Apple Slashes App Store Fees for Smaller Developers

From The Wall Street Journal:

Apple Inc. is halving the commission it charges smaller developers that sell software through its App Store, a partial concession in its battle with critics over how it wields power in its digital ecosystem.

The iPhone maker said that starting next year it will collect 15% rather than 30% of App Store sales from companies that generate no more than $1 million in revenue through the software platform, including in-app purchases. The fee will remain 30% for developers whose sales through the App Store, excluding commission payments, exceed $1 million—meaning the reduction won’t affect such vocal Apple opponents as videogame company Epic Games Inc.

Apple’s 30% take has been at the heart of complaints this year from other tech companies and some users over how it manages the vast digital world of people who use iPhones, iPads and other Apple devices. The policy is also central to a major legal battle with Epic, and to government examinations in the U.S. and Europe of Apple’s competitive behavior as a gatekeeper between software makers and the hundreds of millions of people who use Apple’s gadgets.

Critics have charged that Apple’s commission is too large, is unfairly levied against different companies, leaves customers footing the bill and leads to workarounds by some developers to avoid the fees.

. . . .

A tiny fraction of developers account for the vast majority of sales in the App Store, which is central to a services unit that brought Apple $53.77 billion in revenue in its latest fiscal year. Research firm Sensor Tower estimates that only about 0.2% of the 1.8 million apps in the App Store generated more than $1 million last year, and says that group accounted for an estimated 92% of Apple’s App Store revenue.

The fee cut, therefore, gives Apple ammunition to rebut claims that its practices hurt smaller developers, while leaving untouched the vast bulk of its App Store revenue.

Link to the rest at The Wall Street Journal (PG apologizes for the paywall, but hasn’t figured out a way around it.)

PG was interested in this article because apps and ebooks are really quite similar to each other (although a dropsy epidemic would rage through New York publishing if such a statement were to be uttered within hearing range.)

Apps are electronic code and ebooks are electronic code as well. Apps run on tablets, smartphones, etc., and ebooks “run” on the same devices. Ebook readers don’t use their thumbs as actively as people who play app games on their phones, but, fundamentally, both purchase software for their electronic devices.

Apps and ebooks are sold online through digital storefronts in exactly the same manner.

Unlike app developers, when it comes to royalties, more than a few authors may analogize the sales of ebooks to the sales of printed books with printing costs, shipping fees, physical stores, warehouses full of books, etc., etc.

From the point of view of those who are running ecommerce at Amazon and Apple, ebooks and apps are just two different file formats.

It would be interesting if the people running iBooks caught the spirit of their much larger and more profitable contemporaries in the App department and decided that indie authors are pretty much like small app developers and should be paid 85% of the purchase price of ebooks instead of a much small percentage.

On more than one occasion, PG has been accused of being an Amazon shill because he likes the way Amazon treats indie authors and says so.

However, PG thinks it would be a great idea if Amazon treated indie authors like Apple treats small indie app developers and reduced Amazon’s take on KDP indie ebooks so authors received 85% of the proceeds Amazon collected for their books. (Amazon could also get rid of its ridiculous “Delivery Cost for a Digital Book” charge at the same time.)

Ebook Formatting with a Mac

One of PG’s relatives (on Mrs. PG’s side of the family, so he’s not dodgy) called PG to ask about formatting an ebook for the first time.

PG knew about Apple Pages, but not much else.

Any Mac folks who have had a good experience with a different approach to writing on a Mac, then self-publishing?

US vs. Apple

From The Wall Street Journal:

Politicians and social critics who worry about “the curse of bigness”—and vow to rewrite antitrust law to break up Facebook and Google—forget what happened the last time the government used the law against a Silicon Valley company. In 2012 the government successfully sued Apple for daring to compete with Amazon in selling e-books. The unintended result was not exactly a victory for the consumer or for competition: the continued dominance of Kindle, Amazon’s e-book format and reading device; increased e-book prices; and suppressed e-book innovation.

Chris Sagers, a law professor at Cleveland State University, explains in “United States v. Apple: Competition in America” what he sees as confusion about antitrust law. His analysis can be helpful—he notes the long history of companies invoking claims of “predatory pricing” as a cudgel against more efficient competitors and stresses that consumers often benefit when industries and companies are driven out of business—but he is confused about the case itself.

His thesis is that Apple’s entry into the e-book market was so clearly a violation of antitrust law that critics of the case must not believe in competition. But critics object to an interpretation of antitrust law that ended up punishing Apple for introducing a new pricing approach—an approach that is now common in every other area of online sales. Mr. Sagers forgets the guardrail rule of antitrust: Don’t bring cases against innovations that create more competition.

Consumers were delighted when Amazon launched its Kindle e-reader in 2007, and book publishers were happy to sell books in digital form. But there was an unusual feature. In its selling of e-books, Amazon operated according to the same pricing arrangement that had governed the sale of print books—that is, it bought e-books wholesale and chose its own price for them, just as bookstores had long done with print books. Brick-and-mortar bookstores needed this pricing flexibility for many reasons, not least to clear their inventory of unsold books by means of lower prices. The arrangement let Amazon sell e-books for years as a loss-leader—at the low price of $9.99—to boost profitable sales of its Kindle devices.

Around the same time, Apple had set about licensing music, video and games so that consumers would have reasons to buy its iPad. Apple realized that, for digital goods, there was no reason to follow the wholesale model. It could simply set up a revenue-sharing formula. Content owners and app developers—think of an iPad or iPhone game, such as “Minecraft” or “Fortnite,” that offers premium features—could pick their own price, even choosing to offer content free, and Apple would take 30% of any sales as a commission.

When Steve Jobs decided to include e-books on the iPad in 2010, Kindle had a 90% market share. So book publishers were again delighted—that Apple would be entering the market with its revenue-share model and letting publishers set the prices for their e-books. The largest publishers met among themselves to agree on the terms for licensing their books to Apple. The government sued, claiming an unlawful conspiracy masterminded by Apple.

Mr. Sagers sees this as an open-and-shut case of an unlawful pricing conspiracy and expresses surprise that there was so much support for the book publishers and Apple. He rightly dismisses the self-serving argument that books are so culturally important that publishers and Apple deserved an antitrust exemption. He is also right to note that Amazon was not, despite its huge market share, an unlawful monopolist—big is not always bad.

. . . .

Mr. Sagers believes that opposition to the Apple case shows that Americans are ambivalent about competition. There are times, he says, when “competition seems destructive.” When antitrust law requires firms to compete in such circumstances, then “antitrust itself has seemed like a failure.” The government claimed that Apple conspired with book publishers, risking higher prices, but the case was perceived as a government favor to Amazon, which it was.

Indeed, people objected to the Apple case because it was ill-advised—limiting consumer choices and blocking lower prices. Appeals Court Judge Dennis Jacobs made this point, writing in his 2015 dissent that Apple’s conduct “immediately deconcentrated the e-book retail market, added a platform for reading e-books, and removed barriers to entry by others.” With Apple in the game, Amazon’s 90% market share fell to 60%. Now it’s back up to 83%, according to the latest industry estimate. As competition decreased, prices increased. The typical price for a Kindle best seller is now in the range of $14.95.

. . . .

The Apple case violated the first rule of antitrust: First, do no harm.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

PG hasn’t read the book that is the subject of the WSJ review. However, the author of the review wildly misstates the purposes, activities and actions of Apple and all but one of the largest publishers in the United States.

Let us review the actions and actors in this matter (which were extensively documented and discussed on TPV during the days of yore):

  1. While Amazon was not the first entity to sell ebooks, it was the first to sell ebooks from traditional publishers at a substantial discount from their list prices, which correlated with the suggested list prices for printed versions of the same books.
  2. Amazon also was revolutionary in permitting self-published books (including ebooks) to be listed and sold side-by-side on the same basis as traditionally-published books.
  3. The six largest publishers in the United States – Random House, Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster had developed a cozy little dinner group consisting of their CEO’s who met about every three months in a private dining room in Manhattan to talk about their mutual concerns – most often Amazon’s habit of discounting the prices of their books and what they could do about it. These six produced the majority of books sold in the US and were receiving complaints from their traditional bookstore customers about Amazon’s low prices. The publishers did not want to “cannibalize” their sales of printed books and were the recipients of a growing number of complaints from their traditional bookstore customers. No company attorneys were present during these dinner discussions.
  4. PG will note that private meetings of the top executives of large companies that dominate an industry to discuss the pricing of their products are almost always a bad idea and, by themselves, raise a big red antitrust flag. Competent corporate counsel would always advise against such a practice.
  5. Apple was planning to introduce its iPad in January, 2010, and include an iBookstore as one of the product’s attractions.
  6. PG notes that Apple has never been a fan of significant discounts for the products it sells.
  7. In December, 2009, Apple’s senior VP of Internet Software and Services, Eddy Cue, contacted the members of the Publishers dinner group to set up meetings.
  8. During these meetings, Cue said that Apple:
    1. Would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99, higher prices than Amazon was charging.
    2. Apple would use the same “agency pricing model” that it used in the App Store for ebooks.
    3. Agency Pricing allowed the Publishers control the retail price of the e-books with Apple receiving a 30% commission.
    4. Most significantly, Apple would require what is generically described as a “Most-favored nation” clause in its contracts with publishers that allowed Apple to sell e-book at the lowest price of its ebookstore competitors (read “Amazon”).
  9. PG doesn’t recall if the publishers had another private CEO dinner or not, but evidence at the later antitrust trial showed the Big Six publishers called each other over 100 times in the week before signing the Apple agreements. Everyone except Random House boarded this bandwagon.
  10. In January 2010, Apple held one of its typically flashy product launches for the iPad together with its associated ebook, music and video stores.
  11. During the post-launch mingling, Wall Street Journal reporter Walter Mossberg asked Steve Jobs why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.” In other words, the publishers would force Amazon to raise its ebook prices to match those in the iBookstore.
  12. Amazon complained to the Federal Trade Commission and, rather than not being able to sell any ebooks of the major publishers, switched to the agency model after negotiations with the major publishers. This resulted in an average per unit e-book retail price increase of 14.2% for their new releases, 42.7% for their NYT Bestsellers, and 18.6% across all of the Publisher Defendants’ e-books.

For lots more information, see United States v. Apple on Wikipedia.

Back to the book reviewed in the OP, there was nothing wrong with Apple “introducing a new pricing structure” – agency pricing. Had Apple only done that, no antitrust violation would have occurred. However, when Apple conspired with a group of the largest publishers to force Amazon (and anyone else selling ebooks) to adopt agency pricing when such had not previously been the case, that was an antitrust violation, particularly in the light of what happened to ebook prices after the coordinated joint action took place.

Had the big publishers individually been willing to lose the highly-profitable ebook sales on Amazon as a potential consequence of telling Amazon it had to raise its prices and/or agree to let the publisher set the price, that would probably not have triggered any antitrust concern. Coordination between the publishers to use their combined power to force Amazon raise prices was where the publishers crossed a clear legal line.

With respect to what happened in the court case, each of the publishers admitted guilt, settled the antitrust claim and promised not to do any price-fixing in the future. Apple litigated the antitrust case to the max and lost at every stage.

