A Phony Firestorm Rages Over Apple’s Future

| Hidden Dimensions

“It is an easy and a vulgar thing to please the mob, and not a very arduous task to astonish them; but essentially to benefit and to improve them, is a work fraught with difficulty, and teeming with danger.”

— Charles C. Colton

The current firestorm surrounding Apple is one of those classic Internet storms, just like Antennagate. It’s been awhile since we’ve had Apple to kick around, and for some, it feels good again. I believe all the fuss is driven my three factors.

The Bandwagon Effect. Apple is enormously successful. Some people are jealous. For others, it feels good to get back on Apple’s case. It’s like stretching muscles. Cutting Apple down to size is almost an American pastime amongst certain writers. And there’s no doubt that with the advent of Twitter, tech columnists influence each other. No one wants to be left behind, and everyone figures that the affair is a great opportunity to rustle up some readers with a controversial subject. I said bandwagon, but that was being polite. It’s really a lynch mob.

Editorial Arrogance. The hidden, self-serving assumption in the current criticism of Apple is that the company is going to screw up unless it changes its behavior. Apple is in danger. Publishers will flock to the competing tablets. The fear is that Apple will, somehow, piss all its tablet success away and that we’ll have a repeat of the 1990s. The US$100 billion company will somehow fail. Then we won’t have our iPhones.

Really?

Seriously?

Apple can take care of itself. We’ve seen how Apple has responded to the Android competition by branching out to Verizon. That was the result of some calm, cool negotiations between Apple’s Tim Cook and Verizon’s Lowell McAdam. Most doubted that Apple could ever pull that off.

Do we now doubt that Apple’s executives cannot intelligently respond to any mass defections and imminent loss of the tablet market due to a publisher revolt? Do we really think that Apple cannot size up the situation and respond in its own best interests? That’s a lot of arrogance.

Self Entitlement. I submit, there is a feeling out there, in the Echo Chamber, that because some publishers are whining that the case against Apple is a lock. It’s not. What’s happening, and we should recognize this because it happens over and over, is that some organization whines, tech columnists pick up on it, and focus on it to create a story.

In reality, most Apple customers are oblivious to all this. Put on your white lab coat, get permission from the mall, and take a clipboard to any Apple retail store. Stand out front and interview Apple customers exiting from the store with their new iPads in hand. Question: “How do you feel about Apple’s onerous new subscription policy?” Answer: “Apple’s what?”

Even the most balanced articles that explain the plight of publishers ignore convenient facts. First, publishers have, by and large, failed to set standards, then create and define their own digital marketplace. So now they want to jump on the Apple bandwagon. Second, no one is forcing publishers to be on the iPad. The iPad, for the first time offers publishers a uniform marketplace with close to 200 million credit cards on file. If they don’t want to play in that market, they’re free to negotiate with Amazon, Barnes & Noble, or Google. Many have.

Finally, it’s a false assumption that each publisher will have 30 percent of all its revenue grabbed by Apple. Rather, it’s just the iPad/iPhone revenue. If they didn’t build other outlets, if they haven’t figured out how to be successful without the iPad, if the iPad, Obi-Wan Kenobi, is their only hope, then they should be seriously concerned about their business model. If that’s the case, then the iPad alone isn’t going to save them.

End of the Road

Have we come to this? Is there no American publishing company that can stand on its own two feet and thrive? Can publishers, the curators of the greatest ideas mankind has to offer, not figure out how to develop, market and sell digital media on their own? And do they now estimate their only recourse is to grab onto the coattails of Apple?

Of course, once they give up, once they figure they’re lost, then the only alternative is to cling to Apple. And once they do that, then every dime they pay Apple is paid grudgingly.

And that’s what all the whining is about. What you’re witnessing is yesteryear’s business practices and old businesses dying — and blaming Apple because they can’t ride along for next to nothing.

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52 Comments Leave Your Own

sflocal

Well said John.  I think most critics simply have an agenda with Apple.  They criticize Apple’s success, yet in back rooms they would do anything to be in the exact same position that Apple has earned.

CP

Thanks for the sanity, John. The truth is that most of the people writing about this have no experience in traditional publishing. They do not understand the costs of selling books and magazines at a brick-and-mortar store. They do not understand how much Amazon demands in order for you to play in their playground. In many ways, 30% is an improvement.

NEALC5

I am amazed at the criticism.  Imagine this:

A store wants to set up shop in the most popular and best run mall in the country.  The mall wants to charge a high rent, because they get a lot of traffic.  The store owner says “I can’t pay that rent, because I want to keep more of the profit for myself, and if I pay the high rent, I won’t make as much money as at the other locations.” The mall owner says “Fine, then you don’t have to sell your goods in this mall…the rent is what it is.”

