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  • iFlow Reader App River Dries Up, Apple Waging eBook War



    In a scathingly bitter letter released today, the iFlow staff explains to users why at the end of the month their company and app will be gone for good. Also, the letter goes details the one-sided war Apple is waging on digital book sellers on iOS devices.

    The letter can be viewed in its entiretyhere and opens as follows:

    We are writing to you today to make a very sad announcement. BeamItDown Software and the iFlow Reader will cease operations as of May 31, 2011. We absolutely do not want to do this, but Apple has made it completely impossible for anyone but Apple to make a profit selling contemporary ebooks on any iOS device. We cannot survive selling books at a loss and so we are forced to go out of business. We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game. This is a very sad day for innovation on iOS in this important application category. We are a small company that thought we could build a better product. We think that we did but we are powerless against Apple’s absolute control of the iOS platform.
    No love for Cupertino there. The letter goes on to explain what exactly transpired to spell doom for iFlow and possibly other small booksellers. The two key developments include the adoption of the Agency Model by nearly every major publisher, and the 30% fee Apple demands for every book sold.

    The Agency Model means that the Publisher is the retailer of record, and sets the prices of books, which cannot be changed. Book sellers then become "agents" of this retailer and receive a 30% commission for books sold. This coupled with the Apple's 30% fee means booksellers, like iFlow, would break even at best. Before the Agency Model publishers would often give retailers a 50% discount on books allowing them to make a profit based on markups. Now, no one gets a different deal.

    Random House books up until February 28, were iFlow's most profitable items because the publisher still instituted the 50% discount on their books. When it adopted the Agency Model, that well dried up, and so did nearly all of iFlow's profits.

    The letter makes it clear that iFlow had an ongoing relationship with Apple communicating their business model. Apple approved their app in November of 2010. After investing heavily in licensing fees, integration fees and server fees iFlow opened their ebook store on December 2, 2010.

    Two months later, Apple changed the rules and put us out of business. They now want 30% of the sale price of any books, which they know full well, is all of our profits and more. What sounds like a reasonable demand when packaged by Apple's extraordinary public relations department is essentially an eviction notice to all ebook sellers on iOS. After over three years of developing products for iOS during which we had over six million downloads of our BeamItDown iFlowReader products, Apple is giving us the boot by making it financially impossible for us to survive. They want all of the eBook business on iOS and since they have the unilateral power to get it, we are out of business and the iFlow Reader is dead.
    While iFlow and similar developers knew full well going in Apple could change the rules at any time, they didn't expect to be cut completely out of the market. I'm no anti-trust or monopoly lawyer, but it seems Apple is making a power move to cut Amazon and Barnes and Noble out of the loop on iOS devices entirely. Small booksellers like iFlow (small here equates to over six million downloads of their app) seem to be caught in the crossfire.

    We put our faith in Apple and they screwed us. This happened even though we went to great lengths to clear our plans with Apple because we did not want to make this substantial investment of time and money blindly. Apple's response to our detailed inquiries was to tell us that our plans did not infringe their rules in any way, which was true at the time, but there is one little catch. Apple can change the rules at any time and they did. Sadly they must have known full well that they were going to do this. Apple's iBooks was already in development when we talked to them and they certainly must have known that their future plans would doom us to failure no matter how good our product was. We never really had a chance.
    The letter also provides users instructions on how to keep their books once their app closes down. Users may still be able to read them using iFlow "although we cannot guarantee that it will work beyond May 31, 2011." Users are directed to download Adobe Digital Editions here , log in to their iFlow accounts, go to their books and select "Read On My Computer." From there they can select download and a small .acsm file will be downloaded. This file can then be opened via Adobe Digital Editions and saved in the users library there. They recommend backing up these files as well.

    Its a sad day when a competent developer with a very solid and well liked app has to shut its doors. Odds are Apple wont change its policy regarding ebooks, but you can voice your opinion on the matter by emailing Steve Jobs, Philip Schiller, and Developer Programs at Apple here, here, and here.

