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Comment by donohoe | Hacker News Reader

It still leaves a bad taste in my mouth.

The user is paying for the device, they are paying for the bandwidth, they now pay for the content. Fine, great.

The publisher is paying to build the app, they're paying even more to acquire/write/edit/host the content, they're paying a cost to make it available. Okay... whatever.

Apple claims 30% just for being there.

They don't add to the discovery of most content apps (we're all aware of the big name ones a Wired, NYT, USA Today, etc), discovery is what could happen in the app but not the app store itself.

FYI: I work for the NYT so while I think my issues are critical and fair I want to be upfront about that.

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By "being there" you mean, having the data that enables one click payments from a mobile phone - that in itself, is a huge deal.

I think 30% isn't ridiculous for handling payments on a mobile device.

I remember asking an FT guy if he felt it was a good deal, and he said 30% was good compared to some carriers in the olden days...

Comparing a bad deal to a worse deal doesn't make it good.

I don't speak for the NYT but I've been following that chatter from news organizations for awhile. The thinking (right or wrong) goes like this:

* Publishers don't want to use Apples payment system as it locks them into Apple

* Publishers don't want to use iTunes for managing subscriptions

* Publishers don't want to have to pay 30% of the costs to pay for a service they don't want to use

There is a great and strong argument that its good for users and I agree with that. Users don't have to enter billing info etc across multiple apps. Thats a win, and a big one too.

However the reality is that when people grumble about paying for news content in the first place, and newspapers turn to the internet as publishing market shrinks, and the whole business model of news is in flux, along comes Apple and says we're going to take 30% for adding a service that you (the publisher) don't want and we're going to great a barrier between you and your customer so you're dependent on us.

This could be a huge debate, and I honestly can't go into one. Too tired. Too much to do today. So let me just say that you should always do what the consumer wants and in this case Apple is providing that.

But by a 30% cut they're going to make it difficult for news organizations to budget and pay for in-depth news coverage as they become increasingly dependent on online revenue sources.

I imagine the reason publishers dislike the Apple payment stuff is not the 30% but the fact that Apple owns the customer, not them.

It is no longer the "olden days"

Desktop manufacturers don't skim subscription content - we would all revolt if they tried.

It is NOT 30% for handling payments. It is skimming 30% for the life of the subscription for fielding a single click.

"Apple claims 30% just for being there."

They created the iPad, they created the App Store. Where was the NYT et al when the canvas was blank?

Also what is the cost for digital delivery versus print? And all publishers surely can have a web based subscription service if they desired - fully accessible from any iOS browser or other smartphone.

This is a separate argument but one I am so very tired of hearing so sorry if I come across as a bit terse.

The notion that because its electronic delivery then its cheap, or cheaper than print...

That is called an Assumption. And its a bad one too.

Print is expensive and labor intensive. It involves presses, unions, skill, delivery and distribution. However the big costs of that are offset by advertising in the pages.

Digital distribution is expensive but cheaper than print. It involves programmers, sys admins, dbas, CMS developers, web dev, consultants, support, hosting, ec2, bandwidth and more. However the big costs of this are not as easily offset by advertising on web pages because web advertising is dirt cheap.

"They created the iPad, they created the App Store. Where was the NYT et al when the canvas was blank?"

Isn't that similar to saying Google can ask for a cut for all web subscriptions made in Chrome? Apple created the iPad, true. But it's not that I have not paid for the device.

I think its more like if Google had also developed their own standard for sending pages to replace HTML/JS/CSS, replaced DNS with their own page discovery system, provided tons of pre-built reusable components that make up almost all parts of most sites, and then paid for all of the bandwidth for transferring webapps using this new system.

And then, still supported the old way of doing things, only charging a cut if you used their new system.

So Microsoft should be taking a 30% cut of every dime spent on Windows?

Apple doesn't charge me (or Valve) anything to buy something from Steam for Mac.

Likewise, they don't charge me when Netflix streams a movie on my Macbook.

It's their _market_ that they impose fees on. Amazon charges their Marketplace sellers up to 25% "referral fee" for all sales. Kindle market is 30% as well, I believe. Valve also takes a cut on both "retail" versions and DLC packs released through Steam. There were companies (like Introversion, who makes the awesome Darwinia and Multiwinia RTS games) that almost went bankrupt if it wasn't for Steams mighty distribution service and marketing (dare I say) genius.

What I don't get is, if NYT and other publishers are so ginned up about Apple's cut, why don't they just say "Hey, iPad users, go to NYTimes.com and subscribe. You'll receive the same hard-hitting journalism and insightful commentary in the Safari-optimized nytimes.com edition as you would from our iPad App. Subscribe today!" Problem solved.

wrt "why dont they just say": Apple prohibits "links" off-app subscription sites. It likely they'll take a dim of plain text too (obviously clickable links are not allowed).

I can kinda sorta understand Amazon charging the Marketplace guys (although 25% seems excessive), since they're targeting the long tail who would otherwise be invisible.

Obviously, I think Amazon charging publishers 30% to reach Kindle owners is bullshit, just as I think about Apple.

