Amazon Turns Off In-App Purchases In iOS Comixology

whisper_jeff writes: "Under the bold assumption that, since they were able to do it with books, they must be able to do it with comics, Amazon has decided to avoid Apple's 30% cut of in app purchases by removing the option from digital comic book platform Comixology for iOS users. It will be interesting to see if digital comic readers leap through the extra hoops to read digital comics on their iOS device or if Amazon has just signed the death knell for their new purchase. Readers may decide that buying a book and buying a comic aren't the same thing — that the extra hoops they're being forced to leap through simply aren't worth it for a comic that takes five minutes to read."

Comments

As a big comixology user, this *sucks*

[dknight]

Honestly, one of the great things about comixology was being able to quickly buy/download the next comic in the series when I was binge-reading. I have *hundreds* of comics through them, but I'm not sure if I will be buying any more with this new system. The kindle thing was enough of a pain, but at least a book takes a little longer to read.

I think they've shot themselves in teh foot on this one.

Re:As a big comixology user, this *sucks*

[schnell]

I have *hundreds* of comics through them, but I'm not sure if I will be buying any more with this new system.

Agreed. I have bought hundreds of comics through this app, usually when they are on-sale and/or I'm reading one comic and get hooked and can just use the app to grab the rest of the series or storyline. In-app purchase was key since shopping through the Comixology website was simply not very convenient.

I completely get why Amazon would want to stick it to Apple with a move like this. What I find to be un-Amazon-like is that they are screwing over their customer experience in order to do it. Say what you will about Amazon, they usually work very hard to ensure that it is as easy as possible for customers to hand them money. Here, they're going in the opposite direction just to take a poke at Apple. Very unlike them, and a decision I hope is rectified with a 3.7 version and a mea culpa soon.

Re:As a big comixology user, this *sucks*

[Richy_T]

It's not just taking a poke at apple. Apples fees are egregiously high. Smaller operators may just be forced to suck it up but Amazon is in the position of making a more tactical decision. Not only do they have their own device(s) but Apple is not exactly without other competitors. I guess they feel they're in a position where they can see how it plays out.

Re:As a big comixology user, this *sucks*

[tlhIngan]

Honestly, one of the great things about comixology was being able to quickly buy/download the next comic in the series when I was binge-reading. I have *hundreds* of comics through them, but I'm not sure if I will be buying any more with this new system. The kindle thing was enough of a pain, but at least a book takes a little longer to read.

I think they've shot themselves in teh foot on this one.

And you know what? Comixology knew that, that's why they sucked it up and gave Apple the 30% (though to be honest, the wholesale price Comixology paid meant they still made a profit - even raw comic books that sell for $4 probably cost the store $2 or less). Because by making the user jump through hoops to buy it to get that extra 30% means they'll lose the impulse-buy. And impulse-buy is big - for every person willing to jump through a hoop, 10-20 would just do one-click purchasing (just ask Amazon - if One-Click didn't work, why bother suing B&N over it?), making that 30% easily justifiable.

And no, Amazon won't sell it online any cheaper - they can't. Diamond Comics (the SOLE comic distributor for practically ALL comics worldwide) has a virtual monopoly on it, and they view any reseller that undercuts others (comic stores) very dimly. The only time it doesn't matter is when the items are available through other channels (e.g., most books). But comics are Diamond's property and someone who undercuts may find their orders shorted, especially on items that are often allocated.

Re:As a big comixology user, this *sucks*

[wonkey_monkey]

So, you love the service but not enough just to go to a web site and buy it for 30% (or so) less than you have been paying now?

That's a rather optimistic assumption.

Re: As a big comixology user, this *sucks*

[Jakeula]

I believe the idea here is that comics would cost more when purchasing them on the iOS version due to them having to pay Apple. I read my comics on Android, so I have no clue if there is a price difference. I imagine their 99 cent deals are likely still priced at 99 cents, so I would expect to find that the comics cost exactly the same price on both platforms. Honestly I can see why Amazon would want to change this immediately. Comixology had no ground to oppose Apples charges, but Amazon has the cash to front the costs of this move. I mean, if I just bought a company and a good portion of my purchases came from a platform that charged 30% I would rethink things as well.

Re:As a big comixology user, this *sucks*

[BasilBrush]

More to the point, Amazon have a business plan that means they aim to make no profit, instead they reinvest or subsidise loss making lines with profitable ones, so they can kill other on-line markets and grow towards monopoly on-line market for everything.

They won't care if comixology is unprofitable for years. For them it's better than letting another on-line market take a cut.

Re:As a big comixology user, this *sucks*

[Richy_T]

What overheads to Apple have *at all* from items sold in-app from a phone you have purchased over your own internet connection or data plan?

