Apple Wants in on Digital Book Purchase Revenue


Apple has clarified its official position regarding the rejection of the Sony Reader iPhone app, and the reasoning behind it has far-reaching implications for the App Store. As I suggested in my earlier post on the subject, Apple isn’t blocking access to content purchased outside the App Store, but it does want a share of the revenue made through iOS-initiated book sales.

Digital Daily’s John Paczkowski has the official word from Apple spokesperson Trudy Muller, who clarified Apple’s reason for rejecting the Sony Reader app as follows:

We have not changed our developer terms or guidelines. 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.

Put simply, this means that Apple is telling Sony and others (including Amazon) that a user has to have the option of buying through Apple as well as any other storefronts that might exist, at least when it comes to books. Whether this policy will apply to other types of media (like video and magazines) remains unclear, but since Muller went out of the way to specify “books” in her statement, it seems unlikely at the moment.

The move is a shrewd one from Apple. It puts the onus on companies like Amazon to comply, while allowing Apple to avoid accusations that it’s limiting user choices. In fact, from Apple’s perspective, it’s actually adding, not taking away, purchase options for the consumer.

But for Sony, Amazon, and other digital e-book sellers, the situation is more complicated. In order to sell through Apple’s in-app purchasing, companies also have to also acquiesce to Apple’s revenue-sharing model, which gives Cupertino a 30 percent cut of all purchases. Amazon et al. could get around this by simply charging 30 percent more for books purchased in-app and keeping prices on their own storefronts the same, but whether or not that approach will fly with Apple remains unclear. Another option is for booksellers to pass on the additional cost to publishers, a scenario that’s much more likely than risking sticker shock with consumers.

But users won’t be totally untouched by the new guideline enforcement policy, even if digital booksellers simply accept Apple’s terms without a struggle. For instance, Kindle users might not realize that when paying in-app funds come from their iTunes account, instead of their Amazon one, and may end up assuming they’re spending gift cards when in fact they’re racking up credit card charges. Even if all parties do their best to alert consumers to where funds are drawn from with each purchase method, the potential for confusion still exists.

Personally, as long as everyone plays along and this doesn’t negatively affect prices or make a mess of user experience, I’m happy to see Apple implement this change. If the App Store is generating sales that wouldn’t otherwise exist, doesn’t it make sense that Apple would claim a cut? But I also can’t help but note that Apple seems to have pulled a bit of a bait-and-switch for Amazon and others by allowing the policy to go unenforced for so long. Maybe it’s only now that it’s apparent iBooks is no Kindle Store killer that Apple realizes it’s better off collecting dues than running the stall itself.

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