Apple as a Retailer

Mike Shatzkin over at the Idealog Blog has taken aim at our recent posting about Apple, Amazon and Google. We are in agreement with Mike that this ebooks, digital books, story is a good deal more complicated than it first seemed. We surely are in the very early stages of the game. Too early to call a winner, probably.

But Shatzkin has not understood what Apple are doing with the strategy announced for the iPhone 3.0 SDK. They are tackling the retail environment head on and building the retail functions. Shatzkin thinks that Apple will fail the retail test. Did Mike view the video presentation with which Apple gave a preview of 3.0 SDK? Consider that the very first item that Scott Forstall discusses (before even ‘cut and paste’!) is the way that they have enhanced the App Store. Note that its a store. A place where consumers shop. It is a retail store which enables developer creativity and it will support discovery of books, magazines, games etc, browsing and sampling, search, metadata, price choice and traditional bookstore price anarchy, and after sales support (though some fulfillment and much support will fall to developers and publishers). Most striking is the near total freedom that publishers are given on pricing (99c — $999). Especially in comparison to Amazon’s half-hearted effort to get a $9.99 ebook price, and Apple’s notorious inflexibility on music pricing in the iTunes store. It is surprising that anyone would think that Apple who have made such a considerable success of Apple stores and online retail selling will find themselves out of their depth with digital books. Nobody would say that building a retail system for digital books is going to be easy, but Apple clearly are a good candidate to do it. Especially now that they have announced this co-optive strategy.

Have book and magazine publishers learned much from the mistakes that music publishers made with digital music? They surely have learned something, but we can be sure that Apple have learned through bitter experience from the mistakes that music publishers have been making with music (often at Apple’s expense). Steve Jobs has been having too much grief with the music supremos, eg over price and DRM. This time Apple are stepping back, facilitating a more open retail environment in which the publishers and software developers are invited to decide prices and to create concessions, services and brand-oriented offerings which Apple will transact for them. If a publisher is foolish enough to foist DRM on his customers that too can go through the Apple system. Above all the fashion, style, presentation, pricing and packaging elements can be left to the publishers and content experts. Apple will stick to its knitting.

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