Apple want to be your Middle Man

Recently, before the iPad 2 announcement, Apple announced that it was going to take a cut of items, typically subscriptions to media, purchased within an app on iOS devices which include iPhone, iPad, iPod Touch, and little mentioned but on the horizon Apple TV. This cut was announced as a 30 percent cut, and Apple made this point by cutting Sony’s Reader application which offered in-app purchases of books. The news of Apple kicking the dog that Sony has become was soon overshadowed by people alarmed at the audacity of the 30% cut demanded by Apple. This put the kibosh on Amazon’s plan to put in-app purchases of books on its upcoming update of its Kindle app. The workaround which is what is already in place is to keep all purchases through a separate web site rather than through the app and iTunes. This is the model already in place for Kindle because you get directed to the web site for purchases but it’s going to make it difficult for the Amazon app or for the magazine apps like Zinio and The New Yorker.

Is it fair? It’s the fairness of capitalism and middle men. When a magazine ends upon on the rack of your local news stand, someone is making the margin between the list price and the wholesale price. Apple wants to make money off of its news stand. When publishers analyze the distribution costs, it probably isn’t too bad -the 30% to Apple is probably less than whatever is lost to the middlemen.

It sucks for the middlemen.