Although Amazon was not a party to the litigation, Amazon won.

More significantly (in PG’s majestic and resplendent opinion), authors won. Indie authors in particular won. In June, 2010, a couple of years before any antitrust litigation had been commenced, Amazon introduced its 70% ebook royalty option which has put a great deal of additional money into authors’ pockets ever since.

Apple Violated Qualcomm Patent, U.S. Trade Judge Rules

When it rains,

From The Wall Street Journal:

A U.S. trade judge recommended that some iPhones be barred from import on Tuesday after finding that Apple Inc. violated a patent held by Qualcomm Inc., handing the mobile-phone chip giant a victory in its long-running feud with its erstwhile business partner.

The decision from the U.S. International Trade Commission judge means that Apple, which has its iPhones assembled overseas before sending them to the U.S. and other markets, could be barred from selling iPhones that infringe on a Qualcomm patent covering strategies for conserving power and improving battery life. The judge’s two-page order didn’t specify which iPhone models it covered.

The decision by ITC administrative law judge MaryJoan McNamara, however, is subject to review by the full six-member ITC as well as by the Trump administration, either of which could change the findings and reverse the recommended ban. Presidents have vetoed ITC moves before, including in 2013 when the Obama administration prevented an ITC ban on the sale of some iPhones and iPads from taking effect after Samsung Electronics Co. won a case there.

. . . .

Qualcomm’s complaints against Apple—including another ITC case where a final decision was expected later Tuesday—are part of a world-spanning legal battle between the companies. The fight came to a boil in early 2017, when Apple sued Qualcomm in federal court in San Diego, alleging the chip maker extracted extortionate rates for patent licenses by leveraging its dominance in the modem-chip market. That case is set to go to trial next month.

The U.S. Federal Trade Commission also filed suit against Qualcomm in 2017, focusing on the chip company’s allegedly monopolistic practices. Qualcomm, which denies the claims and says its pricing practices are fair, has countered by alleging that Apple violated its patents in Germany, China, the U.S. and other jurisdictions.

. . . .

In a separate case brought by Qualcomm, a jury in San Diego this month found that Apple violated the same Qualcomm patent that the ITC found issue with in the case set for a decision later Tuesday. The jury awarded Qualcomm $31 million in damages for Apple’s violation of three patents in that case.

Link to the rest at The Wall Street Journal 

Wall Street Calls Apple Event a Dud

From CNBC:

Analysts were left with more questions than answers about Apple’s new services that were unveiled at a press event.

. . . .

“Apple’s services reveal was materially different than we had anticipated,” said Goldman Sachs analyst Rod Hall. “With small calculated impacts from these, ‘other services’, we expect the focus to return to the slowing iPhone business post this event,” Hall said.

Link to the rest at CNBC

And iBooks?

PG did a quick Google search and couldn’t find any mention of iBooks in Apple’s big “moving to services” announcement yesterday.

Is there any reason to think Apple is going to pay much attention to iBooks going forward? Anything Amazon should be worried about?

Apple Doesn’t Have Prime’s Number

From The Wall Street Journal:

 Apple ’s extravagant unveiling on Monday of AppleTV+, its new video content streaming service, unveiled very little. Celebrities talked about their must-see shows without showing any clips. Apple executives trumpeted their plan to offer a bundle of content from different content partners without offering any details on pricing. So what to make of this newest entrant into the fiercely competitive and crowded streaming race?

Apple’s service will offer original shows in addition to content from companies like HBO, Starz, and Showtime. In that respect, it looks a lot like what consumers get on Amazon Prime—a mix of original and partnered content—curated by a tech company that has decided to maximize its current business by leveraging mass desire for incessant entertainment. For Amazon Prime members, however, viewing is free; Apple’s service almost certainly won’t be.

And does it make sense for the iPhone maker to be getting into content anyway? The company first put out its streaming box in 2007, but it has never commanded much market share. (Around 13% of connected TV users use the Apple box, according to eMarketer). The new service is mostly a way to draw more revenue out of Apple’s existing users.

That said, Apple is going to be writing big checks. The main point of its glitzy event seemed to be to showoff the talent it already has signed: names like Steven Spielberg, Oprah, Reese Witherspoon, Jennifer Aniston, M. Night Shyamalan and J.J. Abrams.

. . . .

If Netflix investors were worried, however, they didn’t show it. At the end of the big day, Apple shares were down 1.21% and Netflix’s were up 1.45%. Beneath all the glitz and fanfare, that may be the core takeaway: Apple is late to the game, and Netflix has an enormous lead. The newcomer also will be competing against media stalwarts such as Disney , Hulu and CBS. Consumers opt in and out of services with a few clicks, tuning in for a show on one service only to drop it after a few weeks in favor of another.

Link to the rest at The Wall Street Journal

Apple Felt like a Totally Different Company Today

From Fast Company:

While I sat inside the Steve Jobs Theater watching Big Bird talk to a hand puppet on the stage, I realized Apple was not the same company I knew not long ago.

No new devices were announced. There were no slides filled with impressive specs or performance metrics. No oohs and ahhs. No “one more thing.”

Yeah, yeah, I know: Apple, under CEO Tim Cook, is becoming a services company to account for flagging iPhone sales growth. What we saw today, at Apple’s “It’s show time” event in Cupertino–maybe for the first time–is the public face of that new company.

Part of the reason the presentation felt so different is because it was as much about other companies as it was about Apple. It was about Apple putting an Apple wrapper on a bunch of content and services made by third parties.

. . . .

All these announcements came in the first hour of the presentation. With that much time left I wondered if Apple had some tricks up its sleeve after all. But no: It had simply reserved an entire hour to talk about its original video content, which it has branded “TV+,” and which won’t be available until next fall.

What followed was a string of Hollywood people talking about the shows and movies they’re making for Apple. The uneasy mix of Hollywood and Silicon Valley cultures was on full display. Reese Witherspoon, Jennifer Aniston, and Steve Carrell were there to boost a show they’re making about TV news personalities, but they came off like they were trapped under glass.

Steven Spielberg came out to a warm welcome and talked about his reboot of the Amazing Stories series for television. A dramatic video came on about how we desperately need more conversation among people with different viewpoints. Then the lights went down, and when they came up Oprah Winfrey was there.

. . . .

The question is the company’s identity. At Apple events we’re used to seeing people like Kevin Lynch (Apple Watch) and Craig Federighi (iOS) who you know live and breathe core “Designed in California” products.

Today the company made a big deal of announcing a bunch of third-party content and services, with only passing references to the hardware that made it famous. Should Apple really identify itself with products that its own creative hand never really gets close to?

Link to the rest at Fast Company

TPV isn’t a tech blog, but PG has worked with a variety of tech companies in the past and, although he’s a Windows guy, has always admired Apple’s sense of mission and used iPhones almost forever.

The successor of a talented and creative CEO has a tough job in Silicon Valley. After a quick mental review, PG thinks far more successors at significant tech companies have failed than have succeeded.

Steve Jobs took Apple through some perilous times, but he always pushed the envelope and announced interesting new products. Under Jobs, Apple certainly had some product failures, but it never seemed like a company that was resorting to lame strategies. When things got tough, Apple thought big.

As the OP reflected, after stumbling with the pricing/features of its latest iPhones, yesterday’s announcement seemed to represent, “We’ve got to do something! Let’s copy what other companies are doing, but use Apple branding. Apple has a great brand that we need to exploit.”

PG suggests that brand equity is a precious commodity that needs to be preserved and cultivated with impressive new accomplishments, fostering the assurance that customers can continue to receive great benefits from the company and its products. It needs to feel cool by the standards of its industry.

In the tech world, where real technology talent is always in short supply, newly-graduated engineers from top universities are often attracted to employers who promise the opportunity to work on the cutting edge.

For all of Tesla’s financial ups and downs and Elon Musk, its frenetic CEO, engineers working there feel like they’re inventing the future. Amazon has felt like a serious innovator for a long time and can attract tech and marketing talent based upon that reputation and the opportunity to work on something new and different. (PG hopes Bezos’ marital problems aren’t Amazon’s version of Jobs’ pancreatic cancer.)

If Apple’s reputation becomes, “The company is not what it used to be and shows no signs of turning around,” adverse consequences will appear from many different directions.

 

Walmart Tipped to Take on Ipad with Its Own Android Tablet

From Slashgear:

Walmart plans to launch an Android tablet designed to compete with the cheapest iPad model, according to a new report. The sources claim Walmart’s tablet will be ‘kid-friendly’ and sold under the retailer’s ONN store brand. The company has confirmed plans to offer this tablet, but didn’t provide any official details about it, such as price and launch date.

Walmart already offers a number of electronics under its ONN brand, though they are primarily accessories like headphones. The company reportedly plans to focus on electronics and home items over the following year, at least according to alleged senior management presentations leaked by Bloomberg.

Among its alleged tablet plans is said to be a model designed for — or at least capable of being used by — kids. This model will supposedly undercut Apple’s cheapest iPad model, which is currently priced at $329 USD. It’s unclear whether the model will offer anything special as an attractive lure from Apple’s 9.7-inch slate.

. . . .

It’s unclear whether Walmart’s kid-friendly tablet will target older kids or come with the same protection features and parental controls as the Amazon Kindle Fire Kids Edition.

Link to the rest at Slashgear

Antitrust, the App Store, and Apple

From Stratechery:

Yesterday the Supreme Court held a hearing in the case Apple Inc. v. Pepper. “Pepper” is Robert Pepper, an Apple customer who, along with three other plaintiffs, filed a class action lawsuit alleging that App Store customers have been overcharged for iOS apps, thanks to Apple’s 30% commission that Pepper alleges derives from Apple’s monopolistic control of the App Store.

There are three points to make about this case, and they are captured in the title:

  • First, the specific antitrust doctrine at question
  • Second, the question of whether the App Store is a monopoly
  • Third, what the very existence of these questions say about Apple

In my estimation, these three points move from less certain to more certain, and from less important to more important. In other words, whatever the Supreme Court decides matters less than what the very existence of this case says about the state of Apple and its future.

Antitrust and Standing

The question before the Supreme Court is whether or not Pepper et al. have standing to sue Apple for antitrust violations at all; in other words, the case — which was launched in 2011 — hasn’t even started yet. The Clayton Antitrust Act of 1914 stated that “any person who shall be injured in his business or property by reasons of anything forbidden in the antitrust laws” can bring an antitrust action, but in the 1977 case Illinois Brick Co. v. Illinois, the Supreme Court held that only direct purchasers of illegally priced goods had standing to sue.

The specifics of the Illinois Brick case are helpful in parsing out what makes the Apple case complex; specifically, the Illinois Brick value chain was very straightforward: concrete block makers (including the eponymous Illinois Brick Company) were accused of colluding to fix prices for concrete blocks, which were bought by masonry contractors; masonry contractors in turn submitted bids to general contractors for construction projects, which were ultimately paid for by the State of Illinois. The State of Illinois sued for damages, alleging that the higher prices resulting from the price fixing had been passed through to the State of Illinois.

. . . .

