When the mightiest online retailer in the world, Amazon, has to bow to Apple’s demands and cut ties to its ebookstore in the Kindle app, we know we’re facing a big problem. Retailers have lost an important battle to stop Apple turning its hardware dominance into control over content sales. It’s now time for publishers to step in and challenge Apple for the sake of the long term health of the market for ebooks and reading. There’s an easy way to do it.
Apple’s demand—that it get a 30% commission on all sales made through in-app purchases—was clearly a non-starter for retailers who could never meet it and Apple knew this. The only ones who can pay that sort of cut are the publishers and Apple will deal directly with them. So Apple and its iBookStore now enjoys a major advantage over other retailers: it offers the simplest, most convenient shopping experience of any ebookstore on the dominant iOS platform.
This might seem like a small detail. But small irritations from things that don’t quite work turn consumers off. Apple built the world’s biggest tech company by understanding this critical point: good enough just isn’t good enough. So by forcing its competitors’ customers through a more complicated route to purchase, Apple and its iBookStore could be heading for a similar dominance in ebooks that it enjoys in music downloads.
There’s a lesson here for the book industry. The music industry found out last decade how making it easy for consumers to buy can lead to a big share of the paid digital market. In fact, Apple was so good that it even convinced consumers to buy music instead of taking it for free. Now it has a 65% share of the entire market for paid music downloads making it too big for music publishers to argue with.
But there’s also an important difference that book publishers should take note of: unlike iTunes and digital music, Apple’s iBookStore is a disappointment so far. It hasn’t measured up to early expectations. By most estimates, Apple’s share of the ebook market is still in single digits.
So now is the ideal time for publishers to confront Apple. Apple’s ebook sales are not critical to publishers yet Apple can potentially do huge damage to the industry long term if its current course continues.
The way to stop Apple doing more harm is simple: refuse to supply it with the key titles its iBookstore needs to present a credible offering.
Doing this will help level the playing field between Apple and its competitors by giving consumers a real choice: an easy purchase experience or a great selection of ebooks. The score for Apple vs Competition will be more like one-all instead of the one-nil that Apple’s tilted playing field created this week.
It can be done. Publishers set a precedent for collective action a year ago when they threatened Amazon and other ebook retailers with non-supply if they didn’t buckle under and accept the agency pricing model, ironically a move initiated to smooth Apple’s entry into the market.
Publishers might worry about potential anti-trust actions from such a strategy but they probably shouldn’t. Think about how tough it will be for the US Department of Justice to figure out which of the protagonists, Apple or the publishers, is abusing its market dominance more.
When we look at how much Amazon, Kobo (especially in international markets), Barnes and Noble and others have done to grow the market for ebooks and compare it to what Apple has done—almost nothing specifically for the book market—it’s clear what will best serve the long term interests of books and reading.
Apple is just a market share player in this industry and books are a minor product line for it. If it’s allowed to proceed along the track it’s on, it will grab a big share of a market that ultimately becomes much smaller than it should have been. We need more Kobos and Amazons who commit resources to opening up digital reading to new customers and encourage them to buy and read more.
So book publishers, especially the Big Six US publishers, take a cue from your music industry counterparts who must regret the last decade’s lost opportunities when a more diverse marketplace for digital music could have taken hold and multiplied. Stand up to Apple now. You’re in the best position to do it and readers, authors and channel partners alike will thank you for it.
This really is a load of tosh.
What does amazon charge for sales through it’s Kindle ? Does it allow Apple to sell through it’s Kindle ? Do any of the other eReaders ?
iBooks may not be the best eReader software around, but the nonsensical suggestion that “Apple can potentially do huge damage to the industry long term if its current course continues” is risible.
As regards Music .. ” take a cue from your music industry counterparts who must regret the last decade’s lost opportunities when a more diverse marketplace for digital music could have taken hold and multiplied.”
In what way exactly is Apple causing a problem for the Music industry ?
Do you really have a clue what you are talking about ?
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Please, open a store of your own and not markup the products you purchase for resale. How long would you stay in business? Not terribly long I would think.
Demanding Apple to act differently than any other retailer out there is insane. I’m sure Amazon and everyone else chortled all the way to the bank the entire time Apple was graciously allowing them to make sales without remunerating them for the privilege.
