Welcome to the walled garden. Would you like to hire a periscope?

Paul Raven @ 16-02-2011

While we’re on the subject of ebooks, publishing, digital content delivery and all that jazz… how’re you “the iPad is the future of publishing!” types feeling right now?

Yup: that lush easy-to-use interface makes purchasing easy, and easy purchases happen more often! Which means those 30% rake-offs should make House Cupertino’s share prices rocket still further!

And should your customer – heaven forbid! – want to take true ownership of their hardware, don’t be surprised if that cuts them off from the content they bought through sanctioned channels.

All that money you spent on setting up your new outlet in the glitzy new mall… it seemed like a great way of short-cutting around the economic problems out on the old high street, didn’t it?

You went to bed with the landlord, and he went and raised the rent anyway.

Sleep tight.

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14 Responses to “Welcome to the walled garden. Would you like to hire a periscope?”

  1. tobias s buckell says:

    So where is the same vitriol about the B&N Nook Color and the Kindle? Both are locked down, but are basically computers that could run outside software (Kindle has a browser, come one). Walled garden for thee but not for me? Seriously, same arguments that were trotted out against the app store, but customers flocked to it. Same arguments applied against the app store for the computer itself, and customers are flocking to that. I’d buy the argument if a single person who’s ‘upset’ about this had made arguments against the closed nature of the Nook Color.

  2. Blue Tyson says:

    Nook is irrelevant. Why would anyone not in the USA give a rat’s arse about it from a consumer point of view?

    But didn’t they make that iPad thingy with no USB drive? And their own new DRM yet again? Has Amazon thrown any hissy fits about people modifying a Kindle?

    Both are bad to some degree, but Apple takes corporate control freakery to a different level.

    I think the main point was that hoping Apple will save you was dumb and that making them a leverage point and hence then they can use that to take a nice bite out of you would certainly be well-deserved if it happens.

    Apple can’t even manage a website for people to look up books to buy the few they actually sell?

  3. deadmanjones says:

    Nook and Kindle are indeed “basically computers” that are locked down (as is my Sky+ box and my PS3). But the makers of these machines have never touted them as the laptop killer Murdoch touts the iPad; this posits that it will somehow supersede the internet, and as such is as much the future as the Microsoft Network.

    It’s like asking the Lord Chamberlain’s Office to open a theatre.

  4. John Chu says:

    @deadmanjones: You realize Murdoch is not the maker of the iPad right? In that context, your second sentence doesn’t actually make any sense.

  5. Paul Raven says:

    Tobias: didn’t mention the Nook and the Kindle primarily because no one was ever operating under the illusion that they were some sort of portal to an ecommerce wonderland! Exactly the same thing applies with them; only difference is that they never had a posse, so to speak. And I’m not really pillorying Apple (though I’ll admit I’m not keen on them as a company) so much as I’m mocking those that trusted in Apple’s seeming benificence. They’re not a computer company any more; ever since Jobs took the wheel back, they’ve become an old-school media empire.

    You know me of old: if it’s a locked platform, I don’t trust it on principle, and this is exactly why. Web standards and mobile browsing are all anyone needs to play on the same field as everyone else. But lots of folk thought the Apple ecosystem was a shortcut to Profitsville, and they just got their fingers burned. All that money spent on building specialised platform-specific apps, and they could have just built decent web portals of their own.

    But now that investment’s been made, it’s the perfect time to yank the welcome mat out from under their feet; as I said to someone yesterday, you don’t bother building a walled garden unless you’re planning to close the gate. I’m just astonished no one saw it coming, really. 🙂

  6. tobias s buckell says:

    I think all that matters is whether the customer can easily buy what they want to buy. Market trumps religion. And in this case, if Amazon stays, or allows in-app purchases, customers flock.

    The main reason media/magazines are pissed about this is because now they don’t get to mine customer details and sell customer info on for a profit with magazine subscriptions, because now Apple will only pass on your demographic data if *you* choose.

    If in-app purchases are moved to, we’ll see if consumers care about walled gardens or convenience.

    My bet is convenience. But Apple is tossing the dice, b/c if Amazon yanks the app, then they lose.

  7. Paul Raven says:

    Convenience and a big market is great, but a 30% rakeoff isn’t going to look nice to businesses struggling to get a 10% margin on their existing models… bad news for book publishers, in other words, who still haven’t managed to scale the cost of conversion to digital. (Yes, I know it’s not easy, but the customer doesn’t know that or care about it.) In other words, the customer being able to buy it where they want to buy it is great, but not so much if you can’t make your overheads when selling it there.

    Interesting point re: subscriber data, too, although – if they follow the guidelines, which hardly anyone ever does, sad to say – the media outfits aren’t supposed to market to collected addresses without an explicit opt-in from the customer. I wonder if Apple’s being as strict with that data as regards its own use thereof? (Genuine question, not cynicism.)