This is exactly what Apple is doing.  They say “here’s the fee to get you access to our customers, which we worked hard to get for you.”  Why is this bad?

Bosco (Brad Hutchings)

Sorry John. You missed it. iPad is not the publishers’ only hope. Time isn’t going bust. They’re just gonna wait this one out and use their influence to make sure Apple gets the message from competing devices that aren’t locked down to profit Apple. What publishers want most of all is that when the tablet market shakes out that they can provide a consistent interface and experience to all of their customers regardless of what tribes their customers are in. They want write once, deploy many. And they want their customers paying them unless an intermediary is adding value. Admission to a walled garden when there is no good technical reason to wall the garden is not value. The customers in Apple’s garden do not belong to Apple exclusively. Outside of this board, you’d be hard pressed to find many people who are so proud of being Apple customers that they only want to deal with Apple.

Steve Webb

You skipped what might be the #1 reason: many of these writers work for the very publishers that want to avoid paying Apple.

Bosco (Brad Hutchings)

You skipped what might be the #1 reason: many of these writers work for the very publishers that want to avoid paying Apple.

Steve Webb wins the thread. Now, that’s exactly why Apple should not be screwing with the publishers. How did Steve not learn this the day he threw a tantrum over Flash to the WSJ editorial board and they turned around and ripped him a new one before the afternoon was over?

RonMacGuy

The same Flash that the Xoom is not shipping with? LMAO. Funny stuff.

RonMacGuy

Wow, what a surprise on the position of the responders thus far. Here we go again…

paikinho

Admission to a walled garden when there is no good technical reason to wall the garden is not value.
———————
200 million credit cards would seem like a value.

It is like all business. You carve a niche for yourself and offer products in your niche. Happens every day all over the world.

You can look at all businesses in America as walled gardens. Apples is just much much bigger than average.

You want to sell your stuff in WallMart, then you conform to what their expectations are. They tell you what your price will be and you better figure a way to work within those parameters. Even if it means you have to make an inferior product made with crappy metals and toxins in china.

Apple is doing the same type of thing. Apple is leveraging their position, as do all companies. Just ask Authors how many billions of nothing most of them are making with their works being sold thru Amazon.

What Apple is doing is the norm in Business. If there is a revolt, then they will modify what they do. If it hits their bottom line too badly, then they will change what they do. But apparantly, for at least the next several months they will stick with the strategy they have launched.

Does it negatively affect some people? Yep. Do they need to care? Not if it gets them where their goals are.

dwallin

Bosco, normally what you write makes sense. I don’t always agree with it - indeed I would say I usually disagree, but normally it makes sense.

This time I don’t think it makes sense. You say “And they want their customers paying them unless an intermediary is adding value” which is true, but you draw the wrong conclusion.

Your conclusion: Apple’s store doesn’t add value.

Reality: Apple’s store adds tremendous value, by putting their product right there in front of almost 200 million known, paying, non-IT-literate customers AND making it incredibly easy for those self same customers to buy their product almost without thinking.

That value is worth well more than the 30% that they would have had to pay any other retailer, who doesn’t have 200 million customers and who makes it less easy to buy.

In that way, Apple’s position makes sense and yours doesn’t.

Bosco (Brad Hutchings)

@dwallin: You make a good point. But we disagree. Here are a couple things your point does not account for:

1. Time sure as hell didn’t think Apple added value. I hope we can agree that Time’s actions and statements give a clear indication of that. Digging deeper, Time already has visibility and brand recognition. Like most existing publishers, their challenge is to bring/convert their paying readers in meat space to paying readers in cyberspace while monetizing digital content the way they already know how. Apple just doesn’t add any value there other than “being on the iPad”, which has high, baked-in platform-specific costs that other platforms, real and imagined do not.

(@RonMacGuy: BTW, please note that Flash is not being banned from the Xoom in a way that would protect a Moto channel or make such a channel more desirable to customers. Key difference here. You make the geek mistake of focussing on the technology rather than the business implications.)

2. Most apps in the App Store get no exposure whatsoever. If you’re out of the top 100, the only way you get discovered in the App Store is to get searched for. We will never know because Apple would never share the distribution, but you can safely assume that but a small percentage of apps make enough money that the developers could be paid at even $50/hour for their efforts. Classic long tail. Assume an even distribution, half of apps (150K) are paid, and $1.8B App Store revenue in 2010. That’s just $12K per paid app.

