By Jared Newman | Wednesday, May 11, 2011 at 6:40 pm
In a venomous blog post, a startup called BeamItDown Software says it’s going out of business, and squares the blame entirely on Apple’s in-app purchase policy.
BeamItDown’s iFlow Reader, a digital reading app for iOS, relied on e-book sales for revenue. But because Apple takes a 30 percent cut of anything purchased within an app, and e-book publishers only give 30 percent their revenue to the book seller, iFlow Reader would actually lose money on every book sold.
“We put our faith in Apple and they screwed us,” BeamItDown’s blog post says.
BeamItDown may not be the last victim, either, because the policy that caused this small company to go out of business may soon be unavoidable for major e-book players like Barnes & Noble and Amazon.
It’s no secret that Apple takes a 30 percent cut of all in-app purchases, but as of now, big e-book sellers sneak around the rule by launching their book stores through the Safari browser and billing customers directly.
Back in February, Apple made it clear that this workaround is not allowed. “We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase,” spokeswoman Trudy Miller told All Things Digital. In other words, Amazon will have to create a bookstore within the Kindle app, opening the door to a 30 percent cut for Apple.
For now, Amazon and Barnes & Noble continue to sell books through the web, but BeamItDown’s Phil Huber thinks this won’t last. In an e-mail, he said app makers will have to comply with Apple’s new guidelines by June 30, the same date that Apple’s in-app subscription policy goes into effect. I can’t confirm this, but it seems plausible.
At that point, E-book sellers have a few choices: walk out of the App Store, hope for special treatment or suck up the iOS losses and make money on other platforms. If you own a lot of Kindle or Nook books, mark the date.