Subscription services

Discussion in 'iPad General Discussions' started by Diane B, Feb 17, 2011.

  1. Diane B
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    Diane B iPad Junkie

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    I just read more on TUAW blog and really do wonder what will happen to subscription services like Rhapsody and Netflix, let alone Kindle and Nook, i use all of these services on either the Ipad or my Touch. Rhapsody has said they can't deal with the 30% so will remove their app (assuming no negotiation for a different deal for them). So--i'm wondering what happens to those of us with these apps and subscriptions. Does it mean the apps stop working or that they just won't have an app presence in the store for new purchases? I've even wondered about thr Apple TV and Netflix. An app isn't involved but nonetheless one of the main reasons for most buying the Apple TV is to stream Netflix. If I can't stream Netflix to my Ipad to watch while traveling or on my exercise bike, can't stream Rhapsody (or similar subscription music which can be downloaded for offline listening) to my Touch, can't use the Kindle or Nook app to read---that will definitely push me away from the Ipad. I reslly thought Apple would approach this differently, esp. now with other tablets in the wings but they don't seem to be backing down. OR are they juet exerting themselves to negotiate some sort of a deal with these big vendors??


    Diane
  2. gentlefury
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    gentlefury iPad Guru

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    Well you do have to remember....putting a free app in the app store with no ads that is subscription based is a major workaround the app stores profit. Apple is providing a repo thru which users can download apps....Apple asks for a 30% return on all sales (not bad considering your output margin!) when companies put an app up for free they do so with iAd intact....apple gets a cut...everyone is happy....subscription services however, like netflix, curtail the entire system, using the app store and a way of making money without cutting apple in at all.

    I think they have a point and if these services are too greedy to cut in the resource that is making them so much cash....well then see ya! But of course...the one that gets hurt is the consumer.
  3. Diane B
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    Diane B iPad Junkie

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    I do see Apple's point. I'm just hoping there's a compromise afloat. i had read Rhapsody's POV yesterday and see theirs too with the big outlay for music rights. Then I read TUAW today and the headaches Apple would assume following subscriptions, for instance, month to month with Rhapsody. Its rather a conundrum.

    From this consumer's POV though LOL I'm looking around for an alternative to my Touch for portable use of dled Rhapsody. Never having even considered any other player but the Touch for this I have to reeducate myself. I think its more likely Amazon and Apple will come to terms. I really like my Ipad for all round device for day to day computer stuff and "consuming" also but I think there will be more device choices this next year though I may not be as happy as now with the OS, apps, etc.

    Still, what happens to the apps on our devices now with content?

    Diane
  4. iPadCharlie
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    iPadCharlie iPad Super Guru

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    Good question Diane. As I have said in other posts, the biggest factor in deciding whether or not to upgrade to the next generation iPad (I am such a gadget freak!) has more to do with Apple's relationship with these content providers than any type of hardware/software changes in the device itself.

    I don't know if it has anything to do with this, but I just got a notice from Last.fm yesterday that they are going to start charging $3 a month (after a 3 month grace period). So now if I pay them (not too likely actually) or Pandora the $36 **OPTIONAL** fee, I assume Apple will want their share as well.

    I have also been considering a media player, but I will probably wait on that as well. Actually I have been looking closely at the Roku units since they do 1080 and AppleTV only does 720 resolution.

    Yes, of course Apple is not a non-profit charitable organization and I fully support their right to make money, but this seems like they are changing the rules in the middle of the game. People like you and me (and a few million other people!) bought an iPad so we could read electronic publications on a larger format than the iPod and I will also be disappointed if some of my favorite apps go away.
  5. DaveSt
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    DaveSt iPad Junkie

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    I'm in exactly the same position. I was all set to purchase a 64GB Touch 4G to replace my aging 2G model but I am putting those plans on hold until I see how this all shakes out. I don't there is is a device that competes well with the Touch unfortunately.
  6. Seadog
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    Seadog Super Moderator Staff Member

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    The only real question is whether or not 30% is too much to expect from the vendors. From what I am seeing, most of them can live with the terms, and some may even like them for other reasons. Amazon and others have the choice to accept the deals with varied levels of participation. For example, you could have the kindle reader, but have to go through the store to buy music and books, download them onto your computer and then update your iPad with the books or music. Not realy a big deal to do that, but sometimes inconvenient. My personal thought would be if they could knock their cut to 10%, I think that would be better. But remember they give 2-5% of their cut to the credit card companies.

