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How Amazon’s Tablet Perpetuates Apple’s Stranglehold on Media App Distribution

Amazon appears to be offering publishers the same unsavory terms as Apple, which feels like a missed opportunity.
September 26, 2011

On Wednesday, Amazon will unveil its new seven-inch tablet, which is rumored to be based on the now-defunct BlackBerry Playbook.

Artist’s conception of the forthcoming Amazon tablet.

The good news is that a major player in both the media distribution and hardware space will finally drop a device that could be competitive with the iPad by virtue of price alone. The bad news is, Amazon is using the same leverage Apple possesses to give publishers of content on its tablet basically the same terms that Apple arrived at, namely, a 30 percent commission on all sales.

It’s not clear if Amazon will also be restricting publishers’ access to customer information in the same way that Apple has, but if it does, it suggests that more and more publishers will be forced—on pain of their continued survival—to build HTML5-based web apps that go completely outside of the App ecosystem and are instead delivered via the web, as the Financial Times did.

Indeed, a consortium of France’s most-read papers is trying to renegotiate these terms with Apple. They’re getting better terms from Google’s Android App store (a 10 percent commission and better access to customer data). With Amazon’s announcement, the possibility that Amazon would try to compete with Apple for publishers by offering more reasonable terms, as Google has, is now off the table.

That’s unfortunate—if Apple’s terms become the default industrywide, it will be another blow against the ability of already-ailing content companies to survive the transition away from print. By failing to offer publishers a real alternative, it seems just as likely that Amazon’s terms will drive publishers to the much-better-trafficked Apple App store, where at least they can try to make up on volume what they aren’t making per unit.

There is another possibility, however. It’s hard to imagine that Amazon’s 7 inch tablet will offer all that satisfying a reading experience. Now that some of the publishers who are on board with Amazon’s Wednesday launch have already lowered the price of their iPad apps to zero for existing subscribers to print, it seems possible that publishers now view their tablet magazines as loss leaders for the print product.

A world in which publishers can only profit by making their print product more attractive than their digital one doesn’t seem to benefit Apple or Amazon. Perhaps it will require the ascendance of fully Android-based tablets, for which the commissions and terms are reasonable, to break this deadlock.

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