Apple wants a 10% cut of all Made for iPod accessories
posted Mar 18th 2005 11:50AM
There was nothing too nefarious about Apple coming out with their new "Made for iPod" seal of approval program a few
months ago—it was pitched as a convenient way for consumers to know for sure that the accessories they're buying will
work with their iPod—but according to CNET there is a dark side to the program: Apple is now demanding a tithe of 10%
of the wholesale price of any Made for iPod accessory. No one is forcing anyone to participate in the program (it's not
like you need Apple's permission to make an iPod accessory), and it's completely normal (and expected) for
manufacturers to drop a little coin for the licensing rights for a logo or to pay for the certification process, but a
10% cut? Sounds less like Apple is trying to look out for consumers (who may end up paying a little more for Made for
iPod accessories unless manufacturers decide to take a hit on their margins) and more like they're just looking for a
way to get a nice chunk of the rapidly-growing market for third-party accessories without actually having to sell
anything extra themselves.
[Thanks, Mazo]
Isn't it a little too late for this?
I love how manufacturers disguise their inventive programs with the statement "Nobody has to participate"....
More and more companies are trying to force these kind of schemes on their distributers and 2rd party developers. Who is loosing in the long run? We, the consumer...
Geez, this company used to be my favorite. (I've used Macs exclusively since 1988.) They sniff a little success, and they start to act like "little Napoleons".
Pathetic.
What next? Suing anyone using 'i' in front of their product names?
Why is this an issue? Companies can buy an iPod logo for their product for a 10% fee. Don't want to pay? No logo. Easy peasy!
Another reason Apple sucks. Just kidding.
I remember iPod socks, I even bought a pack because I thought they represented such amazing value. And I don't even have an iPod! $5 each is nothing for a fairly cool quality gadget sock, and it is cheaper than an actual foot sock.
But then I do live in London so have a fairly warped view of good value.
this seems to be basically the same thing Nintendo used (still?) to do during the NES days. manufacturers paid money to get a little 'Nintendo Approved' logo. the only difference is that Nintendo used to actual sue people that made accessories (specifically games/cartridges) without their permission. i'm thinking of Tengen here. i doubt Apple will sue for someone making an 'unapproved' iPod accessory. unless it's something that allows you to download un-DRM music from iTunes for free or something like that... that has a larger problem than just not being 'approved'. if you don't want the badge... don't pay for it. if you think it makes business sense to get the 'made for ipod' badge... pay for it. doesn't seem like anyone is strongarming anyone.
It's not really a "disguise" to get some extra money -- fact is, these companies ARE making money off the iPod. If the company wants a logo on their product (which will probably sell more because of the logo) then they have to pay 10%.
But yeah, I agree that the customer loses out, possibly because the companies might just charge 10% more?
What I love is how people forget that Apple is a business, and businesses are out to make money. Apple doesn't do charity work for us Mac users -- I love how people think this company is a sister company of Heaven or something. Jesus!
Fishes,
narco.
Unless Apple certifies that the product will not damage the ipod and shares the liability with the vendors or provides unique insight on its products specs to the vendors, this is on the high side of royalties.
Not a bad thing, IMO. I owned a ipod photo 60 GB, I bought an Xtrememac leather case that said it worked with it, but when I tried the case, it was clearly not suited for use with that ipod. I ended up returning both. I am sure in other countries where it isn't as easy to return things, making sure that an accessory works the product has value to the customer.
Its a non-issue. We might as well start castigating Nintendo for not only charging a licensing fee but requiring it.
Anyway, for the uninitiated, take any news article that has "sources says" in the first paragraph with a grain of salt. 10% figure sounds rather high, I don't doubt that the anonymous source sold the reporter on a story using inflated numbers.
One of the problems with being the "Think Different" computer company is that people seem to think that Apple is somehow immune from the need to conduct business in the real world.
So people are shocked — shocked — that Apple sues bloggers, charges money to its licensees, and enforces DRM on its iTunes tracks.
