Apple responds: we want a cut of Amazon, Sony e-book sales

Realistically, three things can happen to people with App under this policy. Take, e.g., Kindle.

1) They withdraw the Kindle application 2) The add In-App purchasing 3) The add In-App purchasing, but with a 30% price hike

Frankly, 2 is very unlikely - 30% is probably their entire profit margin on the sale. 3 is possible, but makes every Android tablet look vastly better to new purchasers ("The same apps from iOS, but with content 30% cheaper!). 1 is also quite possible - they just EOL it and say "For future Amazon purchases, please grab a Kindle or Android tablet), thus showing a huge chunk of Apples target market a big banner for the competition.

I suppose there's another alternative: that this becomes one of the annoying "Not for big player" rules that they just have a sub-rosa agreement with B & N/Amazon to never enforce. That in itself is pretty underhand.

Overall, my favoured interpretation is this is a re-run of the "Nothing but Objective C Apps in the Store" debacle. Masses of bad press, a dent in developer confidence, and a rescinded policy within a month or two. Apple really are their own worst enemy with this stuff.

"We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase."

What ars interprets that to mean (emphasis mine):

"If an app lets users access content that they purchased via Amazon's website, for example, then that same app must also let users buy the same book via Apple's own in-app purchase system"

That's not at all what Apple said. Apple said if the app lets you buy books outside of the app, i.e. you click the buy button inside the app and are then sent to the webpage to purchase the book, then the app must also let you purchase the book without leaving the app by using in-app purchases. Apple says nothing about not letting users access content they paid for from other sources.

I can sort of understand where Apple is coming from in this. They provide an ecosystem and apps live within their ecosystem.

That being said, I can't see Amazon or any other big player rolling over on a margin of 30%. This is the problem with one fixed margin: it works well for apps and music but not necessarily for other things.

You see the same problem with the Mac App Store: smaller devs love it. Will you see Microsoft Office or Adobe Photoshop on it? I doubt it. 30% is just too much for those big players to hand over.

I consider Kindle to be a key part of my iPad experience and I can say if the end result of this is that I can't read my Kindle books on my iPad I will be pissed. I bought them specifically because I could.

Ultimately though I think Apple needs to give up control here. They should provide a payment infrastructure and if it's comeplling, people will use it. If it's not, they won't. But don't make me a casualty of war in the names of the the consistency of your 30% cut.

I can think of a couple of scenarios that might fit what we know so far:

1) Apple might simply declare that they want 30% of all in-app purchases. Amazon will likely freak out. This, to me, would seem to be a seriously dangerous move on Apple's part.

2) Apple may drop the 30% cut entirely on in-app purchases. That'd be pretty disruptive but aside from adding a technical hoop to jump through for content providers to link content with Apple's in-app purchasing system, I don't think they would be quite so upset about it since they wouldn't really be losing money on each transaction. Of course this is still pretty harsh on Apple's part, IMO, but it's better than #1.

3) Apple simply requires developers to link purchased digital content with an Apple ID via the in-app purchasing system, but not necessarily requiring that Apple be used for the actual money transfer itself. The purpose of this would likely be to ensure that purchased digital goods are always linked to an Apple ID - even if they were purchased externally. If that's the case, then this is much less of a big deal, IMO, and a huge win for users. For instance, if you restored your device, you could be assured that all your digital content you bought via the Kindle app itself would be restored with a single tap - no need to login to Amazon again or anything like that. Thus Apple can help better ensure that the user will actually get their content back when the device restores which is required of all other in-app purchased content using the in-app purchase API.

If instead, they just want to make sure that if you can buy it on a Kindle/whatever and read it on the iPhone that you can also BUY it from the iPhone in the first place, not such a big deal.

There seems to be some confusion on this issue.

We looked at using In App purchase for a large collection of add-ons. Even if Amazon, Sony and B&N wanted to offer in app purchase as well as through their stores, Apple's system is a pain in the neck to do that. Their support structure just isn't designed for a large array of product options.

