Apple’s new subscription service – an anticompetitive problem?

Apple’s new subscription system is a really dangerous move by Apple. It has the potential to be anticompetitive, and to allow Apple to compete unfairly on pricing against direct competitors in the markets of hardware, software and content. Here’s an example of how:

Spotify is installable on a range of devices, and comes pre-installed on HTC devices.
Currently you can subscribe to Spotify in the UK and access it on your smartphone via their website by signing up for £9.99 on their website.
If they want to continue being able to do this for iPhone users, they now have to offer the ability to subscribe directly from the iPhone app, and when someone does this give 30% of that to Apple.

So now, instead of taking £9.99, Spotify now take £6.99 and Apple take £3.00.
In order for Spotify to maintain their take at £9.99 for a subscriber via the iPhone, they have to increase their price by 43% to £14.29. This means Spotify gets £9.99 and Apple now get £4.30

But maybe you don’t use an iPhone. You use an HTC handset with Spotify pre-installed on it and you’ve been really happy with your experience at £9.99

Spotify can’t sell you access for £9.99 though, because Apple insist that prices have to be the same or less as access via other platforms. So now, as an HTC user you now HAVE to pay £14.29 in order to get exactly the same access that you used to have for £9.99 directly because of Apple’s pricing clause.

HTC and Spotify, or Spotify or any hardware manufacturer for that matter… In fact, Spotify or any mobile phone provider cannot put together a pricing deal for free access for a few months to its service. 3 in the UK offer 3 months free Spotify access for contract holders with some of their devices. This offer could be interpreted to clash with Apple’s same price or less clause for iOS apps. Spotify could by Apple’s terms, have to offer the same deal for iOS users.

Then of course, Apple could finally launch their cloud access to your music on iOS devices after they purchased Lala. They could price it at £9.99 themselves, and negotiate better margins than Spotify have for access to content due to their sheer size and power in music sales. They take 100% of that £9.99 charge, but they’re forcing Spotify to charge more to get the same take, or forcing them to earn less money per transaction than Apple to compete on price, and Apple gets a cut of that too!

I can’t see Apple getting out of this one without someone, somewhere getting involved. I’m looking at you, European Union…

eBook Price Fixing concern

Amazon Kindle

Amazon Kindle

I have written a letter to the OFT, Tom Watson MP, my local MP John Spellar and influential journalist and author Cory Doctorow about the new price fixing occuring in the book business. I have included this below.

 

Dear Sir/Madam,
In August 1994, The Office of Fair Trading successfully applied to the Restrictive Practices Court to end what was known as the “Net Book Agreement”. Under this agreement, book sales and retail pricing figures were set by the publisher, rather than the retailer and allowed the publishing industry to essentially price-fix books as they saw fit. the OFT took the agreement to the Restrictive Practices Court, and in 1997 they ruled it illegal. This ended the practice of publishers setting the minimum price that a book could be sold at retail, and left the practice of price setting only up to the retailer.

This week, Amazon have been forced to fix the prices of their electronic book store under an agreement that the publishers call the “agency model”. Up until this week, only Apple were operating under this pricing structure in the UK with their iBooks platform. Unfortunately Amazon have now been forced to accept this model or to no longer continue selling the books to the public. This has forced the prices up, with books now being tagged on Amazon as “This Price was set by the Publisher”. This publisher based price setting has not only increased the prices at Amazon but has fixed the prices across platforms (Apple’s iBooks, Amazon’s Kindle), and stopped Apple, Amazon and other companies being able to price products they are selling as they see fit. The prices have also increased beyond the prices of their hardback equivalents, which is going to do nothing but encourage the piracy of the digital content, rather than encourage strong positive sales. In a world where we are being asked to become more energy efficient and better protect the environment I find it disgusting that my investment in electronic books in order to be a better, more environmental citizen has been punished by the greed of the publishers deciding to price fix electronic book mediums to suit their pricing desires instead of allowing retailers the freedom to be able to price goods as they see fit.

I implore you please, to do anything you can with your powers, influence and/or ability to raise this issue wherever you can, and to help stop this incredibly anti-competitive practice, which is nothing but damaging to the consumer.

My kindest regards,
Paul Kerton

This email has been sent to the following:
Tom Watson MP, The Office of Fair Trading, John Spellar MP (via his Westminster Office Secretary) , Cory Doctorow

Android 2.0 – Apple had better move quickly!

Android LogoYesterday (and today) Google have officially announced the latest version of their mobile phone software Android 2.0, and Apple had better get moving quickly on announcing some new features for their iPhone platform!

The new Android software has taken the experience of the last 14 months of device releases, and feedback from their customers and multiple manufacturers and have delivered a mature and advanced operating system that is more than ready to take on the iPhone, and has really and truly taken this particular iPhone lover’s eye. So much so, even with the £100 of software I’ve purchased on the app store, I’m seriously considering moving over to Android.

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