Last week we saw Amazon drop a bit of a bomb on the competition by offering a $50 per year data plan. At 250MB a month, it isn’t a very good data plan, but people will buy it. I wondered how Amazon could have negotiated such a good deal with AT&T. Perhaps they’re cutting them in on revenue from users who shop on Amazon while using a Kindle Fire HD via the LTE data network? It was purely speculation, but it intrigued me enough that I spent a bit more time thinking about this whole topic. And I quickly realized that Apple actually has a pretty well-established iTunes affiliate program.
In case you aren’t familiar with affiliate programs, they allow someone to earn a commission by promoting some other company’s products. For example, website (like iMore and many others) can link to great new music via iTunes, or amazing new apps via the App Store, and receive a percentage of any referred sales, without costing the end user anything extra.
The last time I checked, Apple’s iTunes affiliate program paid a 10% commission on sales. So what if they struck a deal with wireless carriers like AT&T and Verizon, essentially treating the carrier as the affiliate on any sales conducted over the cellular network? The carrier would make additional revenue on all iTunes and App Store sales, and Apple could use this to negotiate lower priced data plans for its customers.
It seems to me that any vendor who can get its customers a lower priced data plan (versus other vendors), has a significant competitive advantage. Amazon has started down this road already, and I think Apple could be next if they want to be.
Can Google, RIM or Microsoft do the same? I don’t think so. At least not with something compelling to sell to the end user. Android users don’t tend to spend much money on apps (as least based on the developer discussions I’ve had). Google doesn’t really sell anything other than Adwords (and consumers don’t care to buy pay per click ads). RIM doesn’t even have an affiliate program created yet, but at least their users actually spend money on apps. And Microsoft? They’re hardly out of the gate yet.
Apple has a huge app and iTunes ecosystem that people actually spend money on. Every day. Amazon has a massive retail backend along with a great library of digital content (even if they have very few apps). Both companies have well-established affiliate programs. Cutting in the carrier as an affiliate seems to be logical.
It seems to be a competitive advantage.
But would Apple do it?