    The music industry is already mad about Apple's killing their profits. They are screaming that when apple took over as the #1 seller of music, they leveraged such a low price with $.99 songs, it cut into their prifit margin. When you consider they are making a lot of money on nothing but electrons, it is very hard to feel sorry for the record moguls. Concumers will find it hard to fault Apple because they are making their money by leveraging decent prices for the consumers.

    It is like music, I will buy from iTunes instead of Amazon, if all things are equal, due to the fact that AAC is a better format than MP3. But I often will find music at Amazon that is not on iTunes, or occassionally lower priced. If I wanted to buy Beatles songs, I would have to go iTunes. I actually have found a number of situations where I can buy an album cheaper than just the songs I want. Then I just wait two days and load it onto my laptop. Apple is not going to hurt Amazon or many of the other outfits. If Rhapsody cannot take the deal, it is not like they do not have other choices. They may need to raise their prices a few pennies to stay with Apple, or find they can do without that segment.

    As far as the apps, what will happen is that the companies will issue an update to remove the link to their store. I would suspect that magazines and newspapers will find a way to notify you of when your subscription runs out and link it to renew it directly from them. I should also mention that one thing I like about what Apple is doing and do not like about the Google plan, is that Apple asks your permission to give your personal information to vendors, Google is going to give it to them no matter what.
  7. Diane B
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    Diane B iPad Junkie

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    I do also wonder if Apple will announce their own cloud/subscription service like Rhapsody and Netflix. I've said before that I live near the huge Apple server farm not quite done here in western NC. Its now bermed, landscaped and fenced so that you can't see it from any of the surrounding roads (it sits below ghe road level) and there are no signs at the gated entrances. Very strange feeling LOL. The rumors have been around for awhile that it is for cloud type music and probably video services and I would not be one bit opposed to moving from Rhapsody to Apple if that comes to pass. Don't mess sround with my reading though LOL. Oh, and I can live with buying from the store outside the app. The way mentioned above sounded as though it would mean buying on another computer and syncing with Itunes. Because of Kindle's DRM I wouldn't think I could transfer it with Dropbox in that case, too bad. I guess we can only wait and see what happens. I'm sure there will be lots of behind the scenes negotiations and we'll be the last to hear LOL.

    Diane
  8. lapdog
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    lapdog iPF Noob

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    awesome
  9. DaveSt
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    DaveSt iPad Junkie

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  10. iPadCharlie
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    iPadCharlie iPad Super Guru

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    Nice catch Dave. I posted this link in the News section of the forum. Hope you don't mind.
  11. DaveSt
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    DaveSt iPad Junkie

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    No problem. The "News" area is a better place for it anyhow.
  12. David79
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    David79 iPad Junkie

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    That is crazy, I am glad I saw these posts, I had no idea at all, at least now have some warning. I wont start paying for something that I get free on my laptop, that just isnt right, was the whole point I got the ipad, it wasnt to give apple yet more money, I think they got enough from me lol.

    This is one of the reasons I love this site, you find out a lot of things in advance, mostly for me because this is the only ipad site I am part of lol
    Last edited: Feb 18, 2011
  13. Darkrider
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    Darkrider iPF Novice

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    Good things to know.

    Thanks for the heads up, :)

    Tom.
  14. Prasius
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    Prasius iPad Enthusiast

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    Have to say this is possibly one of the most badly thought out things from apple in a long time.

    I have a print subscription with the Economist, and as part of that I get free digital content via the economist app. Are apple seriously expecting 30% of the print subscription revenue simply for the Economist to provide me with digital content (they provide a digital only subscription too) - I can't see that happening.

    If apple insists on this course of action, I could see content providers leaving in droves and customers following in a similar fashion..... Considerably more serious than lacking flash I think!
    Last edited: Feb 18, 2011
  15. Seadog
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    Seadog Super Moderator Staff Member

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    First off, just because the feds are looking at a company, means very little. They do it on a regular basis when someone complains about anything. It is only making the news because it is Apple, and Apple is news. Steve Jobs sneezes and there is front page commentary. The experts have said that there is little chance of anti-trust regulations being in play here because it does not meet the criteria.

