Tobias Buckell Take on Amazon/Apple App Fight

I have a hunch many of you have not been following what this article is about. Tobias describes it fairly well. And I wasn’t completely agreeing with his conclusions until I got to the last two paragraphs, which is how I think it will shake out, which is why I haven’t been worried much about it, even though I have been following what little has been said about this.

So read Tobias’s article all the way to the last two paragraphs which are sort of a post script that a reader suggested and which I agree completely with. But again, this is all so new, no one knows which way the wind will blow on this one. And Tobias makes a complex subject fairly clear. Worth the read, and worth keeping track of. It might affect all our bottom lines in a slight way.

http://www.tobiasbuckell.com/2011/02/15/30-in-app-decision-inches-closer/

Thanks for the link, Shawn.

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29 Responses to Tobias Buckell Take on Amazon/Apple App Fight

  1. Mark says:

    The problem is if Amazon wants to avoid paying the 30% to Apple, they cannot sell through their app. You’re asking consumers who have been using a Kindle app on the iPhone and iPad to now no longer use it. What’s likely to happen? They open up a browser and go to Amazon and buy that way or use Apple’s bookstore?

    It’s clear to me that if Amazon removes their app rather than pay 30%, that will drive business to Apple.

    So for writers what does this mean? To get in Apple’s bookstore you need an ISBN and you need to upload the book from a computer running the Mac OS. You can let Smashwords do all this for you, but there’s no telling yet if this will have an impact on Smashwords.

    And since we have no idea how many Amazon sales are done through their iOS apps, we have no idea how this will affect Amazon sales.

    My guess is Amazon will try to negotiate better terms and stay on iOS, and that’s likely to reduce the 70% royalty rate to something lower.

    • dwsmith says:

      Mark, Shawn, I don’t think it will go that way. I think they’ll leave the app and just remove the link. Customers can then buy the book where they want and everyone is happy. I just can’t imagine Amazon sending Apple a lot of money every week for their 30%. Not going to happen. Just removing the link but leaving the app will work just fine and then let the customers find the book where they want and move it where they want.

      But only my opinion as to the logical outcome. Anything else seems to make no sense in business. It makes no sense for Apple to continue to allow other companies to sell books through their device and app and make no money from the sales, it makes no sense in business for Amazon to pay Apple 30% for every sale. But it does make sense to just open the gates, remove the link, and let the customers decide where they buy.

  2. Shawn says:

    You’re welcome.

    I’m curious to see how things will shake out.

    I started buying books from Amazon via my smart phone (a Droid) – downloaded the app, ordered through the app, read through the app.

    At Christmas, I got a Kindle. Now I usually buy the book through the link on the Kindle, & I read it on either the kindle or the droid, whichever is most convenient.

    If the iPad overtakes the Kindle, & the iBookstore doesn’t catch up to Amazon, I think lots of people will download the Kindle app to iPad, open the app, & buy their books through the app. Most readers will take the path of least resistance, & even if they know & understand the royalty split, that’s not a reader’s concern. It’s all about convenience & instant gratification. (At least it usually is for me. Grin.)

    And I agree with Tobias, I think in those situations, it will shake out into a 30-30-40 split, with apple getting 30%, Amazon keeping 30%, & the publisher taking a 40% split instead of 70%.

    I think it would be a good thing for writers to start trying to get into the iBookstore, especially if Apple will go with a 30-70 Apple-Publisher split. Bulk up the iBookstore offerings. That would be good for competition, good for readers, good for writers.

    A big part of the equation is who will keep the biggest market share on devices, I think. Another big part of the equation is going to be whether any other online e-book retailers can compete effectively with Amazon.

    I’m still kind of new to this aspect of business, & I could be completely wrong. But I really appreciated Tobias’ take on this.

  3. Nancy Beck says:

    Delurking here.

    Those last 2 paragraphs make up for any trepidations anyone going the indie route may have.

    That, and uploading to Smashwords for everything but Kindle is the way to go. And maybe what you’ve done (if I remember correctly), go direct through PubIt (B&N) and Amazon, but the rest on Smashwords.

    Thanks for all the info, Dean. Although I’ve been a regular at Absolute Write for a few years, it’s good to look at other sources.

