Friday, February 18, 2011

Daylight Robbery

Window tax was introduced in England and Wales in 1696, effectively taxing houses by the number of windows they had. Many windows were merely bricked up and impact can still be seen today in many old buildings which is where the phrase 'daylight robbery' comes from. Like many unjust taxes it itself can change people and their relationships with previously trusted parties.

Google have now created their own tax in response to Apple's tax. Some would say ‘anything you can do, I can do better,' First it was mobile phone platforms, now its payment toll (tax) booths.

Apple first raised the hairs on most publisher’s necks when it declared that it wanted a tax cut of everything bought on its iPlatform. Whatever logic, 30% was the demand and they effectively opened up the first subscription toll booth on their stretch of today’s super highway.

Google then stepped in announcing their own payment toll both called 'One Pass'. It was different is some ways, but very similar in others.However the cherry on the top was that they choose to only levy 10%. Google’s ‘One Pass’ payment system for magazine and newspapers also gives publishers greater freedom to offer different deals though different channels and importantly maintain a close relationship with their subscribers. However both charges appear extreme when lined up with merchant card charges.

One unfortunate aspect of this high profile sparring is that Apple may just get off the hook from landing into heavy antitrust concerns over its iPad newspaper subscriptions services. Andris Piebalgs, an EU commissioner, wrote in a response to questions from a Belgian member of the European Parliament that the commission ‘couldn’t judge whether Apple has a dominant position because the tablet market is “relatively new and evolving.’ In the US, the Justice Department and the Federal Trade Commission are looking into whether Apple’s plans may violate US antitrust laws. The Wall Street Journal reported, that the US inquiry is preliminary and may not develop into a formal investigation or lead to any action against Apple.

So in the minds of the market, 10% plays 30% and its going to be hard for Apple, if as expected, Android tablets join Android mobiles in dominating the market. It also makes Amazon look almost saintly and a victim.

Finally, any self respecting media organisation will now start to think twice about the app-based model of distributing content and move towards a new level of web-based services based on a HTML5 world. Apps offer so much but now clearly carry a new and dangerous health warning to media businesses. It is somewhat ironic that its was another Steve Jobs edict that raised the profile of HTML5. Some say that his greed may hasten that world he desired and it may also now drive a Flash based revival. The one thing that is certain is that publishers do not welcome having to pay taxes every single time they deliver value to consumers.

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