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Developer blames Apple for ruining eBook business

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By Stewart Mitchell

Posted on 11 May 2011 at 10:33

A book seller and app developer has accused Apple of pushing it out of business by changing the pricing structure for eBooks.

BeamItDown Software, developer of the iFlowReader book-reading software for iOS, sold e-books through its app. However, recent changes to the Apple charging structure, combined with publishing industry tactics, meant it was selling books at a loss.

“Apple has made it completely impossible for anyone but Apple to make a profit selling contemporary ebooks on any iOS device,” BeamItDown said in a blog post. "We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game.”

The company warned readers that had purchased books using its services that they should download and backup the files to avoid losing access to them, and posted detailed instructions on how to protect their titles.

According to BeamItDown, which boasted six million downloads, the trouble started when Apple began taking 30% of the sale price of books sold through its app. As publishing pricing models meant BeamItDown already made less than a 30% cut, its margins went from minimal to negative.

"The key point here is that all sellers now get a 30% commission and Apple now wants a 30% fee," the company said.

BeamItDown was particularly bitter because it believes Apple knew that it was going to move the goalposts when it approved the iFlowReader app for inclusion in the App Store.

“After approval, we made substantial additional investments in licensing fees, integration fees, and server fees so that we could open our eBook store,” BeamItDown said.

"Apple's iBooks was already in development when we talked to the company and it certainly must have known that the future plans would doom us to failure," the company said. "It wants all of the eBook business on iOS and since it has the unilateral power to get it, we are out of business." 

Apple has yet to respond to requests for comment on the accusations.

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User comments

Next time...

The key with these things is you tie the amount you pay out to the amount you get in, and not the end user price. Then it wouldn't matter. Publishing does this already to authors, so they should be used to it.

By MJ2010 on 11 May 2011

@MJ2010 Assuming tha you hae sufficient clout to get that into the contract.

Yet another reason why to not buy Apple.

By JamesD29 on 11 May 2011

Deal with the devil

Expect to get a poker in a delicate place.

By 959ARN on 11 May 2011

No surprise there then...

Yet another reason I wouldn't buy anything made by Apple on principal....

By mrmiley on 11 May 2011

Re. Next Time

@MJ2010 My understanding of their blog post is that they have no say whatsoever as to the price they can sell the books at, so they can't possibly make more that 30%
I quote
"- All sales agents are required to sell books at the same retail price, which is set by the publisher. No one can sell at a different price.
- All sales agents get a 30% commission on the sale of a book. No one gets a different deal. Prior to the agency model, publishers typically offered retailers a 50% discount." Now if this IS the case then Apple should be ashamed of themselves for waht they have done!

By mrmiley on 11 May 2011

Drug Dealers

Apple subscribe to the classic drug dealer business model. Sucker them in with cheap deals, get them hooked and then wham!

By Steve_Adey on 11 May 2011

@MJ2010

The problem is that this company actually did "tie the amount you pay out to the amount you get in", but then Apple arbitrarily decided to significantly change the amount they "get in" and simply destroyed any profitability this business had.

By TheHonestTruth on 11 May 2011

Don't Gamble

It's never a good idea to bet everything on *anything* if you're in business. It was a bad decision. It didn't pay off, and that's a shame, but the decision should never have been made in the first place.

By Grace_Quirrel on 11 May 2011

Pull an amazon then, put up a mobile web front end, and let them buy that way. You can always rework it to make more cash and comply with their rules.

By grmartin on 11 May 2011

Here's what I think is the key phrase ...

"However, recent changes to the Apple charging structure, combined with publishing industry tactics, meant it was selling books at a loss." So, Apple decides to do something, the publishing industry decides to do something, BeamItDown doesn't renegotiate a contract to keep it in business and this is Apple's fault? Huhn? Imagine You are standing in a crowded street when a Bull charges towards the crowd; Everyone Else moves to the side but You just stand there and watch the Bull run into You; how is this the Bull's fault per se? Move to the side like Everyone Else!!!

By xuinkrbin on 11 May 2011

Can't they simply jump across to Kindle? Seems the company in question lacks imagination.

By Aspicus on 11 May 2011

"We bet everything on Apple"

Big, big mistake.

Those blissed out hippies at Cupertino only care about the bottom line these days. Hey, their lawyers and accountants gotta eat too y'know.