In this value chain it is obvious who the direct purchasers were: masonry contractors; to the extent the State of Illinois suffered harm it was indirect pass-through harm. Thus, the Supreme Court ruled that the State of Illinois did not have standing; if every party in the value chain were to sue, the infringing party could be subject to duplicative recovery for damages (and parsing out the share of damages would be extremely difficult).

Apple vs Pepper

The question in Apple vs. Pepper, then, is who is directly harmed by Apple’s alleged monopolistic practices. According to the plaintiffs, the value chain looks the same as the concrete block manufacturers:

In this case Apple is in between developers and customers; the plaintiffs explain in their petition:

Apple charges apps purchasers a 30% commission on each app sale (unless it is a free app). The price paid by purchasers for an app is the amount set by the apps developer, plus Apple’s own supra-competitive 30% markup, both of which are paid directly to Apple, the alleged monopolist, every time an app is purchased. Apple keeps the entire supra-competitive portion of the purchase price for itself and remits the balance to the apps developers. The apps developers do not sell their apps to iPhone customers or collect any payment from iPhone customers, and iPhone customers are the only purchasers in the entire chain of distribution.

The plaintiffs argue that this makes consumers “direct purchasers”, giving them standing to sue:

Since Illinois Brick was decided 40 years ago, courts throughout the nation have had no trouble applying its “direct purchaser” standing requirement to various factual settings, including cases in which some form of payment is made to an alleged monopolist prior to the monopolist’s sale of a product.

Apple’s argument is that this misrepresents the transaction; the company wrote in its petition:

There is no basis for Respondents’ argument that pass-through damages claims are permitted whenever there is direct interaction between the plaintiff and alleged antitrust violator. This argument openly exalts form over substance by turning entirely on the formal identification of a “direct purchaser” and prohibiting any “further inquiry into the specifics of a case.”

Rather, Apple argues that the value chain looks like this:

Specifically, the company argues that “Apple does not buy and resell apps”:

Respondents suggest for the first time that Apple “has adopted the role of a retailer functionally buying from developers as wholesalers and selling to iPhone owners as consumers.” But their complaint does not allege that. And Respondents have repeatedly acknowledged that only consumers buy apps; Apple does not. The Apple developer agreements cited by Respondents confirm this: developers “do[] not give Apple any ownership interest in [their] [a]pplications.” So Apple is fundamentally unlike a traditional retail store.

Rather, Apple acts as an “agent” for developers:

As Respondents note, [the Developer] Agreement confirms that “Apple acts as an agent for App Providers in providing the App Store and is not a party to the sales contract or user agreement between [the user] and the App Provider.” Thus, Respondents concede that the direct sale is actually between developers and consumers, facilitated by Apple as an agent and conduit.

Along those lines, Apple argues that developers set the price of their apps, which determines Apple’s 30% cut, and to the extent developers set prices higher to compensate for that cut they are passing on alleged harm to consumers — which means consumers don’t have standing to sue.

Link to the rest at Stratechery

PG says there’s nothing more bracing in the morning than a bracing dose of antitrust law. It tones up the mind and prepares it for broad gauge analytical work in any field.

Amazon Looking To Challenge Apple In Payments War

From Seeking Alpha:

Amazon is aggressively pursuing market share growth in mobile payments. WSJ reports that Amazon is asking gas stations and restaurants to offer Amazon Pay options to customers. Amazon also will be increasing the presence in brick and mortar stores with whom it does not directly compete for retail sales. On the other hand, Apple also is looking to gain a decisive market share for its own digital wallet platform.

A recent Bloomberg report mentioned that Apple Pay is in second position, behind PayPal in number of active users using the digital wallet. However, Amazon has a significant benefit due to its online retail business, Prime membership and further growth in the brick and mortar space. Amazon also is investing heavily to increase the market share of Amazon Pay in international regions. As the mobile payments market matures, we should see two or three major players grabbing a big chunk of the market share.

. . . .

Amazon Pay has been around since 2007. However, Amazon has only recently started making aggressive investments to increase the market share of its digital wallet. It’s now asking brick and mortar stores with whom it does not compete to allow Amazon Pay options for customers. It’s not clear whether Amazon Pay will use QR codes or NFC technology which is used by Apple Pay. QR codes are generally preferred by smaller business owners as they can print and tape the codes without any big investments in NFC terminals.

Link to the rest a Seeking Alpha

Apple to Start Selling New iPhones, iPads, and Watches Through Amazon

From Fortune:

Finding Apple products on Amazon isn’t easy. Most are either unavailable or only sold through third-parties, a result of the rivalry between the two companies.

But that should change soon now that Apple has agreed with Amazon to directly list more of its products in its online marketplace.

In the coming weeks, Apple will start selling the new iPad Pro, iPhone XR, XS, and XS Max, Apple Watch Series 4, and Beats headphones on Amazon, CNETreported on Friday. The countries included in the deal are the U.S., U.K., Germany, France, Spain, Italy, Japan, and India.

. . . .

The agreement comes after some bad blood between Apple and Amazon. In 2015, Amazon removed Apple TV from its marketplace, though Amazon brought the device back last year after a public outcry.

Of course, Amazon sells its own Fire TV Stick streaming device, which competes with Apple TV, raising questions about what sparked the initial decision to remove it.

Third-parties that currently sell Apple and Beats products on Amazon will have to apply to Apple to become authorized sellers, or their listings will be removed by Jan. 4, 2019, CNET reported. Sellers have already been notified about the change.

Link to the rest at Fortune

New MacBook Air

PG has been a Windows user for a very long time and an MS-DOS user prior to that.

All of the PG offspring are Mac users.

On many occasions, PG has had the Windows vs. Mac discussion. Several years ago, with the help of one of his offspring, he purchased a lightly-used top-end Mac desktop and appropriate software to see if he had the potential to become a Mac guy.

After about six months of trying, he was feeling no buzz and one of his offspring inherited the Mac.

He won’t go into detail, but, over the years, PG has collected a variety of Windows software programs and utilities, both widely-used and obscure, that, for him, make his use of a Windows computer quite efficient. Every few years, he upgrades his hardware for more speed/memory/storage/virtue. (For computer geeks, PG’s current desktop contains a healthy i7 processor,  32 GB of RAM, 3 TB of internal storage, including a 1 TB SSD and 16 TB of external storage, so you can see he suffers from an advanced case of something.)

OTOH, PG owns and has owned and enjoyed several iPhones, so he’s not constitutionally anti-Apple.

For visitors to TPV who don’t pay attention to such things, Apple introduced a new MacBook Air yesterday, the first refresh of a popular entry-level Mac laptop in several years.

As with many things Apple, the price increased. For $1199 (up from $999) you get a 13-inch hi rez display (nice, but not large), an i5 processor (middling performance), 8 GB of memory (not much) and a 128 GB SSD (teeny, at least by PG standards). Its built-in camera (Skype, Facetime) is 720p (low rez lame, could impair your online image if you don’t buy an external webcam which will impair the sleek MacBook Air’s appearance).

One commentator on all things Apple opined that Apple’s overall strategy is to raise the Average Selling Price (ASP) of all of its products. The latest iteration of this strategy began with the new iPhones introduced a couple of months ago – $100 or so more expensive than last year’s comparable models. The MacBook Air continues the +ASP strategy.

Over the last several years, based on sales, Apple has evolved into a phone company rather than a computer company.

In terms of unit numbers, Apple sold about the same number of phones in late 2017/early 2018 as it did a year earlier. Increased iPhone revenue occurred during that period because of increased prices.

PG read somewhere that cellphone users in the US are keeping their existing phones for a longer period of time than they have in previous years.

Apple’s competitors in the smartphone and laptop/desktop computer markets have been adding features, but not increasing prices like Apple has.

So here’s the question (PG promises to get back to books shortly): Where’s the tipping point for Apple? When are its products going to cost more than they’re worth, technically and as a lifestyle statement?

“How did you go bankrupt?”
Two ways. Gradually, then suddenly.

~ Ernest Hemingway

You Don’t Own the Music, Movies or Ebooks You ‘Buy’ on Amazon or iTunes

From Two Cents:

When you purchase music, movies or books from Amazon or Apple’s iTunes store, you might be under the impression that that material is yours to enjoy forever; that’s how CDs and paper books work, after all. Why rent You’ve Got Mail for $3.99 every few months when you can “own” it and watch it whenever, forever, for $9.99?

But you’d be mistaken. Anything digital is temporary, even if you clicked “purchase” rather than “rent.” One unfortunate side effect of that you won’t experience with a physical book or record: Your purchases may just disappear if licensing agreements change.

. . . .

As outlined in the Twitter thread, Apple states the content provider of the movies in question removed them from the store. And that removed them from the user’s library, even though he had paid money to buy them. It’s easy to see why that’s frustrating (especially since Apple wasn’t willing to cough up a refund for the purchases he no longer has).

“This wouldn’t happen in the physical world. No one comes to your door and demands that you give back a book,” Aaron Perzanowski, a Case Western Reserve University law professor, who studied these digital purchases, told the LA Times in 2016. “But in the digital world, they can just go into your Kindle and take it.”

. . . .

For example, Amazon notes in the fine print that “Kindle Content is licensed, not sold, to you by the Content Provider. The Content Provider may include additional terms for use within its Kindle Content.” You also can’t sell or redistribute your ebooks, as you might with a physical copy. Apple’s fine printstates that the licensor “reserves the right to change, suspend, remove, disable or impose access restrictions or limits on any External Services at any time without notice or liability to you.”

. . . .

The best option? If you can, buy a physical copy of a movie or TV show that comes with a digital download. At least you’ll have a backup in case your digital copy disappears—assuming you still have a player to watch it on.

Link to the rest at Two Cents

When PG read the OP, one of the first things to pop into his mind was, “born yesterday”.

The author of the OP apparently discovered licensing of intellectual property shortly before writing the article and assumed at least a portion of the Lifehacker audience didn’t know much about the topic either.

“Born Yesterday” was the name of a Broadway play with two revivals plus three different movies.

Here’s a plot summary of the original Broadway play, Born Yesterday, which premiered in 1946, from Wikipedia:

An uncouth, corrupt rich junk dealer, Harry Brock, brings his showgirl mistress Billie Dawn with him to Washington, D.C. When Billie’s ignorance becomes a liability to Brock’s business dealings, he hires a journalist, Paul Verrall, to educate his girlfriend. In the process of learning, Billie Dawn realizes how corrupt Harry is and begins interfering with his plans to bribe a Congressman into passing legislation that would allow Brock’s business to make more money.

As a general proposition, the creator of intellectual property is its owner. Everybody else who wants to observe, read, listen to, etc., etc., that intellectual property is not the owner of the IP, but only has limited rights created by statute or license to do some things with their copy of the IP.

The owner of a physical book can’t make copies of the book and sell them to others because the book’s owner doesn’t own the IP depicted in the book. He/she is only the owner of the paper, ink and binding of that particular copy of the book. The copyright law (statutory and otherwise) which creates and defines the IP in the first place permits the book’s owner to do certain things with the physical book – read it, lend that copy to someone else, sell that copy to someone else, donate it to a library, deface the book, use excerpts or quotes from the book for various purposes, etc., etc.

