Subscription services

[gentlefury]

For those who are not aware, the latest report is that the app store is operating at a loss of 19%. This is a major incentive to crack down on apps that allow people to buy directly from the vendors. And for those who think 30% is too much, check the profit margins of other stores.

exactly!

 

[iPadCharlie]

Misunderstanding. i don't want to buy but stream.

Well you can't hardly beat Pandora for streaming. Technically, it is free, but there is advertising and supposedly a limited number of hours per month you can listen (although I have not hit that limit and I listen a lot). For $36 a year you don't get the ads and there is no limit to the number of hours you can listen.

Another great stream service is Last.fm and is similar (but not as good as) Pandora. Right now it is also free, but in 3 months it becomes a subscription-only service at $36 a year.

I am sure both of these great streams will be affected by this new policy.

 

[DaveSt]

For those who are not aware, the latest report is that the app store is operating at a loss of 19%. This is a major incentive to crack down on apps that allow people to buy directly from the vendors. And for those who think 30% is too much, check the profit margins of other stores.

I don't believe it. Apple themselves said last year that they had netted $189 million in profits from the App Store. Sounds like typical big business creative accounting to me. But let's assume Apple is just breaking even or suffering a loss from the App Store. So what? The App Store is about driving Apple's hardware sales, which are through the roof. Take a look at Apple's quarterly profits over the past few years. The App Store is doing exactly what Apple needs it to do.

In the end, I could care less if Apple is suffering a loss in the App Store. I understand completely why Apple is doing this from a business standpoint. I think most people do. But I am not an Apple business person. I am a consumer. I don't want my content to go away on the platform I have invested in. People can keep spouting the business models at work here, but for the end users that is a meaningless point. Apple's profit margins mean nothing to the end user, only what they can do with the device they paid their hard earned money for.

 

[Thphilli]

For those who are not aware, the latest report is that the app store is operating at a loss of 19%. This is a major incentive to crack down on apps that allow people to buy directly from the vendors. And for those who think 30% is too much, check the profit margins of other stores.

If they are losing 19% on the App Store then they have some terrible accountants. I looked and could find NOTHING to substantiate that claim.

 

[Superbike81]

I'm not going to pretend to have a good understanding of e-business, but how could they possibly be losing money on the App Store? They can't have much overhead, just bandwith fees. What else are they really spending money on? Their in-house screening of all apps?

If they are losing money by hosting apps that other people make, they are doing it wrong, big time.

 

[iPadCharlie]

About the only app that could be weighing down the app store is iBooks. I think everyone will admit that it is an abysmal failure and I wouldn't doubt for one minute they are losing money on it. While the app itself shines above most others as an "eReader", people are just not buying books from Apple. The Kindle app is average at best, but no one can touch the breadth of their content selections. A Chevy that runs will beat a Cadillac stranded on the side of the road!

 

[Diane B]

I've been pretty active in this thread but in the end I'm just going to wait and see. I just hope for compromises so I/we don't lose functionality of this really good tablet even with its quirks and occasional annoyances. Say what one will, yes, there have been other tablets but none of tthem made it and this is a colossal hit. We'll see what happens with reading apps. I don't want to carry 2 objects similar size, actually won't. The tablet suits my day to day needs. I would be willing to add another (small portable) gizbo for my music and for nothing else if I can find one compatible with a good subscription service with room for dling for offline listening. Everyone (developers, retailers, Apple) need to feel they can do reasonbly well with whatever model can be agreed upon. As consumers we can take the results or leave and find our needs met elsewhere.

Diane

 

[Diane B]

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.

Interesting, this is exact quote of my post above. I bet you meant to quote it and comment.

 

[DontUnderstandMyIpad]

About the only app that could be weighing down the app store is iBooks. I think everyone will admit that it is an abysmal failure and I wouldn't doubt for one minute they are losing money on it. While the app itself shines above most others as an "eReader", people are just not buying books from Apple. The Kindle app is average at best, but no one can touch the breadth of their content selections. A Chevy that runs will beat a Cadillac stranded on the side of the road!

iBooks lead to no looses on Apples side if they don't sell ebooks. It is just an app, if people use it to buy, it generates revenue, if no one uses it, then no revenue, but also no cost apart from developing it.

The main cost for Apple is indeed bandwidth.

Here is a quote from another news site:

'I sell my apps, around 20Mb of downloading data, worth 0.99c. However due to a huge number of apps, it’s too hard to sell a copy of this app.
In order to sell an app, I have to make a lite version which is also around 20Mb for free download. And the download ratio is 100 (lite):1 (full), which means 30cent for Apple cost it 2Gb download bandwidth.
When I made an update (of course it’s free), the same bandwidth cost for Apple, without any benefit.
Nowadays, some apps go free for some days which cause nearly a million free download, it just cost too much for bandwidth but generate no money for Apple yet.'