So I’ll agree to disagree with you and hope that my reasoning makes more sense, even if you still disagree.

dhp

A store wants to set up shop in the most popular and best run mall in the country.? The mall wants to charge a high rent, because they get a lot of traffic.? The store owner says ?I can?t pay that rent, because I want to keep more of the profit for myself, and if I pay the high rent, I won?t make as much money as at the other locations.? The mall owner says ?Fine, then you don?t have to sell your goods in this mall?the rent is what it is.?

Add in that the mall demands 30% of all sales in the store, then you’ll have the analogy.

skipaq

There was a time when these same publishers were paying Amazon a much higher percentage until Apple entered the market. We have seen this before and I believe John’s article has it right. The big gorilla in this hard nosed business negotiation is access to customer info. Apple’s refusal to compromise on this is the main sticking point.

From a business perspective what the content providers want makes some sense. But from the customers point of view it does not. In the end the customers will be the one’s who dictate which way this will go. Anyone who thinks that Apple cannot win this one is not being realistic anymore than someone who believes Apple cannot lose.

Whatever the result, I believe John is correct about Apple’s ability to adjust. My preference is to do business with those whose privacy policies are known and restricting.

Nemo

Apple’s new subscription policy affords all publishers and other app stores the opportunity to fully and fairly compete with Apple’s App Store.  Those publishers, who don’t like Apple’s 30% commission or other provisions of its subscription policy, should seize that opportunity to compete by either moving to another app store, for example, Google or Amazon, or by building their own websites that subscribers want to come to as much as they, subscribers, go to the App Store.

iphonzie

If the App Store doesn’t add any value for Time, then obviously they don’t need to play there. They can simply publish on the web behind a subscription paywall, and let iPad users go there in Safari. Then they are outside the App Store, no Apple restrictions whatsoever, and free to make it on their own - if they can. Problem solved.

If, however, Time feels it is important to be in the App Store, then clearly the App Store IS adding value, and Time should pay for the priviledge (note, not the “right”) to be there.

If a publisher puts a FREE app in the store, then charges the customer for a subscription, Apple, as the owner of the Store, should receive a cut of the sale.

The economics will work themselves out. If 30% proves to be too big a hurdle and publishers choose not to be in the App Store, AND it turns out to cost Apple more in lost sales than it gains in the in-app sales, then Apple will make a decision to change it’s terms. Again, problem solved.

paikinho

Most apps in the App Store get no exposure whatsoever. If you?re out of the top 100, the only way you get discovered in the App Store is to get searched for.
————
Same could be said for the 1/2 million or so books produced each year in the print world being sold through venues like Amazon. Other than the top few who even knows how to look without a direct search.

Same can be said for the 18,000 domestic periodicals a year. How many of those can anyone name?

And yet people continue to write and get things published.

Perhaps for Time and the big boys they don’t find Apple necessary for the time being or as you have said they are just waiting. They can leverage their overall popularity. And maybe eventually they get some sort of special deal.

But for North Dakotas Horizon magazine… Apple presents an opportunity for some exposure more than they might get currently and sales they can add outside a small niche of their world is a bonus. It doesn’t hurt to market thru Apple’s Market. Apples Store offers an opportunity for some that they wouldnt have without it. And it is not exclusive. You can still sell your stuff in other stores if you want.

Magazines and Books can still be sold on Amazon, Android OS stores or wherever someone wants to.

John Martellaro

iphonzie: exactly.

Terrin

Yes, but the Times position makes no sense and speaks to what John is writing about. When you go into a Brick and Mortar Store to buy a Times publication, stores like Barnes and Noble are taking more then thirty percent of the cover price. The value Brick and Mortar Stores add, is the same value Apple would add, namely a space that Apple covers the cost for that the Times can offer its wares. Obviously, that has tremendous value for such publishers or they wouldn’t sell at Brick and Mortar Stores.


Further, publishers like the Times incur higher costs in non-digital distribution models. When a monthly publication isn’t sold, the Times actually has to eat the cost of shipping, the cost of publishing the unsold material, and the cost of issuing a refund or credit to the brick and mortar store (yes, brick and mortar stores do not eat the cost of unsold material).

Amazon takes a bigger cut in some cases then Apple and sets the price in some cases. Yet, Amazon apparently offers enough value that publishers are willing to put up with that.

With Apple, publishers have access to Apple’s popular easy to use distribution model. Publishers don’t pay shipping, printing, and don’t have to issue credits for unsold merchandise.

So, when a publisher sells a product via iTunes it actually pays Apple about the same as it pays other distribution models, but spends less money in bringing the content there. Further, Apple is providing the same sort of value as a store like Barnes and Nobles would offer. Even more so, as Apple has more potential customers.

This is the case of publishers trying to benefit from the success of the iTunes store without paying anything. 