The same basic rules, adapted to different media by which IP can be duplicated, transmitted, etc., govern copies of the IP in digital form. Just as making a copy of a book to give or sell to someone else is a violation of the creator’s IP rights, generally speaking, making a copy of a CD, a digital file, a photograph, or other protected medium incorporating such IP to give or sell to someone else is, absent permission from the creator or permission granted via copyright law, a violation of the creator’s IP rights.

Enough of this type of blathering.

The OP caused PG to wonder whether an author self-publishing with Amazon via KDP could make digital copies of his/her ebooks disappear from Kindles everywhere by unpublishing the ebook.

The short answer is probably not.

Here are some excerpts from the current Kindle Direct Publishing Terms and Conditions that describe what rights an author grants to Amazon:

Paragraph 3 Term and Termination (excerpt with PG highlights)

Following termination or suspension, we may fulfill any customer orders for your Books pending as of the date of termination or suspension, and we may continue to maintain digital copies of your Digital Books in order to provide continuing access to or re-downloads of your Digital Books, as well as digital copies of your Books to support customers who have purchased a Book prior to termination or suspension. . . . All rights to Digital Books acquired by customers will survive termination.

Paragraph 5.1.4 Book Withdrawal (excerpt with PG highlights)

All withdrawals of Books will apply prospectively only and not with respect to any customers who purchased the Books prior to the date of removal.

Paragraph 5.5 Grant of Rights (excerpt with PG highlights)

You grant to each Amazon party, throughout the term of this Agreement, a nonexclusive, irrevocable, right and license to print (on-demand and in anticipation of customer demand) and distribute Books, directly and through third-party distributors, in all formats you choose to make available through KDP by all distribution means available. This right includes, without limitation, the right to: (a) reproduce, index and store Books on one or more computer facilities, and reformat, convert and encode Books; (b) display, market, transmit, distribute, sell, license and otherwise make available all or any portion of Books through Amazon Properties (as defined below), for customers and prospective customers to download, access, copy and paste, print, annotate and/or view online and offline, including on portable devices; (c) permit customers to “store” Digital Books that they have purchased from us on servers (“Virtual Storage”) and to access and re-download such Digital Books from Virtual Storage from time to time both during and after the term of this Agreement

It appears to PG that Apple’s agreement with the owners of the copyrights to some iTunes movies did not include anything like the language in the KDP T&C’s and that the movie owners could force Apple to terminate rights of its customers who had paid for licenses to those movies.

It appears to PG that an author or publisher operating under the KDP T&C’s or something similar can’t force Amazon to terminate a customer’s rights to access an ebook they bought through Amazon. Amazon can decide to do so, but an author can’t make Amazon pull a digital move like iTunes did.

As usual, PG is a lawyer, but nothing PG posts on TPV is legal advice. If you would like to obtain legal advice, you need to hire an attorney to give you that advice, not read what a lawyer might post on a blog.

PG invites comments that agree or disagree with his half-baked (or fully-baked) blatherings on this topic.

Apple and Amazon Have the Most Annoying Ongoing Feud in Tech

From Gizmodo:

The world’s most valuable company and a business run by the richest man in modern history have been engaged in an irritating cold war for years, and they need to knock it off.

When I say that Amazon and Apple are engaged in tech’s most annoying feud, I don’t mean it’s the most important battle in tech—it’s not. From a business perspective, Amazon and Apple’s squabbles make a certain amount of sense, but that doesn’t mean the whole thing isn’t obnoxious. I’m referring to the little ways these two giant companies have tried to kneecap each other over the years just to slug their users instead.

Today, one glaring example of these obscenely rich companies giving everyone a headache is the fact that Amazon apps for iPhone won’t allow you to buy e-books or audiobooks from the apps themselves. You can browse Amazon’s Kindle or Shopping apps and have a comfortable mobile experience on iOS—everything is laid out nicely and is easily accessible—but as soon as you decide on the perfect e-book, you’re forced to go to a browser to finalize your purchase. This isn’t an issue on Android.

I have two Kindles, but I usually end up reading books using the Kindle app on my iPhone just because it’s always with me. The first time I realized I couldn’t purchase a book on the Kindle app, I moved over to the main Amazon app where I was foiled again. Eventually, I had to navigate to the Amazon site in my mobile browser and go through the whole process of logging in and checking out. A few months later, I tend to forget about this annoyance and repeat the process. This being 2018, I also tend to spend more time buying books than reading them because the world has broken my brain.

. . . .

Amazon doesn’t disclose how many Kindle devices it sells, but in 2013, research firm Consumer Intelligence Research Partners estimated 20.5 million Kindles were in use in the U.S., and those sales have declined while reading on a phone or tablet has become more common. Let’s just say 20.5 million people have spent five minutes bumbling with the checkout in a browser every year. That would mean people waste over 1.7 million hours in a year because of this problem. This isn’t so much a blood feud in which these companies are trying to mortally wound each other, it’s more like a competition to inflict paper cuts that only hurt users.

The primary reason for this spat is that Amazon apparently doesn’t want to cough up the 30-percent cut that Apple demands from in-app purchases, which includes e-books through Amazon’s apps.

Link to the rest at Gizmodo

PG buys lots of stuff from Amazon using his iPhone, but never realized that he couldn’t buy books on the device.

If Apple had put 10% of the effort Amazon expended in selling books, iBooks wouldn’t be an asterisk in the book business. After Steve Jobs and the Price-Fix Six got caught, Apple evidently didn’t want to get cooties by actively competing for the book business. Evidently, Apple doesn’t understand that it can compete in the book business without violating antitrust laws.

Apple’s Sticky Keyboard Triggers Offer For Free Repairs

From The Wall Street Journal:

Apple Inc. sought to head off customer complaints about defective keyboards on its latest MacBook models, saying it will offer free repairs for qualifying devices in the latest overture to users concerned about the performance of one of the company’s signature products.

The company on Friday said it would replace the keyboard or keys on some MacBook and MacBook Pro models released since 2015 if those devices had letters or characters that didn’t appear when pressed, felt sticky or didn’t respond consistently to typing. Prior to the offer, Apple was quoting customers with out-of-warranty keyboards a cost of $300 to $475, according to the company.

. . . .

The MacBook issues can be traced back to 2015 when Apple introduced a new keyboard system with a “butterfly mechanism” that it said was 40% thinner and more responsive. The butterfly system, which has been used in MacBook updates since then, uses V-shaped underpinnings rather than an X-shaped scissor connection, a change Apple says allows it to bounce back “with a crisp motion that you’ll appreciate the moment you start typing.”

However, customers have complained that dust and debris, such as crumbs of food, cause the keyboards to stop working on devices with starting prices ranging from $1,299 to $2,399.

Link to the rest at The Wall Street Journal

PG expects he is not the only writer (legal stuff and blogging) who has a close and intense relationship with his keyboard. He wishes he had found some type of software to record his cumulative keystrokes since starting with personal computers. It would be a very large number.

His first love was a clicky Northgate keyboard which, with the function keys on the right left side, was an ideal companion for WordPerfect software.

Alas, WordPerfect was acquired by Novell and promptly ruined.

After holding out for as long as possible with his doddering Northgate and increasingly outdated WP software, PG switched to MS Word and tried a variety of ergonomic keyboards before finding the Microsoft Ergonomic Keyboard. It was not love at first sight, but PG’s fingers and wrists came to appreciate this experience after a few days of interaction.

Remembering his earlier Northgate experience, PG has stashed a few MS Ergo keyboards in a closet so he can have a transition period on his schedule rather than Microsoft’s if things change again.

PG still wants to be able to talk to his computer and have really usable results appear on his screen and tries the latest dictation options from time to time, but hasn’t found that nirvana yet.

 

 

How Apps, Music and More Can Buoy Apple Beyond the iPhone

From The Wall Street Journal:

Contrary to popular belief, Apple isn’t a hardware company. Nor is it a software company. Apple is, fundamentally, an ecosystem company—one that, with the help of millions of developers world-wide, has created a vast web of software and services that run on its 1.3 billion active devices.

Apple revenue has been dominated by the iPhone, but thanks to the services side of its business, the company is proving to be more durable than any single iPhone generation.

The trouble is, as Apple increasingly emphasizes device prices over volumes for revenue gains, it confronts a fundamental tension—between charging people more for hardware and, simultaneously, more for services to access through it.

The former puts profit margins ahead of prevalence, while the latter emphasizes maximizing the number of gadgets in customers’ hands.

. . . .

Just as Chief Executive Tim Cook predicted in 2016, Apple has increased revenue from its intangible services into a Fortune 100-size business. In the 2017 calendar year, Apple reported $31.15 billion in revenue from services including Apple’s music (both downloads and subscriptions), video sales and rentals, books, apps (including in-app purchases, subscriptions and advertising sold by Apple), iCloud storage and money Google pays Apple to be the iPhone’s default search engine.

Another way to think of it: Apple is on track to take in about $26 a year in revenue from each of its 1.3 billion active devices.

. . . .

Mr. Cook says by 2020 he wants Apple’s services revenue to double from its 2016 level. Between now and then, if revenue from iPhone sales holds steady or declines, which would be a natural consequence of people holding on to their devices longer, then growth in services could become the primary driver of Apple’s overall revenue growth—or even the one thing that keeps it from declining. Services, and the millions of developers and thousands of companies behind them, are the reason the iPhone is so sticky, says Horace Dediu, an Apple analyst.

. . . .

When iTunes was king, the bulk of Apple’s services revenue was music and movie downloads; with the arrival of the iPhone, it soon became apps. As Apple rolls out more gadgets, its services revenue will continue to diversify.

. . . .

Apple already offers an upgrade program, where users can pay off an iPhone after 24 months or trade it for a new one after a year. Imagine a service where you simply subscribe to a regularly updated iPhone, Apple Watch, AirPods or some subset of these devices. Mr. Dediu estimates that for every Mac or iPhone, the average Apple customer spends on average a dollar a day on hardware plus services.

Link to the rest at The Wall Street Journal 

Thoughts on Apple Books

From Digital Book World:

The news of Apple rebranding the iBooks Store to Apple Books, and preparing a fresh new entry in the digital publishing landscape, is welcome.

Apple’s bookstore, much like many other parts of the company these days, has suffered from neglect. The store, as it is currently, evokes a vision of tumbleweed blowing through an empty desert: nobody’s home, nobody cares, and it’s quite clear there is no larger strategy present.

Apple did the right thing by going outside the company and hiring Kashif Zafar, by all appearances an accomplished publishing business mind, originating out of an engineering background. That is, frankly, exactly what Apple needs, as their digital book store needs to be re-engineered from the ground up.

. . . .

1) Deploy iBooks Author anew

Apple, believe it or not, comes right out of the gate with one strong competitive advantage: they have a relatively-easy-to-use, vertically-integrated, HTML5-based authoring tool that has grown an international user base since it was introduced in 2012.

When iBooks Author was first released, it was ahead of its time. And like everything that is ahead of its time, it was poorly understood and not nearly as well utilized as it should have been.

Fast forward six years later, and digital book readers are clamoring for new types of experiences.

