Update: It seems Apple has somewhat confirmed that ebook apps are included in the new requirements. My two predicted changes below remain fairly accurate, but now you can add two more potential changes: either the apps will go away completely, or ebook prices could rise.
Last week I was convinced that Apple wouldn’t try to enforce an In App Purchase (IAP) requirement on ebook apps, mainly because when it rejected the Sony app earlier this month, it approved a significant Kobo app update at the same time.
Sony deliberately avoided details while it begged for sympathy from the press, but between the lines it looked like it had tried to implement its own proprietary IAP functionality, which Apple has never allowed. No one should have been surprised that it was rejected (and I imagine Sony expected the rejection all along).
In addition, everything that’s been reported by real news agencies so far has focused on Apple’s scheme to make money off of magazine and newspaper subscriptions, not off of competitors’ individual ebook sales.
Well, today Apple finally clarified how this new IAP policy will work for subscriptions, and with two possible exceptions it looks like ebooks were excluded.
The crucial descriptive element for determining what falls under the new policy is “subscriptions”: if you sell some sort of subscription service, whether it involves text, pictures, music or video, Apple now will take a cut of any new customers acquired within the app. This likely includes companies like Netflix and Pandora, but I’m not sure if Apple will consider other subscription-based services — like Toodledo and scanR — to be “content providers” in the same way.
So the good news, if I’m reading this correctly, is that non-subscription ebook apps will still be around when the dust settles — and it’s unlikely that Apple’s new policies will trigger an across-the-board price hike as I initially feared.
The bad news, however, is that the new policy will probably lead to reduced functionality with your ebook app of choice, mainly when it comes to shopping and reading periodicals. Here’s why.
1. Links to web stores might go away. Apple forbids apps that fall under these new rules to link to external payment mechanisms in the browser. This definitely prevents, say, a magazine app from linking to a web page that sells subscriptions, but it’s not clear yet whether the rule will also apply to apps that offer single payment purchases, like the Kindle, Nook and Kobo apps. Common sense says no, since they aren’t selling subscriptions, but Apple says publishers may not link to a page that sells content or subscriptions, so it’s possible this includes ebooks.
2. Ebook sellers likely won’t offer magazines and newspapers on the iOS platform. Since magazine and newspaper subscriptions are expressly listed under the new rules, companies like Kobo will likely have to either remove their own magazine and newspaper subscriptions, or use Apple’s IAP feature and take the loss (or else hike prices). I suspect this is why Amazon rolled out magazine and newspaper support to Android devices last year, but has so far held off on bringing the same functionality to iOS. (I’ve seen a Kindle magazine on the Kindle iOS app, and it works fine — the issue isn’t a technical one.) My guess is the Kobo subscriptions will stop showing up on iOS apps by summer.
It’s still possible that Apple will go after ebooks, but I’m not sure they have any reason to pick a fight over this, especially when the opponent would be Amazon. Besides, the crucial difference between ebooks and periodicals on iOS is ebooks are already here, and people are already used to paying certain prices for them; an across-the-board price hike would not only meet a lot of resistance but earn Apple a ton of negative scrutiny by the press and (more important) the government. Periodicals, on the other hand, are still in an embryonic state on the platform, and they’re often considered too expensive by customers in their current single-issue format.
I’m still no fan of this idea that iOS users are “owned” by Apple, but for now I’m cautiously optimistic that ebook apps will stick around for a while longer. And if not, hey, there’s always Android.
“Apple Launches Subscriptions on the App Store” [Apple]
(Photo: pasukaru76)
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By Jordi B. February 15, 2011 - 4:51 PM
All this has a simple solution. Don’t buy any Apple products. Ever. No matter what.
Since that’s not gonna happen, I hope the Cuperino company will get some unwelcome visits from American and European antitrust offices. If Microsoft deserved it with Internet Explorer and Media Player, Apple deserves it twice.
By Chris Walters February 15, 2011 - 5:22 PM
@Jordi B.:
I can sort of accept the subscription IAP if it remains focused on subscriptions only, because in that sense it’s not very different from the IAPs that Apple already enables for other apps. It will let Apple continue to protect its brand as well as customers (by helping guard against low-quality subscription services), and it will let smaller publishers offer subscriptions without having to invest in expensive CRM systems. BUT at the same time, I hope at least some publishers use this as motivation to develop killer web apps, and get out of Apple’s grip entirely.