The "Made For iPod" program has a non-zero cost to Apple. They are effectively endorsing the accessory. They have to ensure that it is tested accordingly. This cost will be born by the consumer, whether Apple does it or iPodbeltloopz Inc. does it. What the 'Made for iPod" program does is formalize the role Apple plays in that process.
The DRM issue is similar. Is iTunes an improvement over Napster? Don't think so? Fine, keep stealing if that's your idea of a fun time. Just don't expect Apple to stand still while you find ways to steal ("share") iTunes tracks. Apple will keep reinforcing the DRM on iTunes to keep the labels on board. It's not about Apple's greed: it's about the labels and the solidity of the license Apple is granted to sell their tracks.
And the same can be said of the Thinksecret business. If Apple doesn't enforce their Non-Disclosure policy, that policy has no value. If I were to set up a blog whose sole purpose was to _damage_ Apple and I sought to _steal_ trade secrets from them, and publish them on the Net, would I be protected by the First Amendment from the legal consequences of those action?
What if I was being paid by another, say, LARGER corporation to do so? Would I (and they) still be immune from prosecution because I set myself up to look like a fan site or an investigative reporter?
Apple exists in the same world as everybody else. If one values Apple's products, one ought also to value their ability to survive, and even profit, from making those products and selling them.
They should change the Apple name to iSue or iSueyourass
apple tryna soak up spilt ipod money
those little people who makes those ipod accesories are infact doing more good for ipod sale, that should be enough for apple, but it wants a slice of their pie as well,
I completely understand that business is business, but it gets a little stupid when everyone refers to Microsoft as M$, with that witty little dollar sign, and everyone thinks Apple is God's gift to computers.
They're just as bad in my book. At least MS was successful for the most part, in it's monopolistic attempt.
Steve Jobs is just as bad as Bill Gates.
Another 10% advantage for the competition. Apple is pushing this fee to the max. 1-3% are more common for something like this.
It wouldn't surprise me if Apple only allowed endorsed third-party products to be sold in their stores, also.
No doubt Microsoft wants a similar cut for their PlaysForSure logo.
What LucasFilm charges for the THX certification is said to be absurd. Of course, it's kept quite secret, as any Made For iPod charge is supposed to be.
Ummm...
This is how the world works folks. Always has. It's no big deal and it's a good deal for Griffin et.al and consumers. Apple has a lab where they are gonna test these accessories, that's a good thing.
And for companies that participate they get prime retail space @ the Apple store and will sell more product. When they sell more product, the cost per unit goes down and profit go up!
Apple's business practices are no better or worse than anyone else. If you don't like Apple or it's products don't buy them, but please quit whining, it's really getting boring.
I can confirm that the royalty is in fact 10%, #10. It's not an exaggeration.
The consumer is really the loser in all this. 3rd party developers will raise the price to cover this cost and still others will refuse to pay it and will get out of the iPod business all together.
Once a tax is in place, it's almost impossible to get it removed. Who's to say next year the tax doesn't go up to 12%? or 15%? They will continue to tax them as long as they continue to pay. To see companies like Belkin and Griffin just roll over and pay it is an embarrassment(way to fight guys!). Van Harlingen is wrong when he says he doesn't see any reason for the prices to go up. Companies aren't going to lower their margins to make up the difference for this tax.
And there are NO benefits to this logo. Apple will not be testing this equipment any more than it does now. You're paying 10% for the logo on your box and the right to have it sold through their sales channels.
It's besides the point that every company act like this... I think what really amuses me is that "mac people" allways defend Apple. You can't have it both ways... if you stop complaining about Microsoft and others, fine, but stop being so damn hypocritical!
Whatever. Let them keep making all these little manuevers that put them right back on the brink of bankruptcy in the pre-iPod days. They have the market share majority now, but the market is expanding, and pretty soon the market will be saturated (if it isn't already) with digital music players.
