Apple pretty much confirms all ebook apps must offer In App Purchasing

The blog FutureBook writes that it has received direct confirmation from Apple that its new rules about mandatory In App Purchases (IAP) will indeed apply to ebook apps as well, contrary to my interpretation of their vague press release yesterday. I haven’t been able to find another direct confirmation anywhere else yet, but if FutureBooks is correct — and it backs up this claim by citing an official App Store guideline — then it looks like Apple is indeed setting things up so that either ebook prices in general will rise, or ebook sellers will be forced to abandon the iOS platform.

Most news organizations and blogs have been reporting the same stuff I wrote about yesterday. For instance, MarketWatch spoke to an Apple rep who confirmed just what was in Apple’s press release: that Amazon has to remove any links to its web-based Kindle Store, and that if Amazon wants to sell ebooks from within its app it can, but only if it uses Apple’s IAP and pays the 30% commission.

However, Marketwatch does not confirm that Apple is forcing Amazon and other sellers to include IAP.

FutureBook writes that an Apple rep confirmed the same thing: that ebook apps will have to remove links to their web stores, and if they sell ebooks within the app they’ll have to use Apple’s IAP.

But again, that doesn’t mean Apple is requiring IAP, only that it’s not allowing other payment methods for in-app transactions.

I know, at this point I sound like I’m at the doctor and looking for loopholes to get around the cancer diagnosis, but there’s a reason I’m being so stubborn. Until Apple actually says publicly what it expects ebook sellers to do, the media will conflate various announcements, articles and blog posts into “news” that is only partly accurate. I don’t want to accept any single story as fact until there’s proof that Apple has actually said something.

But finally, here’s some actual Apple evidence, again reported by FutureBook, that seems to confirm everyone’s worst fears. It’s a section of Apple’s App Store guidelines:

11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions.

That’s pretty explicit: it clearly says books are included, and it clearly says the rule applies to “purchased content” as well as subscriptions.

Computerworld is reporting mostly the same thing, but it admits it hasn’t spoken to Apple, so I imagine it’s interpreting the rules and doesn’t count as a reliable source.

So I guess I have to stop hoping for the best. What’s unfortunate about this is that I don’t think it’s just a power struggle among companies, because the end result could quite possibly be higher ebook prices for consumers. Although Amazon is just as secretive as Apple, it’s widely assumed that the company is either barely eking a profit on ebook sales or even taking a loss on them, which means that its competitors are likely only turning a slight profit at best. Handing a 30% cut to Apple will surely wipe out any profit on iOS sales, thus negating the benefit of offering an iOS app at all. The options at that point are to either raise ebook prices across the board (Apple’s rules state that IAP prices must match prices elsewhere), or to pull the iOS app and deprive customers of being able to easily read their ebooks on their iPads and iPhones. A third possible alternative is to negotiate a lower commission with Apple, but that’s not a realistic option for every company, and if margins are truly as low as expected, it’s unlikely to be a viable strategy.

I’m unhappy with Apple this morning, as should be anyone who reads ebooks. The company appears to have invented a 30% tax on reading ebooks on the iPad.

Update: Although I usually loathe Gizmodo, this post from the smarter Australian version sums up Apple’s profit-killing maneuver quite accurately: “Apple’s new subscriptions – while justifiably wrapped in the smooth, glossy coat of user-friendliness – are a major power grab that inserts the company between basically every content provider and every iPad and iPhone user. …In technical terms, this is a dick move.”

“Official: Apple locks down the Kindle app” [Futurebook]
(Photo: Shirley Buxton)

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