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Video: Apple Takes a Cut of Publishers’ Money

Saturday, February 19, 2011

Apple announces this week that they will charge a fee of 30 percent to their publishers subscription fees, at the same time disallowing the publishers to raise prices of their products to offset the losses.

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About the Author

is a girl that's been playing video games since she came out of the womb. 22 years later I decided to share these pent-up opinions about the industry, games, my likes and dislikes and everything in between. I also dabble with Linux and make a vain attempt at helping others dabble as well. Actually, I just like the word 'dabble'.

  • http://thegamersgoldmine.blogspot.com Chris

    Yup that figures, big computer companies screwing over other people, i guess Micro$oft and Apple aren’t so different after all. I don’t own an ipad anyway and this is just another good reason to buy an android tablet instead, apple is to overrated anyway.

    By the way worst argument ever…”yeah but my mac never gets viruses, its got great security”, uh no, its just that no one wants to waste the time writing viruses for an OS that only 15% of the population uses (ok 15% not right but you get the idea).

    Anyway guess that will conclude my random rant.

    • xulfer

      Or it could be because administrator level privileges are rarely required in a UNIX based operating system which inherently limits the damage that can be done by a ‘virus’ in most situations. UNIX based operating systems also don’t allow a process to access / modify another random processes memory.

      Linux, OSX, BSD, etc are mostly only subject to runtime vulnerabilities. Such as stack smashing, dos attacks, etc. People spend a lot of time working on these both in white hat, and black hat communities. Feel free to peruse http://nvd.nist.gov/ as a reference.

      By the way *nix dominates the server / embedded market… aka the systems that are actually important, so the 15% number is fairly misguided.

  • John Stamos

    It’s a slick move on Apple’s part, and it makes sense. If the publisher is going to use the iApp to offer a subscription, then Apple is within their right to take a cut of the revenue being generated while using Apple’s service.

    As for weather it’s wrong or right, it’s not wrong, since it’s standard practice elsewhere for the distribution channel to take a cut of any revenue generated via use of their service (e-tailers like Amazon, for example) or in other cases (such as PayPal) to take a cut on the changing hands of money via their service, with the traditional argument being that the sale would not take place without that service.

    I wouldn’t so much as call it Apple outright screwing publishers, the way I see it, it’s just as much a case of publishers trying to pull a fast one on Apple – again, the move isn’t surprising, it’s standard practice. Taking a cut isn’t the shocker here, it’s Apple’s provision that prices cannot be raised to offset (presumably unless publishers also raise their ‘external’ subscription as well), it might hurt the publishers, but it’s a win for consumers.

    Generally, at least one of the three parties involved (Apple, publishers and consumers) has to lose, the question is their appstore app generating extra customers? If so, is the $7 they’re getting out of each oneafter giving Apple their cut $7 they would not otherwise be getting, that is to say would they be getting the full $10 out of an iPad suscriber, were the iPad app not available?

    If making the service available for the iPad is bringing in new subscriptions a publisher would not otherwise be getting, then it’s a rare case where everyone wins. I have to figure everyone is selling their subscription at a margin, so 30% wouldn’t exactly break the bank.

  • davidnottingham

    I disagree John. 30% is a pretty big margin. To take the PayPal example, if they were to levy a 30% surcharge on payments, people wouldn’t use them, and would shop elsewhere. Apple being a closed system means that they have their users over a barrel, Apple users need to get their apps from the Apple App store, and hence have to pay the levy. They know that the software companies are reluctant to lose these cash rich users, and so can pretty much dictate their own terms.

    If this had been a more reasonable percentage, then it might not have been so contentious, but Apple have been greedy. Somehow I reckon that should a software company challenge this in Europe, our competition laws would rule in favour of the app developers. Time will tell.

  • Sammo

    The margin is probably the main issue as David suggests. Introducing such a high percentage is lacking sensibility when economic times are hitting many businesses, but apparently Apple have done very well. They should really help out their supporters rather than screw them over. That’s why I pulled all apple development – they are not worth working with economically for me.

  • http://n/a anon82

    Conventional economic theory says that the price will reach equilibrium where demand equals supply so if prices of apps go up then less people will buy apps and app prices will then go down and more people will buy them etc, until the supply of apps meets the demand for apps at an equilibrium, market-clearing price. So the real effect will be on distribution of revenues between Apple and its app developers. The gut reaction to this story is that Apple is being harsh on developers, but they really have no incentive not to be. Everyone uses the iPhone and the app development platform for iPhone was created by Apple, so its all their own intellectual property and they can charge developers if they want to.