Just think of Sony and the Discman back in the 90s. Instead of making it easier to own an iPod and iPod extras they're making it harder and as they loose market share to iAudio, iRiver, and Creative don't you think the companies making accessories will also go that way.
Apple's always a been a 'my way or the highway' company. I guess that's why the highway is so congested.
#14:
You don't honestly believe that people are buying more iPods because they like the ACCESSORIES, do you. They buy iPods because they value the product. Accessories are purchased after consumers have the iPod itself. The only reason there's a market at all for these accessories is because of Apple. So, it's perfectly reasonable for them to want a share of the profits from accessories. The badge will be a sign of quality, something that reassures consumers that someone has actually tested that the product works as advertised.
I used to think that Microsoft was the evil empire...
http://www.grouchygolf.blogspot.com/
"I completely understand that business is business, but it gets a little stupid when everyone refers to Microsoft as M$, with that witty little dollar sign, and everyone thinks Apple is God's gift to computers."
Well, the big difference is that MS (note: no "$") is a convicted monopolist. Apple is not.
It's like saying the high school bully down the street from you is no different than Jeffrey Dahmer or Ted Bundy. Ok, maybe the high school bully down the street does a lot of bad stuff and maybe some of it you don't know about. But if he's like most high school bullies, he is not a convicted serial killer. The comparison is not valid.
Honestly, I think writing "M$" is pretty stupid as well, and I don't blame MS for trying to make money - it's a business. But the fact is they have broken the law, repeatedly, they have been convicted of that, and if you read the news today, they continue to break the law even now. That's a whole different category than simply being a capitalist.
I do also agree that Apple is not "god's gift to computers" either. But the fact remains, between Apple and MS, one is an official monopoly that's been convicted of unfair business practices, and the other is not and has not.
#24...apple is breaking the 'law'..but as of now, its not become a large enough company for the government to take notice
and somebody talked about sony and walkman and how the market got saturated.
This time its slightly different... at that time you could still play your cds and cassettes if you bought a different portable player from another manufacturer.
Here if there any songs you got from iTunes, you will have to buy an iPod to listen to them, until the government will intervene.
How is Apple "breaking the law?"
If Griffin wanted to use a U2 song to promote one of their products, nobody would question why Bono and the crew came asking for their royalties. That is exactly what the "made for iPod" companies are doing, though. They make most or all of their money selling products that are specifically designed for the iPod. What gives them the right to make money off of someone else's name without kicking back a reasonable amount of their economic profits. As it is - they're raking in free money.
The logic in #27 if flawed. A song from U2 is a copyrighted work of art (opinions nonwithstanding) not an electronic device. A company does owe another royalties logically if utilize technology ivented by them, but if you make something that simply interfaces with another product you owe no such payment.
That would be akin to Goodyear having to pay Toyota because their tires fit on their cars. Just because a pair of headphones is white doesn't mean they owe 10% of their earnings to Apple.
That is why proprietary formats often fail. Universality leads to increased competition and slimmer profit margins, but also product survivability. See Mini Disc for more information.
I can't wait till this whole iPod fad fades away so we can stop hearing about all this crap.
Steve Jobs is Bill Gates?
Uh.. LMFAO.. you do realize there are in excess of 400 iPod accessories out there, right? Basically, the iPod with its resounding domination of the MP3 players market has become the PLATFORM for accessory makers.
So Apple is going to appease the shareholders and put in a 10% fee for basically, testing the accessory and defining which iPod this thing works with (2G, 3G, 4G...) which is not a huge cost. They're not strongarming anyone into using this program... Companies like Griffin don't need the label, because they're established as an iPod company...while some no name start ups, might go for it.
Since iPods are pretty much ubiquitous, or will be by the end of this year, you're going to start seeing pictures of them everywhere, or see them on TV, in sitcoms, etc... the thing is it should never get to the point where you're not letting the customer know what the accessory work with. It's nice that they have a quality control division, like Nintendo does...