@dwallin: You make a good point. But we disagree. Here are a couple things your point does not account for:

1. Time sure as hell didn?t think Apple added value. I hope we can agree that Time?s actions and statements give a clear indication of that. Digging deeper, Time already has visibility and brand recognition. Like most existing publishers, their challenge is to bring/convert their paying readers in meat space to paying readers in cyberspace while monetizing digital content the way they already know how. Apple just doesn?t add any value there other than ?being on the iPad?, which has high, baked-in platform-specific costs that other platforms, real and imagined do not.

CP

Trade book publishers have customers. Those customers are primarily retailers. Admittedly, the retailer is only one step from the consumer, but the focus in trade is getting large buys. The individual reader is key in this relationship, but direct sales are not important to the big houses.

Magazine publishers have customers. Those customers are primarily advertisers. It is important to generate readership in order to snag advertisers, but magazines do not do much active selling of subscriptions. They outsource this work as much as possible. Instead, they focus on advertising sales.

Why is this important? If the argument is that publishers want the readers to pay them directly and not Apple as an intermediary, then the publishers are going against their existing business model. I don’t think the publishers actually care much about the Apple situation because it mirrors what they already deal with. Trade publishers give discounts much larger than 30% so that a retailer or Amazon will carry their title. Magazines pay or discount groups much more than 30% to generate subscribers.

Obviously, if publishers feel that they cannot get enough back from the Apple plan, they will not pursue an app. But I don’t see why they would be hesitant to step into this situation when their current print business models already involve paying a cost to a third party to generate sales or subscriptions.

They may protest because this is a new venture that they would rather have for free. But that’s not how the business works elsewhere. Why should Apple be different?

I’m not sure how this works with services or software, but this is how publishing operates. Apple is now a part of this industry.

Peter

A store wants to set up shop in the most popular and best run mall in the country.? The mall wants to charge a high rent, because they get a lot of traffic.? The store owner says ?I can?t pay that rent, because I want to keep more of the profit for myself, and if I pay the high rent, I won?t make as much money as at the other locations.? The mall owner says ?Fine, then you don?t have to sell your goods in this mall?the rent is what it is.?

I’ve been bringing up this analogy myself.  Here’s the problem:  Apple not only owns the mall, they own some of the shops.

Suppose I want my bookstore in Apple’s mall.  Of course, Apple has their own bookstore in their mall.  Can Apple charge me more expensive rent because I’m competing against them?  Afraid not.  Can Apple refuse to rent to me because I compete against them?  Nope.

Lee Dronick

Apple not only owns the mall, they own some of the shops.

Apple does not own the web/mall. You can sell your books or magazines in PDF or ePub format to an iPad owner without giving Apple a cut.

Bosco (Brad Hutchings)

Yes, but the Times position makes no sense and speaks to what John is writing about. When you go into a Brick and Mortar Store to buy a Times publication, stores like Barnes and Noble are taking more then thirty percent of the cover price. The value Brick and Mortar Stores add, is the same value Apple would add, namely a space that Apple covers the cost for that the Times can offer its wares. Obviously, that has tremendous value for such publishers or they wouldn?t sell at Brick and Mortar Stores.

Well, so you’re calling Time stupid. To me, that’s a fishy opinion to start from. First, they have not shunned digital. They’re going to bring their bits to every other major hardware platform. Like Conde Nast, Flash and other Adobe publishing technologies play an end-to-end role, so even without the business issues, they have to publish twice to support the iPad. They are betting that not being on the iPad is no great loss (my favorite Clinton joke ever). Interestingly, when they push their bits to paper, it truly is write once, publish everywhere. No store demands that the printed version of SI shipped through them use or not use particular paper technologies.

The whole refrain (Nemo is good at it), of “well, if you don’t like the App Store, you’re free to use the browser” is a silly passive aggressive argument. Of course they’re not going to use the browser on iPad (or iPhone) because it lacks and will continue to lack the technologies necessary for magazine style content. And it will continue to lack the technologies because Apple wants to monetize apps and content. No other reason at all. Flash on a Galaxy Tab is very workable. It is certainly not the threat to human life that Apple proponents have made mobile Flash out to be. But so long as Apple wants to get paid for apps and content, it’ll never be in the iPad’s browser.

emozion

Several big content owners have said that the cannot make money when Apple takes 30%.

Firstly, they do not value and price their own product high enough. They should follow Apple’s lead and position themselves for a presence in a premium market, i.e. customers willing to pay a fair price for a fair product. Race-to-the-bottom pricing of any and all content only undermines product value.

