Apple

Go Read This | How in-app purchase is not really destroying the games industry | Sealed Abstract

On the face of it this is just a piece about the gaming industry, though a fascinating one. In fact this article raises issues for all content industries from games, to books, to newspapers, magazines and music.

It covers the gamut, the explosion of content, the role of market makers (in this case Apple – though to a lesser mentioned extent, Google), the use of price as a lever and the challenges of making money in markets that have become so large, diverse and saturated.

I’m reminded of two realities most forcefully when reading it, firstly that while digital unleashes greater freedom to create and make content of all kinds available, thus empowering the creator relative to the middlemen and women of the previous era, it also (in its current guise by power of platform) shackles them to the power of another middle-person (for books, mostly Amazon) AND makes a sustainable career even less likely because of the huge increase of content such freedom unleashes. Secondly, I am reminded of just how little information is publicly available to those looking at the book trade. Consider the information in this article about the nature of games sales in the iOS store and ponder how different our conversations might be about ebooks if these facts were more openly shared (some notable exceptions on that front would be Smashwords who share quite a lot of data).

Getting people to play your game in a market of 150,000 alternatives requires a different kind of marketing. For example, if the user can choose to pay $0.99 for your app, or pay zero for another app that’s probably just as fun, they’ll pick the free one. The result follows: 90% of apps are free in 2013 when weighted by monthly average users. And when you look only at those apps that use an experiment/test/data-driven approach for their pricing, you see a strong upward trend in more free apps. So the pricing experiments that these developers are running (you know, actual flipping research, not just speculating baselessly in an HN comment) are telling them it’s better to go free.

via How in-app purchase is not really destroying the games industry | Sealed Abstract.

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Go Read This | Apple hit with $840 million damages claim for ebooks price fixing | The Verge

This won’t hurt Apple much financially, even if successful, but the legacy of the Agency Pricing move is still damaging Apple and publishers. As I’ve said it was a stupid move that put publishers on the wrong side of consumers which while attractive in the short term was incredibly damaging in the medium to long term:

Apple has received a new damages claim of over $840 million dollars for conspiring with publishing companies to raise the price of ebooks across the entire industry. The claim, filed Friday in New York by an attorney leading a class action lawsuit on behalf of ebooks customers in 33 states, stems from the US Justice Department\’s successful antitrust lawsuit against Apple that took place in the summer of 2013. Using evidence presented during the course of that trial last year, attorney Steve Berman begins by arguing that Apple owes American ebooks customers a bare minimum of $231 million in damages, and probably far more money than that.

via Apple hit with $840 million damages claim for ebooks price fixing | The Verge.

Go Read This | Tesco tablet expected on 23 September

Tesco-LogoIt has been clear for some time that probably only full-scale retailers have the capacity to respond to Amazon, Google, Apple and other digital giants. They have the advantages of scale, access to capital, direct customer interaction and customer inertia working in their favour.

Of course, those advantages are threatened by online retailers like Amazon and by the shift to digital consumption of media. It makes sense then that really forward-looking retailers will attempt to move into the digital distribution and retail space. Many of them have been offering online grocery shopping effectively for some time, long before Amazon or other newer entrants. Tesco has been making what look like smart moves in digital media for a while. It will be intriguing to see if this forthcoming tablet play works.

Success, however, cannot be measured by units sold alone. A good sign of it working would be of the company sells lots of tablets AND signs lots of people up to its digital content services. At the kind of price point the articles on the tablet are talking about, content sales and customer acquisition for the digital services are the goal in the short and medium term.

The question that arises for me is what’s the longer term play for Tesco? How can it build on success in the UK (if it materializes) and can it compete with the giants even if it does succeed in the UK. The costs of such competition can be quite hefty, as B&N has learnt to its cost:

Tesco might be able to hit the £99 price using a cashback-style promotion, Wood suggests: “I can see Tesco using substantial discounts on other services such as bundled media from Blinkbox, or vouchers for discounts on petrol or groceries through its ClubCard loyalty scheme.”

The tablet would take on competitors from the likes of Apple, Google and Amazon, and will be tailored to online shopping and video viewing – both areas where Tesco is looking to capitalise on its position.

via Tesco tablet expected on 23 September – and may be very low-priced | Technology | The Guardian.

For The Record | Consumers, Not Amazon, Were The Winners

I’m growing very tired of seeing the kind of sentiment below (my highlighting):

The company has all sorts of regulatory and competitive concerns, making for a minefield of possible conflicts of interest for the owner of The Post. Amazon has opposed states’ efforts to have e-commerce companies collect sales tax. It was the main beneficiary of the Justice Department’s successful pursuit of five publishers and Apple on antitrust grounds. It is locking horns with major companies like Walmart and I.B.M. And as it expands into same-day delivery of its products, it will come up against grocery chains and drugstores.

via Expecting the Unexpected From Jeff Bezos – NYTimes.com.

In an otherwise excellent piece the NYT continues to allow this spin to go unchallenged. The main beneficiaries are consumers. Yes, per consumer the benefit is small, but when it’s all considered together, it’s enormous!

It is important to acknowledge that because when you do, it reminds you that the biggest losers from Agency pricing was not Amazon, but readers! The consumer was screwed for the benefit of Apple and publishers, not Amazon, readers!

I know, I know, nobody wants to face that fact, but it’s the truth.
Eoin

Go Read This | iPod eclipse — Benedict Evans

Lurking in a seemingly not related post about how the iconic Apple product is slowly becoming less important to Apple, is a great few lines about the nature of the music business and, more generally, the content business at a meta level:

One could argue that trying to charge a little extra and make more profit is more trouble than it’s worth for Google or Apple (or even profit-hungry Amazon) – better to offer it at cost or thereabouts to enhance the value of the broader platform, which is where the real money comes from (advertising and devices respectively).

The same thing is happening in books and video – content is a condition of entry to the platform game that you provide at cost. This obviously makes life pretty tough for startups – it’s hard to try to build your own ebook store or download-to-own music store right now when any device your customers might use probably already has an at-cost service built-in. The one place this might be different is in video, since in that business it is actually possible to have unique content – but of course this is very expensive.

via iPod eclipse — Benedict Evans.

These issues are of concern to everyone in the content business, from authors to publishers. That doesn’t mean we’ll be impacted equally!

 

 

 

Go Read This | Caught between madmen and mercenaries | Studio Tendra

Interesting analysis by Baldur Bjarnason (@fakebaldur), of course, the mistake he makes is to assume the ebook market is in anyway different to any other market:

Your suppliers have no concern for the viability of your business and are quite willing to ruin it for little to no personal gain. Your competitors have corporate parents who are willing to run the ebook retail unit either at a loss or break-even and that’s without taking their substantial R&D investments into account, most of which are focused on developing or protecting vertically integrated silos, not innovations that actually benefit the customer.

In short, it’s a sector that desperately needs new, competent, and innovative entrants but is too irrational to sustain any sane business development or investment.

via Caught between madmen and mercenaries | Studio Tendra.