The biggest problem with iBooks Author has always been the mediocrity of the iBooks Store. Publishers producing phenomenal content using iBooks Author have met poor sales, thanks to poor searchability and poor discoverability, over and over and over again.

. . . .

3) Apple Books needs to match Amazon on key criteria

The Apple Books Store needs to be as searchable as Amazon. Historically, the search function within the iBooks Store has been flat-out broken.

The Apple Books Store needs to be creative in how it makes books discoverable.  Undoubtedly, this will be a combination of algorithmic competency and human curation.

With both searchability and discoverability, Siri needs to play a role as Apple ramps up their voice-first computing efforts. Intelligent voice integration needs to be part of the fabric of the Apple Books experience.

The Apple Books Store needs to be author and publisher-friendly. This means giving authors and publishers deep flexibility with pricing (including bundling / discounting), deep flexibility in how their books are represented within the store (control over author-specific landing pages would be a good place to start), and deep flexibility in marketing (including ability to have hosted video book trailers, deep control over sample content, and more).

There is plenty of opportunity for Apple to compete here. Every single product page on Amazon.com looks precisely the same way, in exactly the same format. Amazon’s practical blandness can be bested by a highly-functional, colorful and vibrant, individualistic approach that holds serve in key areas while innovating beyond what Amazon offers in others.

. . . .

5) Go cross-platform anywhere and everywhere

Apple’s walled-garden approach is not compatible with the interests of readers, who want to be able to read their purchased books on whatever device they choose.

. . . .

The publishing industry – the ENTIRE publishing industry, which goes far, far beyond just traditional publishers obviously – desperately needs a viable competitor to Amazon.

Link to the rest at Digital Book World

PG says competition is always good.

Apple used to be a fierce competitor and achieved dominant success in the iPhone/iPad markets.

Apple also did a phenomenal job of linking its products to a cool personal style/lifestyle image. You might be working a temp job for minimum wage and living in a sub-basement closet, but when you hit the street, your iPhone instantly improved your image so much you took a selfie.

Because of high product quality and that image thing, Apple managed to price its products higher than its competitors and still maintain a dominant sales position.

In some categories.

In personal computers, Apple had a 7% share worldwide in 2016 compared to Lenovo at 21%, HP at 20% and Dell at 16%. Apple makes great computer hardware, but it’s dominant only in some niche markets in a Windows world. iPhone and Windows desktop/laptop is a typical tech combination.

For a growing number of small web startups, Chromebooks are the thing for everybody who is not a programmer. Marketing doesn’t need Macs to run the blog, build a presence on Twitter and Instagram and check out what competitors are doing online.

Apple is really a phone company. It doesn’t dominate any other significant markets. (And Apple is definitely not dominant in major Asian phone markets.)

PG isn’t the only one who suspects that Steve Jobs was the head magician who made all the sub-magicians at Apple work right and not do ordinary things.

The most important post-Jobs product launch happened with the iPhoneX in September.

Apple-watchers more expert than PG think the Apple magic that usually accompanies a major iPhone launch just wasn’t there. Apple fanboys and fangirls all stood in line and jumped in right away, but the far bigger wave that usually follows may not have been so large. Apple’s first post-iPhoneX earnings report is anxiously awaited.

Back to the main point, PG thinks the ebookstore ship has sailed – from Seattle. As the old saying goes, you only get one chance to make a good first impression and Apple blew that chance with its first store. From an author standpoint, PG marked it as undesirable right after its opening when it appeared that Apple hardware was necessary to prepare books for the store.

The Amazon bookstore is 100% platform agnostic and Amazon doesn’t care if you access it from an iPhone or a homebrew Linux computer. Amazon works hard to create a single great customer experience without spending any time or money on enhanced Apple-only features.

Plus Amazon has a huge cache of data about how to sell books and what the world’s largest collection of online customers buys – both inside and outside of the bookstore. In the US, in France, in Canada, in Scotland, in Chicago, in Dayton, in Boulder, in Bel Air, in Steamboat Springs, in Rocky Comfort and Rhyolite.

PG doesn’t see many people talk about the huge value for prospective customers that lives in Amazon’s product reviews, including the millions of book reviews it has collected.

It’s easy to make snide comments about the intelligence, education and motivation of some of the reviewers, but most book buyers have developed a pretty good filter to distinguish quality Amazon reviews from those that originated in a packed room in India.

PG suggests that large numbers of reviews and the metadata Amazon presents when a book has received a large number of reviews – Top Customer Reviews, Most Recent Customer Reviews, Also Boughts and Rated by Customers Interested In, which shows how the customers interested in specific topics rated the book PG is considering, are valuable assets for shoppers of all tastes.

Even if Apple copies all of Amazon’s bookstore features, the lack of this giant pile of data from previous buyers will produce an inferior experience.

As far as indie authors are concerned, the key indicator for PG will be whether Apple is willing to meet or beat Amazon royalty rates.

He noted that the latest (and last?) version of the Nook Store has a top indie royalty rate of 65%. That the big brains at Barnes & Noble couldn’t bring themselves to go all the way to 70% is one of the many reasons why the company is circling the drain.

When the big brains at Apple hit speed dial to call PG about their new bookstore, he’s going to say, “75%. 80% for bestsellers.”

The Antitrust Case Against Facebook, Google, Amazon and Apple

From The Wall Street Journal:

Standard Oil and Co. and American Telephone and Telegraph Co. were the technological titans of their day, commanding more than 80% of their markets.

Today’s tech giants are just as dominant: In the U.S., Alphabet Inc.’s Google drives 89% of internet search; 95% of young adults on the internet use a Facebook Inc. product; and Amazon.com Inc. now accounts for 75% of electronic book sales. Those firms that aren’t monopolists are duopolists: Google and Facebook absorbed 63% of online ad spending last year; Google and Apple Inc. provide 99% of mobile phone operating systems; while Apple and Microsoft Corp. supply 95% of desktop operating systems.

A growing number of critics think these tech giants need to be broken up or regulated as Standard Oil and AT&T once were. Their alleged sins run the gamut from disseminating fake news and fostering addiction to laying waste to small towns’ shopping districts. But antitrust regulators have a narrow test: Does their size leave consumers worse off?

By that standard, there isn’t a clear case for going after big tech—at least for now. They are driving down prices and rolling out new and often improved products and services every week.

That may not be true in the future: if market dominance means fewer competitors and less innovation, consumers will be worse off than if those companies had been restrained. “The impact on innovation can be the most important competitive effect” in an antitrust case, says Fiona Scott Morton, a Yale University economist who served in the Justice Department’s antitrust division under Barack Obama.

. . . .

“Forty percent of Google search is local,” says Luther Lowe, the company’s head of public policy. “There should be hundreds of Yelps. There’s not. No one is pitching investors to build a service that relies on discovery through Facebook or Google to grow, because venture capitalists think it’s a poor bet.”

There are key differences between today’s tech giants and monopolists of previous eras. Standard Oil and AT&T used trusts, regulations and patents to keep out or co-opt competitors. They were respected but unloved. By contrast, Google and Facebook give away their main product, while Amazon undercuts traditional retailers so aggressively it may be holding down inflation. None enjoys a government-sanctioned monopoly; all invest prodigiously in new products. Alphabet plows 16% of revenue back into research and development; for Facebook it’s 21%—ratios far higher than other companies. All are among the public’s most loved brands, according to polls by Morning Consult.

Yet there are also important parallels. The monopolies of old and of today were built on proprietary technology and physical networks that drove down costs while locking in customers, erecting formidable barriers to entry. Just as Standard Oil and AT&T were once critical to the nation’s economic infrastructure, today’s tech giants are gatekeepers to the internet economy. If they’re imposing a cost, it may not be what customers pay but the products they never see.

. . . .

The story of AT&T is similar. It owed its early growth and dominant market position to Alexander Graham Bell’s 1876 patent for the telephone. After the related patents expired in the 1890s, new exchanges sprung up in countless cities to compete.

Competition was a powerful prod to innovation: Independent companies, by installing twisted copper lines and automatic switching, forced AT&T to do the same. But AT&T, like today’s tech giants, had “network effects” on its side.

“Just like people joined Facebook because everyone else was on Facebook, the biggest competitive advantage AT&T had was that it was interconnected,” says Milton Mueller, a professor at the Georgia Institute of Technology who has studied the history of technology policy.

Early in the 20th century, AT&T began buying up local competitors and refusing to connect independent exchanges to its long-distance lines, arousing antitrust complaints. By the 1920s, it was allowed to become a monopoly in exchange for universal service in the communities it served. By 1939, the company carried more than 90% of calls.

Though AT&T’s research unit, Bell Labs, became synonymous with groundbreaking discoveries, in telephone innovation AT&T was a laggard. To protect its own lucrative equipment business it prohibited innovative devices such as the Hush-a-Phone, which kept others from overhearing calls, and the Carterphone, which patched calls over radio airwaves, from connecting to its network.

After AT&T was broken up into separate local and long-distance companies in 1982, telecommunication innovation blossomed, spreading to digital switching, fiber optics, cellphones—and the internet.

Link to the rest at The Wall Street Journal

Apple eBooks Antitrust Settlement

PG received the following this morning. He suspects he’s not the only one:

Your Credit from the Apple eBooks Antitrust Settlement is ready to use

You now have a credit of $4.00 in your Amazon account. Apple Inc. (Apple) funded this credit to settle antitrust lawsuits brought by State Attorneys General and Class Plaintiffs about the price of electronic books (eBooks). This new credit is in addition to any previous credit you received from the settlement.

. . . .

In order to spend your credit, please visit the Kindle bookstore or Amazon.com. Your credit is valid for six months and will expire on April 20, 2018, by order of the Court. If you have not used it, we will remind you of your credit before it expires.

If you have any questions about your credit, please visit http://www.amazon.com/applebooksettlement or contact Amazon customer service.

Publishers Escape Liability in E-Book Antitrust Case

From FindLaw:

A federal appeals court said book publishers violated antitrust laws by conspiring to change prices for ebooks, but they did not injure the retailers who sued them over it.

In Diesel eBooks v. Simon & Schuster, the U.S. Second Circuit Court of Appeals said the retailers could not prove by the publishers caused their losses. The decision also spared further embarrassment for Apple, which was forced to pay a record fine in a related matter.

“We have ruled that the publisher Defendants and Apple did indeed conspire
unlawfully to restrain trade in violation of the Sherman Act,” the judges said, referencing
United States v. Apple. However, the court said the conspiracy did not cause the plaintiffs any damage in this case.

. . . .

In the ebook infancy, the industry operated largely on a wholesale business model. Publishers would sell ebooks to retailers with a suggested price, but the retailers set the final price.

The major publishers unilaterally changed the model, however, requiring retailers to sell at the publisher’s price. The publisher then paid the e-tailer commissions for sales.

In the wake of the change, Diesel went out of business.

. . . .

The appeals court had already heard the story, when the federal government and 33 states sued Apple and six major publishers. The trial court found they violated the Sherman Act.

“Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices,” U.S. District Judge Denise Cote wrote at the time. “Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.”

Link to the rest at FindLaw

Are the tech giants too big to be good partners for book publishing?