Apple did not do it for free. They had a business motive - and as a consumer, I ain't getting the device for free either.

yes they created the iPad...and I paid for it! Why should I pay more after that? It's like Ford saying they want 30% of all cab income since they created the "Crown Victoria" taxi car....

I think this analogy only holds true if Ford is asking for a take of a seamless dispatch service built into all Crown Vics sold to taxi fleets.

... and forcing all taxi companies to use it, and preventing them from putting pointers to their other payment options inside the car.

(Is it just coincidence that every analogy in support of Apple forgets that second bit. Are the analogy writers unaware of that clause, or does it start to sound oppressive so they just leave it out?)

You're right...the "seamless dispatch service" has it value BUT nowhere near the value of the car itself including things like reliability, comfort, space (etc) and certainly not even close to 30%. I think Apple is just pushing this high anchor so that it'll be negotiated down in the future. I believe we'll see this number being gradually notched down until it becomes either very low (in the low teens) or eventually 0 - just like most taxi fleet services now include the dispatch as a standard feature.

Are you paying more? From a user perspective, they're explicitly being charged the same for the content.

We can't view it completely from our developers perspective, because the average user just doesn't care.

All taxes on corporations are passed down to consumers (including Apple's).

donohoe, I am sorry but I had to laugh. It's not just "being there" - you had to pay to build the app, sure, but do you know how much Apple had to invest for creating the platform on which your app could be built? And implementing app store, and running app store, etc. etc...

But yes, 30% feels a bit high for repeated payments with no added discovery by Apple, i agree with you on this one.

I'm not claiming Apple did nothing. They have built a great platform and its been very successful for them.

I can imagine how much they spend building it but I can see how much they made back from that though. And this is before Subscriptions will add to that.

My point is that Subscriptions can happen without Apple. But they have chosen to not allow that. They have also chosen to take 30%.

Finally, they also take away any direct relationship a publisher can have with a customer (you can argue the pro's and con's of that but end result is publishers become dependent on Apple).

they also take away any direct relationship a publisher can have with a customer

It takes 2 party to be in a relationship. Apple gives you the option of being in that relationship or not. Except for billing and shipping, I can't remember what the pros are for the publisher having my information. I do know that at the first chance they get they make money on the backside by blasting out my mailing address to every junkmail operation in existence.

Agreed. However if CompanyX has a relationship with CompanyY and is negotiating prices/deal/terms/whatever it is in on very shaky footing to get a favorable deal if CompanyY completely owns the customer base for CompanyX.

My point is that Subscriptions can happen without Apple.

Where they do, Apple takes no cut whatsoever. If you have a subscription-based web application, for example. The only way Apple can take a cut is if you're using what they provide.

Thanks for representing the NYT viewpoint in the thread, donohoe. My question to you is, why should the NYT be so afraid of this? Customers will (mostly) know about Apple's 30% cut. If NYT wants the entire pie, can't they just sell the user an iPad NYT subscription on the NYT website or elsewhere, thus getting 100%?

Apple has NOT chosen to not allow subscriptions from the outside. Doesn't what Jobs said explain that clearly? If NYT already sold the user, Apple gets zero. If NYT sells a new user from somewhere outside the iPad app, Apple gets zero.

If, on the other hand, Apple sells a new NYT subscriber, from inside the iPad app, Apple gets a cut.

Now, we can argue about whether the 30% cut is way too big, but this seems pretty close to fair, to me.

This is NOT the NYT viewpoint but my own. I am a developer with the NYT but I'm not speaking for the NYT nor claim to be reflecting their views.

I apologize for my bad wording. I meant an NYT viewpoint, not the official views of the NYT. I would still be very interested in your answer and opinions.

If publishers choose to pay Apple 30% for "being there" then I guess it's worth 30%. They don't have to rationalize their fee (even though they try). They're not deceiving or coercing you. They're offering a deal in good faith -- take it or leave it.

Right, but they also have to charge that rate everywhere else.

So if a subscription without Apple is $10 (an easy round number) its not matter of upping the rate to $15 so you can still get your $10 to pay for the content since you now have to also charge that $15 to Amazon users and other subscribers.

That 1/3 price hike is pretty substantial to pass onto the reader, so it bites into the publishers margin instead. The rate remains at $10 or $12 so the publisher is getting much less that they'd like.

With talk of paywalls/subscriptions on web sites of news orgs there is a lot of chatter about people not wanting to pay for news in the first place. So subscription sales aren't a sure thing when it comes to a revenue stream for a publisher and also now Apple wants 30% of that...

Are we asking if the deal is competitive or if it's fair? They are very different questions and most of what I'm reading in this thread seems to treat them as the same.

Maybe Apple doesn't want big, low-margin publishers in the app store. Maybe they want to be the big publisher and they only want small time content that is worth many times what it cost to produce.

As a developer, I don't like that the hottest new platform is a walled garden, but I can't say that Apple has ever even implied that the app store is anything else and they haven't twisted any arms or abused any monopolies to get where they are. They just played really well, went straight to the source (consumers), and now they have everyone else by the balls.

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