iBooks and iTunes Shut Down in China

22 April 2016

From The New York Times:

For years, there has been a limit to the success of American technology companies in China. Capture too much market share or wield too much influence, and Beijing will push back.

Apple has largely been an exception to that trend. Yet the Silicon Valley company is now facing a regulatory push against its services in China that could signal its good relations in the country may be turning.

Last week, Apple’s iBooks Store and iTunes Movies were shut down in China, just six months after they were started there. Initially, Apple apparently had the government’s approval to introduce the services. But then a regulator, the State Administration of Press, Publication, Radio, Film and Television, asserted its authority and demanded the closings, according to two people who spoke on the condition of anonymity.

“We hope to make books and movies available again to our customers in China as soon as possible,” an Apple spokeswoman said in a statement.

. . . .

To a degree more than many tech companies, Apple relies on the smooth operation of its software — including its App Store and services like iTunes, which are tightly integrated with the iPhone and iPad — to keep customers coming back to its devices. Apple, which is facing a slowdown in sales of its iPhones, is also reliant on China for growth, so further moves by Beijing to curtail services could crimp sales.

The company counts China as its second-largest market after the United States. Its China numbers will be dissected on Tuesday, when it reports quarterly earnings.

China’s pushback against Apple shows that the company may finally be vulnerable to the heightened scrutiny that other American tech companies have faced in recent years. That scrutiny was spurred by revelations from the former United States National Security Agency contractor Edward J. Snowden in 2013 of the use of American companies to conduct cyberespionage for Washington.

Link to the rest at The New York Times

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Content + curation + community = a new Apple Books

29 March 2016

From The Bookseller:

Apple is missing the boat on e-books.

And there’s billions of dollars at stake.

. . . .

If you’re buying an e-book, there’s only one place to go: Amazon. It’s not because of discovery; it’s mindshare. Most books aren’t discovered on Amazon – just bought there. Opportunity.But it’s easy to forget how deeply Amazon has burrowed into the online book world. Most Facebook shares or book reviews link to Amazon. Amazon results dominate bookish web searches. Goodreads is the online books community.

Conversely, iBooks is little more than a reader app and a buy link, with no community to speak of. Consider Gates of Fire by Steven Pressfield (one of my favorites): Amazon/Goodreads have 2,600 reviews of the book, Apple has seven. A Google Search for “Gates of Fire” has Amazon 1st, Goodreads 4th, and Apple on page four – essentially invisible! The iBooks web experience is an ugly mess.

It’s instructive to look at Apple’s response when threatened by Spotify. Apple launched a major initiative, Apple Music. It was a “Manhattan Project” with internal and external components:  Apple acquired Beats for $3B and re-invented its music experience as Subscription + Curation + Beats 1 Radio. Connect, a centralised artist blog platform, was another unique addition. The result generates at least $1B annually.

Link to the rest at The Bookseller

Apple doesn’t need to maximize book sales

23 March 2016

Apple doesn’t need to maximize book sales. It simply needs to keep publishers happy enough to maintain an impressive-sounding inventory of titles while waiting for entirely new forms of publishing to develop.

Virginia Postrel

For iPad, Less Is More If It Comes With Good Content

19 March 2016

From Seeking Alpha:

Although it has been delayed a week from its original launch, rumors continue to buzz that Apple will debut a new iPad Monday. Usually reliable sources suggest the new iPad will shift the product line away from the Air philosophy of the last two iterations and towards the Pro model, which was debuted in larger-screen form last year.

Apple’s (presumed) move actually keeps with the prediction of Seeking Alpha’s own Mark Hibben. However, it may not be the correct move. Typical of the “consumers don’t know what they want” company, Apple appears to have decided to go against the prevailing trend in the tablet market.

. . . .

 I am not accusing Apple of being idle. To his credit, Apple CEO Tim Cook has not tried to hide anything. When iPod sales got small enough and Apple Watch sales disappointed, Apple simply folded them into larger categories to hide the gory details. Despite some suggestions he might do the same with iPad as sales went into freefall, Cook has taken the open and honest route.

. . . .

