The iFlow Reader Closes Down

Apple announced a new subscription service for all publishers of content-based apps last February. This new service takes 30% subscription fee for the company, pushing bloggers, publishers and mainstream media to call them everything from greedy to non-competitive. For iFlow Reader, this system takes away any revenue margin that they have. As a result, they will be closing down by the end of May.

As stated on iFlow’s open letter to Apple:

“BeamItDown Software and the iFlow Reader will cease operations as of May 31, 2011. 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. 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.”

While other reactions were ambivalent, this situation creates a bleak picture for small eBook retailers. However, Apple’s CEO – Steve Jobs – explains their simple philosophy in terms of the ‘agency model’ adopted by large publishers.

“Our philosophy is simple, when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing. All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app.”

But the iFlow Reader team sees it quite differently, pointing out that their American dream is now over.

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