App Store suddenly not so friendly to eBook apps
Originally published at A Singularity. You can comment here or there.
The other day Apple rejected Sony’s eReader app for the App Store/iOS platform. This wouldn’t have made much news, since Apple has a history of rejecting it’s competitors in certain markets regularly. What made it news was the new policy behind the rejection: All “storefront” Apps must use Apple’s in app purchasing (IAP) system when purchasing content for the app.
And from a standard perspective, this makes sense, if perhaps a little greedy. You use Apple’s device, apple wants a cut of everything you sell to the user via their device. Not a standard computing concept but we’ve all come to love the mostly fascist control of software/Apps on the iOS and the marketplace that distributes it, so perhaps it is the standard these days. I digress.
If you dig a little deeper, you find that this appears to be a maneuver by Apple to push out competing eBook distributors while appearing to be simply capitalistic rather than monopolistic. Let me explain.
Apple, way back in January of 2011, pushed for eBooks to be sold via the Agency Model like most standard books are sold. In the Agency Model, rather than the distributor purchasing books and then re-selling them at whatever price they prefer, the publishers set the price and there is an agreed percentage that the distributor gets from the cut. Most big publishers, back in the spring, adopted at 70%/30% agency model with distributors like Sony, Amazon, Apple, and others. So when you’re purchasing a book off your Kindle there is a very good chance Amazon is only getting 30% of the price you’re paying.
Now the Agency Model isn’t bad. It has it’s upsides and downsides but the publishing industry is used to it. Where the problem lies is in Apple’s rules regarding IAP. Apple gets a 30% cut of anything sold via IAP. Starting to see where this is going? So if you have an eBook, and you’re say, Nook, Barne & Noble’s eBooker Reader, and you’re now forced to sell your books via the IAP, here is how your profits for selling eBooks is going to look: 100% - 70% Publisher - 30% Apple = %0 profit for B&N.
You can replace B&N with any non-Apple eReader device that does deals with major publishers. Take into account the fact that running a storefront app does require manpower, and therefore has an upkeep cost, and not only are getting no profit, you’re losing profit. Apple has basically just said: eBook readers, get out of our App Store, without having to say that specifically and looking like the bad guy.
Now there are some defenses Apple has. For example they are now disallowing purchasing via non IAP routes. Storefront apps can still send you to the App owner’s website to purchase. They are only requiring the capability of IAP. Even so, it’s easy to see that from a user-friendly perspective, the majority of users are going to choose an IAP route unless App designers make using IAP within their app more difficult than using a webpage that the app switches to. Additionally Apple has stressed that it is not cutting off content purchased outside of the App Store from Apps but in my opinion, these are flimsy defenses compared to the obviously anti-competitive strategy. Combine this with the fact that Apple obviously knows that 30% is the agreed upon Agency Model and Apple really starts to look like it’s maneuvering and trying to throw its weight around.
This doesn’t sit well with me and something tells me there won’t be enough Apple user outcry to have Apple back peddle on this like it has on some other usability features. After all money is on this line this time.
This decision doesn’t just affect eBooks, of course. The rules apply to all storefront apps. Dark Horse comics has announced “unforeseen setbacks” in regards to their digital comics distribution system they were developing very quickly after Sony’s eReader App was rejected.
I gathered the above information from several sources, some of which explain the effects of Apple’s decisions with more in-depth. If you want to know more, follow these links:
SillyBean: Apple and the ebook apps
Comics Beat: Apple goes from savior to Overlord with new app purchase enforcement
Alan Quartermain: iBooks & the App Store vs. The Rest
New York Times: Apple Moves to Tighten Control of App Store
Share