A Worse User Experience

In compliance with Apple’s rules for the iOS App Store, Amazon recently updated their iOS Kindle app to remove the “Kindle Store” button. Previously, tapping that button in the app launched MobileSafari and loaded a mobile-optimized version of the Kindle Store web site. Books could (and still can) be purchased through that site and then accessed from within the Kindle app.

Dan Frommer argues that Apple’s ban on in-app links to web sites that sell content is bad for users:

Now, Apple device owners will have to figure out on their own that they need to go to Amazon’s website in their Safari browser to buy stuff to read with their Kindle app.

This is a worse customer experience. Apple’s devices are now slightly harder and clumsier to use. And it’s Apple’s fault.

From now on, if developers want to sell virtual goods and subscriptions that don’t go through Apple’s in-app iTunes payment system — which forks over a 30% cut to Apple and puts developers at risk of patent lawsuits — they aren’t allowed to link to those other e-commerce stores in their apps anymore.

He’s right: it’s a much poorer user experience. But even worse, companies link Amazon couldn’t sell their content through Apple’s in-app purchase system, even if they wanted to. According to Apple’s iTunes Connect Developer Guide (PDF), developers can only create “up to 3000 separate product IDs assigned to your In-App Purchases per app.” Amazon’s Kindle Store claims to contain “more than 950,000 Books, Kindle Singles, Newspapers, Magazines, Blogs, Audiobooks, and Games & Active Content.”

Even if books represented only a tiny fraction of the 950,000 items in the Kindle Store catalog, there would be far more than Apple’s 3,000-per-app limit. And even if Amazon were willing and able to pay Apple’s 30% cut on Kindle sales and use the official iOS in-app purchase system, technical limitations set by Apple prevent them from doing so.

The end result, then, is a crappy deal for users. Forget whether Amazon can make money while paying a 30% cut. Forget the risk of patent liability and the investment of time and money required to start using Apple’s in-app purchase system. The fact of the matter is, Apple has made getting books onto iOS devices harder. Users must magically know how to switch to MobileSafari and navigate to the Kindle Store, instead of tapping on an easy-to-use “buy” or “store” button. That doesn’t sound like the kind of experience Apple wants to create. It sounds more like Android.

Physical Media for Lion

A number of news outlets reported yesterday that Apple will distribute Mac OS X 10.7 Lion via the Mac app store. It’s a logical conclusion, given that they’ve distributed the Lion developer previews through the Mac App Store. However, it makes me wonder whether they’ll provide some kind of physical media as well. There are a number of scenarios where you want to be able to do a fresh reinstall of the OS, like a hard drive failure, or need to boot off another medium, perhaps to run Disk Utility on your startup drive.

Apple ships the MacBook Air with a Software Reinstall USB drive, which allows users to restore the machine to its original configuration without using an optical disc. The USB drive itself is quite small, and is a little flimsier than the kind of drive you might want to carry around with you. It probably costs Apple very little to make, and I’d say it’s a good candidate to be the physical media for Lion.

The big question in my mind is whether Apple will charge an additional fee to get Lion on a USB drive. It seems that the Mac App Store will be the preferred distribution method for Lion, although I imagine it will also be available stand-alone on USB or DVD. (After all, not everyone has the bandwidth to download a 3-4GB operating system.) There are three possible scenarios for App Store buyers:

Apple provides Lion on USB for no extra charge. Upon installing and registering your copy of Lion, the OS asks for an address where you’d like the USB reinstall drive sent.
App Store buyers pay small fee for Lion on USB. At some point in the process (in the App Store itself? upon registering?), you’re given a chance to buy a USB reinstall drive for a small fee, maybe $10 or $15.
No physical media option. In this scenario, App Store buyers are out of luck when it comes to getting a physical copy. In order to get a USB install drive, you have to buy a boxed copy of Lion. This doesn’t seem particularly plausible to me, but it’s not outside the realm of possibility. One interesting permutation is that it may be possible to put the Lion installer onto your own USB drive manually.