  8. Tobias says:

    You’re right to be cynical. But Apple doesn’t pass it on unless customer requests. There is a reason, other than vague prettiness, that some customers are loyal to the brand. That doesn’t co
    E out of nowhere. And it’s why the mags are really fighting this.

    As for what happens with inapp books, most of this is speculation. We won’t understand what’s going on or going to happen really until Amazon either makes a statement, publishers make a statement or June, when the deadline for legacy apps arrives.

    I’m guessing a realignment of royalties. Which is why I wrote about people considering ebook sales via amazon or apple being ‘direct’ was dumb, we just swapped out old middlemen for new ones.

  9. Ben says:

    Apple says it will take a 30% cut of new subscriptions through the Apple store or the app itself, but a 0% cut if the subscription was generated from outside (e.g. an existing magazine subscriber converting to the iPad version or something).

    That doesn’t seem all that bad compared to the economics of the print market, where you have printing costs, a monopoly distributor that wants its cut, and have retailers who you need to bribe to display your magazine prominently.

    They’ve always taken a 30% cut of apps (and presumably in-app purchases), and I don’t think any of the early adopters of the new subscription charging would be surprised to find a similar cut for subs. So how have they “raised the rent”?

    There’s nothing stopping someone offering the same content through a web-based subscription system where people pay through PayPal, OR through an iPad subscription. In fact, that’s effectively the business model for Neal Stephenson’s Mongoliad project (except you use the app purchase to buy 6 months of access, because the subscription system wasn’t set up yet). If you buy the iOs app, that payment also buys you access to the web version.

    So your analogy about the new mall is flawed, because you still get to keep your shop on the old high street too. And if your customers buy your goods through the high street and then pick them up in the mall, the landlord gets nothing.

  10. jt says:

    Did anyone really think the iPad would save the publishing industry? I think it’s awesome and a cool new way of thinking about computing and I want to own one so bad, but savior of *publishing?* Hardly. Apple barely seems to even care about the eReader aspects of their hardware—as someone mentioned earlier, Rupert Murdoch is the one pinning his hopes on iPaddery, not Apple (or most of the publishing industry).

    The Kindle is a much better poster-child for publishing. It was the first major eReader, it is still among the very best. The iPad was first to a lot of markets, but eReading was not one of them. Nobody buys a Kindle unless they want to read stuff—people buy iPads for no reason whatsoever!

  11. Paul Raven says:

    But while you were working on the unit in the mall, the high street has been suffering from neglect and economic SNAFU… does the name Borders ring a bell? 😉

    I mean, sure, people can buy from outside the Apple ecosystem, if they can be bothered to make the effort; never said that wasn’t possible. The point stands: everyone rushed for the shiny new mall coz that’s where everyone’s gonna be hanging out OMG!!

    But it turns out the deal at the mall ain’t so sweet. You can suck it up and stick with it; you can live with it and work on your own channels as a supplement; you can pull out entirely, take your ball and go home. All options still available… but I’ll bet everyone who threw thousands of dollars at app developers thinking they were safeguarding their digital future is feeling more than a bit chagrined right now. It’s an eggs-in-one-basket screw-up, which is why I’m amazed so many people fell for it.

  12. deadmanjones says:

    John Chu: Meh. Hopefully anyone with an opposable thumb who’s able to navigate to this page knows Murdoch doesn’t make iPads, he’s just the idiot who thinks it’ll replace the laptop and the only one who thinks it’s a panacea for his publishing empire.

    Pretend it says “supporters” instead of “makers”.

  13. Ben says:

    The deal at the mall hasn’t really changed, though. Some magazine publishers came out with iPad magazine apps before the subscription charging was announced; you just had to buy each edition as a different app, with the same 30% cut.

    Apple talked to publishers about the subscription model before it was publicly announced, so it’s not like this is some kind of bait and switch.

    Your complaint that they are slamming the gate closed makes no sense. All they have done is added a slightly different revenue model within their existing walled garden. They’re not doing anything with subscriptions that Amazon aren’t already doing with the Kindle magazine/newspaper subs, except that with the iPad you do have the option to sell outside iTunes.

    And there is nothing to stop people selling content on the Web and designing it to look nice in the iPad browser, or selling ePub books for use in Stanza, so it’s not really a walled garden at all.

  14. Chad says:

    Apple is going to suffer the same fate they suffered in the 80’s (though not as bad). Everyone is catching up and they have open systems. Apple’s system is closed and kind of a pain in the ass (tons of restrictions). Why would I pay more for Apple, especially iTunes stuff, when there are other phones just as good or better, and other tablets that are on the verge of being as good as the iPad? Hell, Dell just put out a tablet that was rated fairly well. I own an iPhone and am seriously considering switching.

    Here is the take on Apple’s 30% cut from the business side.

    http://www.ritholtz.com/blog/2011/02/apples-subscription-morass/