iFlow Reader App River Dries Up, Apple Waging eBook War

[Phillip Swanson]

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

[kakasaka]

Its looks like they are just full of greed, and want no competition so we have to be forced to buy their books of iBooks via iTunes Store

[steve-z17]

The e-reader biz is very competitive right now so I can understand why Apple changed the rules. This company knew that going into it and it ended up going the other way for them, it sucks but that's how the business world works. They can still sell e-books in the store though. All this blaming and complaining just makes them sound like sore losers.

[bjrh]

just go to Cydia!!!

[01grander]

I really wish Anonymous would hack Apple. They deserve it a lot more than Sony does.

[MRMAGNUM]

Another small business bites the dust due to corporate greed

[Xenthis]

Apple loves the money....

[Timstanley]

just go to Cydia!!!

Could work
But I dont think thats going to happen

[rickuk]

Could they move to Android?

[unison999]

I read books on paper, don't see need to read it on iDevice and run out of battery (yes this happened before).

[Axecaster]

Could they move to Android?

Exactly my thoughts. Not sure what kind of arrangement Google has with ebook distribution, but if it's a better deal for the seller, that's good enough persuasion content for a farewell letter.

[NooK]

Yes you read books on paper but not everybody does.
Why are they not on Android platform as well or any other platform such as WebOS, among others? It sounds to me that the reason they are closing down is their own because I don't believe Android takes such a high percentage on book sales but, yes, Apple is to blame for the loss of money for many developers (but not for them closing down, there are lots of other platforms out there).

[Go Gators]

Switch to the Android Marketplace. You'll be able to run your business freely there. It's funny how liberals will bash the hell out of oil companies and other companies that are running 2%-10% profits when Apple is raking in 30%+ in profits and you don't hear a word. I'm happy for Apple and all companies. That's what they're in business too do. It's just very annoying listening to liberal hypocrisy all the time.

[cranie]

Welcome to the Microsoft Business Strategy class.

[Rob2G]

I love Apple and I know I'm an apple fan boy to the extreme, but I hate apples app store policies and fees. It's nothing but apple being greedy. There is no excuse for apple to be doing this.

[ShredNasty]

I really wish Anonymous would hack Apple. They deserve it a lot more than Sony does.

No they don't. You're warped. Sony got it because they removed funtionality and then went after a 20 year old kid. Apple unsuring they're the ones making money on THEIR OS and devices is called business.

[epignosis567]

The e-reader biz is very competitive right now so I can understand why Apple changed the rules. This company knew that going into it and it ended up going the other way for them, it sucks but that's how the business world works. They can still sell e-books in the store though. All this blaming and complaining just makes them sound like sore losers.

Oh shut up for chrissake fanboy.

[Rob2G]

Oh shut up for chrissake fanboy.

Calm down. This is a apple forum, there will be fanboys. If you dont like it then leave. Atleast his post was his view on the topic. None of your post have anything to with the topics, all you ever do is bash apple and tell other members to shut up. I hope you go the way of "Jailbreak Genius" and get banned.

[ShredNasty]

Calm down. This is a apple forum, there will be fanboys. If you dont like it then leave. Atleast his post was his view on the topic. None of your post have anything to with the topics, all you ever do is bash apple and tell other members to shut up. I hope you go the way of "Jailbreak Genius" and get banned.

Genius got banned? Rofl.

[sungod661]

booo hooo cry me a river. If you dont like apples rules you dont have to sell ebooks on there platform.

They are complaining about apple having a monopoly on there own O.S? give me a break. Capitalism greed is good buddy!

Everyone complains about apples prices, there app store policies and of course the fees!! but guess what you dont have to do business with them!

There is no obligation for you to set up shop on the ios platform. If your product was better then what anyone else was offering you would be able to survive but its a lame *** run of the miill product like a million others out there. Good riddance to you, to bad apple didnt let you jack up the prices on us so we can buy an ebook so your crappy business can survive.


Anyone who sides with this b.s lives in an alternate universe


Stay thirsty my friends!