One such move: enterprise, which Jobs famously shunned, but Cook has made a full-court press to woo. The recent release of the oversized iPad Pro was the latest step, and the biggest. Cook already had Apple working with his former employer, IBM, to push Apple hardware to enterprise customers and collaborate on vertically integrated software for specific businesses. Now he has a piece of hardware to match Apple’s new ambitions, with a number of features built into the iPad Pro that suggest it might be the first tablet actually built with businesses, not consumers, in mind.

Apple is also tackling the software side. In addition to creating new apps with IBM for enterprise, Apple is also working on Classroom, to help make iOS more appealing to schools.

. . . .

 But it was not enough. Apple’s recent sales figures showed another decline in tablet sales, down almost 40% in unit sales from the 2013 peak and down 25% from even last year’s depressed number. It’s possible iPad Pro simply was too new and not available in sufficient quantities. Maybe it hasn’t been given enough time to move the needle. That’s certainly Apple’s preferred take on it. Cook says drawing enterprises into the iPad ecosystem will take time. Given Apple’s twelve-figure cash hoard, Apple can certainly afford to be patient with a new strategy, but what it can’t afford to do is ignore evidence it may be on the wrong track, especially when that evidence comes in the form of a competitor in hot pursuit to supplant it.

. . . .

 [Amazon’s] $50 Fire tablet vaulted it all the way back to third place for tablet sales over the holiday period last year, a 175% increase in a single year. If Samsung (OTC:SSNLF) falls victim to the same sales decline as Apple, and Amazon posts another strong year of growth, it may take over second place this holiday season. Amazon’s tablets have long been mocked as “fruitcake tablets,” things people buy for children or loved ones as gifts, but don’t want for themselves.

They are smaller, less powerful, and have lower resolutions. But they are much, much cheaper. Amazon has long since made its philosophy, and strategy, clear. It sees tablets as mere gateways to customers. Fire is sold more or less at cost to encourage the purchase of both digital content, and more importantly, Prime memberships, which spur sales of Amazon’s physical goods in the general retail sector.

This is anathema to Apple, which not only considers itself exclusively a purveyor of premium products, but also inherited from its late founder a visceral distaste for any suggestion a tablet should settle for such a small role in the human condition. When Steve Jobs released the first iPad in 2010, he had only one regret, as documented in his official biography. He had set the bar too low. More than one reviewer said they loved using their tablet to consume content, but it lacked the necessary tools to really be a creator of content. Jobs, who usually didn’t have much use for outside criticism of his ideas, took the reviews hard because he thought they were right. When he designed the iPad 2, one of the last products before his death, he pushed to incorporate content creation tools like a second camera and more powerful software.

. . . .

 This attitude, that tablets are for content creation as well as consumption, has outlived its creator at Apple to the present day. Tim Cook himself made explicit reference to it when launching the iPhone 5s in September 2013. Apple was just starting to get some early evidence that iPad’s growth was levelling, and he spent a considerable amount of time at the keynote pushing the theme. Apple devices, he said, were “great for consuming content,” but they were “incredible for creating content.”

. . . .

Meanwhile, “The Everything Store” was positively embracing the ideal of consumption. Fifty dollars is a breakthrough price, but it also means consumers know they aren’t getting everything they would get with a $500 iPad. Amazon has to make trade-offs to hit that price target, and their success hinges on if they can identify correctly which aspects of a tablet’s functions, specs and capabilities customers value most and which ones they are willing to go without to achieve savings.

This is sort of the mirror image of Apple’s problem, which is to keep coming up with new capabilities that persuade people to keep paying up for their top-of-the-line model. Amazon has come to focus almost exclusively on content consumption as a tablet’s reason for being. Its cameras are mediocre, its screens just big enough to enjoy a movie but not really big enough to work on. But it gives literally thousands of free apps to every Fire owner, and free trials of its Prime Music and Prime Video services. And it keeps cutting prices.

