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Adrian Kingsley-Hughes
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Apple issues statement on ebook sales

By | February 1, 2011, 10:43am PST

Apple has issued a statement relating to App Store policy change with regards to ebook sales.

This in from Apple spokesperson Trudy Muller:

“We have not changed our developer terms or guidelines. 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.”

This is different to the statement made by Sony which indicated that Apple had said that all purchases must be made as in-app purchases.

What does this mean for Amazon with the Kindle app and Barnes & Noble with the Nook app? Well, it will mean that if this statement from Apple is accurate then the app will also need to offer books as an in-app purchase. Since Apple takes a 30% cut of the sales price, then it seems likely that ebooks bought as in-app purchases will cost 30% more than if bought direct from Amazon or Barnes & Noble.

A few thoughts:

  • Has there been a policy change or not? Apple’s statement doesn’t make sense - how can the Kindle and Nook apps have been approved is there was a requirement to have content available for purchase in-app?
  • This cash grab by Apple feels clumsy to me, especially if the company still wants to grab 30% of the in-app price. The only way the market can cope with this is differential pricing.
  • Differential pricing is likely to harm consumers, so expect regulators to be interested in this move.
  • It’s also likely to be harmful to Apple. Nonsense like differential pricing will confuse consumers and make Android tablets seem like a better option.
  • Would people pay 30% more for a 1-click in-app purchase of an ebook?
  • Does the likes of Amazon have the power to strong-arm this 30% down to something more manageable (and reasonable)?
  • I still don’t see the Kindle app being yanked from iTunes over this.
  • Does Apple plan to make iBooks app part of the iOS rather than being an optional download as it is now?

Lots of questions, little in the way of answers.

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Topics

Apple Inc., E-book, Sales Strategy, Pricing, E-books & E-Readers, Sales Force Management, Marketing Research, Sales, Marketing, Personal Technology, Adrian Kingsley-Hughes

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology.

Disclosure

Adrian Kingsley-Hughes

All opinions expressed on Hardware 2.0 are those of Adrian Kingsley-Hughes. Every effort is made to ensure that the information posted is accurate. If you have any comments, queries or corrections, please contact Adrian via the email link here. Any possible conflicts of interest will be posted below. [Updated: February 23, 2010] - Adrian Kingsley-Hughes has no business relationships, affiliations, investments, or other actual/potential conflicts of interest relating to the content posted so far on this blog.

Biography

Adrian Kingsley-Hughes

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology -- whether that be by learning to program, building a PC from a pile of parts, or helping them get the most from their new MP3 player or digital camera.

Adrian has authored/co-authored technical books on a variety of topics, ranging from programming to building and maintaining PCs. His most recent books include "Build the Ultimate Custom PC", "Beginning Programming" and "The PC Doctor's Fix It Yourself Guide". He has also written training manuals that have been used by a number of Fortune 500 companies.

Adrian also runs a popular blog under the name The PC Doctor, where he covers a range of computer-related topics -- from security to repairing and upgrading.

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RE: Apple issues statement on ebook sales
FAULKNE 13th Oct
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View in thread
0 Votes
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Yet another Apple 'control issue'?
Dietrich T. Schmitz, ~ Your Linux Advocate 1st Feb 2011
Me thinks so.
Folks,
Don't like being told what to do?
That's what Apple is yet again angling in on.
More control.

Don't give up your right to 'choice'.
You get all you can take with Linux and Android is there to meet your ebook needs however you want to make your purchase.

So, come on over to the Linux World and be happy.
No control issues.

I stake my reputation on it.
0 Votes
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Uh, this _IS_ choice.
matthew_maurice Updated - 1st Feb 2011
@Dietrich T. Schmitz, Your Linux Advocate It seems to me that the rule change says that if Sony, or anyone else, allows the users to buy outside the app that they must also allow the option to buy inside the app, which of course means Apple will get 30%. It sounds rather fair. If you want to make it really easy for your customer Apple will do it for 30%, otherwise you can make it only mostly easy for nothing.

It's more or less the same as with music. If your customer buys a CD they can rip it themselves to iTunes or you can let Apple sell the music to them directly for 30%.
0 Votes
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Developers don't get that kind of treatment with Android
Dietrich T. Schmitz, ~ Your Linux Advocate 1st Feb 2011
@matthew_maurice
Visit the Android Market for yourself.
If a developer wants to rely on spawning to a 3rd party via a browser session, then so be it.

Apple again wants for their own interests to restrict how Apps should be coded.

iOS Developers free yourselves and code Android Apps!
Google wants you! Apply within at:

h-t-t-p://www.google.com
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Why should Apple get a bite?
dazzlingd 1st Feb 2011
@matthew_maurice
Why do you consider Apple getting 30% of any in app purchase revenue "rather fair?"

The download of any content does not pass through any Apple infrastructure as Apple does not proxy any 3rd party iOS traffic. So it costs them nothing.