From veteran publishing consultant Mike Shatzkin:

An online discussion forum that includes publishers and librarians and tech people usually sends me several emails a day. About 10 days ago, a conversation evolved about Google Book Search and the Google Library Project, two initiatives by the search giant that were initiated in the early part of the last decade.

Because both programs essentially gave Google a trove of book-published content for full text search, there was a wariness among the publishing community about them when they started. In time, publishers (through the AAP) sued Google and the course of the lawsuit ultimately led to a sharp curtailment of Google’s ability to just do the scanning. After a while, it appears the reservoir of interest at Google for the project, which started as more of a “service to humanity” idea than a profitable one, just evaporated. The scans that Google had already done became part of the HathiTrust repository of content, an important research and scholarship tool in the non-trade world without any recognition or impact on the trade world at all.

. . . .

And, of course, Google is the single most powerful source of “discovery” and many in publishing wonder if books overall would have benefited from Google being more “knowledgeable” about what is inside of them.

So, to this day, years after the litigation and the scanning program have concluded, there is a division of opinion in the publishing community. Some see Google as a bully and a villain, trying to make its own rules to benefit from publishers’ content and crippling the value of copyright. Others focus on the lost opportunity and believe publishers would actually have more valuable intellectual property (more valuable copyrights!) today if they’d just allowed the Google programs to develop and flourish.

. . . .

In the course of the discussion, a very knowledgeable and experienced veteran of publishing across education, professional, and trade offered the comment that “Google is a terrible partner.” I asked him (offline from the group discussion; he’s a friend) to amplify that.

My points of context for Google weren’t in publishing; they were in tech. My own most extensive experiences with the big three tech companies that publishers dealt with — Amazon, Apple, and Google — was working out their participation at publishing conferences.

. . . .

What I saw was that Apple was the most uptight; it was hard to get speakers because messaging was so tightly controlled by upper management.

Amazon would sometimes be very agreeable, but primarily when they had an agenda: some program they wanted to get across or some point they wanted to make. So they were often cooperative, but very much on their terms to put across their message du jour. In general, they wouldn’t do panels or Q&As. They needed to control the conversation and skillfully avoided being pushed to publicly discuss anything they didn’t want to talk about. But they were often available and always interesting, and unlike Apple (in my experience), would engage with you honestly about their agenda.

. . . .

Google was, in my experience, by far the most open and accessible of the three companies. You could tell them you wanted speakers or panelists to cover one subject or another and you’d get directed to people who could help you. And Google employed a pretty fair number of ex-publishing people who were conversant about issues from a perspective that publishers could relate to.

. . . .

What my friend said in response to my inquiry, in which I had only mentioned Google, was, “Google, Apple, and Amazon are all bad partners. Ingram, Baker & Taylor, and Firebrand are good partners.”

So much for my contextual frame.

But grouping the three to me made the point that my context was what mattered. Ingram, Baker & Taylor, and Firebrand all make their living in the book business. Google, Apple, and Amazon have a financial stake in the book business that amounts to a small rounding error to their overall financial performance.

. . . .

For the entire life of the book business until about fifteen minutes ago, it was very much a free-standing industry. The only larger-than-the-industry enterprises it had to deal with were the Post Office and United Parcel Service. Our authors, designers, typesetters, printers, and, most important of all, customers to which we shipped directly (the wholesalers and retailers and libraries) were part of the publishers’ world. They depended on the publishers as much as the publishers depended on them.

Amazon was the first piece of evidence — and still the most important piece of evidence — that the old world has disappeared.  . . . . They sell more than half of the books for most publishers, but all the books they sell probably amount to less than 5 percent of their total margin. And while Penguin Random House may be in the neighborhood of half the consumer book sales overall, they wouldn’t amount to nearly that big a percentage of Amazon’s book sales because Amazon gets a disproportionate share of professional and other niche markets and thus from publishers who don’t compete at all with PRH in the consumer market.

And because Amazon has very intentionally created a whole massive pool of consumer books that nobody else has, through their own publishing and enabling independent authors.

Link to the rest at The Shatzkin Files

PG has had direct business/legal dealings and negotiations with Apple and Amazon over the last 15 years or so. For context, he has also had business negotiations with Microsoft, Oracle, Hewlett-Packard and Intel in the tech world plus every major investment bank in New York (Goldman Sachs, Morgan Stanley, etc., etc.), most of the large accounting firms plus Disney, American Express and a bunch of other big companies.

To be clear, this doesn’t mean PG knows everything about negotiating intellectual property partnerships and other deals with large organizations, but he does know some things about that subject.

PG definitely has not represented any large publishers in their dealings with large tech companies. He has, however, represented a lot of authors in their dealings with large publishers.

Speaking generally, large publishers are not cut out to be good partners for tech companies.

Publishers are simply too rigid in their business vision and very much focused on the short term (which is strange for organizations that license copyrights, which extend far into the future).

This short term outlook is substantially affected by the fact that the Big Five publishers are all owned and controlled by other and larger media conglomerates. Four of the Big Five are owned by large European publishing corporations that are not known for their commitment to innovation and could not be described as tech-savvy in any sense. The fifth Big Five publisher, Simon & Schuster, is owned by CBS.

Each of these media conglomerates is heavily focused on this quarter’s and this year’s income, expenses and profits. They’re not what anyone would call forward-looking or focused on the long term. If they think about the long term at all, they’re convinced it will not be much different than last quarter.

(PG worked for a major subsidiary of a very, very large international media conglomerate for three unhappy years and knows that of which he speaks.)

This means that if Google sends someone to talk to the President of a Big Five publisher, Google is talking to a middle-manager in a much larger business organization. The Big Five President can do pretty much whatever he/she wants to do with Barnes & Noble and Ingram (as long as it doesn’t have an adverse impact on profits), but cutting a strategic deal with Google is way, way out of his/her job description.

Organizations like Google, Apple and Amazon quickly become frustrated with organizations that are not able to move rapidly.

iPad vs Mac: Episode 7

From Monday Note:

With the sophisticated user interface and powerful system apps afforded by iOS 11, the iPad feels like it’s finally reaching maturity. But what does the device’s clarified identity say about the Mac’s future?

The iPad is a strange animal, a Chimera that has had trouble finding its place in an Aristotelian classification of computing creatures. Is it a smaller PC, a bigger phone, something else? During the January 2010 iPad unveiling, Steve Jobs briefly departed from his usual razor-edged storytelling to admit ambiguity about the identity of his latest creation:

“[iPad] has to find its place between the iPhone and the Mac”

Jobs’ hesitancy proved to be insightful. In fact, exceptionally so: Seven years later we’re still debating what the iPad actually is. The meteoric rise followed by a three year slump didn’t help clarify the iPad’s place in the world.

. . . .

Tim Cook has long professed his faith in the iPad’s future:

“The iPad is the clearest expression of our vision of the future of personal computing.”

Does the iPad’s rebound prove him right? Does Cook’s proclamation mean that the iPad is destined to replace the Mac? This question — perhaps I should say ‘agitation’ — was raised when the iPad came out and continues to this day.

In the Socratic spirit I referred to in last week’s Monday Note, I’ll take both sides of the argument…

It’s abundantly clear that the iPad will continue to replace the Mac.

. . . .

By offering flexible user interface choices — touch only, Smart Keyboard, Pencil — iPad Pros will not only compete with the Mac, they’ll surpass the laptop.

The iPad also wins the price war. Prices range from $329 for an entry-level 9.7” iPad to $1099 for a 512Gb 12” iPad Pro. Add a keyboard and a Pencil to a fully decked 10.5” iPad Pro — it has a better screen than its larger cousin — and you’ll top out at $1212.

. . . .

Although the Mac still brings in more money-per-device — the Mac’s ASP of $1,303 is three times that of the iPad’s $435 — the company’s mobile devices make it up in volume. Last quarter, Apple sold more than 55M iOS devices (iPhones and iPads), compared to 4.3M Macs.

. . . .

As it becomes a more general-purpose machine, the iPad will continue to steal uses and users from the Mac. As often stated by its execs, Apple isn’t worried about cannibalization. More important, the iPad’s ever-improving UI and functionality will wrest users from its competitors.

This leaves the Mac line doing nicely for two disconnected reasons: High-end “truck-like” applications, and the estimable population of users who, as a matter of personal preference, opt for the traditional “horizontal-hands” UI.

Link to the rest at Monday Note

With due respect to all his Mac friends, PG says Apple is mostly a phone company. A quick check discloses that the iPhone has represented over 50% of Apple’s revenue for almost five years, nearing 70% during several quarters during that time period. The iPad and Mac aren’t what make Apple the company it is today. If the iPhone misses a beat, Apple will shrink quite rapidly.

PG started in DOS when dinosaurs roamed the earth, then transitioned to Windows. A few years ago, with the help of one of PG’s Apple-bedazzled offspring, he bought a top end Mac laptop with appropriate software, but, despite using it as his principal computer for a few months, the magic just wasn’t there for him.

One of the problems was finding Apple versions for the zillion little non-mainstream software programs PG has built into his daily workflow and which either save him lots of time or provide extra security for the confidential information he has on his computer.

An example? Autohotkey , an open-source macro program.

PG’s use of macros dates back to WordPerfect, a perfectly lovely word processing program (far better than MS Word is, even today, in PG’s stunningly humble opinion) that was acquired by Novell, another essentially extinct company, and died a quick death thereafter. (PG knows Corel still produces a product called WordPerfect, but it bears as much resemblance to the real thing as a dinosaur skeleton does to a living velociraptor.)

PG had over 150 WordPerfect keyboard macros that he used in his daily work. With them, he could move like a rocket in his law office. In some cases, he could literally finish a document for which lawyers typically charged the equivalent of a four-figure fee in today’s dollars before the client finished writing a check to give to PG’s paralegal to pay for the document.

Any legal documents PG produced on a frequent basis were macro’d to the max.

He practices a much different type of law today than he did in that day, but still uses Autohotkey keyboard macros for his legal work, his blogging and to make things a bit zippier in the Lair o’ PG. Examples of macros used frequently on TPV are ltr – “Link to the rest at”, ttt “and thanks to ______ for the tip.”, tpv “The Passive Voice” and lwsj “Link to the rest at The Wall Street Journal (Link may expire)”.

One of the earliest macros PG remembers reading about was used by a prolific author who used an ancient word processing program called WordStar. The macro inserted a period, then a closed quotation mark, than an Enter key, then a tab for the next paragraph, then an open quotation mark. He used it for finishing one paragraph of dialogue and beginning the next:

words, words, words[.”

“]Words words words

If you type at 65 words per minute, you are using approximately 20,000 keystrokes per hour. If you can make some of those keystrokes instantly produce much more than a single character each, your productivity could increase.

Amazon’s Alexa Has A Data Dilemma: Be More Like Apple Or Google?

From Fast Company:

Devices like Amazon Echo could someday turn into a treasure trove for developers that make voice assistant skills, but first companies have to figure out where they draw the line when it comes to weighing data sharing against consumer privacy.