The fact that Amazon tablet sales rose while Apple sales fell suggests Amazon may be on to something. At the very least, Amazon seems to have a better finger than Apple does on the pulse of what consumers want to see as incremental improvements in their tablets. Lower costs for hardware and content seems to trump stronger processor power, bigger screens or better cameras. Even Cook’s ambition to put iPads in every school may fall short, as schools on tight government budgets will certainly consider cost as one of the prime factors in determining whose tablets they purchase.

Link to the rest at Seeking Alpha

PG says (the visitors to TPV notwithstanding) far more people are interested in consuming content than in creating content.

Apple’s marketing pitch to the contrary, many more iPad owners use their iPads to consume content than use them to create content. Perhaps a certain coolness associated with content creators rubs off on the iPad, but, as with virtually all tech hardware, last year’s big new thing costs a fraction of its former price this year.

The downward pressure on product prices never stops and a corresponding pressure on Apple to create astounding new products all the time continues.

The competition between two extraordinary companies like Apple and Amazon is fascinating to watch (at least for PG). However, PG doesn’t think Apple will ever be capable of competing on price, but Amazon shows signs that it may be able to compete on breakthrough product creation and design — see Amazon’s Echo and Alexa, for example.


Apple wronged by Supreme Court e-book pass – They can afford the fine, but that’s doesn’t make it right

9 March 2016

From Macnn:

Apple’s three-year legal case over price-fixing of e-books has ended, with the US Supreme Court saying that it will not allow the company to appeal. The court will not listen to Apple’s contention that a 2014 settlement requiring it to pay $450 million in costs and damages is wrong.

. . . .

Apple is now legally proven to have colluded with publishers Hachette, Macmillan, Penguine, HarperCollins, and Simon & Schuster to “eliminate retail price competition in order to raise e-book prices.” That’s from Judge Denise Cote’s 2014 ruling, where she concluded that it was Apple’s “orchestration” of this that made it work. What Apple really did was offer to sell e-books where the publishers set the price, rather than Apple. Compare that to Amazon, which imposed prices and in fact imposed low ones. If you tell publishers they can set the price, they’re going to set them higher.

That’s what happened, and you would think that this was retail pricing as per usual: businesses set a price, and then adjust it as they try to find the sweet spot between number of sales and profits per sale. It’s what they do with cars, it’s probably what they do with houses, yet when it came to e-books, suddenly it was a problem worth taking to the Supreme Court.

. . . .

It’s not fair or reasonable to say that courts don’t understand technology, you can’t possibly apply a sweeping statement like that to an entire judiciary — yet the Justice Department demonstrated a similar position when it failed to side with Hachette. That publisher had taken legal recourse after Amazon’s pricing thoroughly destroyed bookshops, and it needn’t have bothered.

I believe I do understand technology, and I am using it as both a reader and writer of e-books. Let me declare a bias here — an earned bias, borne of easily-describable experience, but a bias nonetheless. I like Apple’s iBooks Store, I like iBooks, and I prefer it to Amazon Kindle. I very much prefer Apple’s straight-down-the-line 30 percent fees compared to the confusing mess of Kindle’s pricing and financial reporting, which often results in authors and publishers getting quite a bit less than the promised 70 percent.

. . . .

Yet there’s the thing: Apple has always been accused of charging more for e-books than Amazon, and in my experience that varies from just-about-true to very-very-true. Charging more is indeed what Apple regularly does, but the argument here is that by charging more — and specifically by corralling publishers into charging more, Apple was cutting out companies who charge less.

If it were that Apple had a lock on the publishers, and forced them to charge higher prices everywhere, that might even make sense, but it is a matter of record that Apple did not do this. Apple went to publishers and said that it would take 30 percent of sales. There was nothing about what price they must charge, there was actually the opposite: Apple said the publishers could charge whatever they liked.

. . . .

Of course the publishers worked together: Amazon was selling books below cost, and that hurt publishers a lot more than it did the Kindle maker.

They were hurting long before Apple came along with iBooks, and they conspired to disrupt Amazon’s pricing model. We know that because the publishers admitted it. Everyone knows that, because the publishers admitted it. So it’s undisputed that Apple did not lead the conspiracy, yet that is precisely what it was accused of, and precisely what it has now been ruled as having done.

. . . .

