a day. But light a man on fire and he'll be warm for the rest of his life.
Remains to be seen. Many think the Kindle app may somehow end up with an exclusion from the rule.
The Apple cut has been pretty well known
No, the Apple cut was initially only for Apps, not for purchases within Apps before Apple changed the rules in February.
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Every post here says some variation of "Quit whining. This is your fault for trusting Apple not to change the rules."
Which is not the point (or rather you are making the author's point for him). Apple's business practices are (and always have been) aggressively biased against third-parties. It's remarkably consistent and it's their Achilles heel.
The stark lesson is: do not develop for Apple platforms. No matter how shiny or revolutionary the hardware, and no matter how brilliant your idea, Apple will rip you off.
It breaks my pluginses, my precious!
I believe major publishers have pricing agreements, fixing a minimum price for their books.
This is why some major titles are more expensive as an ebook than in paper format despite paper being obviously more expensive. I found this with a couple of minutes searching Amazon:
http://www.amazon.com/The-Devil-Wears-Prada-ebook/dp/B000FBFNBK/
$10.19 in paperback, $11.99 if you want the Kindle edition.
With publishers removing any opportunity to discount, it becomes nearly impossible to compete - especially if you have to give 30% of any sale to your competitor.
Here's what I don't get about this: Apple is telling ebook retailers that they have to buy from publishers at a fixed margin. How is the margin of a given ebook publisher any of Apple's business? Apple is basically forcing two other entities to modify or annul the contract they already had, and/or is actively preventing them from agreeing to a future contract that doesn't fit Apple's requirements. How is this not a textbook definition of tortuous interference?
God invented whiskey so the Irish would not rule the world.
No one thinks its a bad for a start up company with limited resources to put all its eggs in the Microsoft Windows basket.
Apple has the 80%+ market share with tablets. They have no choice but to rely on Apple for them to remain profitable. Other platforms aren't bringing in enough revenue at the moment to justify the investment.
If you read the blog post, the owner explains that they repeatedly asked Apple for a validation of their business model, and that the only response they received was that their app did not violate policy. Moreover, he suggests that Apple acted in bad faith by implementing iBooks to destroy his business model, without alerting him of their intentions.
He also states that they went through considerable trouble and expense to build an application, only to give it away for free and depend on revenue from a "middle-man" business model, where they would resell e-books that publishers were already selling.
He further states that all publishers had moved to an "agent" model where they require all resellers be bound to the same price, of which they get a 30% commission, so his margins were already razor-thin.
This all strikes me as very flawed business model from the beginning. This is not an app developer, this is a re-seller--a middle-man-- that happens to give away an app in order to sell e-books from it. The fact that he developed the app is immaterial, since it was not the product that he sold.
Did they really expect Apple to have their lawyers and business executives analyse their company's business model to make sure that it would be successful? Is it really Apple's fault that they didn't see the flaw in their "middle-man" re-seller model?
If his e-book reader is such a novel and marvelous app, as he suggests in his blog post, then why doesn't he just sell the app and let it stand on its own merit? He suggests that iBooks is just gimmicky with its page-turning animations, and that his app is superior; well, then he should be able to make money out of it. His business model was broken, not his app.
-dZ.
Carol vs. Ghost
You must sell books from major publishers at the same price as Apple does.
Which is entirely wrong.
You can't see books cheaper than Apple does, you can certainly charge MORE. This is a rather common thing in retail.
You are required to sell in app if you sell online and allow that to be downloaded too the app.
If you sell books on your own website (that you can get on your iOS device as well), then you have to charge the same price (or more) than it costs to get them on the iOS device. Basically you can't charge $200 for a book on the device, and $20 on your website as a way to skirt around Apple requiring you to sell them in the app.
Those publishers must give you exactly 30% commission.
Apple does not say that anywhere, nor do they have ANY control over who much you pay to license content from others. This is just bellyaching and lies.
iOS booksellers have to give 30% of their revenue to Apple.
Yea, and if you have even the slightest clue about the retail world, you'll know that when you put your shit in someones store, they take a cut. 30% is pretty much THE standard amount. In big box retail, there are times when you end up paying more to be in the store, per item, than your item costs total. Its not just a loss to be in the store, you're actually loosing more than just the cost of your item!
There is no enforced 0% profit margin, though I'll admit, why would you buy from someone other than the iBookstore if the iBookstore is the cheapest, but thats just business. Don't like it? Sell on someone elses device or make your own. Ever heard of Windows Mobile, Android, or BlackBerry?
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Paraphrased: "We bet everything on one single trendy niche product among many, which is linked to one single trendy content sales channel, both of which happen to be tightly controlled by another party whose interests conflict with ours, and somehow it didn't work out for us."