It’s more of a hassle for readers than companies. They know how the game is played, as opposed to the idiots reporting the news. But hey, if creating a controversy gets eyeballs on your ads, then so be it.
An excellent post Frank. That pretty much says it all.
@Frank, @Howard. Your points emphasise Apple’s role as a retailer and if that’s all there was to it, I’d agree with you. But the problem we face is that Apple is both the retailer and the platform/access provider. So Apple is more like a retailer who also controls access to the town’s entire shopping precinct and uses that power to reduce competition.
It’s certainly plausible that Apple could remain as dominant in future as it is now, perhaps more dominant. We’ve already seen this with Microsoft whose operating systems beat out early rivals to win over 90% of the PC market. I’m not going to excuse Microsoft’s behaviour because it was no better than Apple’s and should point to what we can expect. What I would say is that stopping the abuses that come from controlling market access is easier before it’s entrenched than after.
The best thing that may come out of this is accelerating the development of HTML5 and web apps. Companies have an incentive because they’ve now seen how vulnerable their businesses are. I favour a helping hand in this transition by levelling the playing field a bit around the customer experience since it will take more development for a web app to match the consumer experience of a native app.
“Apple is both the retailer and the platform/access provider.”
The same as Amazon is. But you don’t appear to have a problem with Amazon charging 30% and not allowing any apps from any other competitor.
“What I would say is that stopping the abuses that come from controlling market access is easier before it’s entrenched than after.”
On an iPad or iPhone you can buy from any retailer of eBooks and read eBooks from any other retailer. What about Amazon and the Kindle ?
Your arguments simply don’t make any sense.
An open market for tablets, smartphones etc is actually the best chance to reduce Amazon’s dominance by providing equal access for more competitors. That’s what I think we need to focus on. And for the benefit of books and reading — more diversity, more books published, for more readers — we will be better off if there are many players competing than simply one or two dominant players picking off the profitable, low hanging fruit (and, as we’ve already seen with Apple, censoring what’s published).
On your point that you can already buy from other retailers, with or without the app store, that’s true. But don’t underestimate the ease-of-use advantage Apple will get with its apps over a web-only. Most consumers have a very low threshhold of tolerance for things that don’t work smoothly. After all, it’s at the heart of why other device manufacturers have yet to compete effectively with the iPad (and never competed effectively with the iPod).
This anti Apple thing is really under your skin, Martin.
Competition is good. Always. I agree that the more the merrier. But there is already loads of competition. Great Indie eRetailer sites as well as B&N, Amazon and Apple. More is inevitable and welcome.
“as we’ve already seen with Apple, censoring what’s published”
What ? ? Tell me ONE publisher or retailer that does not filter and ‘censor’ what it publishes or sells. Well ?
Censorship is an act of government. Apple simply choses what it feels like selling and doesn’t sell other stuff. I experience the same in every store I visit. The same goes for every publisher I have ever encountered. This is really an irrational and inaccurate criticism.
Your closing para is yet again puzzling. You seem to accept that Apple provides what customers want, in easy of use etc. And yet you express this as a ‘danger’ ? WTF ?
Martin, I see you’ve made the acquaintance of a few of the Apple faithful. Always a pleasure, that. You may have seen this, but this is where I learned about Amazon, Apple, and the “agency model” : http://www.authorsguild.org/advocacy/articles/how-apple-saved-barnes–noble.html . Quite a story there.
Do you have any idea what Apple’s current market share in eBooks is? Can’t find anything at all clear on the internet.
Dan, I don’t have any marketshare stats I can lay my hands on but after Amazon and B&N, there’s a pretty small slice left for everyone else, including Apple. Thanks for the link which is a good reminder of what the agency model is trying to achieve, ie a more diverse marketplace for ebooks. It’s also a timely reminder that the heavyweight in this market is still Amazon whose market power is also an issue for the industry. So it’s certainly not a one-sided issue but Apple’s unique position as the dominant platform provider today makes its business practices a special case, even with its low ebook share today. I’ve no doubt more battles will be on the way to rein in Amazon, Google and who knows who else in the interests of a more diverse marketplace.