Apple’s App Store Policies Have Limited Shelf Life

The punitive cost of doing business through Apple’s app store, which has already proved too much for some major organisations, is in danger of undermining the “everything in one place” superstore concept that the App Store and iTunes are designed to be.

It is more than just the 30 percent cut that Apple takes of all sales completed in app. Customers’ credit cards associated with their iTunes account are billed direct, meaning Apple also retains the valuable customer data from each transaction.

Apple’s refusal to budge on this left the Financial Times feeling it had no other option than to pull its iPhone and iPad apps completely last week, moving instead to an HTML5 web based app viewed through Safari (or any other browser), which it launched in June, and cutting Apple out of the deal completely. Apple’s attitude has also left a sour taste in the mouths of others.

Changing times

The Financial Times was just one of a significant handful of ‘traditional’ media organisations who, desperately searching for ways to make the Internet pay, alighted on the iPad as the answer. Major publishers producing iPad versions of some of their best known titles gave the Apple’s tablet an early boost from which it has never looked back, and the publishers began to monetise some of its electronic content.

But, when in February Apple extended its in-app purchasing rules to include publishers and content sellers, thus exposing them to the 30 percent levy, they could be forgiven for feeling the carpet had been pulled out from under them.

“Our philosophy is simple – when Apple brings a new subscriber to the app, Apple earns a 30 percent share,” said then-CEO Steve Jobs in a statement. “When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.”

A statement from Apple expanded: “Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app.”

Apple ‘generously’ stepped back from this last element, allowing publishers to set whatever price they wanted for their own product in their own app. But it will not budge on the issue of customer data and the sharing of revenue.

But by July it was enforcing the rules stipulating that all apps be stripped of links to outside purchasing mechanisms.

Continued on page 2