Apple’s In-App Rules: ‘Betrayed’ European Publishers Convene A Summit

Publishers in Europe are up in arms over Apple’s decision to reject Sony’s Reader app. They say Apple (NSDQ: AAPL) has left them “confused” with their charging policies, and are now gearing up to meet in London later this month to plan what to do next.

Grzegorz Piechota, the European president of the International Newsmedia Marketing Association — which represents some 5,000 members in 80 countries worldwide — told us that the INMA will be meeting with the European Online Publishers Association and the magazine association FIPP in a invitation-only roundtable on February 17 in London, to compare notes on Apple’s new subscription charging rules.

“The relationship between Apple and publishers has always been direct so its very difficult to find out what is happening elsewhere.”

The news comes on the back of Apple rejecting the Sony (NYSE: SNE) Reader app from the app store, because it violated certain new terms for in-app subscriptions — Apple says that new apps need to include Apple’s own in-app charging option. Others (like Kobo) are also speaking up about how Apple’s new terms could affect their businesses — and not in a positive way.

From the point of view of the INMA, so far the takeaway is not very good:

Some say they feel betrayed.” Piechota notes that newspaper publishers at first welcomed the iPad with open arms. “They believed that it would be a great way to access content from newspapers and magazines. So they hyped the iPad, and many of them invested in apps for it. By promoting these apps, they promoted the device. Publishers in fact helped to make the iPad successful on the market.”

Up to now, a lot of publishers have been able to send users to an HTML page to manage their subscriptions, but the recent change in how subscriptions can be managed for newspaper and magazine apps — with new rules apparently coming in that mean a publisher has to also offer users the option to pay by Apple’s own in-app payments service, has some publishers feeling “They’ve been betrayed by Apple. Some are confused by Apple’s actions; but some say they feel betrayed.”

Why the confusion? According to Piechota, Apple has been inconsistent how it has been communicating, and implementing, its new policies. “Apple said yesterday that that in their policy with Sony Reader, they are not changing anything, just enforcing existing rules. But when they talk to publishers direct, they are saying something else.

“Apple has been contacting some publishers, and not contacting some. Some get emails, others get informal phone calls,” he said. “The whole process of accepting or rejecting apps is not transparent. It’s very hard to explain why some apps are being accepted and some are being refused; some apps allow you to read content that is bought somehwere else and others that won’t let you do this.”

How something gets charged is only part of the issue, though. “Even if you decide readers can buy a subscription in one area or another, there is a completely different business model behind them. Because Apple takes 30 percent of the transaction, that makes it harder and worse for readers because it will mean charging more for the iPad app to make up the revenue. Plus, even if you decide to sell subscriptions through this Apple’s channel you lose all the customer relationship data.”

Publishers in Belgium and France are taking the matter to the authorities, making requests that Apple be investigated by antitrust watchdogs, although Piechota realises this is a costly process that could take years to resolve. “Legal action is the least wanted solution. It is slow and will damage the relationship between Apple and publishers. The first thing is a dialogue. As publishers we need to know what Apple is playing at.”

Is Apple the new Microsoft? “Apple is becoming everything and maybe this is the reason for the problem. They are providing a device and a platform and they are proving the charging system. You are not free to choose. It reminds me of the antitrust problem with Microsoft (NSDQ: MSFT) and Internet Explorer.”

Why subscriptions? These days, Apple makes very little from its Apps business today compared to hardware sales, but that is something that is likely to change as the market matures and hardware sales slow down. Apple’s interest in charging, therefore, could be a long-term play: “There is a huge business in providing content when you talk about subscriptions. It is a long term business,” he says. “They want to make more money and they see that they can become an intermediary because of the success of their platforms.”

It is entirely possible that today Apple will lay out more details on how it will deal with digital publication charging policy, when Eddy Cue, Apple’s VP of internet services, will takes the stage with News Corp.’s Rupert Murdoch to launch the new iPad newspaper The Daily in New York.

But it may take a little more than a press conference to take the bitter taste out of European publishers’ mouths. “We are all talking about a subs system that has not even been announced. Apple is telling us that publishers will have to remove a subscription option but is not providing full details. Why does one publisher know it when others do not?”

The increasing collaboration among publishers working on new platforms like tablets, however, seems to indicate that publishers are trying to get on the same page, and not compete on the strength of their individual distribution strategies: “This [conversation on charging] is inspired by Apple but they’re not the only one. There are many others coming so we need to make sure that publishers are still able to offer something that is fair to readers.”