[pedanticfreak]

This reminds me of the "no intermediate code" snafu that was later repealed. Apple keeps testing the boundaries of what we will tolerate because it knows it can get away with it while the competition still lags behind.

This newest development sets a truly frightening precedent, though. Any subscription service that sees significant growth through their iOS app is vulnerable to Apple's tax collectors. As soon as it looks like you're making money, Apple can jump in and extort 30% of your gross revenue or sink your whole business. Granted, maybe you owe some thanks to Apple, but 30% can quickly turn a sustainable business into a bankrupt one.

Considering Amazon already loses money on each Kindle book sold, losing an extra 30% on top of that may not be a financially viable option. Apple is effectively trying to edge Amazon out of its marketplace.

[thestoicattack]

> Apple keeps testing the boundaries of what we will tolerate because it knows it can get away with it while the competition still lags behind.

I'm not convinced the competition will lag forever. If Apple were not the market leader, would consumers or developers continue to give them the same leeway?

[pedanticfreak]

The point is the competition still lags, so Apple still has a free pass with users and developers. And if the competition suddenly caught up, Apple only needs pull back just enough to make us all forget.

Really, it's stunts like this that shows how much iOS leads the competition. Like electing a convicted murderer to public office because his competition is that incompetent. Android isn't forcing Apple to compete on its terms at all.

[artsrc]

I don't get that they loose money on selling Kindle books. Do you have a source? Another view from here http://money.msn.com/business-news/article.aspx?feed=OBR&... is:

> Although Amazon does not disclose sales or profit data for its Kindle e-reader or content, many believe it derives more profit from digital books than from its Kindle devices and say that content is a better bet for its long-term growth.

[pedanticfreak]

My understanding is that Amazon was guaranteeing some publishers the same profit per sale that they would get from a hardback book in exchange for allowing Amazon to fix the price at $9.99. In some cases the profit was more than the $9.99 Amazon was charging so Amazon had to pony up $1 or $2 on each sale.

I think more recently Amazon has allowed publishers to use an alternative agency model that lets the publishers set their own prices and Amazon takes a fixed percentage cut of the sale. This doesn't cause Amazon to lose money, but now publishers can sell eBooks at nearly the same price as paper books which hurts the Kindle's attractiveness and slows adoption.

Regardless, this is an unworkable situation Apple has constructed. Amazon barely makes 30% of the sale price of each book if it even makes that much at all. It can hardly afford to give away its entire fee and then some to Apple.

This is either a strong arm attempt to get Amazon to agree to a strategic agreement for a fraction of the revenue or Apple is simply trying to destroy the Amazon Kindle app entirely. Either way Apple wins and Amazon loses. I suppose consumers can come out ahead if the strategic agreement allows in app purchasing of Kindle books for the same price, but it could also be bad if the iOS Kindle app disappears.

[wildwood]

I wonder if Apple might use this as a way of phasing out BookShelf and making the Kindle app the standard reading software for the iPhone. If the Kindle app shipped on every new iPhone, that might be worth it to Amazon to give Apple a respectable cut of the action.