  4. Mark says:

    “If the iPad overtakes the Kindle….”

    It has several times over in sales. The estimates are 17M iPads sold and maybe 3-5M Kindles sold.

    And there are many millions more iPhones sold. That’s an e-reader platform too.

    See, what no one knows is what percentage of Amazon ebook sales are to iOS (iPad and iPhone) devices. What if it’s 20%? If Amazon removes their app, that could be a 10-20% drop in ebook sales for writers.

  5. Mark says:

    “I think they’ll leave the app and just remove the link. Customers can then buy the book where they want and everyone is happy. I just can’t imagine Amazon sending Apple a lot of money every week for their 30%. Not going to happen. Just removing the link but leaving the app will work just fine and then let the customers find the book where they want and move it where they want.”

    It’s a big deal to open a browser, find Amazon, and buy from them compared to an app on the iPad that takes you right into the bookstore with one click.

    Any Kindle reading app on the iOS will not be allowed to have a link to the Amazon store. A user will have to go to Safari and open it, go to Amazon, and go to the Kindle store. That’s cumbersome and Amazon will lose business to Apple. Just think of the iPhone — what’s easier to use, an app or browsing in a tiny browser?

    And if more and more people start buying through iBooks, it means writers need to get their books on that platform. That means an ISBN and uploading through a Mac computer, or letting Smashwords push it there.

    This is not good news. This is someone taking 30% of a book sale. That’s’ less for others or more for the consumer.

    • dwsmith says:

      Mark, okay, now I think you are missing something or I am.

      What difference does it make if I sell a novel on Kindle or on iPad? I think Kindle is giving me 70% depending. And iPad is giving me, through Smashwords, 60-65% depending on which country and so on.

      Getting an ISBN is just part of being a publisher, and you can get them free through Smashwords or pay $9.99 for one through Smashwords for your own company name on the ISBN. And you can buy them yourself from Bowker. No big deal. And there are more than one gateway to push books to Apple than Smashwords. Or, as you said, do it yourself with a Mac. I have a Mac and it’s easier to use Smashwords at the moment.

      So again, if my book is available on iPad of Kindle, what do I really care. Maybe I’ve just never been one of the people that think Kindle is everything. That might be it. Honestly, I’m making more money selling overseas through Apple than I am on Kindle. Not sure what that means, but it sure is fun.

  6. David Barron says:

    The last two paragraphs do rather defang the whole thing, yeah. I can’t imagine Amazon hasn’t spotted that… I’m letting Smashwords deal with Apple at the moment and I do get a trickle of sales through that, so (slightly) more power to them.

    I think I want the market to be as fragmented as possible, so long as everybody uses standard eBook formats and I have the option to turn off DRM. Once I have enough stock (~200 titles) to justify the management time, I’ll set up my own webstore too. Can’t hurt.

  7. Mark says:

    There are two scenarios at play here. In the first one, Amazon decides they can’t live with giving Apple 30% so they will no longer sell through their app. In this case it makes no real difference if you make a sale where you make the sale. The difference is if your book is available everywhere.

    If an Apple user has been buying from Amazon and will switch to buying from iBooks and CAN STILL FIND YOUR WORK, there’s no real impact to you.

    And this is assuming Smashwords isn’t really affected by this policy, so they can keep pushing your books onto iBooks.

    In the second scenario Amazon decides it wants to stay in Apple’s ecosystem. They will work with Apple. Now Apple’s taking a chunk of every sale. Amazon needs to turn around and tell publishers they can’t give them 70% now. So they lower the royalty to something like 50%, or maybe even down to 40%.

    Clearly this will affect publishers, especially indie publishers.

    And I’m also not confident that Smashwords will always be able to push books onto iBooks. What is your experience with them, Dean? Have they managed to get everything you submit to them onto iBooks?

    • dwsmith says:

      Everything so far, Mark. About 150 titles, no glitches at all, which has surprised me.

      I can’t see Amazon playing ball and sending Apple checks in your second scenario. That would be like Ford sending Toyota checks. Not going to happen. Just bad business to feed your competitor in any way. If Apple demands, they will drop the link. I’m honestly surprised Apple let it be there in the first place. Someone goofed.

