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Apple Requiring eBook Apps With External Purchases to Also Offer In App Purchasing

As an iOS developer who actually has in-app purchases, I've always found the 30% cut to Apple a bit ridiculous. A lot of non-developers I've talked to think it's reasonable, since it matches the cut that Apple takes from app sales. However, with the App store, Apple is responsible for hosting, bandwidth, and updates. I'm happy to pay Apple for the convenience of not having to deal with all of those issues.

However, with in-app purchases, the developer is responsible for all of those things. All Apple stores is an entry in a database. Why should they get the same cut when I'm paying hosting and bandwidth costs, developing the store interface, and having to deal with updates? If they want 30% of in-app purchases, then I should be able to upload my in-app content to them the same way I do my app.

It seems like a tiered pricing structure for in-app purchasing would make sense. If the App is free and the developer handles all of the in-app purchasing costs, then Apple would get 5% (to pay for reviewing the content and hosting the initial app). If the app costs money, then Apple gets nothing (since they already made their money on the sale of the app). If Apple provides an in-app hosting service, then they get 30%.

EDIT - Oh yeah, they also deal with payment. Maybe tack on a couple percent to the above (or just charge them whatever it costs to process payments, which at the volume they do it in is probably almost nothing).
 
Bottom line is Apple does not like other people making money off iOS unless they get a piece of that action.

iAD was created because Google was raking in millions in revenue from iPhone users. I bet it pissed Steve Jobs off to no end that a developer could put a application in iTunes for $0, and the developer along with their direct competitor profited from said application while Apple got $0. Apple at one point tried to change the terms making it far less profitable for other ad agencies to have their ads in iOS applications but backed down due to pressure.

Now we have apps like Kindle, B&N who put an app in the store for $0 (once again Apple gets nothing) and who are raking in millions selling ebooks. I'm sure it pisses off Steve Jobs to no end.

If you want to play in Apple's world, you better be prepared to give them 30% of what you make. That's something I don't agree with at all so I'll be sticking to Android.
 
If Apple's going to reinforce the reoccurring billing rule they are going to have content providers fleeing iOS. Netflix and Hulu are not going to cut them in for 30%.
 
Runt888 said:
As an iOS developer who actually has in-app purchases, I've always found the 30% cut to Apple a bit ridiculous. A lot of non-developers I've talked to think it's reasonable, since it matches the cut that Apple takes from app sales. However, with the App store, Apple is responsible for hosting, bandwidth, and updates. I'm happy to pay Apple for the convenience of not having to deal with all of those issues.

However, with in-app purchases, the developer is responsible for all of those things. All Apple stores is an entry in a database. Why should they get the same cut when I'm paying hosting and bandwidth costs, developing the store interface, and having to deal with updates? If they want 30% of in-app purchases, then I should be able to upload my in-app content to them the same way I do my app.

It seems like a tiered pricing structure for in-app purchasing would make sense. If the App is free and the developer handles all of the in-app purchasing costs, then Apple would get 5% (to pay for reviewing the content and hosting the initial app). If the app costs money, then Apple gets nothing (since they already made their money on the sale of the app). If Apple provides an in-app hosting service, then they get 30%.
Click to expand...

You make an excellent point and one I guess many don't realise.
If you are hosting the data and paying for it, and all Apple is, is a link, then it would of course made sense that there should just be a nominal Apple charge for this, not the full cost.
 
Book a Ramma

Ok, my name is Joe Publisher. I have a book on Kindle the same book on IBooks.

I sell the hardcover for 20. I sell the ebook for 10. I want to sell on both APPL and Amazon. Hummm. What to do?
 
hayesk said:
Nope he's right. If they offer external purchasing, they also have to offer in-app purchasing. User has a choice of which to use.
Click to expand...

So, excuse my ignorance, but if the developer prices at $14.50 through in-App and $9.99 at their own store, how does Apple expect to receive any sales revenue in that situation? I buy online and sync as always. What's all the hub-bub about?
 
ZAiPhone said:
11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected
11.3 Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected

–Apple’s App Store Review Guidelines
Good Luck with 11.3 in Court.
Click to expand...

zacheryjensen said:
Read 11.3. Yeah. Think about that one for a second.

The only way, say, Evernote could comply with BOTH rules is to make it so any service they offer through the app must be purchasable with in-app purchases (which Evernote allows despite the 30% cut) AND not allow that same purchased service to be used anywhere but on iOS!

These rules together make in-app purchases pointless for pretty much every app I've ever used it in.
Click to expand...
You've hit the nail on its head. So, storage space bought from Dropbox via in-app purchasing can only be used on iOS devices. And storage space purchased outside iOS, can only be used outside iOS. Pretty much defeats the purpose of Dropbox.
As I posted before, a sensible rule would be:
"Additional application features that can also be accessed via a web browser or native apps on a desktop OS can be used in iOS apps regardless of where they were bought."
I am fine with keeping the restriction to not allow purchase of services or goods used outside the app with IAP. This can serve as a protection for being ripped off via IAP.
 
