Following up on the post from July 26th, there are a number of site launches and legal challenges to Apple that are bringing their pricing practices into question. We focused on the standard 30% take of anything sold through Apps and questioned what it would take to change that – including HTML5 web versions to curtail that charge. The issue was also the seemingly arbitrary figure of 30% – or any particular pricing that does not take any market considerations like demand, product or competition in mind. Just one look at this morning’s Cynopsis Digital presents these three bits of news related to those charges and pricing issues:
- Digital movie service Vudu, purchased by Wal-Mart last year, is bringing its service to the iPad using a mobile-optimized website instead of a dedicated app. The move will enable Vudu to avoid paying Apple its 30% cut – becoming the first provider to directly compete with Apple’s iTunes store – but there are some sacrifices that had to be made. Movies from Disney, whose largest individual shareholder is Steve Jobs, will not be available for rental or download-to-own. Also, video delivery will be limited to standard definition.
- The computer/gadget giant finds itself as a defendant in a new lawsuit brought by 5 of the 6 largest U.S. publishers, claiming that Apple is using its clout to illegally fix eBook prices. Hachette, Simon & Schuster, Macmillan, HarperCollins and Penguin allege that Apple has used its market power to raise prices by 30-50% above similar books published under the wholesale model.
- Amazon has also come up with a workaround to give iPad users access to Kindle books without having to give Apple its 30% cut. The company unveiled a new HTML5 Kindle mobile app for the iPad, the free Kindle Cloud Reader, providing access to Kindle books via a web browser that works on Google’s Chrome or Macs Safari browser for the Mac, PC or iPad. It pretty much mirror’s the native Kindle app for the iPad, with a few features such as passage highlighting missing. No download or additional installation is needed. This could be the beginning of a new renaissance in browser-based apps, as in addition to doing end-around Apple’s restrictive policies, they provide media companies with quick reach to multiple devices at once without having to launch a half-a-dozen separate apps.
Certainly, there are trade-offs when you are not providing a native app. Those include simplicity (both in interaction and payment) and the loss of some features – like HD video for Vudu and the loss of passage highlighting for Kindle. But time will tell if that makes any difference.
What remains to be seen is if these companies make their prices lower on those non-apple outlets. If the only beneficiary of the removal of the 30% charge is the publisher, I question whether users will make the change to an experience that will not be as full (or fulfilling) as the native version. It is interesting to see major players leading the scuffle and we can only hope they do it smartly and effectively.
As I really do like Apple and feel they are really the ones who blazed and legitimately built a new revenue stream for many companies, I feel there needs to be a happy medium here. My hope is that they will make their pricing structure more fluid and less seemingly arbitrary. Google will have to follow suit as Apple is clearly in the driver’s seat. I really don’t know how Apple would be able to continue with the practice if they hold their policy and more publishers “jump ship” to HTML5. It’s not like Steve Jobs can later decide he’s banning HTML5 to stem the flow when he drew the line in the sand a couple of years ago by pushing for HTML5 development to strike down Flash.
I also don’t want Apple to stop being the leaders in development and innovation because they are so bogged down in litigation or just trying to defend their turf. We certainly don’t want to run into the mess we saw when the government went after Microsoft years ago. My simplified view of that episode is that it stunted Microsoft’s business, its innovation and it cost a lot of tax payers’ money for what ultimately became a non-issue.
When all is said and done, nobody can afford draconian or absolute measures at this point, in this economy. Something’s gotta give…And hopefully not at the consumers’ detriment.