Now that dilemma is heating up: Citing three unnamed sources, The Information reported this week that Amazon is considering whether to provide full conversation transcripts to Alexa developers. This would be a major change from Amazon’s current policy in which the company only provides basic information—such as the total number of users, the average number of actions they’ve performed, and rates of success or failure for voice commands. Amazon declined to comment to The Information regarding the claims, but the change wouldn’t be unprecedented. Google’s voice assistant platform already provides full transcripts to developers.

The potential move by Amazon underscores how it is caught between two worlds with its Alexa assistant, especially in regards to privacy. By keeping transcripts to itself, Amazon can better protect against the misuse of its customers’ data and avoid concerns about eavesdropping. But because Alexa already gives developers the freedom to build virtually any kind of voice skill, their inability to see what customers are saying becomes a major burden.

. . . .

With Google Assistant, developers can view a transcript for any conversation with their particular skill. Uber, for example, can look at all recorded utterances from the moment you ask for a car until the ride is confirmed. (It can’t, however, see what you’ve said to other apps and services.) Google’s own documentation confirms this, noting that developers can request “keyboard input or spoken input from end user” during a conversation.

For developers, this data can be of immense utility. It allows them to find out if users are commonly speaking in the wrong syntax, or asking to do things that the developer’s voice skill doesn’t support.

. . . .

In terms of sharing data with developers, Apple’s Siri voice assistant is on the opposite side of the spectrum from Google. Developers who work with SiriKit get no information about usage from Apple, not even for basic things like how many people use voice commands to access an app, or which voice commands are most commonly used.

. . . .

But keep in mind that Siri’s approach to third-party development is entirely different from that of Google and Amazon. Instead of letting developers build any kind of voice application, Apple only supports third-party voice commands in a handful of specific domains, such as photo search, workouts, ride hailing, and messaging. And instead of letting those apps drive the conversation, Apple controls the back-and-forth itself. The apps merely provide the data and some optional on-screen information.

Because these apps don’t communicate with users directly, there’s no need for them to have conversation transcripts in the first place. Instead, Apple can look at what users are trying to accomplish and use that data to expand Siri on its own.

The downside to this approach is that Siri just isn’t as useful as other virtual assistants.

Link to the rest at Fast Company 

If PG lived in China, he would be inclined not to use Alexa.

Dear Apple, Please Don’t Give Up on iBooks in iOS 11

From The Mac Observer:

Here are some ideas I have to improve iBooks in iOS 11, because I want to see it succeed. As an avid reader, I was disappointed that there was nary a mention of iBooks at WWDC 2017. I’m not just talking about the app, I’m referring to Apple’s eBook ecosystem as a whole. I think improvements can be made in both areas, and that Apple could give iBooks a bigger presence in physical Apple stores.

. . . .

When it comes to books—or any type of content—the two most important features for people are discovery and sharing. The App Store is getting a major redesign in iOS 11, one designed to make it easier to discover new apps and games. I’d love to see Apple bring the same attention to iBooks. A new UI could feature eBooks and audiobooks in new ways and make it easier for readers to figure out what to read next.

. . . .

Now, to the iBookstore ecosystem. Apple should make it easier to self-publish on iBooks. I’ve never personally used the iBooks Author app, but the consensus among many users is that it produces gorgeous books, but is difficult to use. Apple should also take a cue from Amazon and make iBooks the premier platform for self-publishing. While it’s possible to self-publish on iBooks today, the process is not as easy as it is on Amazon Kindle.

. . . .

Currently, iBooks has a “More Books You Might Like” section under the Featured tab, but the suggestions are awful and I almost never browse through them. Using machine learning, Apple could scan my iBooks purchases and recommend books based on genre, popularity or other factors. Apple may already be doing this—or something like it—but recommendations on iBooks needs to improve.

Link to the rest at The Mac Observer

Amazon Has a Few Things to Say About Apple’s HomePod

From PC Magazine:

Apple made its long-awaited debut into the smart home space at WWDC this week, announcing its $349 Apple HomePod connected speaker with Siri. At the Wired Business Conference today in New York City, the exec behind Alexa—Amazon’s SVP of Devices David Limp—explained how he thinks Apple’s connected speaker fits into the landscape.

There’s plenty of talk about pitting the features, pricing, and specs of Apple HomePod, Amazon Echo, and Google Home against one another. For Limp, the first thing that stands out about the HomePod is its price.

“It’s definitely a premium product at $350,” said Limp. “From our standpoint, it’s a little different philosophically from how we’re looking at Echo. We see these endpoints for assistants in every room. One of the reasons we came out with the Echo Dot was getting the price to under $50. If you think about putting an Echo in every room times a two-room apartment or an eight-room home…compared to $350 for HomePod you could have eight Dots with our three-pack.”

. . . .

“The second thing we learned [aside from pricing] is that people’s taste in speakers are unbelievably personal,” Limp argued. “It’s like cars. What you like in terms of the bass response, someone else may hate because they listen to classical music and focus on the treble.

“You might like Bose, they might like Sonos,” he continued. “Dot and Echo through Bluetooth and Audio Out can connect to other speakers. A Dot with the speaker of your choice seems like the right path for consumers. It’ll be interesting to see if Apple comes to the same conclusion.”

. . . .

“Our hope and our first efforts are to open up the environment with skills to augment Alexa. Over time you could imagine saying something like ‘Hey Alexa, ask Siri this.'”

Limp said that’s a very real use case, and that the differences between Siri, Cortana, and Google Assistant ultimately shouldn’t stop that kind of integration in the future. Amazon’s stance is that it’s open to integrations and making sure its software works with anyone’s hardware.

Link to the rest at PC Magazine

PG says he’s using Echo and Echo Dot in different ways around Casa PG since he bought more than one. The more places where he can access Alexa, the more he talks to Alexa. (Like asking Alexa when the next Chicago Cubs game is.)

How Apple Sees the Near Future

From The Atlantic:

Without once saying the words “artificial intelligence,” a stream of Apple executives described a vision of the near future in which Siri, the company’s AI avatar, stitches together the company’s many hardware products.

And they introduced a new—and widely anticipated—entry into their lineup: a $349 cylindrical voice-controlled speaker they call HomePod.

After a strangely dystopian video in which Apple’s apps go away and the world plunges into post-apocalyptic violence, Apple CEO Tim Cook led off the company’s keynote at its big gathering for coders, the Worldwide Developers Conference, in San Jose.

The WWDC keynote tends to be a place where Apple showcases all the little incremental “refinements” they are making to their software and hardware. This year, however, there was a thread that ran through many presentations: Siri.

Through the demonstrations and talks, Apple’s vision for Siri became clearer: It is an all-purpose stand-in for predictive, helpful intelligence across all Apple devices. “Siri isn’t just a voice assistant,” said Craig Federighi, Apple’s senior VP of software engineering. “With Siri intelligence, it understands context. It understands your interests. It understands how you use your device. It understands what you want next.”

For example, Federighi said, imagine you’re planning a trip to Iceland. Siri might suggest stories about Iceland within the news app or even suggest the spelling for a difficult Icelandic place name. (Perhaps she’ll suggest some Björk for your HomePod, even.)

Link to the rest at The Atlantic

Apple Is Manufacturing a Siri Speaker to Outdo Google and Amazon

From Bloomberg:

 Apple Inc. is already in your pocket, on your desk and underneath your television. Soon, a device embossed with “Designed by Apple in California” may be on your nightstand or kitchen counter as well.

The iPhone-maker has started manufacturing a long-in-the-works Siri-controlled smart speaker, according to people familiar with the matter. Apple could debut the speaker as soon as its annual developer conference in June, but the device will not be ready to ship until later in the year, the people said.

The device will differ from Amazon.com Inc.’s Echo and Alphabet Inc.’s Google Homespeakers by offering virtual surround sound technology and deep integration with Apple’s product lineup, said the people, who requested anonymity to discuss products that aren’t yet public.

Introducing a speaker would serve two main purposes: providing a hub to automate appliances and lights via Apple’s HomeKit system, and establishing a bulwark inside the home to lock customers more tightly into Apple’s network of services. That would help combat the competitive threat from Google’s and Amazon’s connected speakers: the Home and Echo mostly don’t support services from Apple. Without compatible hardware, users may be more likely to opt for the Echo or Home, and therefore use streaming music offerings such as Spotify, Amazon Prime Music or Google Play rather than Apple Music.

Link to the rest at Bloomberg

PG says competition keeps competitors sharp and is great for consumers.

Tech’s Frightful Five: They’ve Got Us

From The New York Times:

A few weeks ago, I bought a new television. When the whole process was over, I realized something incredible: To navigate all of the niggling details surrounding this one commercial transaction — figuring out what to buy, which accessories I needed, how and where to install it, and whom to hire to do so — I had dealt with only a single ubiquitous corporation: Amazon.

It wasn’t just the TV. As I began combing through other recent household decisions, I found that in 2016, nearly 10 percent of my household’s commercial transactions flowed through the Seattle retailer, more by far than any other company my family dealt with. What’s more, with its Echos, Fire TV devices, audiobooks, movies and TV shows, Amazon has become, for my family, more than a mere store. It is my confessor, my keeper of lists, a provider of food and culture, an entertainer and educator and handmaiden to my children.

. . . .

This is the most glaring and underappreciated fact of internet-age capitalism: We are, all of us, in inescapable thrall to one of the handful of American technology companies that now dominate much of the global economy. I speak, of course, of my old friends the Frightful Five: Amazon, Apple, Facebook, Microsoft and Alphabet, the parent company of Google.

The five are among the most valuable companies on the planet, collectively worth trillions.

. . . .

 [L]ast week I came up with a fun game: If an evil, tech-phobic monarch forced you to abandon each of the Frightful Five, in which order would you do so, and how much would your life deteriorate as a result?

. . . .

When I went through the thought experiment, I found that dropping the first couple of tech giants was pretty easy — but after that the process became progressively more unbearable. For me, Facebook was the first to go. I tend to socialize online using Twitter, Apple’s messaging system, and Slack, the office-chat app, so losing Mark Zuckerberg’s popular service (and its subsidiaries, Instagram, WhatsApp and Messenger) was not such a big deal.

Next, for me, was Microsoft, which I found slightly more difficult to quit. I don’t normally use any Windows devices, but Microsoft’s word-processing program, Word, is an essential tool for me, and I’d hate to lose it.

In third place, full of regrets: Apple. There’s nothing I use more than my iPhone, and close behind are my MacBook and iMac 5K, which may be the best computer I’ve ever owned. Abandoning Apple would prompt deep and truly annoying rearrangements in my life, including braving Samsung’s bad software. But I could do it, grudgingly.

Link to the rest at The New York Times

Apple cuts App Store affiliate commission from 7% to 2.5%

From TechCrunch:

Apple just sent an email to members of the App Store affiliate program saying that App Store commissions will be reduced from 7 percent to 2.5 percent on May 1st — that’s a 64 percent cut. While this change will have no effect on App Store users, it has some implications on the App Store ecosystem.

Many websites from the Apple community link to App Store downloads with a unique referral ID in the link. When customers buy apps or in-app purchases using this link, Apple gives back a small cut to its affiliate partner. Developers still get 70 percent of the sale while partners get incentivized.

. . . .

