So Apple released a new subscription model. It says that all in-app purchases will be subject to a 30-70 split in profits, much like the music and App Store currently emulate. Further, all purchases that can be made outside of an iOS app, must also be available for purchase inside the app and no link can be provided within the app to outside stores. And they can’t be priced lower outside of the iOS app either. This seems to be bad news for Amazon.com because they just so happen to put a 30% profit margin on their books, I’m sure that other eBook retailers with iOS apps are also thinking for ideas.
There’s quite bit of controversy over this policy; I’ve even seen people that decided to sell their iPad because of it. I’m a of Apple, but this last move seems like too much. 30% is a huge chunk. Not allowing publishers to opt for different prices outside of the iOS app or to provide a exterior link inside the app seems to be anti-competitive to me. But I’m not a lawyer and (by the laws of the land) that means I don’t know what is right or wrong (go figure).
What would I do if I were Amazon? Well, they have a few questions to ask themselves. Their main questions will revolve around how much profit they make from the iPod/iPad and how much revenue they would lose as soon as they stopped providing an iOS app. If the answer is, “not much” then I’d say it’s safe to say that the iPod app is safe. If the answer is more than is comfortable then we’d see Amazon do one of a few different things.
- Amazon could stop providing an app in the App Store.
- Amazon could just not worry about it.
- Amazon could raise the price of eBooks to mitigate the cost.
- Amazon could make it possible, but very difficult to buy books inside the Kindle App.
- Amazon could hire a hypnotist who has some kind of access to Steve Jobs and "persuade" him to revise this policy.
You see, when Amazon is making their decisions, they have to think about people like me. I’d be a library book person myself, but the unfortunate thing about that is that my local library is very small and the very interesting books I’ve been reading (Sources of Power and This Year I Will both very interesting) as well as the books I plan to read in the near future are almost never available there, so I get kindle books from Amazon. They are around $10 each, and I like the fact that I’ll have them forever, so it’s not that bad of a deal (though someone really needs to develop an eBook library). The only problem is that I don’t particularly like reading them on my computer, I’m glad I have an iPod Touch for that. I’m not interested in buying a one-use-only gadget. If I couldn’t read Kindle books on my iPod, I wouldn’t buy them at all.
The only problem is, if I can’t read them on my iPod, I won’t buy them. But even if I did buy them inside of the iPod App, Amazon wouldn’t make any money. Personally I’d probably opt to buy them online anyway, my wife and I get free Amazon gift cards so I wouldn’t want my iTunes credit card used, but most people wouldn’t care how they are paying for the book, so that means that isn’t an option really.
Maybe Amazon will choose to raise the price of their Kindle Books 10-15%. This would still give them a somewhat smaller profit when the book is purchased within the Kindle App, and they would receive more than 30% profit when purchased elsewhere. Of course, they run the risk that people may stop buying the more expensive eBooks, but if they find the right percentage perhaps they won’t lose anything on their revenue.
But they could decide that Apple’s idea of fair, isn’t fair, and leave the App Store until Apple decided it would be more “reasonable”. It could well mean that Amazon chooses to call Apple’s bluf and leave the iOS App Store altogether, retreating to the haven of their own Kindle, until Apple comes crawling back. Whether that would happen I don’t know, but there could be unintended consequences for Apple (lower sales, lower profit). Again, that wouldn’t be all good of Amazon either. Like I said, I have no interest in a Kindle and I’m sure there are others who feel the same.
I don’t know what Amazon will do. I suspect they’ll raise prices, probably 10-15%, or leave the iOS App Store entirely. I can say that I hope Apple and Amazon work this out.