And the corresponding article:
http://www.cultofmac.com/apples-app-store-itunes-popular-not-so-profitable/27864

Also take into account, that credit card companies get their own share as well, which is another 2-5%.

 

[Superbike81]

They cant be paying THAT much for bandwidth.

 

[iPadCharlie]

I would be willing to add another (small portable) gizbo for my music and for nothing else if I can find one compatible with a good subscription service with room for dling for offline listening.

That is precisely why I kept my iPod Touch. I can keep most of my music library on it and stream from content providers. I would actually be more likely to upgrade to a 4th generation iPod Touch than a 2nd generation iPad.

 

[Diane B]

Well you can't hardly beat Pandora for streaming. Technically, it is free, but there is advertising and supposedly a limited number of hours per month you can listen (although I have not hit that limit and I listen a lot). For $36 a year you don't get the ads and there is no limit to the number of hours you can listen.

Another great stream service is Last.fm and is similar (but not as good as) Pandora. Right now it is also free, but in 3 months it becomes a subscription-only service at $36 a year.

I am sure both of these great streams will be affected by this new policy.

I wonder since right now you can't do the subscription from either the Iphone or Ipad Pandora app. You have to do it from your main computer. I've listened to Pandora for years and love it but it doesn't allow you to add your own music, make playlists and no downloadable music---the concept is quite different. I love the music genome concept and have learned of new musicians because of it (when I hear something that appeals to me I check the info on my Touch or net radio and add it to my Rhapsody library). i have a lot of "stations" but it still doesn't fit the Rhapsody model for me. I subscribed to it the last several years because I wanted to add my support for a service I use a lot I just recently read an interview with the founder and he says they are doing very well, thank you very much (mostly due to their ads and the pairing with Ford for their service in car ala XM and Sirius won't hurt), and so didn't resub this month when mine was due, I had some back and forths with their support last year and was basically told then that the Ipad and Touch aren't affected by the monthly limit on play like playing over the net on computer(why I have no idea). And of course we don't see the ads on the Ipad or Touch as we do on the net version. I have so far this month only heard one brief ad also. As a matter of fact its streaming right now on our living room sound system.

But I still only know of Rhapsody (which is basically "renting" you your music that you would otherwise buy) and Napster that allow you to choose exactly the music, artists, albums you wish to hear and download some or all of them, make playlists but also offer 'stations' based on genre or artists, but are created in a quite different way from Pandora's music genome. Some people who are mystified with Pandora's choices for their artist stations need to go online and read how the music genome works--very interesting.

Then there is Netflix but for me, since we use Apple TV mostly to watch streaming, its less critical for me--others may feel differently.

Diane

 

[Diane B]

A Chevy that runs will beat a Cadillac stranded on the side of the road!

LOL. i love this. I know, I know, who needs my comment or "right on" but I enjoy good analogies, stories, etc.

 

[Diane B]

That is precisely why I kept my iPod Touch. I can keep most of my music library on it and stream from content providers. I would actually be more likely to upgrade to a 4th generation iPod Touch than a 2nd generation iPad.

Love my Touch and if I can stream from a subscription service LIKE Rhapsody on it I will buy yet another when this one dies, though no sign of it yet and I use it every day, sometimes almost all day through a radio or sound system since I listen to NPR radio a lot and it is static free and clear through the Touch/wifi AND I can choose from the whole US's NPR stations plus the BBC. Mine is 3rd gen I think so I can take advantage of all the 4.2.1 OS upgrades. I have the 64GB so have almost all of my library on it, stream both Rhapsody and Pandora and other net radio plus download music from Rhapsody that I can choose to play offline in the car (primarily).

I have an old Nano, a Classic Ipod and enjoyed them but when I bought the Touch is when I got infected with Apple fever and because of it I bought the Ipad early last May. Otherwise I'm a very very longtime PCer.

Diane

 

[gentlefury]

I'm not going to pretend to have a good understanding of e-business, but how could they possibly be losing money on the App Store? They can't have much overhead, just bandwith fees. What else are they really spending money on? Their in-house screening of all apps?

If they are losing money by hosting apps that other people make, they are doing it wrong, big time.

Go ahead and start a site that hosts applications. You set the ground rule that if you want me to host your app you will pay be only 30% and you will get full distribution to millions of users. If you want you can even release the app for free and make money thru ads (that users will share with you)....some users however decide they want to use your distribution method but circumvent your charges by allowing you to go to a website and pay for additional services, or in the case of pandora pay entirely.....now, millions of people download pandora and say hundreds of thousands of people pay for the service. You only see money from ad revenue.....and not a penny from the paying users. Thats not cool since you are still hosting this app that is downloaded millions of times a day.

Get the idea if that happens over and over and over...eventually you are hosting a ton of "free" apps that people are paying for outside your jurisdiction. Not very fair and blatantly sidelining your terms of service agreement.