For a $1 app, this affiliate commission is just a few cents. But it can add up if you’ve built a serious audience. And I know this because I’ve experienced this myself.

. . . .

Our little website got something like 15,000 readers per month. And we made hundreds of euros in the first few months with App Store commissions and a Google ad near the bottom of the page. It wasn’t anything groundbreaking, but it was a fun little way to make some money as a kid who didn’t want to work during summer break.

. . . .

If Apple drastically cuts this revenue stream, the company could end up alienating people writing for those sites. But it could also indicate that some bigger App Store changes are coming soon.

Link to the rest at TechCrunch and thanks to Elaine for the tip.

While Apple’s iPad remained the Leader in Tablets for 2016, Innovation is needed to reinvigorate the Sector

From Patently Apple:

While Apple toppled iPad expectations for 2016, the fact remains that for the year iPad sales dropped 14.1%, more than double the industry as a whole which fell 6.6%, according to the latest TrendForce report covering the tablet market. Apple’s total shipment for 2016 came in at 42.55 million units. Strong demand for iPad in North America and exceptional results from year-end holiday sales sustained iPad shipments last year.

. . . .

TrendForce report Anita Wang pointed out that “Apple has as many as three to four new iPad products lined up for 2017. In addition to an economically priced 9.7-inch model that is ready for market release, Apple will also launch a new 12.9-inch model. Furthermore, Apple will also introduce a new 10.5-inch iPad. This will be a new size category for the device series.”

TrendForce estimates that this year’s iPad shipments will fall by 6~8% annually to around 40 million units. There are reports of a “Pro” version of iPad mini being planned. If Apple decides to release such a product this year, the annual iPad shipments may stabilize and even register growth.”

Adding more “Pro” iPad models is simply means that more iPads will be able to use Apple Pencil.

. . . .

On the flip side, Amazon’s cheapo tablet market approach allowed them to double sales (99.4% to be exact) from last year and zoom to the number three spot worldwide with 11 million units. Anyone can sell cheapo tablets at a loss like Amazon, so on that count at least Microsoft is a pure competitor trying to innovate and make a profit. Microsoft also doesn’t want to enter the lower end of the model and compete with their Windows partners.

Link to the rest at Patently Apple

PG says disruptive technology always enters and builds in a market from the cheap side up. He doesn’t know if this is Amazon’s strategy, but bang for the buck is a powerful marketing and sales tool.

Amazon May Be About To Build A True iPad Challenger

From Seeking Alpha:

Amazon is having shortages throughout its product lineup at present. E-Readers, tablets, streaming boxes, voice assistants and Prime-exclusive phones all have at least one model out of stock for two weeks or more. All but the phones and E-Readers have half or more of their total model variants out of stock.

. . . .

It first came to my attention when I did my customary check of Amazon’s tablet devices this weekend and noticed that the Fire HD8 was now being advertised at a $120 price, $30 higher than it was at launch. At first I thought the price had actually been hiked, something almost unheard of for The Everything Store. But no. Actually, the company had just replaced the baseline variant with the 32GB expanded storage variant, which had always been $120. The reason why is simple: the more popular, 16 GB $90 version is out of stock all the way until April 7th. And the shortages are still spreading. Two of the four color variants of the HD8 32GB are also now out of stock, one until early April again and the other for up to six months!

. . . .

The shortages are also not limited just to the Fire line. They extend throughout Amazon’s device family. The Echo Black is sold out again until February 25th, just like it was over Christmas when sales rose nine times over year ago levels. The White is still in stock, however. Meanwhile, the Kindle Paperwhite has just the opposite problem: the black option is still in stock but the white is sold out. Echo’s $50 cousin, the Echo Dot, is sold out until the same date for the White color option, the black is sold out until March 2nd.

. . . .

The shortages of so many products simultaneously outside the holiday season are somewhat unusual, certainly. Usually, when products go out of stock outside the holiday crunch, it means that the devices are about to be retired and replaced with updated models. But it’s unlikely Amazon is going to literally replace its entire product lineup in the space of a few weeks.

Another explanation is that Amazon devices are just that good, just that in demand. But product shortages have now exceeded those in the heart of the holiday season, which was an unqualified success for Amazon.

. . . .

My interpretation of this data is that we are actually seeing a confluence of a couple of different trends in the device market. While a device-wide shortage might seem to imply a device-wide explanation, I think a few different things are going on. The Fire TV and Echo shortages are simply natural shortages of in-demand products in rapidly growing sectors. The HD8 shortage is probably real, but being exaggerated. The other shortages, however, are something else.

The Echo and Fire TV are really Amazon’s two most successful product lines, even above tablets. While Amazon’s tablets sell well, they are still regarded as just “good enough,” things you buy because the value per dollar is so much better even though they are not top of the line.

By contrast, Echo and Fire TV are widely seen as leaders in their field, things you buy because they are the very best money can buy.

. . . .

The tablet shortage, however, I believe does portend a pending product refresh and potentially a very significant one.

. . . .

I noted before that the HD8, while still not as cheap as its $50 cousin, is actually a pretty incredible engineering feat for Amazon. An HD upgrade used to triple the price of a Fire device. Now, it is only $40 more to get more memory, more processor power, and most importantly to many users, a battery life twice as long at 12 hours or better.

Amazon did a pretty remarkable thing achieving all of that with a 40% price cut in one year. And it has a lot of people telling tablet shoppers that they are really better-advised to spring for the extra $40 for everything they are getting for it.

. . . .

The last shortage, however, has a different cause, I think. Of all of these shortages, only one device is listed positively as out of stock indefinitely. That usually means it is never coming back, and that usually means a product refresh. It came as a surprise to more than a few people that Amazon did not update the HD10 prior to the holiday season, including me. If Amazon is now finally ready to do so, it would explain why the current HD10 is not only out of stock, but out of stock with no projected return date.

. . . .

HD10 represents Amazon’s last remaining foothold in the higher-priced market, though still nowhere near full-sized iPad prices. But it is the closest thing iPad has to a direct competitor in the Fire lineup, the one variant that almost comes off as “for iPad lovers who don’t want to pay for an iPad.”

. . . .

The HD10 upgrade may be more significant. If Amazon can reproduce the battery life gains it made with the Fire HD8 and pair them with some higher-powered processors like what it sold in the old HDX lineups, closer to what iPad and high-powered Androids offer, it will mark a new kind of Fire tablet. Or a return of the old kind, more accurately. If it can do this without any price increase and perhaps even with a price cut below the psychologically important $200 threshold – i.e. $199 – it may create a strong new challenger in a shrinking market.

Link to the rest at Seeking Alpha

I Wish Apple Loved Books

From DimSumThinking:

There’s an old joke, “how do you know when your friend is a Vegan.”

“Don’t worry,” the answer goes, “they’ll tell you.”

The same is true about Apple and projects they are passionate about.

Listen to Jony Ive describe the Apple Watch and you know he loves traditional time pieces and was passionate about improving the experience. Look at the Health Kit team and you know they care about improving lives with this device. You’ve got a team involved in imagining what this device can become.

Two years in a row Apple devoted valuable time at their developer conference to Apple Music. There wasn’t an announcement either year that made any difference to developers and yet we heard from Bozoma Saint John this past year and Jimmy Iovine the year before. We saw a video featuring Zane Lowe talking about his years of experience as a radio personality before being wooed to lead the efforts at Apple Music’s Beats 1.

You might like or hate what Apple has done with music but from programming and content, to software, to Air Pod headphones that you can control from your watch – Apple clearly has a passion for music.

. . . .

I’ve joked that if Eddie Cue loved reading the way he clearly loves music, then iBooks, the iBookstore, and iBooks Author would be amazing. Not only aren’t they amazing, they aren’t even good.

It’s like they’ve assigned a committed carnivore to design the meals and cook for Vegans. You need someone who loves and understands vegetables and shares the commitment to not using meat or meat products.

How do you find someone who loves books and reading?

Don’t worry, they’ll tell you.

I don’t believe there are a significant number of people who are passionate about books and reading involved in iBooks, the iBookstore, or iBooks Author.

. . . .

iBooks Author could have been a trojan horse into the personal publishing business. It would have been classic Apple. Instead of small authors going to Amazon’s platform, they would have started with iBooks Author. Apple should have made it easy for them to push to Amazon as well. Why? Because these people wanted to publish on Amazon but they weren’t considering publishing with Apple. Thousands of authors would have come to Apple to create content and stayed with Apple after publishing content there.

OK, so iBooks Author is essentially abandonware, what about iBooks and the iBookstore.

. . . .

Yesterday, I uploaded my latest version of my book to Gum Road and to iBooks. Within minutes I was getting email notifications of sales of my book on Gum Road.

An hour later my book was approved for sale on iBooks. This is remarkably quick. It used to take days. I looked online and my book wasn’t on the iBookstore yet. Also, my name was still listed incorrectly.

Sigh.

In the tool for uploading your book to the iBookstore, the prompt for the author’s name reads “Last Name, First Name”. So I entered it that way. So my book appeared on the store as written by “Steinberg, Daniel H” and was not connected in any way to any of my other books. It turns out it’s been like that for months – I just found out about it.

I called customer support and opened a ticket. The person was as nice as can be and said they couldn’t change it but I could upload a new version of the book with my name corrected and then they could fix it.

So I called customer support yesterday after I uploaded the new version of my book to check that the name was fixed.

Derrick told me that it probably was but I couldn’t be sure until the book appeared on the store.

But, I told him, iTunesConnect says my book’s been approved – can’t he check.

Well, he said, it has been approved but it might not appear on the store for a day and I should check back.

As I found out later when the puzzled emails started to pour in to my Inbox, my book hadn’t been approved. In fact, the existing book was pulled from the store for violating Apple policy. The version that had been for sale on the store for two months incorrectly used the word “iBook” as in “When I released this iBook.” Apple wants you to refer to it as a book. Using the word “iBook” in this context violates Apple policy and they had removed my book.

Then they went home.

I fixed the problem within minutes and uploaded it.

Apple rejected my upload. The version number wasn’t larger than the version number of the current book for sale on the store.

Link to the rest at DimSumThinking and thanks to Nate for the tip.

Amazon and Apple end exclusive deal on audio books

From The BBC:

Apple and Amazon have ended a deal that tied them into an exclusive contract for the supply and sale of audio books.

The deal was signed before 2008 when Amazon bought audio book supplier Audible, which had the Apple iBooks contract.

Pressure from anti-trust regulators in Germany and the European Commission led to the deal being abandoned.

. . . .

The terms of the agreement meant Audible could not offer audio books to any other company and Apple had to take audio books only from Audible.

The investigation into the Apple-Amazon arrangement over audio books was started by the German Federal Cartel Office in late 2015. It responded to complaints from German publishers who said the two tech giants were abusing their market dominance.

In Germany, said the publishers, more than 90% of all downloads of audio books were done via the Apple iTunes store or through the Amazon and Audible websites.

With the deal abandoned, Audible will now be able to supply firms other than Apple with audio books. In addition, Apple can now get audio books from other sources and sign up other publishers who can push their titles through its iTunes and iBooks outlets.

Link to the rest at BBC and thanks to Jan for the tip.