business

Apple’s Advocate Explains the Grab for 30%

Like many, I reacted very negatively to Apple’s new policy: any paid content inside iOS apps be available through Apple’s subscription system, must be available at the lowest price, and must give Apple a 30% cut of that price.

John Gruber has written a very thorough analysis of the popular arguments against this new policy, and attempts to divine Apple’s reasoning for implementing it:

Apple doesn’t give a damn about companies with business models that can’t afford a 70/30 split. Apple’s running a competitive business; competition is cold and hard. And who exactly can’t afford a 70/30 split? Middlemen. It’s not that Apple is opposed to middlemen — it’s that Apple wants to be the middleman. It’s difficult to expect them to be sympathetic to the plights of other middlemen…

This is what galls some: Apple is doing this because they can, and no other company is in a position to do it. This is not a fear that in-app subscriptions will fail because Apple’s 30 percent slice is too high, but rather that in-app subscriptions will succeed despite Apple’s (in their minds) egregious profiteering. I.e. that charging what the market will bear is somehow unscrupulous. To the charge that Apple Inc. is a for-profit corporation run by staunch capitalists, I say, “Duh”.

Gruber has scored a direct hit on Apple’s strategy, and his explanation makes it seem very solid for Apple, its customers, and content creators. The biggest losers are Apple’s competitor middle-men. I think Apple’s main interest is being the best damned middle man in the business. The only problem is that some of those middle-men make products I really like, and Apple will only play ball with them if Apple gets to make the rules.

Daring Fireball: Dirty Percent

How eBooks and e-Readers Fall Far Short of Dead Trees

eBooks have been a great thing for me- I rarely think to carry a book along with me or have a bag for carrying one, but I always have a smartphone on me, plus an iPad at times. When I was in Spain in 2009, I read a novel on my iPhone that’s over 1000 pages long in paperback form. No, a 3.5″ backlit LCD screen isn’t the nicest reading experience, but I’d like to borrow a saying from the photography world that I believe applies here:

The best way to read a book is the one you have with you.

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New York Times for iPad: Legitimate heir to the Newspaper?

NYTimes 2.0 for iPad

From paper to pixels: The Times and other media have yet to find an economically sustainable replacement for their paper-based products.

The Internet has shaken up the status quo for many incumbent economic leaders – and newspapers have seen this effect more so than any other industry. Since the Web hit the American household in the 1990s, print media has been experimenting with strategies for digital distribution and revenue streams, with few conclusive results after well over a decade. The Web has moved the audience’s attention from monolithic news outlets controlled by publishers in favor of social links (Facebook and Twitter) and aggregators (The Huffington Post, The Daily Beast and Drudge Report.)

This year’s announcement of the iPad seemed to change the publishing industry’s outlook on doing business over the Web. Instead of the hyperlinked, non-linear, short-attention-span, copy/paste-friendly nature of a desktop Web browser, the iPad offers a publishing platform similar to their paper product – with an iPad app, the publisher has verticalized control of available content, its layout, navigation experience, and – most importantly – revenue generation methods.

On October 15, the Times released “NYTimes for iPad,” (iTunes Link) labeling it “free until early 2011.” In testing it, I’ve decided it’s an excellent application in its own right, and could potentially be a great sign for the future of print journalism, but it could be yet another business fumble if the company doesn’t execute the proper balance between advertising, consumer pricing and usability.

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On WordPress, Thesis, and profitable GPL software

My twitter feed (full of people in the WordPress community after meeting a ton of people at WordCamp Boulder last weekend) unexpectedly caught fire this morning on the #thesiswp hashtag. I had no idea what the fuss was about, but I wasn’t surprised when I read into it: the item in question is Thesis, a robust premium WordPress theme that costs a minimum of $87, and whose source is under a closed software license.

The debate and confusion is really about the licensing status of custom WordPress themes. WordPress is covered by a copyleft license which requires that works derived from the software be covered by the same free, open source license (specifically, GPL v2.) But “derivative works” is a pretty vague concept, and can be interpreted in many different ways. That’s why WordPress founder Matt Mullenweg wrote the Software Freedom Law Center, some of the most experienced legal experts on libre software issues. They provided a rather comprehensive interpretation of the issue:

“In conclusion, the WordPress themes supplied contain elements that are derivative of WordPress’s copyrighted code. These themes, being collections of distinct works (images, CSS files, PHP files), need not be GPL-licensed as a whole. Rather, the PHP files are subject to the requirements of the GPL while the images and CSS are not. Third-party developers of such themes may apply restrictive copyrights to these elements if they wish.”

This falls in between WordPress developers’ wish that the whole community support libre software and Thesis’ completely closed license. Theme PHP must be GPL-compliant, but the graphics and CSS may be licensed otherwise.

As someone who makes custom themes for clients, I am familiar with the feelings of apprehension about open sourcing some of your work – often done for a client who neither knows nor cares about the finer points of free software principles. The common fear is that by giving away your code, you also give away your business model. This couldn’t be farther from the truth. (Unless your business model depends on every customer abiding by your copyright – a foolish strategy in light of how easy it is to pirate web app source code, not to mention an overvaluation of the originality of your source code) (UPDATE: WordPress’ own Jane Wells points out that it’s even less complicated than this for custom theme work, as you only must publish your source under GPL if the theme itself is publicly distributed.)

The truth is that many companies comply with the GPL, retain their trademarks and licensing rights (including WordPress theme graphics and CSS), and do so to great profits. Google, Apple, Facebook, Red Hat, Novell, and countless others make their GPL source available – as do many other WordPress premium theme makers. You can sell themes as long as your PHP complies with the GPL. Pirates can easily copy the rest of your theme regardless, but embracing the GPL not only complies with copyright law and the license terms, but it supports the ideals that made WordPress possible, and makes the whole community project stronger for everyone. And you don’t have to go out of your way to be financially sustainable while doing so, either. Novell and Red Hat sell their entire OS open source under the GPL, the Mac OS X kernel and UNIX userland is open source, so there is no reason why a WordPress theme can’t be both GPL-compliant and profitable.

In short:

  1. Know the license before you use any software
  2. REALLY know the license if you plan to make any money by reselling/extending/developing on top of that software
  3. Comply with copyright law and license terms
  4. Have a business model that relies on your ingenuity and competitive advantages, not on often-disrespected intellectual property laws. If it works for so many on the Fortune 500, it probably can work for your small business.