This ruling is wrong. It’s as wrong as rather similar case in 1995, when the Supreme Court also refused to hear an appeal case from Apple.

Link to the rest at Macnn and thanks to Felix for the tip.

PG was about to discuss the various factual errors in the OP, but it’s late as he posts this.

PG will repeat what he has said before: This was a slam-dunk antitrust case for the Justice Department. Apple was right in the middle of the conspiracy to fix prices along with five of the six largest publishers in the US.

That’s illegal. Antitrust 101 illegal.

Compared to other price-fixing schemes, some of which have continued for years without being discovered, the participants in this one were total idiots. The only smart thing the publishers did was settle before trial.

There were so many smoking guns, you couldn’t pick your way through the evidence without getting burned.

How Apple and Big Publishers Pushed E-Books Toward Failure

8 March 2016

From Bloomberg Business:

Apple suffered a final defeat in its legal fight with the Justice Department over e-books Monday, when the Supreme Court refused to hear the company’s appeal. When the case was filed in April 2012 it was seen as a fight over the future of the digital book industry, with Apple Inc. and the five biggest publishers aligned against Inc. While Apple and its allies lost in court, their vision for the industry won out. It hasn’t been good for e-books.

The Apple case centered on whether publishers or online retailers  would determine the prices for e-books. At the time, Amazon was selling e-books at a loss, buying a book for, say, $14.99 but then charging Kindle users just $9.99. Publishers worried that tactic would train customers to expect books to come cheap forever.

. . . .

While Apple fought through the courts, the publishers all settled with the Justice Department. Meanwhile, Amazon decided that letting publishers set their own prices wasn’t such a bad idea, after all. Its newest deals with the big publishers allow them to do so. If Apple hoped to gain an advantage over a rival, it failed. Amazon controls about three-quarters of the U.S. e-book market, according to Good e-Reader, a website that follows the industry. In 2010 it made up 54 percent of the market.

Once Amazon gave up on its goal of setting a $10 standard price for e-books, the prices began to rise. Today, three of the top five best-selling books on the New York Times list for fiction cost at least $12. It’s not unusual to be able to buy a paperback book for less than the cost of the digital version.

There’s a widespread assumption that digital media always wins out over physical media. But even the Internet isn’t immune to the basic laws of economics. E-book sales declined 12.3 percent over the first 10 months of 2015, compared with the previous year, according to the American Association of Publishers, which compiles data from 1,200 companies.

. . . .

“It’s a fascinating question and clearly what it shows is that purchasers make a decision based on price,” said Robert Thomson, the chief executive officer of News Corp., which owns Harper Collins, in a recent call with investors. “They are valuing a print book versus an e-book.”

Thomson said he still expects e-books to grow as a percentage of the company’s overall book business, but acknowledged that people have lots of choices on their devices, and won’t necessarily choose books over other forms of entertainment.

Link to the rest at Bloomberg Business

Competition is not served

7 March 2016

Competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new e-book retailer at the expense of passing control over all e-book prices to a cartel of book publishers.

Judge Debra Ann Livingston, writing for the majority in Apple Inc., v. United States, Second Circuit Court of Appeals

Supreme Court Rejects Apple’s Appeal

7 March 2016

From Publishers Weekly:

At its conference on Friday, March 4, the Supreme Court declined to take up Apple’s appeal in its e-book price-fixing case, effectively ending one of the publishing industry’s most closely-watched legal battles.

The Supreme Court’s denial of certiorari also means that Judge Denise Cote’s 2013 decision finding Apple liable is now considered final, triggering $400 million in refunds to e-book consumers under the terms of a 2014 settlement with 33 states and a consumer class. In addition, Apple will pay some $50 million in fees and attorney costs.

Apple attorneys had argued that Judge Cote erred infinding Apple liable for a “per se” case of price-fixing in 2013, claiming that Apple’s role as a vertical player required that it be judged under the more expansive rule of reason framework. The Supreme Court, however, rejected that argument without comment, leaving in place a 2-1 affirmation by the Second Circuit.

. . . .

