[Editors’ Note: Each week, the Macalope skewers the worst of the week’s coverage of Apple and other technology companies. In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.]
Apple announced its new subscription service and terms for iOS apps this week and, just as people in Egypt and Wisconsin have taken to the literal streets to protest, pundits took to the virtual streets to rail against the establishment, man! And who turned the iPhone rumor machine on high? LU-CY!
It ain’t Marquess of Queensberry
TechCrunch’s Jason Kincaid wants to know, why are you people defending Apple’s decision to take 30 percent of subscription revenues?
The first mistake people are making has been to focus on whether or not this move is Apple’s prerogative. Ignoring the rumored antitrust issues, I really don’t think it’s worth considering whether Apple has the right to impose a 30 percent fee on applications, any more than I question whether Monster Cable has the right to sell their HDMI cables at multi-thousand percent markups, or whether cell carriers have the right to charge exorbitant fees for text messages. But that doesn’t mean they aren’t being obscenely greedy.
That’s a rather quaint viewpoint, don’t you think? This is capitalism. And, to be truthful, the Macalope’s not at all convinced capitalism is the best system, but it’s the one we’re stuck with, so expecting for-profit companies to play by imaginary rules you’ve made up about what’s “fair” is simply not realistic.
Another flawed response is that Apple has the users’ interests at heart — after all, they’re restricting how much user information publishers can gather (and re-sell), and they’re making the in-app purchasing process as simple as possible. Which is great, but that doesn’t explain why Apple is demanding 30% of each purchase.
They’re doing it because they can (or at least think they can).
And finally, there’s the related notion that anyone who doesn’t like Apple’s rules can pick up and move to another platform, like Android. Which is ridiculous. Android and iOS share many similarities, but they’re loaded with subtle (and not-so-subtle) UI differences that intimidate “normal” people.
Well, yeah, and this has been the Macalope’s response to those shouting about “Steve Jobs’ walled garden” for a long time. You have to evaluate the platform as a whole. Are there restrictions? Sure. There are also benefits. Adults can come to different conclusions about which is best. Sometimes it’s hard to switch, but they can. People do it all the time.
Not to mention the fact that users have built up libraries of dozens of applications and DRM-laden content that won’t transfer between devices.
That’s an issue but it’s not insurmountable. The bigger problem is probably that breadth and quality of apps on Android is so much worse.
There are three counter arguments to Kincaid’s claim that users won’t switch. First, new users aren’t locked in and can choose appropriately. Second, content providers will switch if it’s a bad business deal for them. Third, if Apple manages to lock in all the users—and thereby all the content providers—anti-trust suits start making more sense.
The App Store isn’t a storefront in the way that Amazon.com or Walmart are — this isn’t just an extravagant affiliate fee. We’re talking about the primary method of app distribution for one of the most important computer operating systems, ever.
The Macalope thinks Kincaid might be seriously underestimating Walmart’s stranglehold on the communities it has a presence in. However, there is some truth to that argument. Despite that fact that we hear every week how Android rulez and iOS droolz, Apple still holds 82.7 percent of the app store market (although its share is shrinking). Android may have more users (on smartphones) but Apple’s better at selling apps. Which is probably why the company feels that it can throw its weight around.
Frankly, the Macalope’s not a big fan of this scheme. It seems too easy to undercut and too likely to have publishers storming off in a huff. As an iOS device user, the Macalope would be one sad mythical creature if that were to happen. But until he sees where it’s really going to hurt him, the Macalope’s not sure that he’s going to care if Amazon’s making less money than it otherwise would have.
And from Apple’s perspective? Well, smart business people always try to negotiate a free tie.
You say that so much it’s lost all meaning
At least Kincaid’s arguments were well-reasoned and civil. Over at Gizmodo, naturally, it’s all angry table flipping where Apple is concerned.
OK, OK, we get that you’re peeved because they locked you out of press events after you bought a stolen iPhone. We get that! But “evil?” Is there some “subscription to your soul” clause in Apple’s policy that the Macalope missed? Because we are talking about a subscription model here.
Apple takes a 30 percent cut of every transaction. In other words, Apple is eating the people that provide the things that make the iPad special.
No offense, but the Macalope imagines Apple’s probably in a better position to determine what makes the iPad “special” than Gizmodo is. (Just kidding about the “no offense” part.)
But check it.
Oh, Gizmodo. You’re so righteous.
Rhapsody says straight up: “an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable.” For those of you who don’t speak executive, that’s Rhapsody president Jon Irwin saying that his company cannot afford to offer its service under Apple’s new rules. They will leave.
Let them go.
No, really. The Macalope doesn’t say that maliciously like “Who needs those losers, anyway?” (although he’s never used Rhapsody). He means let the market (and maybe the courts and the government) decide. If Google can cut publishers a better deal and they all leave iOS, Apple will have to relax its terms.
Is the Macalope the only one who remembers that Amazon used to get away with taking 70 percent of the proceeds from Kindle publications? Why did the folks at Amazon do that? Because they could. And when did they switch? When Apple entered their market with better terms.
Apple’s philosophy about the iOS platform is “This is our store. If you want to sell things in our store, you have to give us 30 percent of the proceeds.” That’s rough, but it’s not “evil”.
For a moment, let’s all pretend we’re big boys and girls and that we know the difference between bare-fisted business practices and, oh, genocide.
It even makes julienne fries
If you could have invested in a stock called Rumors About the Next iPhone at the beginning of this week, you’d be retired by now.
It’s a budget phone without storage! It’ll increase iPhone sales sixfold and multiply Apple’s revenue two and a half times! It’ll have near-field communication for payments! Carriers will have to fight to the death to get on it! And there’s a slide-out keyboard!
A slide out keyboard? How’d that one get in there?