Apple developer rule changes may impact a wide range of apps | iLounge News

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Apple developer rule changes may impact a wide range of apps

While the majority of yesterday’s Apple App Store subscription press release focused on the company’s new subscription purchasing system for periodicals, the company also snuck in a policy change that could impact important non-periodical apps. Coupled with an existing policy that gives Apple a 30% share of in-app purchases, the new policy forbids publishers from providing links in their apps to sell content outside the app, where Apple receives no revenue.

This language echoed an earlier statement from Apple spokesperson Trudy Miller, who in responding to the unexpected rejection of Sony’s reader application said, “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.” While that policy appears from one perspective to be reasonable, the practical consequence is that companies are now faced with the business choice of raising their prices across the board as a way to recoup revenues lost to Apple, or cutting off support for Apple’s products and users. Under one scenario, both the company’s Apple- and non-Apple customers will pay more for their content; under the other, customers will pay the same prices but be unable to use the content on Apple’s devices.

The ramifications for traditional publishers, such as the New York Times and Time, Inc., are still being sorted out. “We have agreements with other other tablet makers on mutually beneficial business terms,” a spokesman for Time Inc. told the Wall Street Journal. “Apple’s latest announcement seems to be a step in the right direction, but it raises a lot of questions, mostly centered around consumer data, that we have to work through and agree on.” The New York Times, which has been preparing its own billing system to allow it to sell a digital subscription that includes both online and app access, said through a spokesperson that “We are working with Apple to understand how this impacts our plans, if at all.” Other companies that have not traditionally been understood as publishers, such as digital book vendors Amazon and Barnes & Noble, are being treated as publishers by the new policy and subjected to the same content-related fees and rules. iLounge reached out to both Amazon and Barnes & Noble for comment on how the policy changes might affect their e-reader apps for iOS, but had not received a response from either at the time of this article’s publication.

The impact of the change on other companies—such as those that provide subscription-based access to streaming media, like Netflix, Hulu, and Rhapsody—is even less clear. Rhapsody has already issued a statement airing its concerns over the changes, which states, “Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.” The statement added that “we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development.”

As a consequence of the change, Apple will likely face antitrust scrutiny over its new policy, although it remains to be seen whether its position in the market is seen as strong enough to force action, and to establish Apple’s position in the market, the market itself must be defined. While publishers might claim that Apple dominates the market for consumer tablets, and is using its position to restrict competition, Apple might define the market as including all digital and print media, suggesting that any publisher unhappy with Apple’s terms is still free to reach customers through other means. “Millions will be spent litigating how broad the market is,” Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, told the Wall Street Journal. He also said that digital media is the most plausible market definition in this case, and that he doubts Apple currently has a sufficiently dominant position to warrant scrutiny. Should Apple reach a point where it is selling 60 percent or more of all digital subscriptions through the App Store, according to Hovenkamp, “then you might move into territory where an antitrust challenge would seem feasible.”

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Comments

1

“Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.”

Here’s the problem with this.  If Rhapsody is looking at iTunes and iOS as a credit card fee, they are completely wrong. The relationship is more like iTunes is the brick & mortar store.  iOS is the geographic location. If you want to sell there, pay 30%. Stores that pay a lease in real life still have to pay 2.5 % for cc fees.  It’s not all in one.

Posted by Big Money Tony on February 16, 2011 at 1:28 PM (CST)

2

@1: Here’s the problem with this: You are completely wrong. Without the iTunes app environment, iOS devices are about as compelling as, well, any other device. In and of themselves they are rather average.

Trying to compare iOS to a brick & mortar store is asinine. By your logic Microsoft should be able to demand 30% from every sale Amazon gets from me when I use my PC, and, arguably, Google should also be able to demand 30% since I do so through Safari, and I’m sure Verizon is also due their 30% since I do all of this over their DSL service. I’m sure Amazon will do just fine on their remaining 10% cut, and I’m sure I’ll do just fine when all prices suddenly double or triple to cover all of the highway fees everybody acting as a broker in a transaction has decided is their due…

Or maybe Apple has no business whatsoever demanding how the very parties that add so much value to their over priced hardware handle their sales if they aren’t utilizing Apple’s servers.