If it makes you feel any better, that particular manufacturer probably isn't going to have lasting, long-term dominance (but if they stay on the ball (and I think they will), they'll be a player you can't quite totally ignore), so it's pretty silly to say they've ruined the ebook business. You'll face other challenges later, so the general lesson you should take from this ephemeral phenomenon is: don't be anyone's bitch. And face it, you did decide to be someone's bitch.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Their app only has two reviews, and both of them are bad. Maybe they were going to fail anyway.
There was a time when one could dream of starting a small niche business and if done right, grow it into a large and successful company.
Those days are long gone. The dream today is more along the lines of "start a small business and hope to
A. eek out enough profit to keep the doors open, or
B. (if you're lucky), get bought out by a bigger company".
While starting any kind of business is a bit of a crap-shoot, the odds used to be good enough to at least encourage people to try.
I've been around long enough that none of this comes as a surprise, but what still irritates me is that people, for the most part, are OK with this. It's just business.
Well, that's all fine and good, and one day we can all thank our Wal-Mart overlords for allowing us to buy their products at whatever price they want to charge while paying us the minimum amount they can get away with.
I just wonder, how long do you folks that think unbridled capitalism will last? Marx predicted that Capitalism can't last because it will basically keep eating it's young, with the wealth and power continually becoming concentrated among so few that eventually the populace would revolt.
Personally, I would rather see some checks put on capitalism rather than see it fail and be overtaken by some form of communism, but I guess the pure capitalists won't believe this will happen until it's too late. What a shame.
Sometimes the light at the end of the tunnel is the headlight of an oncoming train.
So basically.. if you want to survive as an app developer make sure that iOS isn't your primary platform. You can make an iOS app on the side but you better make Android your primary goal so that if Apple screws you over you aren't screwed.
From the application developer's blog here discussing the issue, they say:
I'd be happy to read any articles or discussions about the "Agent Model" that show these guys are lying, as you say they are. They very well may be, I don't know. But according to what they say, Apple has fixed prices such that a competitor can not make money through the iOS platform.
Under the new 'Agency Model', the publishers set the end-user price. They set that price at $10, and you, as an agent, get $3 of that. You can't change your prices up or down. Only the publisher can do that.
Sort of. They indeed can't affect how much you pay to license content. However, they don't need to: publishers no longer 'license' content— they give a fixed commission to sales agents. Many publishers give a different amount. Unfortunately, it's most commonly less than 30%. 30% is, in fact, the highest commission the publishers give any sales agents these days. So most booksellers will be getting perhaps $1.50 or $2 commission from that $10 book. But still, Apple will take $3 from them, meaning they have to pay $1 - $1.50 to the publishers out of their own pockets. Which is unsustainable, when it happens on every single bit of income your company makes (or a high enough percentage of it, like, say, more than 30% of your revenue sources).
They're not selling books through Apple's store, though. They're selling software. And they're happy to let Apple have 30% of the price of the software, since Apple hosts it on their servers, advertises it, etc. The situation you describe would suggest that if I created an eReader device and sold that at a Wal-Mart, then Wal-Mart should be able to claim a percentage of all money I make through that device. Which is wrong— they sold my eReader, so they got their commission on that. They can sell gift cards for it, and get commission on those. But they don't get commission on anything they're not involved with.
The problem, however, lies with the eBooks being sold. Apple doesn't do anything with those. You have to pay someone like Microsoft or Amazon for Azure or S3 storage, or you have to run your own server farm (trust me, 3 million eBooks needs an awful lot of space). You then need to look at CDNs so your customers on the other side of the world can pull down content as fast as your local ones. You need to hire lawyers to negotiate with the publishers, since Apple doesn't do that for you.
In the end, what is Apple charging 30% for? What service are they providing that is worth so much?
Credit card transaction handling.
That's it. They don't host anything, they don't pay for bandwidth costs, they don't help with acquisition. They don't even do a great deal to help you get customers, since they're actively trying to lure your customers away to their competing software offering.
Sure. The company I work for sells eBooks on just about every platform going. iOS i
Not quite.
ePub isn't just a bare open format. It's also a vehicle for DRM. Once you introduce this DRM, then you need a special decoder. That special decoder then needs to be available to the customer. At that point, you have to worry about Apple as a gatekeeper.
The idea of selling stuff directly to the customer only works so long as it's in a format that Apple already can deal with.
Even THAT is entirely dependent on Apple and could change at any moment.
A Pirate and a Puritan look the same on a balance sheet.
First off, grats on being the 50th person to make that obvious but not well thought out observation.
Secondly, it's completely wrong. Starting a business with a narrow focus is typically what you do and it's what is preached in schools. Find something that you think can make a profit, focus on it, and do it well. In this case they had something until Apple decided they wanted it.
You can't blame them for trying.
Sigs are awesome huh?
...than the one in your commodore 64, why aren't you complaining about not being able to run arbitrary software on it?
The agency model was created by Apple who made it a requirement for any publisher who wished to sell books through Apple’s iBooks app.
This seems to be talking about agents selling books through iBooks. Where does it say that Apple made it a requirement for any developer who wants to sell books in their own iOS app to adopt the same model?
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.