Re:As a big comixology user, this *sucks*

[hjf]

I live in Argentina. I have a comic book shop and the markup is 30-35% only.

"Newsstands" get the comics, sell them, and pocket the difference. The remaining ones are returned at no cost for them (not even shipping).
"Real" stores like mine, have to pay in advance, unsold ones you stick up your own ass, and have to pay higher taxes, operating costs, and credit/debit card fees (3%/1.5% respectively, plus other taxes). People don't expect a newsstand to operate with CC but when they come to my shop they get mad if I only accept cash.

Sigh...

Re:As a big comixology user, this *sucks*

[Concerned Onlooker]

I think you have a selective memory. Developers originally flocked to the app store because Apple was only taking 33%, not the 50% or more they were used to suffering from.

Additionally, it's not even about overhead. It's about supply, demand and what the market will bear. I hope you complain just as bitterly when you buy batteries. Do you have any idea what the markup is on those things?

Re:As a big comixology user, this *sucks*

[tlhIngan]

I am not a heavy comic reader, but I always went to the Comixology site to buy rather than the in app purchase. I figured that Comixology deserved the full price, and not the 30% skim that Apple took.

Perhaps, perhaps not. It's a seldom known fact that the cost of sales varies pretty dramataically.

It's possible (and for many companies, entirely probable) that it's cheaper to pay Apple 30% than to duplicate Apple's efforts. In fact, many are extremely happy that stores are only charging 30% and it saves them money in the end. It doesn't matter the store - Amazon, Google Play (FYI - IAPs in Play Store require Google getting a 30% cut as well), iTunes, Steam. I've seen many prefer "someone else" handle all the nasty billing/taxes/gift cards/etc work.

After all, it's only a matter of time until some payment processor that your favorite site uses is breached, so that's a genuine concern. Then there's the whole CDN, accounts (how many websites were poorly secured and had breaches, again?), past purchases, etc. stuff that has to be handled.

Hell, in the end, Comixology could've run the numbers and figured the cost of a sale on their website. It could be break even - they make the same as iTunes via their website. Or perhaps they make more money through iTunes than their website (don't laugh - there are companies who have done the math and realized their cost of sales is higher than 30%).

Of course, Amazon is a huge company, so if payment processors is a huge chunk of the cost of sales, switching to Amazon would save them a bunch of money now. Of course, if it isn't, then it's just Amazon screwing over iTunes and Google Play users to favor their own App Store, which is also a perfectly valid strategy.

Re:As a big comixology user, this *sucks*

[BasilBrush]

But given that apps with in-app purchase are typically free to initially download, your claim that none of it is needed is pure crap. Apple hasn't got any money for all the services it's provided prior to the in-app purchase, so of course they deserve a cut of the in-app purchase.

The amount of the cut is certainly debatable. But the fact that they take one is not controversial in the slightest. Well not with actual developers. Idiots on Slashdot that aren't developers, is a slightly different story.

Re:As a big comixology user, this *sucks*

[BasilBrush]

You're comparing apples and oranges. Amazon takes a cut of 30% or 65% to sell your book, makes it searchable as part of their listings, and distributes your book. Apple takes a cut of 30% for merely allowing you to sell content using an app that you wrote, solely because that app is running on their hardware platform.

Again, no it's not just because it's on their platform. Apple are providing many things I already mentioned. You still aren't including them because most of them are lumped in with the original app for which Apple has usually supplied all services FREE. I've already covered that.

And of course you're missing the fact that every business charges what the market will bear, not their costs plus a minimal profit. And in general the market is quite happy with the market they are offered for a mere 30% charge.

But as with any other service purchased by a major corporation, once purchased, consumers would expect it to be integrated under Amazon's brand, which means integrating their billing system into Amazon's.

Actually, if you read Twitter and the blogs, you'll find 95% against Amazon. No one wanted this changed except for Amazon.

Second, the reason the free-to-download, fee-to-play model works is that Apple makes the in-app purchases nearly transparent to the user. If the user is forced to enter a credit card number on an outside site, that ceases to be true, and the model breaks very badly for the game developer.

It breaks for everyone. The user doesn't want different billing models for different apps.

I can't imagine how awful that would be to integrate multiple in-app purchase systems into such a giant behemoth of a billing system. :-)

It's pretty easy. They get a cheque from Apple once a month.

Because smaller companies almost certainly need Apple to provide the infrastructure for handling payment and distribution, whereas larger companies already have that infrastructure. To small companies, Apple's offerings are awesome, and make their lives easier. To larger companies, Apple is a leech. It's not a question of whether big corporations should get better terms. Everyone should get better terms.

