June 17, 2011

Apple app rules still look bad if you are trying to sell anything

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Last week we discussed a high-profile change in Apple rules governing how retailers and publishers can sell content within iPhone and iPad apps: the new rules reversed an Apple threat that, come June 30th, 2011, apps would be required to push customers to Apple’s in-app payment system (with Apple taking a 30% cut) or risk ejection from the iTunes store.

According to the New York Times, the crux of the change is that publishers can now sell “their content on their own Web site at any price they choose, and make that content available in iPhone and iPad apps. Publishers are no longer required to offer users the option to purchase the content directly from within their app.”

However, as a modest report for CNN’s Money blog notes, this isn’t entirely good news for retailers, as Apple may still later this month start enforcing a long-standing prohibition against referring customers to outside payments systems. The policy, if enforced, would effectively render apps by all the major e-book retailers—Amazon, Google, Kobo, and B&N—useless for purchasing new titles. Books could still be imported into the apps if purchased on the web, or via Apple’s iOS payment system, but other purchases would be impossible. According to CNN, “Under Apple’s new rules… ‘shop’ buttons would be verboten. Amazon and other merchants would have to strip them out of their apps in order to stay in the App Store.”

Is this true? It is if Apple decides to strictly enforce the rules. Curiously, according to CNN, “an Apple spokesman declined to discuss what will happen to the apps when Apple’s deadline hits.” Rhapsody, the online music vendor which has a lot to lose if Apple does enforce purchasing rules, doesn’t yet know how to interpret Apple policy going forward: according to a spokesperson “We’re in the camp that’s still only 80% sure of what this all means.”

The worst case scenario is that apps will have to be stripped down, with retailers and publishers redeveloping their apps to abide by the new Apple rules. Companies like Amazon and Kobo would surely prefer iPhone and iPad users have some access to their libraries than none at all—so will surely give this a try. But others, like the iFlowReader, a company we mentioned in a previous post on this topic, may not be able to afford to redevelop their software or be able to lure readers to an app where you can’t acquire new content.

As a commentator on MobyLives noted, the new Apple policy, if enforced:

[D]oesn’t help iFlow Reader, as they were selling books in the app itself, which is still forbidden. The only way they could do it is if they sold books outside of the app and users imported them, but they couldn’t have a link to that external bookstore within the app for users to buy books. Given they are a relatively small player, it is unlikely they could get enough book sales on an external site to sustain their business.

 

Kelly Burdick is the executive editor of Melville House.

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