      There are about two dozen sites that can feed the Apple store beside Smashwords and also you can do it yourself. So getting to Apple isn’t that hard.

  8. “So getting to Apple isn’t that hard.”–err, if Apple will take you. I can’t sell through iBooks because I write erotica. Jobs won’t allow it in his ecosystem. Amazon, on the other hand, doesn’t care. So anything that diverts potential readers from Amazon to Apple makes it harder for them to buy my stories.

    That said, it’s really a distraction. I can spend time following and getting all worried about how my stories might be affected by something that’s still swirling, or I can go work on the next story. Now which, I wonder, would our illustrious host say is the best use of my time? ;-)

    • dwsmith says:

      Got that right, Big Ed. Follow this stuff, but then get back to work and not worry about it.

      So far, with indie publishing, writers are in great shape and getting better. On the traditional side there are issues that will be shaking, but at the moment for indie publishing, things are looking very rosy.

  9. Camille says:

    Most of the people I know who read ebooks read on iPhones or iPod Touches…. and they don’t buy through the Kindle app. They buy while browsing (say reading this website right here), and download and read later.

    People who think Apple is the one true satan, however, seem to think that it’s already been stated that Apple wants to disable even that. Which doesn’t make sense to an iOS user — seeing how the whole app things works — but most of those people don’t own any Apple products.

    The problem is that Amazon JUST added enhanced buying capabilities into the latest version of Kindle (where it will suggest other titles when you finish a book) and Apple’s rules will mess up that. That’s a problem for Amazon, thought, not the customers.

  10. Mark, Amazon announced after the holiday that they had sold more than 10 million Kindle 3s, it being their best selling product ever. That makes total Kindle sales to date (including older models) probably in excess of 12 million. There’s still a lot more iPads than Kindles, though.

    Now, I’ve got a question…
    This is all about having the Kindle app on the Apple app store, right? I mean, Apple can’t stop folks from going to Amazon and downloading the app there? Or can they?

    If Amazon simply pulls their app from the Apple store, and continues letting people download the app from Amazon.com like they already have been, then I think there will be some loss of sales, but not a ton. Among other little stats I saw recently, 2/3 of iPad owners polled either already had a Kindle or planned to buy one within the next six months. Apple’s ebook store is not doing so well, and I can’t imagine Apple users, who have invested hundreds of dollars in Kindle books, being thrilled at Apple trying to strongarm them into an epub based system that doesn’t work as well as the Kindle site.

    I’ve also been reading that Kindle software will be installed automatically on most of the new tablets coming out this year. Couple dozen different new tablet computers coming out, each about as powerful as the iPad for less money. Might not knock Apple out of the top tablet seat, but will definitely cut into their expansion.

    So my best guess would be that we see:
    - Apple remove the Kindle app from their app store, as they should have from day one.
    - Amazon continue encouraging iOS users to download the app from their site instead. They’ll get less downloads, and lose some sales, but the Kindle package is already known by Apple users as the best reader software for iOS, so I think sales will not dip too much.
    - iOS users will either buy using the app from Amazon, or buy from iBooks if they can’t be bothered to go download the Amazon app. Amazon loses some percent of sales, Apple gains some percent.
    - Publishers are not impacted, because they are not going to tell Amazon “oh yes, you can pay us 30% less per book”. Ain’t gonna happen.
    - Writers will not be impacted for the same reason. Self-publishing royalty will stay as-is for now, at least. Might see sales on iBooks go up a tad faster and Amazon sales not grow as quickly, but that will be hard to spot behind the general wild growth of the entire market.
    - I don’t *think* Smashwords will be impacted. Here’s why not: they are acting as a publisher for all their users, on iBooks. They take your book, bring it to iBooks, and they get 70% back from Apple on each sale. Then they take their 10%, and give the author 60%. Yes, you’d earn more per sale if you went direct to Apple, but Smashwords counts on the convenience of doing it for you to get users.

    My guesses. ;)

  11. Meanwhile, in a nondescript corner of Amazon’s secret research labs, engineers are even now experimenting with the prototype KindlePad, with color e-ink, touch-screen, and the ability to run all kinds of apps, not just the e-reader…

    Hey, I am a science fiction writer. ;)

  12. …although if I were going to make a real technothriller out of it I’d have to tie in Jeff Bezos’ (Amazon founder) real-life spacecraft development company, Blue Origin, and their secretive test flights in Texas.