You've already accepted that users don\'t want to enter their credit card details over and over for different apps. Your proposal just made users lives worse. Ergo Apple's solution is better than yours.

Amazon will either return to Apple\s IAP system, or they will slowly kill Comixology. The users don't like the change that has made the app far less useful to them.

Re: As a big comixology user, this *sucks*

[BasilBrush]

That's quite amusing since Amazon also impose a most favoured nation clause on their suppliers. That makes it quite quite hard to make them out to be the victim here.

Worse, Amazon pay a percentage of ebook sales to authors. But Amazon themselves set the price. And of they decide it's zero, they are giving the ebook out to customers without the author receiving a penny.
http://www.mhpbooks.com/amazon...

You were saying?

Re:As a big comixology user, this *sucks*

[BasilBrush]

Have you ever written a billing system that has to handle refunds through three entirely different mechanisms provided by three different companies?

Apple handle refunds. It's part of the service.

Have you ever had to explain to customers that the refund policy for product A is different from the policy for product B because you bought product A using an iOS app?

No, but of the many things that customer support have to explain to customers that doesn't seem particularly complex. Especially as iOS users tend to know that they do all their purchases through the App Store. Simplicity wins.

Yes, it is more difficult for Amazon than it is for other developers, unless they have no intention of ever unifying the purchasing experience, which is something that they are obviously trying to do.

Well that's their choice to make it more difficult for themselves than all those other businesses.

Yes. Let the market sort it out. The three companies who go off on their own and do things outside of in-app purchase without a really good reason (companies without an ongoing customer relationship outside of the iOS world) will get slammed in the press, and nobody will make that mistake again. The companies that do have a legitimate reason won't be criticized for it, and in the end, it will all "just work (out)".

Your belief that the free market means things magically "just work out" is touchingly naive. Especially after the estimate of just 3 companies getting it wrong out of the hundreds of thousands of iOS developers. You just made life more complicated for iOS users. That is not "just working out".

As I understand it, Amazon's MFN contract clauses were mostly phased out a while back because they they were found to be illegal by a court of law.

Possibly. I don't remember seeing a news article saying they'd stopped. But then again I haven't heard about them doing it recently either. But the irony remains if Amazon used to do it and only stopped because a court ordered it.

Re:Are they allowed to do that?

[whisper_jeff]

In app purchases pay a 30% fee to Apple to payment processing, etc. Purchases made outside the app (ie: at a developer's website such as amazon.com) do not incur the 30% fee.

It's up to each developer to decide if the 30% fee is worth the ease of use and Apple handling all the payment processing or not. The vast, vast, vast majority of developers happily pay that fee. Amazon is the one high profile developer to buck that trend, first with Kindle and now with Comixology.

You can sell externally, can't provide link in-app

[SuperKendall]

I thought that any bolt-ons for apps had to be sold through the Apple Store so they could collect their 30% cut.

You can sell things externally to unlock features - for instance there are many applications for websites that require a paid subscription to work.

What you can't do is provide a link in the app that takes you directly to a purchasing page to work wrounf the in-app thing.

Honestly tough, I've always thought it was a pretty fair trade-off to pay 30% to gan access to many millions of people who already have payment details entered and ready to go at the press of a button.

I'm pretty sure Comixology will lose far more in sales than they would gain by not giving away 30%, I've bought a number of things in the app but if I can't I simply will not bother to figure out how I can get them.

I do think it's a precursor to Amazon folding Comixology into the Kindle application, then it would be easier for people to make use of to buy comics as they already do books for the Kindle app. In that case I don't think they will lose many sales (though that's long term and I've not heard they plan to do so yet).

30% is such a nice cut

[postmortem]

If you're mafia, or Apple.

Re:30% is such a nice cut

[whisper_jeff]

Or Google. https://support.google.com/goo...

And virtually everyone else that offers payment processing services

Sorry - you were attempting to imply that Apple was akin to the Mafia because they charge the same rate as everyone else for the same service. As you were.

Re:30% is such a nice cut

[Gavagai80]

And virtually everyone else that offers payment processing services

Only in mobile app walled gardens. PayPal, 2checkout, authorize.net etc only take about 3%.

Sad to say it, but Go Amazon.

[Anonymous Coward]

Anything that keeps down Apple's extortion, even a bit, is a win in my book. And you can tell that Amazon is doing this _explicitly_ to keep the unearned profits out of Apple's pockets rather than to optimize their own revenue. If all they were concerned about was their bottom line they would offer the in-app purchases at an additional mark-up that covers Apple's 30% and let any customers who value that convenience over the extra cost have at it, while still offering external purchases at current prices. Amazon is by no means a saint either, but a little healthy sibling rivalry and competition can often (though not always) benefit consumers in the long run.