Secondly, one may ask whether content owners never even considered di-stri-bu-tion costs in the digital marketplace? What is content owners’ monetisation scheme exactly? Oh, that is right, give it all away for free on the ‘net and sell some ads. So ‘90’s.

Lee Dronick

Several big content owners have said that the cannot make money when Apple takes 30%.

This is not going to be a rhetorical question, I do not know the answer. Does Apple place restrictions on an App developer having 3rd party advertisements? If I subscribe to say a woodworking magazine app could there be an advert and link to a tool vendor?

mhikl

If Apple is on the torture rack then what will be, will be.

Apple will continue on with business as usual. The importance of Steve Jobs? quest and values to his spirit is undeniable. He is a Buddhist and that, like being a Christian, a Muslim or mercantile protectionist brings a frame of mind to the believer that is as durable as a diamond wall. Belief in concrete or etherial values makes the driven man which is why Steve is meditative on the practical betterment of his company and its products for the greatest possible user experience. He has the needs of the consumer at heart because he knows that this is the gold thread to enduring success and profitability.

It is the spirit of the experience he wants to share with the world, something no other company seems to appreciate which is why Time has its nose out of joint. Apple has the profits to back up the fact that Steve?s team is on the right road. Time, on the other hand, is becoming thinner in page and profit. If money and sales are your only goals, you are lost. Sony eventually succumbed to such a path and look where it is now.

The droid-styled spirit lives in an old world where the competitive race was profit and market share. Success depended upon the consumer being ignorant of truth and facts falsified by splashy, expensive, incorporating advertising. Today with the internet, text messaging, blogging, Facebook and twitter, people have the greatest access to information and the exchange of ideas the world has seen since Herr Gutenberg developed movable type and media advertising hit billboards, newspapers and the airwaves. It is not so easy to fool the masses as we are witnessing in Egypt, Iran and elsewhere in the Middle East. Revolutions used to take years; now they can be accomplished in what seems like moments.

Experience is the message and to see the iPod, then the iPhone and now the iPad in glorious action buries any prattle about walled gardens, spent futured vapourware, and such silly vague tantrums on worn-out Flash by geeky cry-babies. Weak and haughty bafflegab by idea-illiterates will meet with little more than derision and irrelevance as the Apple experience and spirit consumes the corporate world.

Time magazine can sit on its behind in the vague hope of waiting this one out successfully. It will bashfully re-enter Apple?s game when it sees its competition embracing and succeeding in the well designed garden that is ushering in the 21st Century of a more enlightened competitive spirit.

emozion

@Sir Harry Flashman: I cannot answer your question for sure w/o digging into the nitty-gritty of Apple’s terms, bothered with which I cannot be. I believe that Apps are open to third-party ads.

@mhikl: great comment, great harangue! I love the old-style flourishing rhetoric. And I concur.

Lee Dronick

Time, on the other hand, is becoming thinner in page

It just so happens that last Friday I received my last print edition of Time, I have let the subscription expire for several reasons. For one as you say the magazine has become quite thin. I have a number ways of getting stories on current events such as websites and 24 hours TV news. As inexpensive as the print subscription was it is no longer of value to me. Not to mention after the magazine has been passed through the members of the household it will end up in recycling.

paikinho

The magazine and newspaper we have all grown up with are becoming obsolete. The only way to stay viable for most of these old institutional content printers is to go to the electronic world.

Unfortunately the entire process is in flux right now as different organizations try to figure out how to make the transition.

Apple has provided an approach according to their model, as have many others who are more in sync with the coming electronic distribution models.

All of this is in its infancy and everyone is unsure how it will all shake out or how to keep revenue streams steady. But it will shake out eventually and there may be one or 2 models that work equally as well.

Apple put out their model, no harm. If publishers find it useful, then it will flourish. If not then apple and others will have to modify their strategy. This is still all a learning process.

macProf
trrll

It is not yet clear how far Apple will take this. Asking a cut of subscriptions does not seem unreasonable (even if not necessarily popular among publishers) and more importantly from my point of view as a user, it does not appreciably affect my access to features that I currently rely upon.

On the other hand, if it impacts my access to Kindle books or Netflix movies through my iDevices, that is a significant issue, as these are features that I currently use extensively, and that contribute substantially to the value of Apple’s products to me. Both Netflix and Amazon have built up their own digital marketplaces which work quite well for them, so if Apple plans to include them in this requirement, Apple will be asking them to pay substantially for a service that they don’t need, and the most likely consequence would be that owners of Apple products would lose access to their Kindle libraries and Netflix subscriptions.

macProf

Good piece John.