    Source: iFlow
    This article was originally published in forum thread: iFlow Reader App River Dries Up, Apple Waging eBook War started by Phillip Swanson View original post
    Comments 42 Comments
    1. iliveudie's Avatar
      iliveudie -
      Do you have any idea how hard it was for me to read this entire article along with their official note? Damn near impossible. It makes me cringe, it makes me nauseous, it fuels the fire deep inside me to see to see Apple, a multi BILLION dollar company, attack little businesses like this.

      I am fully aware of the competitive market with e-reading at this moment, but for Apple to allow this app, and then, two months later, bend them over and brutally rape them like this...it disgusts me!
    1. Ozzie5374's Avatar
      Ozzie5374 -
      Quote Originally Posted by Meh View Post
      How does that make them sound like sore losers? Apple changed their policies without notice and took away all their profits after they invested all their time and effort as well as money 2 months before the change. They have every right to be upset. It's not as if Apple is getting better deals on ebooks to sell in iBooks. It's that Apple is asking for such a huge cut of the profits that they would gain 0 profit. What would be the point of continuing to sell when you gain nothing from it?
      And what would be the point of big companies screwing everyone so much that THEY end up with nothing to sell? 30% of nothing = $0. We here in Australia have just had our yearly Federal Budget "given" to us. What? Changing rules without notice? A friend of mine recently bought a second hand boat. New outboard. All kitted out for fishing in the Gulf here. Now the Govt. Is declaring a whole heap of new sanctuaries-NO FISH ZONES. Changing the rules? Get over it!!
    1. Jahooba's Avatar
      Jahooba -
      That's low, Apple. Real low. And yes, I am keeping score.
    1. Meh's Avatar
      Meh -
      Quote Originally Posted by Ozzie5374 View Post
      And what would be the point of big companies screwing everyone so much that THEY end up with nothing to sell? 30% of nothing = $0. We here in Australia have just had our yearly Federal Budget "given" to us. What? Changing rules without notice? A friend of mine recently bought a second hand boat. New outboard. All kitted out for fishing in the Gulf here. Now the Govt. Is declaring a whole heap of new sanctuaries-NO FISH ZONES. Changing the rules? Get over it!!
      Uh... What? I'm sorry but are you serious? 30% of nothing is $0 yes, but if they drive everyone else out of business they'll be the only ones in town with iBooks. What gets them more money, 30% of all sales or 100%? Of course it's their platform and can do whatever they want, but it's still a bit of an F you since they did it a bit after they went through the trouble of creating the app as well as paying all those fees.
    1. dveer's Avatar
      dveer -
      Quote Originally Posted by Xenthis View Post
      Apple loves the money....
      They better or they wouldn't be a business. You go to work every day because of the paycheck right?
    1. Rob2G's Avatar
      Rob2G -
      Quote Originally Posted by ShredNasty View Post
      Genius got banned? Rofl.
      Yep he did, it was a great day. You can thank Poseidon for finally banning him.
    1. jwil736's Avatar
      jwil736 -
      Walmart does the same thing but not digitally... at least they don't have a 6 or 12 month lease that they cannot afford. Or how about liquidating all their merchandise? This is all done from a computer! DIGITALLY... I feel bad for them but they should have seen this coming trying to compete with big corporations.
    1. twitchthecat's Avatar
      twitchthecat -
      Quote Originally Posted by 01grander View Post
      I really wish Anonymous would hack Apple. They deserve it a lot more than Sony does.
      That would be fun. Wipe the $&!? off of that Cupertino.
    1. steve-z17's Avatar
      steve-z17 -
      Quote Originally Posted by Meh View Post
      How does that make them sound like sore losers? Apple changed their policies without notice and took away all their profits after they invested all their time and effort as well as money 2 months before the change. They have every right to be upset. It's not as if Apple is getting better deals on ebooks to sell in iBooks. It's that Apple is asking for such a huge cut of the profits that they would gain 0 profit. What would be the point of continuing to sell when you gain nothing from it?
      Because the business knows what it's getting itself into, they know it's a gamble investing time and money into a company that may take off or go under. This happens to businesses all the time, it isn't anything new. These guys decided to play the blame game with Apple (who has every right to change their policies) and it's getting them nowhere. I'm not saying it's right, it really does suck that that happened to them, but there's no use pointing fingers and getting mad at a company who gave you an opportunity to make a business.

