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

[URFloorMatt]

Amazon can't just up the in-app price for a very, very large amount of books because of a little piece of rubbish called Agency Pricing.

And therein lies the thinking behind this decision. Amazon and Sony aren't free to just up the price to compensate for any Apple charges. But, you'd have to think that the publishers won't respond well to this decision themselves. Apple doesn't want to deal with them because it wants more of their money than they're willing to give, and now it's found a way to cut Amazon, B&N, and Sony off at the knees to get precisely what it wants? Apple is potentially pissing off a lot of major players in the ebook market with this announcement.

And I hope Visa and Mastercard are paying attention. Apple is positioning itself to dethrone them both. Of all the likely future events that this points to, I'd say the most likely is this: NFC and electronic payments are coming to the iPhone 5 in a big way.

 

[Runt888]

And I hope Visa and Mastercard are paying attention. Apple is positioning itself to dethrone them both. Of all the likely future events that this points to, I'd say the most likely is this: NFC and electronic payments are coming to the iPhone 5 in a big way.

Aren't the vast majority of iTunes accounts connected to a credit card?

 

[MattInOz]

I can see both sides of this.

On Apple's side, it sucks that a company can release a free app and use Apple's infrastructure to deliver it, but not pay for any of it.

On the other hand, sucking away 30% from every single purchase just seems like too much.

But that's apples choice they make a profit on iDevices and macs. These services offer an incentive to buy those devices. There are many free apps that make apple no more that 99 dollar developer fee, yet those apps make money other ways, ads or own content.

If hosting those apps is costing to much. Then they should find away to make delivery cheaper or increase the fee in a more honest way.

If they want to open a channel for people to purchase other store content without giving credit card info to yet another company. Then open a gift card API that let's us buy credit in other stores at a percentage more in line with what a retailer gets for a gift card.

 

[eclipxe]

One thing a lot of people are missing - the book publishers (most big ones) now use a pricing model that does NOT allow the big retailers to set their own prices - therefore the theory of just selling the books for more via the AppStore and having them cheaper on the Amazon site would not work.

 

[wwchris]

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.

Huh? Apple is not paying for hosting, bandwidth or payment processing?

All Amazon does is post other peoples' books for sale, same as Apple, and they take 30% same as Apple. Not sure why it's OK for Amazon to do it, but not Apple. Now are we talking about the bandwidth for the download? At 500K per book, Apple serves that every time you open the App Store. It's trivial.

What you are ignoring (as I mentioned in a previous longer post) is the value Apple is bringing to Kindle and their store. If Kindle was not available for iPad, I would never have bought a Kindle book, ever. I don't have a Kindle reader and don't want one. But, since it was available for the Ipad, I set up an account and have purchased books. Money Amazon would never have made.

The other part of what is being ignored here is if as an author, I want my books in the iBook store and Amazon doesn't want to do it because their make less profit, not a problem. I will just post my books in there as well. Apple gets 30% of the ones they sell, Amazon gets 30% of the ones they sell and I reach the largest audience possible. Yes, it fractionalizes the marketplace, but why should Apple make nothing off of providing a platform for Kindle reader to grow on, while making their their own iBook store less valuable?

 

[Popeye206]

Aren't the vast majority of iTunes accounts connected to a credit card?

Yes... and who do you think is paying the credit card processing fee?

That's right... Apple does that as part of their 30%. Now I'm sure Apple has negotiated great terms given their volume, but this does cost. As well as the advantages that developers get from easy purchases that customers make because all they have to say is "download now" and they bought it.

Honestly, people here are just whining over things they just don't get and does not affect them.

Any developer who has been in the software industry for a while and had to deal with channel sales will tell you, what Apple has provided is a software sales dream. Anyone who says otherwise just does not understand how channel and distribution works.

 

[bobr1952]

Huh? Apple is not paying for hosting, bandwidth or payment processing?