I find it hilarious.. that the same people who are 'dissing' Apple for making money of this booming iPod Economy are the same ones who criticize Apple for being such a 'small' company.
They now have a bigger market cap than Sony, okay? SONY!
Apple is not going out of business, okay?
And no, Jobs is not Gates.. Gates jacks up licensing fees on his little monopoly.. those are no OPTIONAL.
And there are NO benefits to this logo. Apple will not be testing this equipment any more than it does now. You're paying 10% for the logo on your box and the right to have it sold through their sales channels.
----
No benefits for an optional logo, hmm?
Then they won't use it.
There is a benefit to the logo.. if Apple endorses your product, it looks good..
What people always seem to forget when the new "HOT THING" comes about, is that these things disappear. It's always "Hey, remember that thing? It was so hot 20yrs ago. Oh, but that won't happen to this _____." It will happen to the iPod. The iPod will eventually saturate the market and its fashion appeal will disappear and it will become nonexistent in 2 years or less.
Poster # 30.
You've fallen into the same trap as others.
Apple will not be testing the accessories under this program.
Your going to be paying higher prices just beacuse of an endorsement by Apple. No testing, no guarantees, nothing.
BTW, Griffin will go for this program & 10% of the SRP will go straight to Apple. It's the smaller companies that won't be able to afford this tax. Ipods & accessories go hand in hand, they are interdependent. An iPod is just a reasonable MP3 player with a user friendly interface, the accessories extend it's useability.
Everybody has a right to make $$s but don't confuse this as a benefit for iPod users, it's just a grab for more cash without Apple having to do anything.
#18
The playsforsure logo while doesn't guarantee everything, it does ensure:
Driverless connectivity
AutoSync with WMP10
DRM'ed Purchased Audio
DRM'ed Subscription Audio
DRM'ed Purchased Video
DRM'ed Subscription Video
THX certification is well, a certification that says this equipment meets their very high standards down to a very small margin. Lucas and company (or whoever owns THX now) certifies the equipment themselves which is why it's so expensive. They don't want their logo on a $69 Walmart receiver.
What exactly does Apple guarantee or ensure on "Made for iPod" accessories? Let me guess, a 10% price hike that isn't necessary.
It's not a necessity, none of it is. Gas, food, clothing... those are necessities, yet people pay much more than 10% over what they need to for brand names without so much as a second thought. Spending any amount on an iPod is 100% more than you NEEDED to spend so why whine about 10% more on top of that? People just need to put things in perspective.
#28 - You said:
"That would be akin to Goodyear having to pay Toyota because their tires fit on their cars. Just because a pair of headphones is white doesn't mean they owe 10% of their earnings to Apple."
Nice try. Goodyear isn't exclusively selling tires for Toyotas - AND - if Goodyear decided to only make tires for Toyotas AND base their tires soley off of a Toyota design AND use the Toyota logo to sell their tires, then Toyota would be entitled to royalties.
My point is, you can't make money off of someone else's work for free. And I would't call products like "iTrip," and "iMic," just a "white pair of headphones."
"What gives them the right to make money off of someone else's name without kicking back a reasonable amount of their economic profits."
The free market. They're not "making money off Apple's name", they're making a product that happens to be compatible. Nobody owes the original manufacturer anything for that. Legally and morally, manufacturers don't have monopolies on accessories.
They do frequently try - non-standard connectors are a common technique. Some PDAs require permission to buy the plugs and stuff like that, but if you can make the accessory with that, you're clear.
010111 is right. The game console industry does it why can't Apple? Have you walked into you're local Apple store? It's a flippin iPod store! The Macs are crammed in the back.
They also did it with FIREWIRE. (Sad this will get lost in all these comments!) That's why they eventually lowered the rate to use "Firewire." Why Sony called it iLink or whatever instead. Or called by it's standard.
This isn't news! Don't post it? *sigh* This is why commercialized blogs suck.
It was the time.
I wonder why 90% of the iPod accesories are too ugly to put them near an iPod... probably 95% of the 3rd party accesories...