Last edited:
manu chao said:
You've hit the nail on its head. So, storage space bought from Dropbox via in-app purchasing can only be used on iOS devices. And storage space purchased outside iOS, can only be used outside iOS. Pretty much defeats the purpose of Dropbox.
As I posted before, a sensible rule would be:
"Additional application features that can also be accessed via a web browser or native apps on a desktop OS can be used in iOS apps regardless of where they where bought."
I am fine with keeping the restriction to not allow purchase of services or goods used outside the app with IAP. This can serve as a protection for being ripped off via IAP.
Click to expand...

I was completely fine with all of this...until 11.3. That will be a serious issue if they try to enforce it. I use Kindle, Dropbox, Evernote specifically because they are universal. Mind you, all of my systems are Macs but that's not the point. Actually it is the point, using their logic, I couldn't use dropbox on my Mac if I bought it on my iPad? :confused:
 
If I was Amazon I would implement in-app purchase and add 30% to the price and make it very clear it was the Apple 'tax' to buy in app. Then have a nice link right next to that would take the customer to the Amazon website where they could buy the book at the normal price. Problem solved!
 
I thing 80% of the apps in the App Store could have been implemented as web pages. The ONLY reason they are not is because fo rsome reason user are willing to pay for apps but not the web. Amazon and Sony don't need reader apps they could make web based readers

But what they really need to do is put their stuff in a standard format. I don't want three or four different ebook formats and each with it's own reader.
 
Winni said:
There is an awfully simple solution for this: Open iOS so that others can start their own app stores for the platform. Problem solved. And I firmly believe that Apple should be forced to do this with a court order.
Click to expand...

While I think this is an asinine decision on their part, if a court ordered me to do that, on principle alone I would simply shut down my store. There is no point in building something like the App Store from nothing only to have a court tell me how I should run it.
 
Runt888 said:
As an iOS developer who actually has in-app purchases, I've always found the 30% cut to Apple a bit ridiculous. A lot of non-developers I've talked to think it's reasonable, since it matches the cut that Apple takes from app sales. However, with the App store, Apple is responsible for hosting, bandwidth, and updates. I'm happy to pay Apple for the convenience of not having to deal with all of those issues.

However, with in-app purchases, the developer is responsible for all of those things. All Apple stores is an entry in a database. Why should they get the same cut when I'm paying hosting and bandwidth costs, developing the store interface, and having to deal with updates? If they want 30% of in-app purchases, then I should be able to upload my in-app content to them the same way I do my app.

It seems like a tiered pricing structure for in-app purchasing would make sense. If the App is free and the developer handles all of the in-app purchasing costs, then Apple would get 5% (to pay for reviewing the content and hosting the initial app). If the app costs money, then Apple gets nothing (since they already made their money on the sale of the app). If Apple provides an in-app hosting service, then they get 30%.

EDIT - Oh yeah, they also deal with payment. Maybe tack on a couple percent to the above (or just charge them whatever it costs to process payments, which at the volume they do it in is probably almost nothing).
Click to expand...

In general I can agree with you except now you have a loophole. I'll make my app $0.99 and then I'll do an in-App Purchase of its functionality beyond some really basic stuff. I just got around Apple's 30%.

And that's the problem.
 
Aatos.1 said:
You've said it very well. I feel exactly the same way.

For many years I've spent tens of thousands of dollars on Mac Laptops, Desktops, iPods & iPhones. I absolutely loved the company they _were_.

I experienced year after year of fun & excitement when buying their latest products.

Then it all began to degenerate into this arrogant, self centered, greedy machine. The very place they said, as a young company, they would never go.
Click to expand...
So, you're saying this change occured sometime since June 2007? SJ's been back in charge since the 90s. Is all this hatred just about the iOS Appstore? Seems odd.
 
This has to be a PR mistake on Apple's part. I don't think that their PR person understood the issue, because what she is advocating does not make sense.

If we take it to its logical conclusion than an app that allows you to buy shoes would have to sell shoes through Apple. That doesn't make any sense.

I think what she meant (or what Apple's actual position has to be) is that apps that use an in-app purchasing method like Sony Reader attempted to do must use Apple's official in-app purchase channel. Otherwise, apps must use some other method - like sending users to the browser to complete the transaction.

This actually makes sense - for one, Apple has some responsibility to protect its users from fraud. Vetting the payments makes sense. Furthermore, Apple has to vet the content that these apps are selling. Again, it makes sense.

But what doesn't make sense is forcing any application that "sells something" to sell it through Apple - that, I would argue, is impossible. Every app is selling something, if not implicitly - it's impossible to expect that every app selling something must also use Apple's in-app purchasing method.

It just doesn't make sense. I think this PR person will be fired given the magnitude of this story...

I should also say, I do NOT agree with Apple taking a 30% cut on in-app purchases. I think that is too high of a cut when all Apple does is handle the transaction itself. They should charge a rate comparable to credit card systems.
 
milani said:
This has to be a PR mistake on Apple's part. I don't think that their PR person understood the issue, because what she is advocating does not make sense.

If we take it to its logical conclusion than an app that allows you to buy shoes would have to sell shoes through Apple. That doesn't make any sense.