What I don’t like, though, is Apple’s assumption that because it built the platform, it “owns” the customer base–especially since it seems to be expanding the scope of what it should take credit for. I’m pretty sure I already paid Apple for the device, and in some cases for the app as well. Claiming profit from content seems a very slippery slope that ends with Apple saying it owns a piece of everything that appears on one of its devices.
By Jordi B. February 15, 2011 - 6:39 PM
@Chris Walters:
Let’s say that a movie service such as Netflix or a TV series service such as Hulu+ offer an iOS app to consume their content on a subscription basis. I don’t know how these services work since I am not based in the US and I certainly have no iOS device, for all I know they work as web apps under iOS, but bear with me for the sake of the argument.
So, Apple automatically gets 30% of Netflix monthly fees for all iOS users?
What happens if I am subscribed to a newspaper and I get a free online subscription to go with it? Do I have to pay twice?
It’s more or less acceptable for Apple to enforce content subscription apps to be paid once (rather than free), but to get 30% fees off them on a monthly basis is pure greed.
By Chris Walters February 16, 2011 - 9:31 AM
@Jordi B.:
(For context, Netflix’s app is built specifically for iOS and relies on Apple’s platform to stream movies.)
I think it will work as follows: If you sell a service or product to a customer outside of the app, there’s no commission paid to Apple, so in that respect Netflix will continue with business as usual. However, starting this June Netflix will have to offer the ability to subscribe to its streaming video service from within the app, and it can’t charge more for the subscription there than it does on the web, and Apple will take 30% of that.
My fear is that many businesses won’t be able to sustain a profitable app if they have to sell subscriptions through it at a loss, so they’ll be forced to pull the apps. I’m guessing Apple thinks otherwise, but man, 30% seems like an outrageously high commission.
Also check out this new post — if FutureBook is right, then ebook sellers like Kobo and Kindle will *have* to sell their books within the app using Apple’s IAP, which would almost certainly wipe out any profit at current ebook prices.
http://booksprung.com/apple-pretty-much-confirms-all-ebook-apps-must-offer-in-app-purchasing
By Booksprung » Apple pretty much confirms all ebook apps must offer In App Purchasing February 16, 2011 - 9:20 AM
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By ArtikelNU.nl » Blog Archive » Het is e-boekenweek March 7, 2011 - 2:41 AM
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By Moses Siregar III April 14, 2011 - 3:46 PM
Hi Chris, thanks very much for this article. I’ve been searching for recent news on this subject (mainly how the kindle and nook apps might be affected, in light of what’s happened with the sony app), but I’m not finding much of anything. Have you learned anything new? Thanks again!
By Moses Siregar III April 14, 2011 - 5:38 PM
I just spent a few hours trying to figure this out and wrote up a blog post about it.
From what I’ve gathered, it doesn’t seem to be true that Sony was rejected because they offered their own in-app purchasing method. I talk about that in the blog. Thanks again for your article.
By Chris Walters April 14, 2011 - 6:36 PM
I think you’re probably right. If we can believe the Sony PR guy who contacted Technologizer, and the iOS app was indeed only linking out to a web store, then it looks like Apple applied stricter guidelines to Sony than it did to Amazon, B&N, and Kobo.
If that’s the case, then I assume Sony was shut out mainly because it was late to the party, whereas the other three apps are being grandfathered in.
As to your other comment, so far as I know Apple hasn’t changed its June deadline for all currently approved apps to comply with the new In App Purchase guidelines.
I still can’t imagine Apple is willing to weather the criticism of forcing existing apps off the iOS platform, so I’m hoping for a last-minute clarification. At that point, maybe Sony will be able to join the herd. But this is all guesswork of course.
By Moses Siregar III April 18, 2011 - 10:37 AM
Do you know any good links that talk about the June deadline? I haven’t seen much about that.
By Chris Walters April 18, 2011 - 11:47 AM
http://digitaldaily.allthingsd.com/20110215/june-30-deadline-for-apple-subscriptions/
By Moses Siregar III April 19, 2011 - 1:15 PM
As you’d mentioned in your article, this probably won’t apply to straight-up ebook selling apps. It’s probably about subscription model plans. Fingers crossed, anyway.