The Supreme Court’s denial ends one of the most contentious legal dramas in modern publishing history, dating back to the launch of the iPad in January, 2010. Concerned that Amazon’s $9.99 Kindle prices for newly released e-books was devaluing books in consumers’ minds (but individually ill-equipped to move Amazon off that price point) five major publishers simultaneously negotiated a hasty deal with Apple that would change the e-book business from wholesale to agency pricing.

The move enabled publishers to collectively retake a measure of control over consumer e-book prices—which they immediately raised. And for Apple, the deal meant that titles in their new iBooks store could not be undercut by Amazon.

Link to the rest at Publishers Weekly

Apple Rejected by U.S. Supreme Court in $450 Million E-Book Case

7 March 2016
Comments Off on Apple Rejected by U.S. Supreme Court in $450 Million E-Book Case

From Bloomberg:

Apple Inc. must pay $450 million to end an antitrust suit after the U.S. Supreme Court refused to question a finding that the company orchestrated a scheme to raise the prices for electronic books.

The justices turned away an appeal by Apple, leaving intact a federal appeals court ruling favoring the U.S. Justice Department and more than 30 states that sued.

The rebuff means Apple must comply with a settlement it reached with the states in 2014. The accord calls for Apple to pay $400 million to e-book consumers, $20 million to the states, and $30 million in legal fees.

Government lawyers accused Apple of leading a price-fixing effort as part of the 2010 introduction of its iPad tablet and iBookstore feature. Apple was seeking to gain a foothold in a market dominated by Inc., which at the time treated best-selling books as loss leaders, selling them for $9.99.

A federal judge in Manhattan found that Apple persuaded five of the biggest publishers to shift to a system under which they, and not the retailers, would set book prices. The shift led to a 40-percent increase in the price of e-book best-sellers, U.S. District Judge Denise Cote said.

Cote pointed to statements by Apple’s late founder, Steve Jobs. At the Apple event to introduce the iPad, Jobs was asked why someone would buy a book through iBookstore for $14.99 when the same item was available on Amazon for $9.99.

“Jobs paused and with a knowing nod responded, ‘The price will be the same,’ and explained that ‘publishers are actually withholding their books from Amazon because they are not happy,’” Cote wrote.

Link to the rest at Bloomberg and thanks to Nirmala for the tip.

The 30% Rule of Selling eBooks ~ Go Exclusive? Or Sell Everywhere?

9 February 2016

From author Donna Fasano:

Several years ago, an Amazon rep told me that selling my books via Amazon Select—going exclusive to Amazon—would greatly benefit me as an author. When I voiced some reluctance to remove my books from the reach of Nook, Kobo, iBook, and Google Book readers, he went on to explain that, as long as my earnings from other venues was at or below 30% of my total earnings, then the extra sales I would see at Amazon Select would make up for the loss.

The terms and conditions of Select have changed with the invention of Kindle Unlimited, so I don’t even know if the 30% rule still applies. I currently have 4 of my 18 self-published books in the Amazon Select Program for a second 3-month stint which will end in two weeks. The way I figure it, it’s good to try new things. However, the Kindle Edition Normalized Pages (KENP) Read have shown pretty dismal results/earnings. Before removing the 4 books from Select, I needed more sales information from the various venues where my books are available.

. . . .

The information clearly shows that, during the past 4 months, I’ve only had 1 month where Amazon Kindle sales were greater than 70%.

With the advent of Kobo’s fabulous new Promotions Tab on my Kobo Author Dashboard, I believe my Kobo sales and readership will grow. I’m still learning how the promotional campaigns work and which ones fit best for my books, but it seems that I have gotten it right 2 months out of 4. I imagine I will only become better at choosing and marketing the correct campaigns. I can tell you that during the first week of February, Kobo and Amazon are neck and neck with Kobo at 40.5% and Amazon at 43%. Also, I get a thrill when I see Kobo readers in Nigeria, Qatar, South Africa, Slovakia, Columbia, and dozens of other countries are reading my books.

Link to the rest at Donna Fasano and thanks to Al for the tip.

Here’s a link to Donna Fasano’s books. If you like an author’s post, you can show your appreciation by checking out their books.

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