If I had to place a bet, I’d go with option 1, but only by a hair. I certainly wouldn’t be surprised to see Apple pick option number 2.

What if there were no Coke at Disney World? Or, Problems with Apple’s in-app purchase rules

Apple made a lot of waves last week with it’s announcement regarding In-App Purchases (IAP). They introduced two major changes. First, developers can now sell auto-renewing subscriptions on a weekly, monthly, or yearly basis. Second, Apple has revised the App Store Review Guidelines to require the use of in-app purchase in a number of situations.
I’m going to leave subscriptions aside for now and concentrate on the new App Store rules governing the use of in-app purchases. Subscriptions are important, but I think they’re just a part of the larger problem developing around IAP. Apple’s new requirements are as follows. Apps that allow you to use content purchased elsewhere, such as through a web store, must allow you to purchase the same content using IAP. Moreover, apps must offer that content via IAP at an equal or lesser price, even though Apple takes a 30% cut of all in-app purchases. Finally, apps may not include links to web sites or other “external mechanisms” though which the content can be bought without giving Apple it’s 30% commission. The relevant sections of the App Store Review Guidelines are below:

11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions.

11.14 Apps that link to external mechanisms for purchasing content to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected.

Leaving aside any possible anti-competitive behaviors going, the biggest problem with Apple’s new rules is that they’re bad for customers, and thus they’re bad for Apple. Why? It’s all about customer choice.

Amazon’s Kindle app is a fantastic example. Until now, it hasn’t been possible to buy books through the Kindle app. Instead, the app includes a “Kindle Store” button that launches Mobile Safari with an iPhone-optimized version of the Amazon.com Kindle website. Users can then search and browse for books. Upon purchasing a book, a button can direct the user back to the Kindle app, where the book will be downloaded and made available for reading.

Now, imagine the same app under Apple’s new rules. The Kindle Store link will be gone. Without it, most users will have no idea they can buy Kindle books through the Amazon website. Instead, the app will have a searchable list of books that can be purchased directly within the app. From a user experience point of view, it’s great.

So what’s the problem? It’s hard to imagine Amazon making any money this way. I’m no book publisher, but I’ve read that margins in the industry are quite low. Remember, Amazon must pay a substantial portion of the sale price to the book’s publisher. What’s left after the publisher’s cut and Apple’s 30% cut? Very little – perhaps not enough to make the Kindle app worth Amazon’s while. Ordinarily, we might expect the added costs from Apple’s 30% commission to get passed on to consumers via higher prices for books purchased within the app. But Apple has specifically banned that practice.

Instead, Amazon might choose to pull the Kindle app from the iPhone and iPad. That’s neither good for consumers nor good for Apple. Sure, consumers could still buy books through Apple’s own iBooks store, but generally speaking, the selection is worse and the prices are higher. Furthermore, you can’t read iBooks on anything but iOS devices. There’s no reader for Mac, Windows, web, anything. (I expect an iBooks reader for Mac one of these days, but that’s another matter.)

John Gruber tweeted this analogy:

App Store : Apple :: Disney World : Disney They make money on everything you buy in the park.

It might be a fair analogy, but it doesn’t mean it’s good for customers. Suppose that Disney charged a fee on every Coke sold at Disney World, but also required that the price of a Coke in the park be the same as the price of a Coke at your local gas station. If the fee were high enough that Coke couldn’t make money, they’d just stop selling soda at Disney World. Coke and Disney don’t care; they’re raking in so much money elsewhere that they probably wouldn’t even notice the lost sales. It’s the visitors to Disney World who suffer – they can’t buy a Coke when they want one.

