iTunes was not built for publishers

Publishers, among others, have been told they no longer sell products without permission that might compete with other online retailers.

Apple is concerned about the selling of books and magazine subscriptions for example, which can be done through an app but by-passing the iTunes store; therefore denying Apple its 30 percent commission.

Major industry groups in Europe and the US have expressed outrage at Apple’s latest move to control the business models and product offerings of independent companies.

Apple claims to be enforcing its rule that says any offer that is outside its walled garden must also be offered through an approved app-purchase. Which puts Apple in charge.

This sort of behaviour should not come as a surprise.

Apple has not built the iTunes store for you. It has built it for itself.

The market leadership position that Apple commands in this space will not last forever, not even a decade.

The commercial history of the Internet, and the IT sector in general, suggests Apple only has so long at the top.

Its challenge is to stay there for as long as possible.

The only way IT companies really know how to do this is by creating products and services that are locked down; meaning you can only use, say iTunes in this case, to get what you want in the way that you want it.

Apple appears to be beginning that lock-down process. It knows the clock is ticking to the time when Google’s Android phones and app market will compete and, probably, dominate in the way iTunes does today.

The European Newspaper Publishers’ Association, and the US-based International Newsmedia Marketers’ Association, have started their campaigns of complaint.

Progress might have to be made through government regulators as I cannot see Apple being too concerned.

It does not toss and turn at night worrying about the plight of publishers. Further, Joe Public is not buying iPads to consume news apps, and it is but one benefit of the overall utility of the device.

There are a couple of takeaways from this:

Firstly, initial response and take-up of iPhone and iPad apps suggest that such technology is not a quick fix for the economic challenges of newspaper publishers – though in the long run it will be very much part of our fabric.

Secondly, any publisher that has staked its strategy on Apple has got it wrong; and, frankly, has no clue about what is going on around them.

At a recent international ICT expo in Los Angeles, delegates could count – if they had the inclination – some 200 different tablet computers being lined up for release this year. Main players such as Dell and Hewlett-Packard all the way down to whitebox operators in Taiwan and Vietnam are seeking their share of a potentially massive market.

On top of this, Google’s Android mobile computing platform has led Apple’s iPhone in the United States for more than six months – and where the Yanks go, we usually do too.

Nokia – the biggest of all handset makers – has just thrown its lot in with Microsoft and the Windows Mobile operating system, dumping all other joint ventures and its own software development, too.

That adds extra spice to the game.

So, at the risk of getting the future completely wrong (an odds-on chance), here’s a bit of crystal ball gazing for the next three or four years:iTunes logo

• Tablets will become as common as mobile phones in our market places;

• This creates major opportunities for publishers but adds stress to the printed products;

• A tipping point will come when telcos offer data plans with pricing for tablets greatly reduced from current levels – e.g. we’ll see an echo of the go-to-market strategies for the mobile phone

• Telcos will do this when the volume and choice of tablets has primed the market. They’ll want to bundle all manner of services – mobile, fixed-line, TV, home data – and lock-in customers for extended periods

• Google will begin to dominate and its app store will build to compete with Apple as an increasing number of software programmers and entrepreneurs gravitate to Android.

• As the Android market grows, so will iTunes begin to diminish in its importance and music will be its enduring niche

• Apple will see history repeat itself; just as it did after the Windows95 launch, its market share will slide

• Microsoft will grab decent market share, too, because it will be better positioned to extend its relationships in the corporate market

• Devices such as the Kindle (Amazon) and Nook (Barnes & Noble) will capture the book sector as book readers will tire of the physiological impact of back-lit screens

• And many of us will carry around a phone, tablet and when we travel, a book e-reader.

Where publishers will fit in such a scenario is difficult to say. It is up to each one of them.

Some will focus on cost containment and cost-cutting of existing businesses. If they think there is a future in only that death-spiral of an activity, they will not be in the game.

Those who can afford to put decent money on a few numbers at the roulette table – and commit good journalists and commercial executives – will win.

Whether they will win big is debatable.

We’ve seen brands hang in there on the web. But no publisher should be so arrogant as to believe that, as barriers to quality publishing lowers thanks to app-technology, this dynamic might not change.

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