What really pleases me is the potential for authors to bypass the usual publishing houses, which, like record labels, normally have to OK the book/piece/whatever in the first place, and then take a hefty portion of the profits taken thereafter, not to speak of all the markups to the purchaser due to the normal complicated process of printing, marketing and distribution. It would be great if iBooks/iTunes would become a worthy reviewer of grassroots literature, allowing truly worthy and promising authors to become recognized, sell broadly and keep 70% of the profits.

Lee Dronick

What really pleases me is the potential for authors to bypass the usual publishing houses

What does it take for an individual to get a book into the App Store? Not necessarily as an “app”, but as an ebook?

Edit: I did some research and you can use Lulu to get your iBook published. http://www.lulu.com/apple-ipad-publishing

mhikl

emotezion, the harangue part was an afterthought upon reviewing a few posts by our most vocally insulting AINT, the Antithesis of Intelligent Not, Thought. (His name rhymes with Old Crow.) I figure it ain?t my fault when my back is up, causing the fingers and brain to disassociate. I think Twain said something of the sort, but more prosaically, I?m sure.

Sir Harry, I used to get great pleasure out of Time and many other Mags but I believe their concern over ever increasing profits became their down fall. The Innovation God had left the building but forgot to turn the lights off. Slowly they are dimming on their own.

But I believe there is hope. I know there is a way for great print to bridge the world between confusion and hunger. Confusion with the corners our world seems to be turning and hunger that the inexplicable should be explicable.

By this confusion and hunger I mean that we have lost the great thinkers and enunciators of news matters. Printing has become impossibly expensive whilst entertainment has become, conversely, cheap. Television has given up on investigative reporting and turned to creepy reality programming and entertainment news. News organizations have become incestuously incorporated. CNN in prime hours is plugged full with the likes of Petty Gossip Queen Joy Behar, Attila of Terror Nancy Grace, Lord Insipid Piers Morgan who took over for Nod-off Potentate Larry King. My dream is that eventually we won?t have to endure the face and hair of that flaming Queen Witch on CNN?s uglier second cousin while flipping through the channels.

The list of vacuous news is endless on all US networks save beleaguered PBS orphans who will probably have their crust of bread from the government, rationed to extinction within the month. I can?t comment on publishing media because I frequent the library so little now that I read in the electronic world but evidence supports the view that opinion reigns and true investigative reporting is dead. We are left with Wiki leaks and that is so broad as to be unintelligible.

I got lost again. Regarding hope. The answer lies in Apple doing it right. I hope it can and I hope the governments of Europe and the US don?t squash the hope. They missed the boat with M$; maybe they want to make a defiant last stand like Custer.

I do not live in the US and so have access to further media TV outlets all of which possibly attest to my sanity; though some might argue otherwise. I also have a rally of friends willing to share torrents when home brew graces the table or until the wife tires of our arising tenor. Now that?s a group of crack pots I must endure, gladly.

Oops, there?s another harangue, emotezion. grin

(I feel another poem coming on.)

PS Sir Harry and macPof. Yes, this is what will be. Did I hear or just imagine that Steven King is thinking to publish electric with his next novel? If he self-publishes, would he be the first popular writer to do so?

AJGraham

What’s missing from all these analyses is a distinction between newspapers and magazines on the one hand, and e-books, movies and music on the other. With newspapers and magazines, Apple is serving as a third-party (between end user and content creator) distribution system, providing a mechanism for ongoing sales, of benefit (convenience, exposure) to both consumers and producers beyond that available in existing digital distribution systems; thirty percent doesn’t seem unreasonable there, given the value-added provided by Apple. But with other kinds of content there *already are* third-party distribution systems, eg. Amazon/Kindle, Netflix, Rhapsody, etc., that are not dependent on the provision of sales mechanisms by other parties. Apple is now requiring them to include its own mechanism as an option, effectively inserting itself as a *fourth* party—at a rate the market might not be able to bear—and that is why this firestorm is NOT phony.

paikinho

AJGraham

Well put.

Jim Bowers

The music, movie, book, periodical and search engine businesses all have the same problem/business model. The content that we creative types make makes no difference to these folks. They make their money on the distribution. (Pay-as-you-go, subscription or advertisement.)

Bosco, you seem to think that Time really matters. None of these old business model companies matter - IF they don’t move to the new (digital) means of distribution.

Apple has a main conduit in the new model; that is a fact. If Time and the other old timers can’t move on from the geriatric approach, who needs them. There will be a thousand replacements for each of the ossified, horse-and-buggy businesses.

Bosco (Brad Hutchings)

Bosco, you seem to think that Time really matters. None of these old business model companies matter - IF they don?t move to the new (digital) means of distribution.

@Jim: Nice sentiment about getting with the digital program or going the way of the dodo bird. Problem with that argument is, they have a very distinct multi-platform sales strategy. It just doesn’t include iPad. Find out why.

