Apple’s 30% vig greed grab still upsets me. I still can’t understand why Apple — and Steve Jobs — can’t see how blatantly unfair it is and how it will hurt Apple.
It’s particularly puzzling given the words that have come out of Steve Jobs’ own mouth. At one time, he knew better and stated so.
The 30% vig greed grab will lead to the exclusion of eBook services that people have come to depend on and which they chose well before the iPhone itself even existed. What Apple and Jobs are practicing here is a zero sum game.
Steve Jobs once understood that no one benefits from a zero sum game:
It was clear that you didn’t have to play that game. Because it was clear that Apple wasn’t going to beat Microsoft.
Steve Jobs once understood that Apple has strengths and weaknesses and that it’s better to let others handle certain things because they have that expertise:
We don’t think one company can do everything. So you’ve got to partner with people who are really good at stuff.
Apple isn’t going to beat Amazon, Sony, Kobo, and Barnes & Noble in eBooks. So why should Apple even try?
Anyone who truly values eBooks would never trust Apple with them. They have a history of ridiculous and outright embarrassing bannings. They are inept at eBooks, they have no respect for publishing, and they have evinced a disdain for freedom of expression that is astonishing from a 21st-century company. They are unlikely ever to develop the expertise that’s necessary to properly handle publishing and should therefore stay out of it and leave it to those who do it well: Amazon, Sony, Kobo, Barnes & Noble, and all other future entrants.
Apple’s strength is software. Jobs acknowledges this:
It’s worth highlighting this very important bit:
Because an iPod’s really just software. It’s software in the iPod itself, it’s software on the PC or the Mac, it’s software in the cloud for the store.
Boldfaced emphasis added by me.
And that is what Apple should be concentrating on: the software.
The iTunes Store, as I’ve stated before, should become a platform.
Jobs makes the case for it himself in those three videos:
1) Zero sum is a game no one can win
2) It’s foolish for Apple to try to do everything
3) Apple understands software
The iTunes desktop software — which needs a total rewrite anyway — should become a store browser and content management/sync software.
Store Browser: It doesn’t link only to Apple’s stores. It links to whatever stores have licensed the backend iTunes server software. The music companies always complain about how they should be in charge of pricing. So has at least one television network. Let them license the iTunes server software and sell for themselves. They’ll learn firsthand what things must be priced at to avoid being bled by pirates. This solution also lets Apple get out of content banning. Let the Big Six publishers set up their own iTunes-compatible stores for their eBooks. Let the magazine publishers do this too. The one area that Apple can still exercise some control is over app compatibility. Developers would still have to clear their software through Apple to ensure it’s free of malware and privacy violations. But if those apps aren’t going to be sold by Apple, they can’t ban them for things such as “lacking lasting entertainment value” and the like. In other words, they can no longer make that kind of value judgment. Let the market do that, as it should.
Content Management/Sync: Apple still handles the DRM, just as Adobe — outside of the iOS system — today handles DRM for eBooks. The iTunes software is still the digital hub for downloaded goods and the way to sync them to iOS devices and to stream to other devices (such as Apple TV). Apple can concentrate on making it a better experience for everyone.
I’ve already pointed out that even app developers giving Apple 30% are getting a raw deal because it’s impossible for Apple to live up to its marketing commitments for that 30% cut. The objective math is against them. By decoupling the iTunes Store from Apple, each new store can concentrate on the marketing it needs to do to its customers. Better X-number of iTunes-compatible stores marketing Z-number of apps than Apple insisting it can devote marketing resources through one store as the number of apps climbs to 400,000, then half a million, then over a million. The numbers eventually become unsustainable. Just ask writers how hard it is to attract attention for their book against the over 800,000 in the Kindle Store.
By doing this, Apple makes its money by licensing the iTunes store software and by being the transaction processing entity. There is far more money in that than the structure currently used by Apple. The way things are now, Apple is its own bottleneck, detrimentally restricting its possible income, and delaying the future that it knows it must embrace.
Apple still has enough of a head start that it can again change the game by doing this. Doing so is the best thing to do for Apple, its customers, its partners, and its partners’ customers. Everyone would win.