      Quote Originally Posted by Rob2G View Post
      Yep he did, it was a great day. You can thank Poseidon for finally banning him.
      That was a glorious day!
    1. reddawg's Avatar
      reddawg -
      It's interesting that Congress took an immediate interest in Apple's location gate scandal, but ignores the much larger issues of Apple's monopolistic practices in the music, advertising and publishing industries.

      It's hard enough for companies like Barnes & Noble to survive in a publishing market that has changed from paper to digital. It makes it impossible when companies like Apple are not playing fair in these markets and are stiffling the competition.

      It's time for the DOJ to step in and make Apple play fair and congress to stop grandstanding with the "location gate scandal".
    1. ShredNasty's Avatar
      ShredNasty -
      Quote Originally Posted by reddawg View Post
      It's interesting that Congress took an immediate interest in Apple's location gate scandal, but ignores the much larger issues of Apple's monopolistic practices in the music, advertising and publishing industries.

      It's hard enough for companies like Barnes & Noble to survive in a publishing market that has changed from paper to digital. It makes it impossible when companies like Apple are not playing fair in these markets and are stiffling the competition.

      It's time for the DOJ to step in and make Apple play fair and congress to stop grandstanding with the "location gate scandal".
      Think of all those carriage and wagon makers that went out of business when Henry Ford came along. The government should have stopped Ford from having an awesome product. Cripple Ford with legislation to allow the man with the inferior product to remain in business.

      No. Wait, people had balls back then. The leading carriage manufacturer started General Motors, instead of looking for a handout and crying like a 7 year old girl with a scraped knee.

      They can take their coding experience and make the next Angry Birds. Or they can whine and b*tch about Apple while someone else does. Either way, Apple is on top.
    1. Ozzie5374's Avatar
      Ozzie5374 -
      Quote Originally Posted by Meh View Post
      Uh... What? I'm sorry but are you serious? 30% of nothing is $0 yes, but if they drive everyone else out of business they'll be the only ones in town with iBooks. What gets them more money, 30% of all sales or 100%? Of course it's their platform and can do whatever they want, but it's still a bit of an F you since they did it a bit after they went through the trouble of creating the app as well as paying all those fees.
      Then we vote by putting our money where our mouth is, unless you're just soap-boxing. Don't buy anything Apple....oh, and get rid of anything Apple that you already have. There. Feel better now? Ain't capitalism great.
    1. quidam_brujah's Avatar
      quidam_brujah -
      Quote Originally Posted by Phillip Swanson View Post
      I'm no anti-trust or monopoly lawyer, but it seems Apple is making a power move to cut Amazon and Barnes and Noble out of the loop on iOS devices entirely.
      You didn't tie this into complaints that Amazon, Sony and B&N had back in Feb about Apple 'proposed' App Store changes that require any content purchases made outside the app to be available inside the app.

      Currently, Amazon (via Kindle app) and B&N (via Nook app) use mobile Safari to conduct transactions, then the app downloads content from either Amazon or B&N: Apple is not in the loop.

      This is a big distinction, which is why they don't have to fork over an additional 30% to Apple. Your article implies they get hit the same way that BeamItDown does. They don't.

      The fear is that the Feb subscription announcement is going to hit booksellers as well.

      Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO
      Now, Amazon and B&N aren't 'publishers', they're resellers, so this shouldn't affect them, right? Who knows. I haven't read the details of the new rules, but this is generally the source of all the b1tch1ing by these guys.

      I don't disagree that Apple's 30% is a bit rich, or requiring everything to take place within the app instead of a browser is a bit over the top, but it's a little more nuanced than what your article presents.
    1. TheGrandFinale2001's Avatar
      TheGrandFinale2001 -
      Quote Originally Posted by bjrh View Post
      just go to Cydia!!!
      That's actually not a bad idea.

