updated 10:55 am EDT, Wed May 11, 2011
Smaller sellers being squeezed out, company says
iOS app and e-book vendor iFlowReader is shutting down as of May 31st, according to an announcement. "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," part of the statement reads. "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."
The problem, according to iFlowReader, is that Apple has adopted an agency model for e-books, which in turn has been implemented by the major publishers. "Agents" -- such as iFlowReader -- are required to sell books at a price set by the publishers. Because agents currently only get 30 percent of the commission on a book, and must then pay another 30 percent to Apple, small booksellers are being squeezed out of the market, iFlowReader argues.
The company points out that on March 1st, Random House became the last of the big publishers to switch to the agency model. On February 28th all Random House titles disappeared from iFlowReader's store, only to appear on Apple's iBookstore the following day. Until that point the company notes that it was still getting a standard 50 percent discount on books it would put up for sale.
"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," the iFlowReader statement continues. "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.
"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."
Apple's competition for e-books is now mostly limited to Amazon, which avoids the brunt of the issues mentioned by iFlowReader by selling books through its own Kindle platform. In the Kindle iOS app, books are simply synced with a person's Amazon account.