This sounds like extortion... yet it's interesting to consider that these are essentially the terms the music labels have been living under for years. In that case, they paid because Apple came up with a viable service before them. Now Apple's trying to extract the same terms from companies that have successfully built sophisticated services and vast user bases independently of Apple. It's absurd to think of Apple getting a commission for "bringing a subscriber" to Netflix just because someone starts their subscription in the app.
I've supported most of Apple's major strategic decisions, but this looks like a flagrant abuse of their market position.
It's called affiliate marketing and it's one of the best ways for an independent operator to make money in the SEO business. I guess the only question is whether Apple can claim 30% in perpetuity or just for the first X months.
I downloaded the Kindle and Netflix apps exclusively based on my experience with Amazon's and Netflix's services. These companies handle all of the backend for the services - Apple does nothing. Where is any "marketing" taking place on Apple's part - simply letting these companies' apps be searchable?
I'm not opposed to Apple charging what it wishes for in-app content purchases, but making this a mandatory option for all services at a fairly steep rate might not be viable for all businesses.
I don't think this will last. If iOS were to lose Netflix , Kindle and Pandora(which isn't unimaginable) the platform would instantly be less appealing than lowly WP7 and WebOS for a lot of users.
The Kindle and Netflix apps were free when I downloaded them. The interesting part to me is that Apple apparently insists that providers' external sales prices not undercut the iOS price:
Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.
This means that Netflix would either have to take a $3 hit on any $10/mo. subscription initiated from within iOS or raise the price for both the iOS and external subscriptions by a few dollars in order to offset the apple fee.
Not sure how this will play out, but it's interesting. Obviously Netflix and Apple can change their terms at any time. This is a decent opening move by Apple.
making this a mandatory option for all services at a fairly steep rate might not be viable for all businesses.
You're quite right. Businesses wishing to offer subscription content via iOS might need to retool their subscription plans to accomodate for the overhead this channel brings with it. I use the $9/mo. Netflix plan now to get unlimited streaming and 1 DVD at a time. Perhaps that plan will one day only support browser-based streaming and then Netflix will release an $11 all-devices, no DVDs plan.
Hulu Plus is trying something like that out - you can't get their content on mobiles at all without a premium subscription but you can get it free (ad-supported anyway) via the browser.
Or perhaps to comply with the letter of the rules, Netflix and Amazon will provide different pricing packages depending on which mobile platform you want to be on - that $9.99 Kindle book will come with free Android and Blackberry compatibility, but will have a $13 "Kindle + iOS" version. Netflix could be be compatible with other platforms by default but charge for iOS compatibility like they charge for Blu-ray. Etcetera.
The marketing/value add Apple brings is putting a highly desirable platform with great capabilities in front of loads of people who are proven to like spending money on apps etc. NetFlix and co. would never have this reach without Apple.
Not saying your wrong, but the marketing was to build the entire sales channel. You are free to use your Amazon Kindle for your Kindle purchases. It's all a bit of a grey area, more so than some make out if you ask me.
You make a valid point, but ultimately, I think the current state of affairs - where Apple provides a nice sales channel (marketing in a sense) on their already highly profitable devices and where Netflix brings an attractive service to the platform - is a fairly even trade. Apple is asking for such a drastic renegotiation of this "trade balance" that I predict services will need to reprice for iOS or abandon the platform. Music and video services are already struggling enough - and Apple has too many viable competitors! - for me to imagine them simply submitting. Sony's withdrawal of their app is the writing on the wall, I'm afraid.
Apple is providing the most compelling user experience with which to enjoy Amazon and Netflix's services. You know what a service is worth without a cool, convenient way to enjoy it? Not much.
You think iOS users will jump to WP7? Once you've tasted quality, it's hard to go back to the lowest common denominator. And Apple isn't going to lose those three services. Apple didn't become the largest non-Exxon corporation in world history by being that stupid. Ain't happ'nin.
If you honestly believe that "Apple is providing the most compelling user experience with which to enjoy [Amazon's] services", then you evidently haven't used a Kindle.
The Kindle was designed to provide the most elegant and compelling user experience with which to enjoy Amazon's services and it succeeded wildly.
Not only have I used one and liked one, but I've bought one. The Kindle is great. But it's not very useful as a Netflix device, and my statement was about devices that can be used for both Amazon e-books and Netflix (which is why you had to use brackets while quoting me, and leave out part of what I said). The Kindle isn't a player in that market.
I've supported most of Apple's major strategic decisions, but this looks like a flagrant abuse of their market position.