Apple "Walled Garden" More Like A Vineyard, Sour Grapes And All
May 13, 2011
There has been much ado of late about Apple's in-app subscription and purchasing model. Many publishers, for a variety of reasons, have been slow to embrace iOS as a proper distribution vessel for books and magazines. Finally, though, the big boys appear to have sorted everything out.
Unfortunately, some of the smaller fish are getting caught in the net. You no doubt remember just two days ago that BeamItDown Software penned this scathing letter about Apple's crippling approach to in-app purchases and the blanket-enforcement of its controversial "agency model." Says the iFlow Reader developer:
We absolutely do not want to do this, but Apple has made it completely impossible for anyone but Apple to make a profit selling contemporary ebooks on any iOS device. We cannot survive selling books at a loss and so we are forced to go out of business. We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game... The crux of the matter is that Apple is now requiring us, as well as all other ebook sellers, to give them 30% of the selling price of any ebook that we sell from our iOS app. Unfortunately, because of the “agency model” that has been adopted by the largest publishers, our gross margin on ebooks after paying the wholesaler is less than 30%, which means that we would have to take a loss on all ebooks sold. This is not a sustainable business model... We put our faith in Apple and they screwed us.It is certainly sad when a company is forced out of industrial profit and has to shutter its doors, but BeamItDown is neglecting to place any of the blame for this ultimate failing upon their own shoulders; and that makes it exceedingly difficult to empathize with the company. Firstly, and quite basically, the brand placed all of its proverbial eggs in one basket. True, iOS is a big basket, but it's still just one basket. When the rules change and that basket's wicker bottom widens, small operations might fall through the cracks, and that's exactly what happened. Had the developer spent some of their "over a million dollars in cash and sweat equity" on a preservation or contingency plan -- like making a web app, for instance, or coding in tandem for the Android or BlackBerry platforms -- this situation would have proved well short of lethal. Secondly, the company claims that, despite notching "over six million downloads" of iFlow Reader apps, it cannot survive Apple's policy change. If true, this statement proves a piteous lack of both business sense and customer trust. Consider the official name of the app in its iTunes listing: "40,554 Free Books and So Much More - iFlow Reader." The app calls itself a host to free media, first and foremost, yet its business model seems to have been strictly based on the building and employment of a retail ebook service. To take matters further, BeamItDown openly proclaims, "We think that our product is the best one available on iOS for reading ebooks," that their "unique AutoScrolling approach" has a great many fans, and that they "had extensive plans to make it even better." The company is touting its product's merits as a "reader," not a "seller;" and if it truly is such an amazing experience, they should be committed to their six million customers in continuing to provide the platform everyone so strongly believes in. There are so many options precedent to the one they settled on that it boggles the mind. They have a huge app installation and scores of daily users built on the strength of their free reading experience. Those public domain books will remain free forever, and that list will continuously grow as more and more great works slip out of copyright. I wonder, then, where is the dedication of which BeamItDown hints? All those updates that were coming -- put them in a premium package and charge a buck or two. BeamItDown, If six million people each purchase even a one dollar app, you'd have a bona fide commercial mega-success! The attitude the developer is taking seems absolutely all-or-nothing. Perhaps that's my biggest problem with it. They got thrown a lemon, loudly proclaimed, "Aw, fudge!" and dropped everything. But Lemonade's still waiting patiently right around the corner! Of course, lemonade tastes better when you hold the sour grapes. This drama reminds me of when all my town's independent rental stores closed, and I couldn't get that one Johnny Depp movie. Not What's Eating Gilbert Grape... For a less subjective look at the reality of Apple's exclusive control, check out Mathew Ingram's post on GigaOM.