    Hmm…protagonist… How about an idealistic engineer who idolized Jobs back in the NeXT days who celebrated his return to Apple but has become disillusioned by his perception of Jobs as he grows immune to the well-known Jobs Reality Distortion Field.

    I dunno, needs work. ;)

  13. camille says:

    Kevin, you can’t just download an app from anywhere. It has to be through iTunes.

  14. Mark says:

    “This is all about having the Kindle app on the Apple app store, right? I mean, Apple can’t stop folks from going to Amazon and downloading the app there? Or can they?”

    Every app has to be approved by Apple. Apple can simply disable the app. So if Amazon wants to sell through the app, they need to play by Apple’s rules. They can still have the app as an ebook reading app, of course. They just can’t sell through it without handing over a large chunk to Apple.

    Dean, it’s not that easy to get books up on Apple directly. You need two things: an ISBN, and the ability to upload from a Mac. The ISBN costs money and plenty of us don’t have Macs.

    It’s good that Smashwords is batting 1000 for you. As long as Smashwords isn’t affected unduly by this then writers should be ok.

    I will add this — if readers are used to buying from Amazon via their iPads and iPhones and they find it more difficult to do so if Amazon takes down their app, there is no guarantee that they will shift their buying habits elsewhere.

    • dwsmith says:

      Mark said, “Dean, it’s not that easy to get books up on Apple directly. You need two things: an ISBN, and the ability to upload from a Mac. The ISBN costs money and plenty of us don’t have Macs.
      It’s good that Smashwords is batting 1000 for you. As long as Smashwords isn’t affected unduly by this then writers should be ok.”

      Mark, there are many places, not just Smashwords, that works as a portal to Apple bookstore. I think at last count I noticed there were two dozen, maybe more. I just like Smashwords because it’s one stop shopping to Apple, Kobo, and Sony. Instead of three stops. Makes things very easy at the moment.

      ISBN numbers are needed, sure, and if people are thinking long term, they can be bought in a huge bulk. Smashwords and other sites offer both free ISBNs if you don’t mind their name as publisher on the ISBN listing or a small fee of like $9.99 per ISBN if you want your own publishing company name on the listing with Bowker. Changes nothing either way anywhere else. I use the free service for Apple, B&N, and Smashwords for all collections and buy the ISBNs for novels.

      Also, if you buy them in huge bulk, they are under a $1.00 each, but that’s only for publishing companies that plan on being around for a while and doing more then ten books.

  15. Tom Dupree says:

    And, of course, Google has gotten into the game too, trumping Apple’s one-day-old “deal” for periodical publishers. Don’t forget that worldwide, there are more Android OS devices than iOS, and Android’s biting off a bigger chunk every quarter.

  16. Mark Fassett says:

    Kevin – You can’t download the iOS version of the kindle app directly from Amazon. You can only get apps for the iPad and iPhone through the App Store. It has always been this way. The question is whether Amazon will go along and sell books through IAP (In App Purchasing), which is what Apple is requiring of any app that links to an external site to sell stuff.

    Note that this doesn’t just affect books. The Rhapsody music service is also affected, and it sound like they might actually be thinking of filing a lawsuit.

    http://www.cnn.com/2011/TECH/mobile/02/16/developers.unhappy.mashable/index.html?hpt=Sbin

    What Apple is trying to do is analogous to Microsoft wanting a cut of everything sold via a computer that had Windows installed.

    As an aside – the iBookStore is horrid. If Amazon removes the Kindle app (which I doubt), I would switch tablets, despite how much I love my iPad. If Amazon removes the link in the Kindle app, it’s easy to create a shortcut on the home screen to the Amazon Kindle store. I won’t buy from the iBookStore, no matter what the outcome.

  17. Mark says:

    I am pretty sure Apple wants to sell more books. I doubt they will back down with Amazon, though there’s a rumor that Apple is cutting a special deal with Netflix because they don’t want to lose them.