All Amazon does is post other peoples' books for sale, same as Apple, and they take 30% same as Apple. Not sure why it's OK for Amazon to do it, but not Apple. Now are we talking about the bandwidth for the download? At 500K per book, Apple serves that every time you open the App Store. It's trivial.

What you are ignoring (as I mentioned in a previous longer post) is the value Apple is bringing to Kindle and their store. If Kindle was not available for iPad, I would never have bought a Kindle book, ever. I don't have a Kindle reader and don't want one. But, since it was available for the Ipad, I set up an account and have purchased books. Money Amazon would never have made.

The other part of what is being ignored here is if as an author, I want my books in the iBook store and Amazon doesn't want to do it because their make less profit, not a problem. I will just post my books in there as well. Apple gets 30% of the ones they sell, Amazon gets 30% of the ones they sell and I reach the largest audience possible. Yes, it fractionalizes the marketplace, but why should Apple make nothing off of providing a platform for Kindle reader to grow on, while making their their own iBook store less valuable?

That does bring up an interesting point for sure. I have bought quite a few books from Amazon over the past year--all for my iPhone. I would never buy a Kindle--but I love reading books on my iPhone. I wonder how many books Amazon sells to iPhone/iPad owners? I would guess quite a few--certainly enough that they would want to find a way to continue to do so regardless of what Apple may ask them to do.

 

[rack2066]

Just a question.
Do you think Amazon's kindle device users should have the right able to buy books from other vendors? And those vendors should be entitled to install rival bookstores on the Kindle itself.

If not, why not?

C.

Actually I can run other bookstores stuff on the kindle, if it doesn't have DRM preventing me from doing so. Ive bought ebooks in pdf form that work on my kindle in the past. If there is DRM then its the other vendors fault not amazons.

 

[Michael CM1]

That does bring up an interesting point for sure. I have bought quite a few books from Amazon over the past year--all for my iPhone. I would never buy a Kindle--but I love reading books on my iPhone. I wonder how many books Amazon sells to iPhone/iPad owners? I would guess quite a few--certainly enough that they would want to find a way to continue to do so regardless of what Apple may ask them to do.

I've bought at least 10 books, probably closer to 20. I think I bought more than half of those through the Kindle app. Someone will have to explain Apple's wisdom to me since I can open up a Safari window, buy the book, and then it will sync next time I open the Kindle app.

If this was such an important rule, why did Apple not enforce it from the beginning?

 

[Oletros]

Huh? Apple is not paying for hosting, bandwidth or payment processing?

No, it isn't

 

[cmwade77]

Suggestion to Developers

What I would do for In App Purchases is pass along the 30% extra cost, along with a little extra (say 5%-10%) for processing and put in the description something like:
Save money and buy this book, music, etc. from our website and view on it your phone, to do so click here.

 

[ewoods]

Do you know what I am sick of? People like you trivializing the Gestapo. The holocaust was not a trivial matter. Stop abusing language like that.

Please remember that most modern languages are "living languages" and word meanings are constantly changing. For reference, the word "Gestapo" has become a commonly-accepted term for any organization that uses oppressive tactics. Most people accept this new meaning and I don't believe you're going to singlehandedly change their minds. Just try to keep in mind that no one intends to offend you personally by referring to Apple as a gestapo organization.

Back to the discussion...

 

[Runt888]

Huh? Apple is not paying for hosting, bandwidth or payment processing?

Not for content purchased from Amazon.

Yes... and who do you think is paying the credit card processing fee?

That's right... Apple does that as part of their 30%. Now I'm sure Apple has negotiated great terms given their volume, but this does cost. As well as the advantages that developers get from easy purchases that customers make because all they have to say is "download now" and they bought it.

Honestly, people here are just whining over things they just don't get and does not affect them.

Any developer who has been in the software industry for a while and had to deal with channel sales will tell you, what Apple has provided is a software sales dream. Anyone who says otherwise just does not understand how channel and distribution works.

