The price of content

Apple’s stance on the pricing of content sold through applications on their iOS platforms has caused a lot of controversy. It has raised two main questions.

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. This is a very sad day for innovation on iOS in this important application category. We are a small company that thought we could build a better product. We think that we did but we are powerless against Apple’s absolute control of the iOS platform.
- iFlowReader May 2011

Apple’s stance on the pricing of content sold through applications on their iOS platforms has caused a lot of controversy. It has raised two main questions, namely, is their behaviour morally acceptable and is the 30% rate they demand on all sales too high.

As the people at iFlowReader and others have found out to their cost, Apple can and will change the iOS rulebook when they see fit. Without warning. The latest change that has caused furore forces companies to give 30% of the purchase price, on all digital sales such as books, music and magazines, through in-app purchases to Apple. Apple did not create and do not own any of this content.

The problem here is that the publishers want 70% of the price. So for every pound spent the publishers want 70 pence and now Apple want the remaining 30 pence. It is not hard to see why many are going out of business.

It is of course up to Apple how they choose to run their App Store and iOS in general and anyone who follows Apple know they demand complete control over everything they do. In the past this has been to their detriment but they see it working for them in iOS. It certainly stops end users having to worry about downloading virus ridden applications or poorly written software but it comes at a price. If you are a company that develops apps for  iOS your business is completely in the hands of Apple - they can pull the rug from underneath you at any time.

Changing the rules once companies are up and running, knowing in all probability you will put them out of business will not gain Apple any friends. However iOS is their platform and as such Apple have every right to charge the 30%. The question is, is that percentage too high? Well it is hard to justify this amount any way you look at it.

In terms of applications themselves you can make the case for Apple taking such a cut as they provide a store in which your application will be seen by millions of people. Apple will take care of the hosting and payment process for you as well. When it comes to content it is a different story; Apple do not own or host any of the content created. The usual percentage cut merchants will ask for using their payment gateways is in the single figures. I have yet to see a sound justification for the 30% and in the long run this could come back and haunt them. Google by comparison charges 10% on its Android platforms and if trends continue as they are most of us will be buying digital content on an Android-powered device in the future.

Categories: Technology
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