That 30% Revenue Share, Subscriptions and the End of Apple’s Empire

Why are Apple products such a joy to use? Because their every aspect is part of a clearly defined singular vision, a vision that is kept in place by a zealous control over every aspect of its supply chain, OS and application ecosystem.

Steve Jobs’ instincts have so far managed to prevent this monomania lurching into out-and-out megalomania, but has it now overstepped the mark? Contrary to the Apple Orwellian 1984 campaign of the 90s, it is no longer the subversive facing down the might of the totalitarian Microsoft Machine – now it is the machine.

For anyone who hasn’t been connected to the net for the last week, Apple is now demanding a 30% cut of any revenue passing through its market place (gross, not net). If content providers want in on Apple’s platform, they can’t offer their content cheaper anywhere else. There must be very few business that can afford to give away a 30% cut of potential revenue in the current market place and hope to remain in business for very long. At the same time, Apple will not guarantee passing along user information for the fee – users will have to opt in, meaning that the relationship stays firmly with Apple rather than the provider. Put this egregious demand together with Apple’s constant gerrymandering of rules and regulations, as well as its flip-flopping over the use of 3rd party development tools, and one can see an unhealthy degree of contempt for both content providers and the Apple development community in general.

For the record, I have an iPhone, I like Apple products and I think Apple are to be congratulated for the trailblazing that they have achieved with such amazing consistency. However, I hope that the current anti-trust cases that seem to be gathering pace in the US and Europe will result in them receiving clear signal that it is simply not possible to operate with impunity in the commercial market place in any position of market hegemony. Perhaps Apple should remember how Microsoft ended up in deep trouble in Europe simply for the way it packaged IE with Windows – they weren’t even demanding any financial reward for things associated with IE.

At the moment Apple might feel like an irresistible force – but let us not forget that the greatest extent of empire often occurs at some point after the decline has set in – just as it did with the British Empire. Whilst Apple will no doubt to continue grow for some time, I can’t help thinking that their new subscription model and its aftermath will mark the passing of its zenith.

Apple’s hold-everything-close-and-tight approach to getting things done seems is in stark contrast with Google’s lets-give-everything-away-to-everyone ethos of getting everyone possible to buy into their preferred future – somehow the latter seems more in step with the age of Social Media, Open Source and Crowd Sourcing. Nevertheless, there will, I think, always be space for singular vision – but it remains to be seen whether Apple, in a post-Jobs succession, will have that vision.

For Fortune magazine’s take on this see http://rss.cnn.com/~r/fortunebrainstormtech/~3/HkozhYGYrnI/

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About jonallenby
I'm the co-founder and Technical Director of a new media agency - Lime Media. I would describe myself as having a healthy scepticism about technology - new ways of doing things are always new, but they are not necessarily better. Best to cut through the hype and think about how technology will physically change people's lives, for better or worse. I am also struggling to finish a part-time PhD in language, metaphor and philosophy at Goldsmith's College, University of London. Apart from thinking and reading, I like playing with my children, cross-country running and White Crane Kung-Fu - though usually not all at once.

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