I think what she meant (or what Apple's actual position has to be) is that apps that use an in-app purchasing method like Sony Reader attempted to do must use Apple's official in-app purchase channel. Otherwise, apps must use some other method - like sending users to the browser to complete the transaction.

This actually makes sense - for one, Apple has some responsibility to protect its users from fraud. Vetting the payments makes sense. Furthermore, Apple has to vet the content that these apps are selling. Again, it makes sense.

But what doesn't make sense is forcing any application that "sells something" to sell it through Apple - that, I would argue, is impossible. Every app is selling something, if not implicitly - it's impossible to expect that every app selling something must also use Apple's in-app purchasing method.

It just doesn't make sense. I think this PR person will be fired given the magnitude of this story...

I should also say, I do NOT agree with Apple taking a 30% cut on in-app purchases. I think that is too high of a cut when all Apple does is handle the transaction itself. They should charge a rate comparable to credit card systems.
Click to expand...

it makes perfect sense, apple wants to be like Visa and Mastercard and take a bite out of every purchase

soon selling the devices won't be the primary business, it will be collecting money on every transaction
 
mdatwood said:
If I was Amazon I would implement in-app purchase and add 30% to the price ...
Click to expand...

I agree. Apple is generating another revenue stream from services (billing services in this case) and allows them to slowly overtime move from a hardware vendor to a services vendor for their platform. In the case of Amazon, they knew this... it was clearly stated in section 11.3, you must use Apple's IAP API if you are going to sell stuff.

If you want to make apps on their platform you have to use their billing system & give them a cut of all $ from services sold (and goods sold, too.) So buying Amazon books from iOS should cost 30% more than buying the same book from, say, a competing platform such as Android or your windows desktop.

Let the consumer decide where they want to play.


P.
 
akac said:
In general I can agree with you except now you have a loophole. I'll make my app $0.99 and then I'll do an in-App Purchase of its functionality beyond some really basic stuff. I just got around Apple's 30%.

And that's the problem.
Click to expand...

I guess my point was that Apple's not really doing anything except hosting a small, simple app, so why should they get more than 30% of $0.99?

With the Kindle app, for example, Amazon is paying for hosting, bandwidth, and doing all the payment processing. In return, Apple has a platform that is more valuable to their customers (or potential customers) than it would have been otherwise.

I've generally been on Apple's side when it comes to controversial decisions - not everyone may have liked them, but I could always see a benefit to the customer (be it platform stability, an increased user experience, etc.). This is the first time where the only benefit I see is to Apple's pockets, at the expense of their customers.
 
Piggie said:
I can't see this. If Apple start doing special deals with 1 person then everyone is going to think they should get a special deal.

The only think I think is that the % should change as the price goes up. It costs Apple no extra money to host a $1 app than it does a $100 or $1000 app.

Seems stupid to ask 30 cents from one and $300 from another.
Click to expand...

You obviously have never dealt with retail sales at a distributor level. I guarantee you that if Apple wants Amazon to sell through in app sales in iTunes there will be negotiations on price. Amazon is not stupid.
 
thetexan said:
Bottom line is Apple does not like other people making money off iOS unless they get a piece of that action.

iAD was created because Google was raking in millions in revenue from iPhone users. I bet it pissed Steve Jobs off to no end that a developer could put a application in iTunes for $0, and the developer along with their direct competitor profited from said application while Apple got $0. Apple at one point tried to change the terms making it far less profitable for other ad agencies to have their ads in iOS applications but backed down due to pressure.

Now we have apps like Kindle, B&N who put an app in the store for $0 (once again Apple gets nothing) and who are raking in millions selling ebooks. I'm sure it pisses off Steve Jobs to no end.

If you want to play in Apple's world, you better be prepared to give them 30% of what you make. That's something I don't agree with at all so I'll be sticking to Android.
Click to expand...


apple tried to buy admob first, google came in with a higher offer. then apple bought quatro
 
mdatwood said:
If I was Amazon I would implement in-app purchase and add 30% to the price and make it very clear it was the Apple 'tax' to buy in app. Then have a nice link right next to that would take the customer to the Amazon website where they could buy the book at the normal price. Problem solved!
Click to expand...

I'd add 40% or 50% to the price - since doing a parallel release through the walled garden has development and implementation costs beyond the 30% Apple tax.


akac said:
While I think this is an asinine decision on their part, if a court ordered me to do that, on principle alone I would simply shut down my store. There is no point in building something like the App Store from nothing only to have a court tell me how I should run it.
Click to expand...

What would you have done if you were running Microsoft when the DOJ and the EC restricted Microsoft's practices?
 
Piggie said:
You make an excellent point and one I guess many don't realise.
If you are hosting the data and paying for it, and all Apple is, is a link, then it would of course made sense that there should just be a nominal Apple charge for this, not the full cost.
Click to expand...

What RUNT failed to tell you is that the in-app purchase also goes through your iTunes account making it easy for the customer to purchase and security in knowing they are dealing with Apple and not a company they may not heard of.

This promotes sales. I know I think twice before giving my credit card to a company I don't really know, but I don't even think of that when buying through iTunes because I know where it's all being handled.

Ultimately, the developer has the choice not to distribute this way and just promote going to their web site for more.
 
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