Apple intentionally hurting eBook stores

Apple announced the terms of their in-App Subscription Service this morning, and it does indeed look like they are shooting directly at Amazon. What I’m concerned about is the fallout from these new rules on other apps…here’s the paragraph that causes me issue, with the pertinent passage highlighted.

Publishers who use Apple’s subscription service in their app can also leverage other methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not involved in these transactions, there is no revenue sharing or exchange of customer information with Apple. Publishers must provide their own authentication process inside the app for subscribers that have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

To summarize: publishers are allowed to sell subscriptions on their own websites, but if they do, they must also allow for in-app purchase of said subscription, and there has to be pricing parity between the two methods. This means that, for instance, a newspaper couldn’t offer a subscription on their site for $5, but make the in-app purchase $8…this prevents publishers from variably pricing things higher in the App in order to pad the price to take into account Apple’s 30% of the sale price. So far, so good…it’s that last sentence that really worries me:

In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.

Notice that in that sentence, Apple stopped talking about subscriptions and now include content generally. This single lline is the one that, I think, kills eReader software on iOS devices. This means that Amazon can’t keep the Kindle app the way it currently works, which is to tap a button inside the app that then takes you to the Kindle store in Safari. That’s not allowed given the above. That will apply to Barnes & Noble’s Nook software, as well as any other eReader software that I’m aware of on iOS. eBook providers like Amazon and B&N almost certainly can’t afford to move all their sales to in-app purchases because of the 30% Apple “tax”. This means that either they raise prices and move into Apple’s ecosystem, or they stop allowing purchases of books at all on iOS devices.

The rules appear to allow Amazon to sell Kindle books for iOS on the Amazon website directly (obviously Apple can’t do anything about that) but it seems to break any connection between the app and said site. This intentionally damages the user experience for this and other eBook apps, and is the main reason I can’t believe that Apple is pushing this as hard as they are. This is much different than other limitations that Apple has placed on the development of Apps…this isn’t hardware based limitation (multitasking) or anything like that…this seems to be purely a “show us the money” limitation. I’m really disappointed if this is the way that Apple chooses to enforce this, because while they are guilty of many things, intentionally hurting usability has never been one of them.

What I’m really curious about is this: Is Apple going to push these requirements for any App that allows for any purchase…like, for instance, the Amazon app that allows you to shop on Amazon directly. Or Zappos, or Ebay, or any number of other apps that act as a front-end for purchasing goods. If that’s the case, I think that Apple is in for some real trouble and pushback from companies, and possible legal repercussions. Seems like it can’t possibly be legal for the manufacturer of a computer (which is what the iPhone/iPad/iPod touch is, after a recent legal decision) to require that anything purchased on that computer provide them with a cut. I’ll be keeping my eyes on this one.


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