Revolutions don’t happen without spilling a lot of blood. And if I sound overly blasé about it, that’s because I’m holding a bag of popcorn rather than a gun.
Plenty of people are up in arms about Apple’s recent decision to charge 30% for all subscription- and content-based offerings on the iOS App Store. And they should be: for these people, Apple is literally taking away their profit margin, and sometimes even more. Prior to this change, large distributors could buy their wares at a lower price, put it on sale in their App Store storefront, and sell it for a higher price. Now Apple is taking a 30% piece of that sale price.
It’s the kind of move that will dismantle business models. Think of the kinds of companies that are currently operating on the App Store that will be affected:
- Book and magazine sellers, such as Amazon, Barnes and Noble, Kobo, Zinio.
- Music subscription services, such as Pandora, LastFM.
- Video streaming services, such as Netflix.
There may be other services caught in this net as well (including some Software-as-a-Service offerings, like Readability), but I believe that Apple is really targeting these media services in particular.
The thing these categories have in common is that they are distributors of content. They are not the publishers, nor are they the creators. They are companies whose sole purpose is to take the creative output of one group, and deliver it to another.
There can be no doubt that Apple is declaring war on distributors. And why not? In Apple’s eye, they offer no value; in fact, they might just be vampires on the process. What purpose do they serve in a world where Apple has fielded over 100 million iOS devices? If Apple can offer the book store, or the music streaming service, then what purpose do these other companies serve?
But it goes even further than that. I believe Apple intends to not only remove the distributors but the publishers as well. Print publishing in particular is an industry ripe for tumult. At its core, print publishing is based on moving paper; its entire business model is fundamentally stuck in the Twentieth Century. In a world where companies like Apple provide a hundred million sets of eyeballs, what creator needs publishers to ensure their work gets promoted?
In this vision of the future, we’ll see authors and agents work with editors and designers to provide an ebook to platforms like iOS and Android. And instead of 10% of the sale price (at best!), authors will take 70%, and disburse payment to their assistants as they see fit. This vision puts publishers (as we know them today) in the dustbin of history along with their precious printing presses and forests of paper. And authors will take their place at the top of the money pyramid, right where they belong.
A lot of people will get hurt in this process. People will lose their jobs, companies will collapse, and some people will even cry. I really believe that the future is going in this direction, regardless of whether Apple pushes it. But Apple’s move is going to accelerate the process, providing that opening for ambitious and talented authors to slip in and show the rest of us how it’s done.
While Google is today playing the partner to existing publishers, Apple’s gravity will also provide the motivation for authors to appear on Android as well. The story of the Internet is about separating barriers between writers and readers. Once a critical mass is reached, Google will make a similar store available to authors, and everyone will gush about how awesome it is that we’ll finally have an “open” alternative to the “evil” Apple iBookstore.
And like a maple in autumn, the leaves of the publishing industry will shrink, fade, and flutter to the ground.
Short term pain A potentially big problem with this vision of the future is that it puts Apple at the centre of it. The company’s track record for bringing all media to the table is spotty, at best. They caught the music industry unawares, and the movie and book industries are skittish as cats in a dog pound.
So in practical terms, it may be neither quick nor desirable to have Apple acting as the vendor for all media. A lot of people will be pushing very hard against this eventuality, and I can’t entirely blame them. The result is likely to be that my iPad won’t be able to give me access to every book, every movie, every song out there. I think Apple is betting they’ll have enough, though, to keep building their user base.
Suffice to say, we’re entering a period of dramatic change in the publishing industry. You can say what you want about Apple and its motives, but they are bringing us something that we may not be able to say no to: more content, with lower prices. It should definitely be interesting.