As of May 31, 2011, iFlow Reader and BeamItDown Software will cease to exist. The untimely demise of this small company is a tale of a company that played by the rules and achieved success--until Apple changed the rules and killed it.
An open letter on the iFlowReader.com Website explains, "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."
What is iFlowReader? iFlowReader is an innovative app for reading electronic books in the industry-standard ePub format. The iFlowReader app is...or was available through the Apple App Store for use on iOS devices--iPhone, iPad, iPod Touch.
The iFlowReader app and book business are a drop in the bucket compared to the big dogs--Apple with iBooks, Amazon with Kindle, Barnes and Noble with Nook. Tragically, though, the app and the company behind it are forced to shut down because they got in the crossfire as Apple changed the rules to try to gain a competitive edge for iBooks over the Amazon Kindle app on iOS devices.
So, what happened? When Apple introduced iBooks and got into the book game to go head to head with Amazon and its ubiquitous Kindle app, it decided to make new rules. Essentially, Apple changed the rules so that companies must pay Apple a 30 percent fee for any content sold within their app to try and stifle price competition from rivals like Amazon, and at least get a cut of the action from the continued success of Kindle.
The problem, as described by the iFlowReader team, is that book publishers have adopted an agency model for doing business which pays the retailer a 30 percent commission on sales as an agent of the publisher. That means that after operating costs and expenses, the retailer isn't actually making 30 percent in the first place. You can see where this math is going--Apple's 30 percent fee is more than an app like iFlowReader makes in the first place, so the new rules mean that iFlowReader is selling books at a loss. It is hard to stay in business that way.
The iFlowReader.com open letter sums up with, "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," adding, "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."
If you are an iFlowReader user, or have an investment in books through iFlowReader, make sure you visit the site before the end of May and follow the guidance provided to make sure you will still have access to the library of books you have accumulated.