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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.”

13 Responses to “Apple’s In-App Rules: ‘Betrayed’ European Publishers Convene A Summit”

  1. I dont understand the problem that people have with Apple. Apple charge for in app purchases of additional content because THEY HOST THE DATA! Its their bandwidth, it’s their servers, it’s their infrastructure.

    Because Apple wish to provide a hassle free, seamless environment for their products they choose to control how content is delivered especially where money is changing hands within their products. We have become conditioned to the “Microsoft World” of anti-virus software, malware, bugs, slow-downs etc.. when we use our PC’s but Apple have always wanted a different experience for their users.

    The only way to have that seamless experience is to have a controlled one. That is the reality. If you don’t like it, dont buy Apple products, but I guarantee you will always have less “down time” with Apple than any other product line. That is by design.

    Kindle is not showing you products in their apps and allowing you to buy them. It is allowing you to sync content you have bought in the Amazon store. Thats is all. Apple allows apps to sync to whatever data they like, how on earth would Twitter or DropBox work if that were not the case? Comparing what the Sony Reader and Kindle are doing is wrong, its not the same thing.

    The fact that Apple have always insisted that they make only a modest amount from the 30% they get for HOSTING AND DELIVERING (remember that!) data shows that the business of selling content isnt as important to them as the overall experience of downloading and using content on their machines. That experience is paramount, and allows them to sell more iphones because they have a better content delivery system than the android/nokia/rim platforms. That really does matter.

    So while publishers scream blue murder and are too thick to work this stuff out, take what they say with a pinch of salt. Jealousy is not a flattering part of the human psyche..

  2. RCharles

    I’ve been waiting for the iPad2, which seems like a serious improvement over the first device. But I’m opposed to Apple taking a cut of anything/everything I buy via the iPad. It just increases my costs since the supplier will have to make up the 30% skim that Apple takes.

    So I won’t be buying an iPad 2 very soon until this is clarified and Apple allows alternative processes on the device, with no tax going to Apple.

  3. So Staci, can I just enter my credit card and get charged against it regularly. Since mine’s still in free trial, I haven’t had a chance to find that out and there’s no instructions, at least not online. Will I need to also go to another site to enter my CC? I haven’t seen any other apps that are doing a recurring charge without losing subscribers because they had to go back into another site to continue their subscription.

    • Staci D. Kramer

      @Laura Sorry if that wasn’t clear enough. It”s free for the first two
      weeks, then users will have to choose a weekly autopay option ($0.99) or an
      annual one ($39.99) that is paid through your iTunes account.

  4. If publishers are myopic enough to hang their futures solely (or even primarily) on Apple’s platform, then they have nothing to complain about. OTOH, if publishers would generate something innovative on their own, maybe they wouldn’t be hostage to Apple’s terms.

  5. Roger Black

    With Apple’s surging lead in the tablet market, most publishers are reconciled to paying them 30% of each subscription. The questions are: 1. Shouldn’t the fee be reduced for renewals? 2. How does it work for multi-platform publishers? Will Apple sell non-digital or non-iOS subs and take their cut? 3. How does a publisher get customer contact information so they can sort out a multi-platform subscription?

  6. I don’t feel sorry for the publishers. Anyone could have told them this would happen when you get in bed with the devil. Not only did you sleep with the devil, but you too will be burned by it. Good job and Godspeed surviving this decade.

  7. This is another in a long line of Apple violations of trust. Apple banned Adobe Flash. They put Google Voice app in purgatory for over one year. Competing iPhone browsers were banned for years. The removal of Java and the rise of the Mac App store is another joke. Apple’s ambiguous app store policies were created to benefit Apple’s bottom line period.

  8. contentnext

    The terms were certainly newly enforced which amounts to the same thing.

    Under the terms as Apple is now interpreting them (and this interpretation is a new thing) the Kindle and B&N apps are going to both be in violation despite the fact that they don’t do in-app purchases. It’s pretty clear Apple’s going to let them continue to exist until they have time to make changes to their apps.

    Sony just got unlucky that they happened to be the ones who were the first hit and easiest hit since their app hadn’t even been accepted already like with Kindle and B&N.

    And Zato your propaganda/bought and paid for stuff is getting old. Like you I thought this was overblown at first but after Apple clarified it’s pretty clear that this is a change in their interpretation even if it isn’t a change in their actual text rules. I love Apple products too, but seriously….

  9. “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.”

    “New Terms” ?? There is nothing new about them.
    “Is Apple the new Microsoft?” The bought and paid for Anti-Apple BS goes on and on.
    Who is paying for this propaganda?