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Summary:

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. Apple, it turns out, wants a share of the revenue made through iOS-initiated book sales.

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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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  1. …or maybe its time someone looked at Apple through the hard lens of the Sherman Act when it comes to mobile platform application sales.

    Dick move, Apple, dick move.

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  2. Greed is greed even when its spelled APPLE

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  3. i disagree with the other comments. why should apple fund the infrastructure and not get ROI on it’s investment. folks that say apple should do this or that or any other company for that matter seem to forget a basic business fact. apple exists to create products and increase shareholder value as a public company and that means increasing revenues and get a return on its investments. a business doesn’t exist to allow another company to make money off itself. amazon and others want access to the millions of ios folks then they pay, its that simple. it’s not greed, it’s business and comments about feelings or fair have nothing to do with business. like the godfather, it’s business not personal and business rules apply. the utopia people yap about does not exist in any world i’m aware of. capitalism. read jack welch on why a company exists—-To Win and like it or not, Apple is Winning, at least right now.

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    1. Build all the infrastructure you want, Jack, but unless there’s compelling content on that infrastructure, provided by equally hard working companies like Amazon, no one is going to use said infrastructure. Plus let us not forget that the typical Apple margin on it’s hardware alone is in the vicinity of 50%, so frankly your “ROI” argument holds as much water as a torn paper bag. Now if all you want is the Apple way with no choices – also known as communism by the way Jack – then sure: Go ahead using a platform as closed as iOS. But I’m beginning to think that after 25 years of loyally buying the best products out there, it’s time for Apple and I to go separate ways. Thankfully, Google has stepped up to the plate just in time.

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      1. actually, after re-reading my post, i can see why the slant on my belief closed is good or the communist part is a bit extreme. all i was saying is that people comment with the slant of how dare apple. they can do what they want. and ixnay on your 50% margin comment. just because 1 division is doing great doesn’t mean you start a socialist commune and give away margin on other divisions. the idea is people like products then they buy and when they don’t people won’t. that simple. i actually don’t like the closed environment all the time but it’s a choice that apple makes when trying to satisify the expectations of customers. and the folks reading these blogs and scream about open/closed and flash or whatever are the loud minority. the general public that created the huge company apple has become could care less about flash and no argument would convince me until they start becoming a non-entity in the ios space and that won’t happen for a long time. your comment ‘also known as communism by the way jack-then sure, go ahead using platform as closed as ios. exactly what i was talking about, that comment has ‘feelings’ all over it and this subject has nothing to do with what a person feels or thinks it’s about can a company make a decision if it wants to? why do so many people bring feelings to business.

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  4. Damn you Apple. If Amazon pull their Kindle app cos of this, I’ll be looking elsewhere for my next smartphone…

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  5. This sort of behavior is why I suspect the iBookstore will languish. Why should Sony, Amazon, and others pay Apple 30% on sales when all Apple has done is create the gadget and OS on which their application runs? That’s a bit like Microsoft and Dell getting together and demanding that same 30% for everything Amazon sells using their hardware and software.

    Kindles are a different matter. Amazon has created the entire sales chain. They created the book collection, they’ve created the store, and they’re taking care of the distribution for their 30% slice. All Apple will be doing is handling the billing.

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  6. Looks to me that Apple is robbing companies. This smell mafia to me. I am guessing the greed of Steve Jobs has come to an epic crescendo. It will be fun to watch how this game plays out.

    Jesse James and Steve Jobs would have been best pals, perhaps would have worked together had they lived in the same time period. They are certainly using the same tricks.

    Perhaps like Jesse we might see this action shoot him in the back?

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  7. [...] is set to enforce rules on e-book software for it’s iOS devices by requiring such apps to offer book content as in-app purchases. Effectively, Apple would earn 30 percent on the sales of Kindle and Nook books as a result. The [...]

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  8. [...] app store was genius, and of course it was too good to last. But by the time Apple implemented its in-app purchase rule, Amazon had already established itself in a big way with Kindle for [...]

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  9. [...] app store was genius, and of course it was too good to last. But by the time Apple implemented its in-app purchase rule, Amazon had already established itself in a big way with Kindle for [...]

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