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One word: disintermediation. iFlowReader was acting as an intermediary, selling a publisher's ebook to a reader and taking 50% of the revenue. Why should Random House pay someone 50% of the selling cost for doing an arbitrage play on a bunch of ones and zeros with no additional effort? Random House can cut out the middle man (who adds no value) and sell it themselves. It's a smart business move.

Now iFlowReader claims to offer a more compelling interface, so pivot and find a way to sell the reader software either to end-users who can import their already-purchased ebooks or license it to the publishers. Offer branded versions of the software to the publishers if it's that good and charge the publishers based on a percentage of the gross purchased through the software, which should be quite easy to track.

Except RandomHouse isn't cutting out a middleman here, they're just using a different one.

I was of course referring to a middleman between Random House and Apple. Whether Apple is also a middleman is a different discussion.

How was iFlow Reader a middle man between Random House and Apple?

In that the owners of IFlow Reader tried to monetize by getting a piece of every ebook sale, and when that strategy failed, they decided to stop selling iFlow Reader.

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