eBook Retailers Pull Option for In-app Sales from Apple Devices

Picture this: two lemonade stands side by side. Our lemonade is 25 cents and yours is 50 cents. If you want to compete, you might consider lowering your price, making superior lemonade, maybe offer a free Captain America collectible cup and decoder ring with each qualifying purchase…. But, we suppose another way to go would be to buy the land our stand sits on, charge us an annual fee to use the land, tell us we can only make our lemonade with water we purchase from you, and then take 30% of our profit.

Enter Apple and Barnes & Noble. Apple’s corner of the world may get a lot of traffic, but B&N has decided to sell their lemonade elsewhere.

To put it in real world terms, Barnes & Noble no longer offers readers the option to buy an ebook straight from the iPhone or iPad. Amazon and Google have both made similar moves. This means you can still read your Nook, Google, and Amazon ebooks on an iPhone, but you will no longer be able to shop for books directly from these apps. Instead, you will have to navigate to individual retailer websites to make your purchase.

BOOKSTORE BARNES & NOBLE has launched an update to its Nook for Iphone app which removes the option to buy ebooks directly within the app.
-via Barnes & noble pulls ebook sales from iphone app- The Inquirer.

Why the change? While there is no official explanation, we believe it has everything to do with Apple’s move to charge app makers 30% of in-app sales. This move is what drove companies like iFlow out of business. Apple doesn’t want their competitors selling products on their devices without first offering up a large chunk of the profits. Keep in mind that Apple has their own iBookstore and eReader apps, so they took steps to discourage the competition (in this case, Amazon, Google, and B&N) from drawing customers away from Apple-owned applications without first paying a fee for doing so.

While the consequence for Apple remains to be seen, they may not be doing themselves any favors. Apple is still underselling books when compared to the major retailers. Apple’s iBookstore may not be the best option for consumers because it is too proprietary. Amazon, Google, and B&N all have apps that allow you to read your books on other devices (with the exception of reading Kindle books on the Nook and vice versa), but Apple allows for no such thing. If you purchase a book from the iBookstore, you can only read that book on an Apple device or via Apple applications. In other words, don’t hold your breath waiting for the chance to read your iBook on your Android phone, or Nook, Kindle, Sony Reader, Kobo, or even your PC, for that matter. Compare this to Google’s ebookstore, which allows users to read their book on virtually any device at any time via their digital cloud.

Apple treats newspaper subscriptions the same way. Outlets like the Wall Street Journal also chose to withdraw from selling subscriptions on the iPhone to avoid the 30% fee.

Not only has Apple now failed to gain fees from these retailers, but they may also eventually risk alienating customers who might otherwise have purchased an Apple device. For those of us who are not die-hard Apple fanatics, those Android tablets are beginning to look better and better. And what about Amazon’s (non-existent) tablet? Will Amazon shut out competitors such as Barnes & Noble and Google, keeping users from purchasing books or other products from third-party retailers? This remains to be seen. While Amazon is most definitely a major player, Google is likely the one Apple will need to keep an eye on.

Perhaps Apple should focus instead on the ways in which it can increase revenue as a result of continuing innovation. Innovation means keeping up with the rapidly-changing marketplace and the demands of the consumer (Flash, anyone?) by creating new products, but it also employs a certain degree of flexibility and willingness to work with others. (Didn’t we learn this in kindergarten?) Flexibility is being susceptible to modification or adaptation. An open source system that can adapt is much more likely to survive the winds of change than a closed system, which is rigid by nature and apt to break. In a system that is rapidly evolving to one where applications drive a device, the app-makers become a key element in the business model. Driving them all out of business the moment they develop a useful app might not be the best business plan for the long term. Apple apps can just as easily become Android apps, and maybe we can all get our tablet-techno-gadgetry fix from companies that provide a wider range of options for their customers without also supporting the destruction of entrepreneurship and the spirit of free enterprise. We’re just sayin’….

(For a glimpse at Apple’s Developer Agreement, see here. The quote at the top of the article says it all.)

In the News…

• Why Amazon's tablet will threaten the iPad - msnbc.com
  Published: July 26, 2011
• Amazon launches Kindle textbook rentals - Christian Science Monitor
  Published: July 26, 2011
• Apple Pushes For Ban on Samsung Galaxy Devices - PC Magazine
  Published: July 11, 2011
  eBookdesigns: Once again, Apple attempts to flex big muscles and dominate the market. What's one way to get rid of valid competition? Accuse them of stealing.