    Second, this means nothing to the consumers, because it will not affect pricing of any products. Music is already priced to where Apple has the bulk share of the market. If it were not for Apple, everyone would probably be paying $1.99/track from all sources. That is what has Rhapsody and others upset, because they cannot compete with the price level Apple has set. The book and magazine sellers will determine if they want to sell on iTunes. The only difference is that if you buy from another source than iTunes, you will do it on your full computer. What is the big deal there?

    Right now, Apple is using their market power to get content at a lower price than if you bought it through traditional retailers. They are doing what Wal-Mart, Amazon, etc. has failed to do. Even magazine subscriptions will be where you are able to renew them from the original vendor. They just have to pay Apple if Apple does the processing, and you cannot go to the vendors sales site directly from the app. The likely scenario is that you will sign up for a free app or an app that is part of an inititial subscription which Apple may get 30% of. After the initial subscription, when it is time to renew, you would get an e-mail saying that you can renew by going to [xxx] website. A subscription as part of a print subscription, will not be affected by Apple's policy, nor will any other purchase that is not made through iTunes. It is the same thing that happens with Amazon if you buy something through Amazon from one of their affiliate vendors. Amazon takes a cut of the profits for processing the payment and providing the site information. Surely, you do not expect them to do that for free? Remember that every app that is posted on iTunes has to go through a review process, then it costs Apple time and money to post the app, provide downloading capability, and reviews. It is not cheap, and they do not make any money off the free apps.

    Apple gets a lot of attention because they are so good at what they do. The catch is, what they are doing here, is nothing new. It is a correction on a problem that was going to hurt their finances in the future, so they fixed a leaky hole in the boat.
  16. DaveSt
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    DaveSt iPad Junkie

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    You are leaving out the part that is potentially the big deal here in my opinion. This is the other part, quote from Apple:

    "Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app,"

    This probably doesn't affect Amazon so much because I'm not sure one time purchases of ebooks can be considered subscriptions. However, the reports I have read state that Amazon must offer in-app purchasing to the Kindle app, so who knows where that one is going. If Amazon is required to offer in app purchasing I see that as a problem.

    This does however affect services like Netflix and Rhapsody which according to the above quote have to offer subscription through the app and thus pay 30% to Apple. If this is a one-time cost then that is fine but I have not seen the clarification stated by Apple anywhere.

    As far as Apple approving and hosting the apps themselves, that is a self imposed cost. I'm not going to shed any tears for Apple because they require all applications to go through the App Store. Looking at their last few quarterly profit numbers I feel pretty safe in saying the application approval process isn't hurting the bottom line too much.
    Last edited: Feb 18, 2011
  17. Superbike81
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    Superbike81 iPad Addict

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    30%?

    WOW!

    Isn't that a bit excessive for being a content host?

    Or is this 30% about the industry standard?
  18. DaveSt
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    DaveSt iPad Junkie

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    30% isn't actually that bad. Until recently Amazon was charging Newspapers, bloggers, and periodicals 70%. They have recently lowered that rate to 30% for some publishers. Amazon also charges 15 cents per megabyte for the content delivery. I do believe that those charges are only for content delivered to Kindle devices however because that is what subsidizes the "free" 3G service to those devices. Publishers are not charged for delivery to non Kindle devices.

    I have no problem with Apple charging for real subscription based content such as magazines made for iOS. I only have a problem if Apple requires Amazon to make their ebooks available to in-app purchasing. The rest of what Apple is charging seems to be reasonable assuming they don't try to take a cut from monthly services like Netflix.
  19. DaveSt
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    DaveSt iPad Junkie

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    I stumbled across a VERY interesting analysis of this issue that puts things in a little different light. If you read all the way to the end, it seems like Amazon might still come out the winner here (for subscriptions, NOT ebook sales) even if they are forced to sell within the iTunes framework. This article does a much better job of explaining the fee structure than I ever could, and some of the numbers in my previous post are actually a little low. I didn't know Amazon charged so much for non US and UK delivery for example. Anyhow, the following link is worth a read.

    AppleInsider | Inside subscription content: Apple iPad vs Google One Pass vs Amazon Kindle
    Last edited: Feb 18, 2011
  20. Thphilli
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    Thphilli iPad Enthusiast

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    Skimmed through it and there was too much bias to say that its worth a read. Just one example, they call the Xoom an $800 device when there is officially a model at $600. I wouldn't take seriously any publication that called the iPad a $829 device.

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