By Harry McCracken | Tuesday, February 15, 2011 at 11:22 am
This is one of the more significant moments in the history of the iPhone and iPad: Apple has announced its system for selling subscription-based content through its App Store. As with apps and one-time purchases such as game content, it’ll take a 30% cut of the sale.
The company’s announcement says that content owners will be free to sell their wares outside the App Store as well–no 30% fee to Apple involved–as long as they provide the same (or better) offers within the App Store. That’s a relief. But it also says this:
In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.
That means that the current content-acquisition system used by Amazon’s Kindle and numerous other apps–which all happens in the Mobile Safari browser, not the app–is now verboten. From a consumer standpoint, the case for the new subscription system is that it’ll make buying stuff simpler: The browser-based approach has always been more than a tad clunky. Publishers, however, are entitled not to be thrilled by the new directive to do things Apple’s way and cut the company in on the profits of at least some sales–All Things Digital’s Peter Kafka says that Time Inc., for instance, isn’t going to play ball.
And given that e-books sold with agency pricing already turn over 70 percent of the profit to the publisher, it’s not clear what Amazon.com, Barnes & Noble, and other distributors of e-books are going to do: If they turn over 70 percent to the publisher and 30 percent to Apple, that leaves them with zip. (Or less than zip, actually, given that it costs money to build apps and acquire e-book rights.)
As a selfish owner of an iPhone and an iPad, I’m mostly curious about what happens to existing iOS apps and content people have already paid for–some of us have already invested a lot of dough in Kindle books under the assumption we’d be able to read them on iPhones and iPads. Apple’s statement doesn’t say when the new requirements take effect, but All Things Digital’s John Paczkowski reports that app publishers must come up with new versions that follow the revised stipulations by June 30th. (For now, the App Store is still full of programs which violate the new rules. In fact, Amazon released a new version of Kindle yesterday which still uses in-browser buying.)
How about Netflix, which lets you watch all the video you want for one flat fee? If the company wants to continue offering iOS apps, it will have to start allowing folks to pay for Netflix subscriptions through Apple’s subscription system and turn a percentage of their monthly membership fees over to Apple. I guess.
What happens if Amazon or other companies call Apple’s bluff? Is there any chance the 30 percent fee might be reduced? I don’t know. Can I keep using the Kindle apps I’ve already downloaded even if Amazon pulls out of the App Store or releases an app that doesn’t give me full access to my library? I don’t know. Will Apple’s own iBooks start to look like a more compelling Kindle alternative than it has to date? I don’t know. Will publishers downplay Apple support in favor of Android’s less restrictive platform? I don’t know. But with the June 30th deadline on the horizon, it sounds like a lot of this stuff will have to become clearer in the next four and a half months.