Posted by Code Monkey in Midstate New York on February 16, 2011 at 2:37 PM (CST)

3

The other thing is, that parties seem to be seizing upon a misinterpretation of Miller’s poorly worded statement from what I can tell. In their more official clarification, Apple has said you are free to offer sales outside of apps all you want and to deliver that content to apps, you just have to use your own servers to do so. The only catch is that you can’t have a sales front within an app that hooks into your servers. All this chest thumping from Rhapsody and Hulu appears to either be a disturbing display of stupidity or an attempt to spin the media reports to paint Apple as more of an ogre than they are being. Just do what Amazon has done: a button that opens up your web store or membership service page in Safari with no explicit store front in-app. This isn’t a particularly hard thing to get around so I’m more inclined to think Rhapsody and the NYT are simply spinning things out of context to try and weaken Apple’s position.

Posted by Code Monkey in Midstate New York on February 16, 2011 at 2:52 PM (CST)

4

“By your logic Microsoft should be able to demand 30% from every sale Amazon gets from me when I use my PC,”

Your comparison would make sense if Apple is actually demanding every transaction made using the safari browser to give them a 30% cut.

Posted by Ben on February 17, 2011 at 4:05 PM (CST)

5

@4: No, the comparison was Microsoft’s Windows OS versus Apple’s iOS. Apple IS demanding a 30% cut for all transactions made either within an iOS app or, for certain categories (periodical subs) at least the option for all transactions that can be used within an iOS app. The comparison was valid, my mention of browsers was only to show the absurdity of anyone defending Apple’s stance.

If simply having an OS makes you entitled to a “finder’s fee” for all transactions on that OS, surely every other technology partner is due the same sort of “finder’s fee”.

Apple is, to paraphrase another poster on this topic, on rather thin ice.

Posted by Code Monkey in Midstate New York on February 17, 2011 at 6:00 PM (CST)

6

@Code Monkey

While I respect your opinion, I believe you are incorect. As @Ben noted, if Apple demanded everything a cut of everythign sold in Safari there is an issue.  Apple is only asking for 30% of app & in-app purchases.  If I use Safari on my iPhone to make the purchase, Apple doesn’t get a cut from Amazon or whoever I buy from.  Same on my iPad, Macmini, or PC.

However, apps via the App Store for iOS devices are setting a platform for sales.  Again it’s free enterprise. If Rhapsody or whomever does not want to pay 30% simply don’t offer the service on iOS devices. Back to my retail comparison, if you want to sell in Beverly Hills, CA, you can’t get free rent. Either you don’t sell there, or you pay the appropriate rate.

Posted by Big Money Tony on February 18, 2011 at 3:08 PM (CST)

7

I’m not really sure what sort of thought process you’re using here. It is an iOS versus any other OS issue, period. The browser distinctions means bupkiss.

Apple has set up a system where, officially, you cannot sell or give away ANY piece of software that runs on a dominant *consumer* OS except by paying them money to be in their developer program and then going through their approval process, which is itself a hotbed of anti-consumer controversy.

They have then created a rule that says certain classes of data used by apps must be sold in-app or not at all, and prior IAP rules give them a 30% cut.

And you have no problem with this, even though it is 100% NOT in your interests?

I just don’t even begin to understand this sort of bend over and grab your ankles attitude when it comes to corporations that would turn every single one of us into canned dogfood if it increased their profit statement 0.01% for a single quarter.

Would all you Apple apologists be singing the same tune if tomorrow Microsoft announced that all software on Win 7 would be deactivated and we could only purchase software from now on from the Microsoft Application Store?

I just shake my head in wonder at what people will accept when it’s Apple doing it.

This isn’t Beverly Hills, and Apple isn’t doing anything other than extorting money, full stop.

Posted by Code Monkey in Midstate New York on February 18, 2011 at 3:35 PM (CST)

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