  18. Do different electronic formats (eg Sony and Apple) need different ISBNs the way every other different format does? Once you go with a few electronic versions and a POD version (and who knows, maybe a limited edition hardcover) you’re using up enough ISBNs per title that bulk buying does start to look attractive.

  19. Sorry about that; I hadn’t realized that Apple had made it impossible to download an app from sites other than their app store. Am I wrong in thinking that there is a potential anti-trust lawsuit right there? I mean, if MS tried to make it so that only programs which are sold from the MS site will work on Windows, people would have a fit.

    I’m really wondering how much Apple dares to push this issue. A poll from a couple of months ago showed that 2/3 of iPads users were reading books on the device, and 75% of those were reading Kindle books. That means about 50% of their iPad users have Kindle software installed and are invested in AMZ format books. I cannot imagine those users will be happy if Apple forces Amazon to pull their app. The negative publicity Apple is already getting about this issue would snowball by June – and early summer is when a bunch of those new Android tablets are due to roll out, isn’t it?

    It still doesn’t seem like it will impact writers that much, though… Amazon simply can’t agree to this deal – financially, I don’t think they will have any choice but to either sue or withdraw their app, maybe replacing it with a reader-only app if Apple lets them. Smashwords (and other companies that upload for you to iBooks), acting as a publisher, is already paying Apple their 30%, so they shouldn’t be impacted. I think this whole deal will have more impact on the platform wars themselves than on writers and publishers.

  20. Camille says:

    There is one place where removing the in-app buy button will affect writers.

    It’s true, most of us don’t shop for books in-app, but a lot of us do sample books before purchase, and the convenience of buying when you get to the end of a sample is good thing. (This is where it is good to at least have a link to your author page in the front matter of the book — make it as easy for readers to get back to buying your book or other books as possible.)

  21. Blarkon says:

    The other issue with the Kindle app on iPhone/iPad is even if they remove the in-app purchasing ability, Apple’s new rules still mean that because you can buy a book for your kindle on Amazon’s site, you need to provide a link within your app.

    Put another way – if there is a way to purchase content and then view it on an IOS device – even if that purchase occurs outside IOS completely (if could even be a phone order) – the app MUST include a mechanism through which you can purchase in such a way that Apple gets a 30% cut.

    For example, I use an app on my iPad that allows me to access a subscription based library. There isn’t a link to purchase a subscription in the App, but you can renew your subscription on the website. Because you can do that – the app maker must now include the option of performing a subscription renewal through the app even though at the moment the app is “read only and not buy”.

  22. Jeff L says:

    No one seems to be looking at an alternate solution. There is absolutely no reason that Amazon cannot negotiate a volume discount with Apple that effectively reduces the pass through percentage. The first $100,000 in sales is at 30%, next $200,000 at 20%, then 10%…. Amazon just sets their cut to 41% to compensate overall on iOS sales..

    If anyone else can move that volume of sales, Apple could work with them too.

    Interesting sub question – how if at all does this effect ebooks purchased via the Amazon app (not the Kindle App)

  23. Interesting article on this here:
    http://dvice.com/archives/2011/02/opinion-reports.php

    Don’t know how accurate the information is, but this writer is claiming it’s all much ado about nothing…

    Basically, that Sony tried to create a new app that used in-app purchasing, which has always been a no-no, and the old Sony app and current Kindle app do not do.

    Second, that Apple announced their subscription fee of 30% for all subscriptions sold via their store. This is incidentally the same level Amazon uses for subscriptions.

    Third, that the subscription announcement was unfortunately timed at almost the exact same time Sony was making a media stink about the app being denied, which resulted in a lot of people misunderstanding the whole thing.

    I’ve read over the Apple announcement:
    http://www.apple.com/pr/library/2011/02/15appstore.html
    I might be missing something, but I am seeing nothing about ebooks or other products. All they’re talking about here are subscriptions. In basically the same verbage Amazon already uses for subscriptions on their site.

    Was this whole issue just a case of the media not really reading the darned announcement?

    • dwsmith says:

      LOL, Kevin, you might be right. I went back and read the original announcement at Apple and what Sony actually tried to do. You are spot on. A big silliness. Sigh, I should have done that before I linked to that blog. Sorry, gang.

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