Terrin

I suppose when the music industry resisted online sales, and my view was they should embrace online sales, you’d consider that view fishy then as well.

The Times is a big company old guard company that hasn’t adapted to changing markets particularly well. Anything, it does is suspect. They don’t have a proven track record in the digital age.

Well, so you?re calling Time stupid. To me, that?s a fishy opinion to start from.

jecrawford

@Bosco

Repetitive and boring.

paikinho

Bosco
Key phrase from your article post being:

?We love Apple. We love the iPad,? said Randall Rothenberg, chief digital officer for Time Inc. ?We have a great desire to sell subscriptions in the iTunes store. We continue to have conversations about that.?

They are just negotiating for something that is mutually beneficial. At some point they will be on iPads everywhere.

paikinho

By JEREMY W. PETERS
Time Inc. has a memo for Apple: We?re not waiting at the altar forever. We have Google.

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The above statement is Jeremy Peters’ own interpretation of how Time Inc. is feeling. Not Time Inc.‘s own position.

?Without a subscription model, we haven?t been able to reach all the people who want the magazine,? said Terry McDonnell, editor of Sports Illustrated. ?Now there?s finally a way for that to happen.?

This quote was before Apple announced their subscription model. They had already negotiated a deal with Google.

?We love Apple. We love the iPad,? said Randall Rothenberg, chief digital officer for Time Inc. ?We have a great desire to sell subscriptions in the iTunes store. We continue to have conversations about that.?

This is actually how Time Inc. views the relationship. Now that Apple has a Subscription Model for magazines, Time can negotiate with Apple.
To me the above quote is an indication that they are in negotiations.

So your earlier point that Time Inc. is somehow punishing Apple or holding out on them seems to not be the case even by the article which you yourself linked.

RonMacGuy

@Bosco

Repetitive and boring.

Ditto. I really don’t understand what he is trying to prove here. Trying to “educate” us? Trying to convince Apple people switch to android? Trying to demonstrate how smart he is? It is all just so tiring to deal with.

Bosco (Brad Hutchings)

@paikinho: But Mr. Rothenberg offered a stick with that carrot: ?Those stores that lock us out, well, it just means that other stores are going to get more traffic, more buyers.?

BTW, Time, Inc. is “the largest magazine media company in the US. Each month, one out of every two Americans reads a Time Inc. magazine, and more than 1 out of 5 who are online visits a company web site.”

Someone up above called them “The Times” and suggested they would go out of business if they don’t innovate. Talk about not getting the point. Parent company Time Warner has a market cap north of $40B.

@paikinho: You suggested that they negotiated a deal with Google. They didn’t have to. They don’t have to use Google’s IAP. They can if they like for 10%. In some quick research, I couldn’t determine whether they used Google’s IAP or not. I don’t think any of you get the scale of friction that Apple creates as a basically do-nothing middleman. The only value Apple adds right now is 75% market share in the tablet space.

Get this very clear: Time Warner, a company worth $40B, does not want to be business partners with Apple. They did that with AOL and left with a bad headache. They are the biggest publisher in the US. They can not only afford to steer the tablet market toward something amenable to how they do business, they will. They do not see the business of tablets as any different than PCs, notebooks, or netbooks.  That is, the vendor makes the tablet and sells it to a customer and that’s basically the end of the vendor’s involvement.

@RonMacGuy: In the movie Stand and Deliver, Edward James Olmos did not portray Bolivian immigrant teacher Jaime Escalante teaching calculus to JPL engineers.

paikinho

Get this very clear: Time Warner, a company worth $40B, does not want to be business partners with Apple.
———-

A bit of a stretch that you assume they don’t want to partner with specifically Apple when the new electronic media distribution system is what the future of all publishing is about. Don’t you think.

Especially when in the article you sited there was this quote.
?We love Apple. We love the iPad,? said Randall Rothenberg, chief digital officer for Time Inc. ?We have a great desire to sell subscriptions in the iTunes store. We continue to have conversations about that.?

I’m not sure you can speak for Time Inc., what their plans are or what their desires are. Especially when you ignore quotes that are in direct opposition to what you assert.

Bosco (Brad Hutchings)

@paikinho: Time already has their own electronic distribution and payment collection system. Apple adds no distinguishing value over any other way that Time already sells subscriptions. Put the 30% aside, Apple reduces channel value and add problems by not giving Time subscriber information. Time’s product is called “All Access”, because they allow the subscriber access from a myriad of platforms and devices. Without subscriber information, how does Time allow that subscriber to access from his computer or maybe from his television?