It just seems like a really, really bad idea that will bring government intervention. The Kindle app kicks over to Safari for purchases, but I really can't imagine them requiring Amazon to add an in app purchase through Apple. I can't imagine the circumstances that would make that acceptable.

Apple is just trying to create a new revenue stream early on as iPad sales increase and the tablet market heats up; smart move. It'll take a big ereader player like Amazon to battle them, and if ereader content creates a price hike war due to Apple's insistence on 30% cuts, then negative public sentiment towards pricing or not having access to ebook material that has already been purchased on one platform will hopefully create a retraction in Apple's policy. But then again, the airlines never got rid the baggage fee, and even with negative sentiment we all still pay them.

I think Apple is opening a can of worms.

I'd like to be the guy from The Neutral Planet and sit this one out until it sorts itself out.

Buy this book for 10$ on amazon.com Buy this book for 13$ with your itunes account*

*explanation

If I have it correct, I as a developer can make a maze application and sell mazes on my own web site, but I must also give users the option of buying them in the app and fork over 30% to Apple. If I do this, it's up to me to convince users that the experience of buying mazes on my web site is superior to the experience of buying them right in the app.

As long as Apple doesn't prohibit applications from "playing" content purchased elsewhere, as a user I have no problem with this, because it gives me another choice for purchasing new content that offers a smooth and easy purchasing experience.

Amazon, et. al. probably hate the idea, but that comes down to two lords arguing over which one gets to exploit the serfs.

Obviously Apple wouldn't approve such an app, meaning they should have some explicit policy against using external payment systems for any application functionality, such as the ability to read a particular book on the Kindle app.

If you disagree with Apple taking a cut of app developer profits at all, that's another discussion entirely, but assuming that it's okay for Apple to take a cut of developers' profits, I think this policy is reasonable, if not necessary, new or not.

Apple are potentially forcing Amazon to price purchases through its iOS application at a higher price to make up on lost margins on sales due to Apples surcharge. Someone is going to pay for that: either Amazon will eat the cost or the consumer will.

What they are effectively creating is a barrier to entry for Amazon conducting business on their platform all the while Apple have a competing offering that is unencumbered by the surcharge.

Now if Apple didn't have there own competing business to Amazons ebook business I wouldn't be as concerned since there is no competitive stake hold in the surcharge. IMO, this issue has Antitrust written all over it.

In my opinion the solution is for apple to not charge the app sale percentage (30%) on in-app sales. An app sale charge is a one time thing, you could have an infinite amount of in-game sales, why would each transaction cost the same as the initial one?

This is also a taste of problems to come if the rumors of iPhone 5 NFC payments are true.

If you use it as a taxi, you pay 30% of the taxi fare.

If you use it to go to a mall, they pay Apple 30% of your spend.

"I do not actually run an App Store," said jfm3, "but if I did, and I managed to make all you bitches have to use it all the time, I'd totally want a piece of every single drop of hint of money that could possibly pass through there."

"I can't believe you're paying for that crap," he added, in between sips of his excellent tea. "What the hell kind of hackers are you?"

Seems like a workaround might be to link to the Amazon mobile site from the Kindle App. But maybe that is too close to "selling" content thru the Kindle App.

edit: It seems in other threads on the front page that this is likely Sony blowing things out of proportion. Most of the "news" is all speculation and discussion. I suppose we'll have to wait and see what policies or actions Apple actually takes.

This newest development sets a truly frightening precedent, though. Any subscription service that sees significant growth through their iOS app is vulnerable to Apple's tax collectors. As soon as it looks like you're making money, Apple can jump in and extort 30% of your gross revenue or sink your whole business. Granted, maybe you owe some thanks to Apple, but 30% can quickly turn a sustainable business into a bankrupt one.

Considering Amazon already loses money on each Kindle book sold, losing an extra 30% on top of that may not be a financially viable option. Apple is effectively trying to edge Amazon out of its marketplace.