This was in response to URFloorMatt, who thinks that Visa/Mastercard should be worried.

Also, see my previous post - I never said Apple didn't deserve 30% of app sales. But they do much less for in-app content, so it doesn't make sense that they get the same cut. And since I am a developer, it does affect me.

 

[Frobozz]

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.

This is one of the few truly insightful posts we've had. I also make iPad apps, although my company has a free app. Wasn't aware apple takes the same cut for in-app purchases. I suppose the logical reason is that everyone would change to in-app purchases to get the extra cut of revenue. Haven't checked-- but can you purchase a new app through in-app purchases, or just content packs? I'm certainly familiar with content pack purchases.

 

[Sharkus]

At least there is now mention that if external content is purchased it can be accessed in app; providing you also support IAP. This is slightly better, but not great. As said by others, there's 30% less margin to those who created the app. When you're talking eBooks and publishers are already taking a percentage, this leaves a very small margin for the eBook retailers. Some of them might be large companies, but there are a few out there that are not huge.

Perhaps some companies could possibly negotiate the 30% with Apple, see if they can drop it slightly, but I cannot really see Apple doing that.

One other concern here is how to provide the content to others. From the limited amount I know, to provide IAP you need to setup a catalog via iTC. From the brief things I've read, it would appear that an IAP needs to have a unique catalog entry. To me that would mean if you had 100 eBooks, each having their own unique ID, then you'd need 100 catalog items. What happens if you have 10,000 books, do you need to add 10,000 catalog entries. Is there some kind of automation tool to add Catalog items to ITC?

I also have a feeling things could be changing when Apple releases it's new subscription system. Obviously they don't want people evading that, and so are being more strict on how other apps are skirting round IAP's

 

[Runt888]

This is one of the few truly insightful posts we've had. I also make iPad apps, although my company has a free app. Wasn't aware apple takes the same cut for in-app purchases. I suppose the logical reason is that everyone would change to in-app purchases to get the extra cut of revenue. Haven't checked-- but can you purchase a new app through in-app purchases, or just content packs? I'm certainly familiar with content pack purchases.

No, new apps can't be purchased with in-app purchasing. Technically I guess it would be possible to enable additional functionality based on an in-app purchase (assuming the functionality was already built in), but I think that might be against the rules (not 100% sure on this, so don't quote me).

One other concern here is how to provide the content to others. From the limited amount I know, to provide IAP you need to setup a catalog via iTC. From the brief things I've read, it would appear that an IAP needs to have a unique catalog entry. To me that would mean if you had 100 eBooks, each having their own unique ID, then you'd need 100 catalog items. What happens if you have 10,000 books, do you need to add 10,000 catalog entries. Is there some kind of automation tool to add Catalog items to ITC?

I wondered about that also. At least for normal developers, adding in-app content is a fairly laborious process. I guess Apple might provide a more automated process for larger companies with a lot of content.

 

[BC2009]

You're not thinking like Steve here.

It won't cost twice as much. If Amaon wanted to protect their net profits, it would cost 30% of the net price more. But I think they'd be idiots not to sacrifice profit margin for the increased sales volume they get by reaching 160 Million new iOS users.

B&N, Sony, and Amazon all had the best of both worlds for a long time, and Apple has had enough. They have a competing product that they can deliver to massive audience they didn't have access to without iOS. Margins can suffer a bit for volume.

At the end of the day, price conscious consumers can continue to purchase directly through their web store. However, those who are either ignorant or ambivalent, preferring convenience, will just purchase in app for a slight markup.

Assuming Amazon's contract with publishers does not stipulate 70% of gross sales price. In which case, regardless of what Amazon raises the price to, then will still owe 70% of that to the publisher and 30% to Apple.

 

[paul4339]

...

Any developer who has been in the software industry for a while and had to deal with channel sales will tell you, what Apple has provided is a software sales dream. Anyone who says otherwise just does not understand how channel and distribution works.