Re:Are they allowed to do that?

[alvinrod]

It probably makes sense for Amazon to do it though considering they have their own infrastructure for handling payments and their own huge customer base. They don't own the content that's being sold either, so I imagine that Apple's 30% cut eats into potential profits by a large amount.

Re:Erh... wouldn't it be smarter....

[whisper_jeff]

Not allowed. If an in app purchase is offered and the same purchase is available on an external source, the price of the in app purchase cannot be higher.

Re:You mean, such a low cut...

[GryMor]

30% wholesale is 23% of retail, apple is taking 30% of retail (42% of wholesale if they were the store), AND THEY AREN'T EVEN THE STORE.

Amazon is worse?

[Anonymous Coward]

That's a VAST oversimplification with a huge "axe to grind against Amazon" and/or "fanboyism of Apple" slant at best.
Not to mention the whole "setting the workplace back 100 years" is 100% pure BS.
You're forgetting Wal-Mart already existed long before Amazon even made any significant inroads into anything beyond selling physical books online at good prices and with an unmatched selection and good, though impersonal, service.
I happen to LIKE seeing companies like Amazon help keep things in check to some degree.

Face reality, developed countries will never return to the mom & pop corner store days, so if there are at least three or four big companies vying for each market, that's a heck of a lot better than only one or two since neither monopolies nor duopolies tend to work out very well for consumers. I don't want Amazon to rule the world, but I sure as heck don't want Apple or Facebook or Google or Wal-Mart to either. It's good for someone to put Apple in their place from time to time.

Re: metaphors

[Richy_T]

Quit raining on his chain.

Re:Are they allowed to do that?

[Dahamma]

Actually, it's not even a matter of Apple handling the payment processing. Even if you handle your own payment, they still want 30% if it's in app.

And you can *say* the "vast, vast majority of developers happily pay that fee", but in fact it's ONLY for their OWN in-app purchased assets, which 99% of the time are completely arbitrary (oh, Apple just took 30% of the fee on your extra life or 1000 quatloos? No way!) Please name any major TVOD or popular music providers who are paying a 30% fee on all purchases. I guarantee you can't, because that's for the most part more than the their profit margin on that content. Hell, even *Walmart* makes less than 30% on physical DVDs/BDs these days. Apple actually has to be careful they don't get too much of the content market with iTunes, or their conflict of interest in being a content seller and a fee-based marketplace could get them into anti-trust trouble...

Re:Are they allowed to do that?

[Dahamma]

I know for video that's pretty much the entire profit margin. Apple basically doesn't want any competition to iTunes so they have priced out TVOD/music competitors completely.

Re:You mean, such a low cut...

[Dahamma]

If there's a minimum amount of profit you must make from each sale, the answer is simple - when selling through Apple increase your prices to compensate for Apple's cut. Pass along the costs directly to the customer if you think they are unfair.

Except, of course, the obvious flaw to that suggestion for most digital content (books, music, movies/tv) is that the content owners are charging the same wholesale cost to Apple as they are to the other providers. Apple gets to keep all of their margin (which for digital content is often in the 30% range) while their competitors either give away the content at cost or become completely uncompetitive vs. iTunes.

Similarly, lots of things sold in stores are taking more than 30% of wholesale. Usually a LOT more.

Actually, physical media is no longer taking "a LOT more" than 30% margin these days, either. You can credit the popularity of digital purchases, Amazon's loss-leaders, or Walmart's low prices, but 30% is actually a pretty decent margin for physical DVDs & BDs now, as well.

Re:You can sell externally, can't provide link in-

[SuperKendall]

Imagine if apple wanted a 30% cut of your ebay or amazon (regular purchases not e-books) purchases made using ebay/amazon app.

Have you ever sold anything on eBay? Between eBay and PayPal (pretty much required to sell on eBay) and sometimes shipping fees, you are looking at not that far off 30% gone from the sale price.

If every middleman wanted a 30% cut, supply chains will completely collapse

Plainly they have not.

Again depends on their volume and how much amazon pays the content owners.

It depends on the NEW volume, which inherently will be far lower. Where do you even GO to buy a Comixology comic? I don't know, and I don't care - even though I have about 20 comics I purchased through the app.

Re:You can sell externally, can't provide link in-

[tepples]

Have you ever sold anything on eBay? Between eBay and PayPal (pretty much required to sell on eBay) and sometimes shipping fees, you are looking at not that far off 30% gone from the sale price.

My employer sells things on eBay, and eBay and PayPal combined take 15 percent. So does Amazon. Shipping will be the same no matter which storefront and payment processor the seller uses.