Likewise, these new IAP rules are bad for Apple. Neither Apple nor companies like Amazon will notice much in the way of lost sales. The people who get screwed are the customers, who suddenly aren’t able to buy the products they want. Sure, they get a better user experience from those developers willing to play Apple’s game, but they’ll be missing out on critical content. If I can’t buy the book I want on my iPad, what good does it do me that the user experience would be better, if only they carried my book?

Certainly nobody, not even Amazon, is going to abandon iOS overnight. But clearly, Apple is in the iOS business for the long haul, and it’s still early enough that they could falter with serious consequences. Thankfully, there’s an easy fix – charge less. Apple’s original justification for the 30% commission for apps is that it pays for the (substantial) overhead involved in payment processing, storage, and bandwidth to send apps to customers. For in-app purchases, however, only payment processing is relevant. (For example, Amazon’s library of Kindle titles isn’t stored on Apple’s servers or downloaded through their network.) To solve the problem, Apple needs only to reduce their commission on in-app purchases to something more in line with a credit card processor — maybe 5%.

Apple’s policies for the App Store have a way of starting out sounding draconian and relaxing over time. Hopefully we’re in the first stage of that process, and Apple will come to their senses sooner rather than later.

99¢ TV Rentals from NBC

AppleInsider reported yesterday that NBC strongly opposes Apple’s 99¢ price point for TV show rentals. Though NBC offers shows for purchase on iTunes for $1.99 ($2.99 for an HD version), NBC Universal CEO Jeff Zucker was quoted as saying 99¢ rentals “would devalue our content.” Putting aside the reasonableness of this position, NBC’s credibility on the issue is pretty weak. Why? They’ve caved on iTunes pricing before.
Think back to late summer 2007, when NBC pulled all of its content from iTunes after Apple refused to increase the per-episode price to $4.99. At the time, NBC shows accounted for 30% of TV show sales on iTunes. A year later, NBC was back on iTunes at the same price point, along with HD versions for $2.99. Apple held their ground on pricing, and NBC backed down. Apple doesn’t need NBC shows. People will still buy iPods and iPhones, and even Apple TVs, without 99¢ TV rentals from NBC. Might Apple sell more devices if they had NBC on board? Sure. But something tells me they aren’t wetting their pants about waiting NBC out on this one.

Open Standards

I’ve seen quite a few blog and Twitter posts complaining that the live video stream of today’s Apple media event is available on Mac OS and iOS only. Moreover, some people seem to be upset because Apple claims to be using “open standards.” Most of these complains are something along the lines of “What good are open standards if you can only access them from Apple products?”
Apple is the first to admit that the live stream is only available on Apple devices, and only a subset of them at that:

Viewing requires either a Mac® running Safari® on Mac OS® X version 10.6 Snow Leopard®, an iPhone® or iPod touch® running iOS 3.0 or higher, or an iPad™.

But that’s not the end of the argument. I think what people are complaining about is the use of the word “standard.” Surely, anyone can comply with the open HTTP Live Streaming specification, though it is probably not 100% finalized. It is not, however, standard. The word “standard” implies wide use and acceptance, and although HTTP Live Streaming will probably become a true standard eventually, it’s not yet a standard today.

I think Apple is using the term the way most people understand it, however. “Open standard” has come to mean something more along the lines of “not closed and proprietary.” The point is not how commonly it is used, but whether it could be used by anyone who wished to develop software using the proposed specification. The more widely it’s used, the more “standard” it becomes. Applying the word “standard” only to software already in wide use does little more than make “standard” synonymous with “old” or “outdated.”

One last note about Apple’s choice of HTTP Live Streaming for the media event today: streaming live video is a tricky business. Back in the day, Apple had all kinds of trouble with video streams of keynote addresses – they’d break down from high traffic, and were often of fairly terrible quality. Especially since this is the first live stream they’ve done in a while, I’d expect Apple to pick the technology they were most confident would work well. In fact, that’s always Apple’s MO: use the best technology available to deliver the best user experience. If there are side effects of those choices that people don’t like, tough. That’s just how Apple works.