Apple revises in-app purchase policy for the iOS App Store

I’ve been an outspoken critic of Apple’s strict policy on in-app purchases and subscriptions, which was to require all content available for an app to be offered through Apple’s in-app purchase system, with Apple taking a 30% cut. Furthermore, prices were required to be set at equal to or less than those of the same item outside the app (like content available from a publisher’s website). So I was happy to see that Apple recently revised its stance, allowing purchased or subscribed content to be read by an app without it being offered through the in-app purchase system. However, all in-app purchases must still go through Apple’s system, and buttons or links to purchase content in any other way are not allowed. The relevant section of the App Store Review Guidelines now reads:

Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app

While this is an improvement, I still contend that a nonnegotiable 30% fee, regardless of the type of app and type of purchase or subscription, is draconian and anticompetitive. It excludes companies that rely on a margin of profit below 30%, like eBook sellers and music subscriptions services, from using Apple’s in-app purchase system.

The fee was recently blamed by BeamItDown Software for leading them to shut down their company and discontinue their iOS-exclusive eBook app, iFlow Reader. In an interview with CNET, the company’s co-founder Dennis Morin said, “the In-App Purchase model makes it impossible to comply with the requirements of the [eBook] agency model, which was created by Apple.” While using the in-app purchase system is no longer mandatory, much of the complaints leveled at Apple by Morin and BeamItDown Software still stand. Besides, certain apps should not be excluded from taking advantage of in-app purchases (which forces them to build beyond the iOS ecosystem) only because they can’t afford to give up almost a third of their revenue. iFlow Reader co-founder Philip Huber says the revised policy doesn’t change the plight of his company:

Apple still prohibits us (or anyone else) from having an in-app bookstore without giving Apple 30%. Apple also still prohibits anyone from providing a Buy button or even a link from our app to bring up Safari in any convenient way to purchase content.

Apple has (warning: sarcasm ahead) graciously allowed applications to read content purchased elsewhere. That works fine for the big companies like Amazon and Google who started with a web presence and most people already purchase that content on the web.

For a small company like ours, we foolishly built our sales platform on Apple thinking that most people would prefer to buy either from their device or computer. Apple knows this all too well, which is why they’re restricting convenient ebook purchases on your devices to be made within iBooks. This is pure and simple greed on Apple’s part. Their PR department can and will spin this, but the harsh reality is that the eviction notice is still effective.

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