I agree, the veteran developers I talk to says the same.. .in the past sales , channel and distrib costed way more than 30%... with the App store, it allows smaller shops to spring up and focus on development. For small shops it's great... with Amazon (and others) who already has an established payment processing system, not so great.

P.

 

[Joe-Diver]

So....don't download the app from the app store.

Get it from it's own site and install it.

That's where I got the Sony, Kindle, Barnes and Noble...and Borders ereaders. Not from the app store, but form their individual sites.

You don't HAVE to put your app in the app store. If you simply must though, you'll have to abide by whatever rules Apple comes up with. If you don't like it, tough. Don't put your app there.

 

[spritelyjim]

Maybe a reasonable change in policy would be to charge 30% of a resellers' cut, not of the entire price. That way everyone gets something.

But then I guess you'd have to prove you were a reseller, not a content provider, and a few (albeit difficult to take advantage of) loopholes would open up. But it'd be a reasonable policy at least.

 

[mweingar]

Developers have also been seeing how close to the line they get. Though without more information it is impossible to say who is in the wrong.

Personally if i buy a app and it has in-app purchase i don't want to have to give a 3rd party my credit card when everything else is on the same bill.




I think it means that there must be the option to pay with in-app. The developer may not want it but for customers it is easier and safer.

This is not about easier or safer. This is about Apple getting 30% of the revenue for all content. It is indefensible and gives me the extremely strong desire to throw my iPad out a freaking window.

If I were Amazon or B&N I would give up, pull my apps from the store, and make a stink in the press about Apple. These companies offer readers for multiple devices. It makes NO SENSE that Apple should get a cut of their book sales just because one of their readers is on iOS.

In actuality, I bet Amazon and the others just make it so you have to buy from a browser on another device and it will show up in your archive on the iOS device. This should circumvent the issue.

 

[Oletros]

So....don't download the app from the app store.

Get it from it's own site and install it.

That's where I got the Sony, Kindle, Barnes and Noble...and Borders ereaders. Not from the app store, but form their individual sites.

You don't HAVE to put your app in the app store. If you simply must though, you'll have to abide by whatever rules Apple comes up with. If you don't like it, tough. Don't put your app there.

Oh, I didn't know that you can legally sideload applications on iPhone or iPad

 

[ParishYoung]

An easy solution

• I have not read all 260+ comments to apologies of this has already been stated
• This only applies to Amazon's Kindle App

I think Amazon can easily add the extra cost of giving Apple 30% by simply multiplying the total cost of the book by 1.3. Simple.

The issue is that the user doesn't want to pay the extra 30%, granted (I wouldn't either)

But this will simply come down to clever marketing or "positioning" by Amazon, utilising 2 purchase buttons in their App:

Button 1 = Buy from Amazon and store in the cloud
Button 2 = Buy through Apple, have stored in the cloud, and have a copy on your local PC / Mac in iTunes

This way most purchases, I estimate, will be made at the cheaper price although those customers who want the option of having it backed up on their own PC will pay the 30% extra.

What are your thoughts on this idea?

 

[ouimetnick]

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.

Why should it piss greedy selfish Steve off? Amazon is paying for bandwidth, and storage and servers to host their books sold in THEIR OWN Kindle store. If greedy Steve wants some money, then he should host all of Amazon's books, and pay for Amazon's storage and servers. Why should Steve and Apple get money when they don't deserve it?

 

[ParishYoung]

No, new apps can't be purchased with in-app purchasing. Technically I guess it would be possible to enable additional functionality based on an in-app purchase (assuming the functionality was already built in), but I think that might be against the rules (not 100% sure on this, so don't quote me).



I wondered about that also. At least for normal developers, adding in-app content is a fairly laborious process. I guess Apple might provide a more automated process for larger companies with a lot of content.

New functionality can be purchased using In-App Purchase.

There's a Twitter App (I forget which one) that you can enable PUSH notifications via an in App Purchase.