      As far as the company goes they should have never fully trusted Apple. Especially if your product that's something that would essentially compete with something Apple already has; even if Apple approved and seemed to be on your side. Cause at first Apple didn't see you as a threat but once that changed it was game over. This should be a lesson to all developers... WATCH YOUR BACK!!!!
    1. NooK's Avatar
      NooK -
      Quote Originally Posted by sungod661 View Post
      If you dont like apples rules you dont have to sell ebooks on there platform.
      I'd agree with you except nobody knows what Apples rules are because they change them whenever it pleases them. I think this article is proof of that.

      Well, now we know that Apples main rule is that whatever rule they currently have can be changed at any time without further notice.

      I hope the outcome of this is that more companies just give up on making business with Apple because they will never learn otherwise.

      Yes, Apple, just like any other company in a capitalist world, is out to make money but to do that they need to build a level of trust between them and the developers, they are completely dependant on them after all (iOS would be nowhere if all of a sudden all developers decided to stop developing apps) and right now they are doing the opposite of that.
    1. Caligula's Avatar
      Caligula -
      I must be the odd man out, but whenever I hear about people complaining about Apple's policies, I think hey, if Apple didn't provide what it did, you wouldn't have a platform to do any of this. Ultimately it's up to Apple. They can be douches if they want to be, but isn't that up to them? They still have a large and loyal user base, so they must be doing something right.
    1. NooK's Avatar
      NooK -
      They will always have a loyal user base that will never change but that is not the point. It's a matter of earning more money and being top of the Market and that is where apple is slowly failing at. Many years ago Apple started with computers and was number one for a while until someone else came along and decided to do something better (Read: Better, NOT necessarily good or perfect though) and now macs have a much smaller share of them Market but that has not stopped the user base from buying them. The exact same thing is happening with iDevices where Apple keeps ignoring the user base and doing a bunch of crap until eventually they will go from having from having the Market to just that, having a user base.

      What every company must remember it is not the user base that need to be thankful for the release of a product but rather the company that needs to be thankful for the user base buying and believing in their products after all, a company can do whatever they want to try and push a product to the Market but ultimately the consumer is what makes or breaks said product.
      Google is very good at that, just watch the keynotes from this year I/O and count how many times they are thanking their users. I can remember 2 just of the top of my mind. Don't think google is all flowers either, if you dig deep enough you will definitely find that corporate greed that comes along with any company in a capitalist world. They just happen to be a lot better at handling their consumer base and adapting the user needs into their Market strategy rather than trying to change the user to their own needs.

      The difference between Apple and Google is that Apple doesn't care about what their user base wants, their users should want what Apple wants them to have, while Google will listen to their users and then come up with products which benefits themselves while still providing some (if not all) functionality wanted by their user base.
    1. CovariantTensor's Avatar
      CovariantTensor -
      Quote Originally Posted by unison999 View Post
      I read books on paper, don't see need to read it on iDevice and run out of battery (yes this happened before).
      Was that on a full charge?
    1. sunshinejenn03's Avatar
      sunshinejenn03 -
      There are only 6 publishers (not all, as the article states) participating in the Agency Model....out of hundreds of publishers across the US. And don't forget indie authors who self-pub through Amazon's publishing system or Pub-It! by B&N.

      FYI B&N and Amazon are doing fine, even with the advent of the Agency Model. Not only have they made it possible for indie's to publish themselves, but they still sell the most ebooks - independently - over Apple. I love my iPhone and I really want an iPad, but I would never use either device to do serious reading.
    1. Gamemaster77's Avatar
      Gamemaster77 -
      Quote Originally Posted by 01grander View Post
      I really wish Anonymous would hack Apple. They deserve it a lot more than Sony does.
      I don't think that Anonymous hacked Sony. I believe they would have taken credit for it. Now I'm not usually a conspiracy theorist or anything but I have this weird feeling that Apple hacked Sony.