Apple (and its flock of tame sheep) used to revile another company for behaving exactly like this. Now, what was that company called? Micro.... something or other? Anyway they were the bad guys cos Apple were obviously the good guys.

By Lacrobat on 11 May 2011

Simple answer.....

Give Apple the elbow and don't do business with them. There are plenty of alternative platforms out there to sell through.

By everton2004 on 11 May 2011

Apple - the "Good Guys" turned bad!

They make well designed stuff but such control freaks it puts me right off new Apple stuff

By cyberindie on 12 May 2011

I amazed they are still getting away with it

If this was Microsoft they would be in court, they can't even bundle IE in with an OS without everyone jumping up and down and yet Apple can charge 30% of the sale price of everything you sell. Can you imagine what would happen if Microsoft started charging developers 30% on every licence they sold for Windows apps? Or if they charge Mozilla 30% for everything a user bought through that browser?
If they were charging say 4 or 5% you might forgive them but 30% is just plain ridiculous.
Apple are a money grabbing monopoly of the worst kind and sooner people realise what is going on and their bubble bursts the better.

Unfortunately it seems that the UK's largest publisher, Random House, has finally caved in to Apple's market pressure.

By Lorribot on 12 May 2011

Apple doesn't charge for purchases made through their browser, only through the App Store. Apple's approval process is not designed to guarantee you a profit, it's there to weed out pornography and other harmful apps.

The 30% on everything bought directly or indirectly via the App Store rule was introduced because magazine publishers were giving away free apps from which subscriptions were sold and Apple were doing the development and marketing for free. They had to change their terms.

In app purchases were only possible in the first place because Apple listened to what their developers wanted. Previously developers had to sell a game or app once, with no in app purchases and they screamed for the changes because they thought they could sell more games if they gave them away and suckered people and kids into paying more than they would have spent on the game alone. The publishers saw a loophole, and Apple closed it. As a consequence a developer that had tried to undercut other developers and publishers in a cut-throat market found themselves disadvantaged. Sad, but that's how business works.


By the way, Microsoft IS allowed to include IE with its OS, but also has to include other browsers too so the user has a choice. Until Microsoft withdrew IE from Macs, Apple offered Internet Explorer as a browser as well as Safari, so it really isn't the same.

By SwissMac on 12 May 2011

How could we forget that Apple can do no wrong and that everything MS does is billions time worse. Silly us.

By Aspicus on 12 May 2011

Aspicus

If you can't deal with facts, tough.

By SwissMac on 12 May 2011

@SwissMAcs

Brilliant. Having a good laugh is a great way to start off the day. Thanks :)

By Aspicus on 13 May 2011

SwissMac never ceases to amaze......

How can anyone so blindly devote themselves to a corporate monster such as Apple. I particularly like the way that he makes conclusions that are unquestionably correct without a single shred of proof, evidence or fact to back it up.

"Apple's approval process is not designed to guarantee you a profit, it's there to weed out pornography and other harmful apps."

Now that did make me laugh!

By everton2004 on 13 May 2011

Small fish

with lack of vision is out-done by bigger fish with enough sway to influence the marketplace.

Nothing new there, and welcome to the real world. No particular fan of Apple any more, but those using this as an opportunity to have a pop at that company, are really missing the point.

The business space changes daily or hourly these days, and if you can't keep up, you go under. Sad but true, and it happens to thousands and thousands of other business, which have been driven in the wrong direction on a daily basis.

By PaleRider on 13 May 2011

Business Practices

I think that BeamitDown management should have done its homework before getting into business deals with apple. For 30 yrs apple has been sued over and over for unfair and deceptive business practices - and this is all over the media all the time. Apple has always screwed its customers and business associates in the name of making a bigger profit - don't blame them for this but do blame them for their endless lying and overall business dishonesty. If you don't want to get screwed by apple in any way don't do any kind of business with them - as simple as that.

By arthur_cabot on 15 May 2011

The real problem with iBooks

I can't address how Apple treats its app developers but I can tell you what is wrong with iBooks and why I'd never buy one.

You can't read them on a computer like you can with Kindle books. I've got several iPhones, and an iPad but often I'm sitting somewhere with my Macbook Pro or my Macbook Air and there is no way to access iBooks. Kindle, on the other hand, solves the problem because I can access and read my books on my computers as well as the other devices. This is a really stupid oversight by Apple.

By ocbizlaw on 22 Sep 2011

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