Well anyway, don’t hold your breath waiting for Time to offer subscriptions to all its popular magazines on the iPad. The channel just isn’t lucrative enough for Time to cede control over the customer relationship to another company.

And it is funny how you (twice) ignore the “stick” from Rothenberg to claim that his “we love Apple” quote represents what his company really thinks.

paikinho

I don?t think any of you get the scale of friction that Apple creates as a basically do-nothing middleman. The only value Apple adds right now is 75% market share in the tablet space.
————————-
Hardball business always creates friction, but it the end the decisions will be made based on what level of profit each will get and also what services can be provided for their customers.

Lots of middleman apparently do nothing. I used to know a guy that supplied toilet paper to Africa. He made millions. But he did relatively nothing. He just linked up manufacturers with people who hadn’t had toilet paper up to that point. But what people don’t get is that middle men figure out where there is a need and connect the wires together. Basically this is like creating a new market and is a value add in and of itself. Middlemen get rewarded for their efforts all the time.

If Time wants the wires connected for Apples 200 million credit cards for Electronic distribution via apples store, then they will.

Why might they do this? Those 200 million credit cards certainly are clearly in existence outside of Apple’s network. The likelihood is that 1/2 of them as you point out may already have subscriptions, but if Time wants to add value for their current customers, then they can do that for their “iOS owning customers” by adding Apples Store as an option to their myriad efforts to transform themselves from paper to electronic publication. And according to Apple’s policy it seems that they can keep all of the profits and Apple won’t take a cut from any existing customers Time brings over.

paikinho

Time already has their own electronic distribution and payment collection system
————
But they don’t on Apples Store.

Where you see a “stick”, I do not. Do you have evidence from the comment that they do not love Apple and the iPad? I would say that it is more code for we are in negotiations with Apple currently and will not speak ill of those we are negotiating a future partnership with.

Lancashire-Witch

@ AJGraham.  I agree - it’s not “phony”.

paikinho

@Lancashire-Witch
Not phony - people need something to get all hackled up about.
The publishing thing will sort itself out over time. And concerns are legitimate.

The only phony thing is that Apples future is in Jeopardy. Most companies would love to be in Apples enviable position.

paikinho

(time warner) They do not see the business of tablets as any different than PCs, notebooks, or netbooks.
————
Although, you may think this about Time Warner personally BH, I doubt that Time Warner or many companies view the business of tablets same way as a PC, Notebook, or Netbook. That would seem to be misguided and argue further why they would need the help of other folks like Apple.

Tablets are clearly different than the old school computers. Android OS or iOS tablets it doesn’t matter. These will dominate the computing world in the next decade or so. Withering industries like making PC Desktops, Notebooks, and Netbooks will soon be supplanted by tablets for most people. These older forms will certainly have a place, but personally, I find trying to read a magazine on my PC to be lacking in functionality. I can’t take it to the beach or lie in bed with it very well while I read my news.

spaul40

The comment ws made that Xoom does not have flash and a big Ha-Ha afterwords. Adobe is saying the code will be available within 4 weeks. How many weeks before it is available on the ipad?
What the developers are griping about is not just giving Apple 30% off the top of what is sold of their product thru itunes. What they are griping about is that they cannot sell that product outside of itunes for a lower price. So if you as a developer want to average 25% profit on a product that costs you $8 to produce, you would need to sell it on the open market for $10 (.25*$8). However, since Apple is going to take 30 % of your selling price, you have to price the product at approximately $14.30 to net the 25% profit. Now you can price that product at $14.30 everywhere; only problem is that you have done your homework and the elesticity of demand for the product plumets above $10. Apple has a NEAR monoply on downloads for Apple products so either the developer ignores Apple or only lives off of what he can sell thru Apple. Workable but very controlling of Apple. Again, Apple can charge 50% and there is nothing wrong with that. It is only that they say the developer cannot sell their product for less than what is on the Apple site.

RonMacGuy

The comment ws made that Xoom does not have flash and a big Ha-Ha afterwords. Adobe is saying the code will be available within 4 weeks. How many weeks before it is available on the ipad?

spaul40, that was me. But you misinterpret my laughing. I was laughing that once again Adobe has failed miserably in launching Flash on yet another android device on time. How many times have they delayed? How terrible has it run once it was released? How many gaping security holes does it have yet again? How much will it destroy battery life this time? What will it look like on a website that has not updated the site for the particular version of mobile Flash? So many questions… so little time…

How many weeks before it is available on iPad?!?!? My God, I hope never!! Don’t miss it at all. I either have an app for that, or I can wait until I get on my Mac or PC if I really need it. I don’t want that junk messing up my iPad or iPhone. But hey, that’s just me.

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