What next? Paying Apple a percentage to watch a Netflix movie through the iOS app? Paying Apple a percentage of any eBay fees when you buy something through the eBay app? Perhaps they want a 30% cut when I pay a bill through the Bank of America app?
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RE: Apple issues statement on ebook sales
Droid101 1st Feb 2011
@matthew_maurice
Doesn't sound fair at all, actually, but keep on drinking that kool aid!
0 Votes
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Because iOS is their world
matthew_maurice Updated - 1st Feb 2011
@dazzlingd We all just play in it. Whether that's right or wrong is beside the point. Apple created the ecosystem, so they get to make the rules. To most people it appears that they did such a good job that people, consumers and developers, are falling over themselves to be a part of it. This gives Apple the leverage to run iOS how they want to. Anyone who objects can buy, or develop for, an Android or WP7 device. The reality is pretty much that a lot of people are willing to put up with it. That is why Apple gets 30%.
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RE: Apple issues statement on ebook sales
rhonin 1st Feb 2011
@matthew_maurice
chuckle......
Why I don't by any music, video or books from Apple.
Amazon, B&N and Google are much cheaper.
Better selection for my tastes too.
happy
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RE: Apple issues statement on ebook sales
man_strosity Updated - 1st Feb 2011
@matthew_maurice

Yeah, and if you own a Toyota and drive to the mall, send Mr. Toyoda a check, while you're at it.
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Of course they can undercut Apple
oncall 1st Feb 2011
@zenwalker

They unload all the support costs of selling through an iPad app. Hell, why even bother manufacturing their own device to sell at cost when they can leech off the app store and leave the headaches of device support to Apple while collecting their respective cuts from the publishers. What a GREAT deal for them.
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RE: Apple issues statement on ebook sales
MG537 1st Feb 2011
@Dietrich T. Schmitz, Your Linux Advocate
Don't you worry my Linux advocate. Your precious little Google will generate the same $$$ whether that click, they depend so much on, comes from an iOS device or WP7 device or an Android device.
As for Linux users being happy or happier, I wouldn't stake my reputation on it.
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Oh Marla there you go again.
Dietrich T. Schmitz, ~ Your Linux Advocate 1st Feb 2011
@MG537 nt
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RE: Apple issues statement on ebook sales
Pete "athynz" Athens Updated - 1st Feb 2011
@Dietrich T. Schmitz, Your Linux Advocate

Hardly. Apple is saying that an in-app purchase must be an option NOT the only one.

Let's break down their statement, shall we?

?We have not changed our developer terms or guidelines. 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.? The relevant part here is: the same option is also available to customers from within the app

What is so hard for all of you ABAers and Apple Haters - and yes Linux Advocates - to understand? This rule is simply giving the consumer a choice between purchasing in the app - for convenience I'd imagine - and purchasing outside the app as the Kindle, B&N, etc. do now.

So what does this do to your reputation Dietrich? Still smarting from the "Android Steamroller" comment just before the whole Galaxy Tab sales figures fiasco, huh?
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It's not for Convenience...
Zorched 2nd Feb 2011
@athynz : It's so Apple can take a cut of the $$$. This is nothing more than Apple backtracking on their previous wording that banned all purchases of content not made on the app-store. Which, when you think about it, could actually have been construed as Apple wanting a cut of ANYTHING bought via the device. THAT would have torqued customers to no end.

This declaration is nothing but them covering their rears.

The problem with ebooks is that ever since the Amazon vs. publishers battle, the ebook prices are set by the PUBLISHERS, not the retailer, so they either raise the prices for in-app sales, or they possibly LOSE money on every sale because they have to pay the publishers a predetermined rate.

Raising book prices on the app will bring lawsuits by users that feel wronged, so now they (Amazon and B&N) are in a no-win situation where they may have to remove the app because they can't please both the publishers AND the customers. Apple comes out smelling like roses because now they have the eBook market all to themselves on Apple devices and they didn't have the bad press of having the whole thing blamed on them because Amazon and B&N CHOSE to remove the apps themselves, not forced by Apple.

Devious, Apple is. Greedy, they are.
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RE: Apple issues statement on ebook sales
spikedstrider 2nd Feb 2011
@Dietrich T. Schmitz, Your Linux Advocate Why is this so hard for people to understand. Apple is not stopping sales outside of the ap. I can still buy it through my normal places and read them my iPad. I get that Apple wants you to use them as a virtual store, but you are not forced to. I drive to 2 or 3 stores when shopping for the best price. That is in a car and it can be a big inconvieniance. So when buying books and music, you have to type to go to different sites and decide where the best value is. This does not seem like a huge inconvieniance. I really don't see why it is even a thought. I mean sure it sucks all in AP purchases will suck but Apple may start to see people not swallowing the Koolade and they made need to rethink their pricing and marketplace. The iPad gives people a way to get things they enjoy, Apple just like any business wants a piece of the pie.
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RE: Apple issues statement on ebook sales
lelandhendrix@... 2nd Feb 2011
@Dietrich T. Schmitz, Your Linux Advocate

Nobody seems to be getting this right, STILL. And its not that hard once you carefully review the facts.

The issues about in-app and out-of-app purchases is a matter of semantics and Trudy Muller didn't help with it.

Apps like the Kindle app for iOS are not making purchases in OR out of the app. As soon as you select to shop for books, the app closes completely and opens a link to Amazon.com. You can purchase whatever you want through safari, as you always could, and that is not at issue.

This is because, just like the Netflix app, the Kindle app serves ONLY to access data on an external server--specifically amazon servers. There is no purchasing going on in the app.

Contrast this ith Sony's model, whereby purchases are done WITHIN the app but on an external server. Apple is requiring that any app that allows a purchase from within the app also accept the iTunes user's account as payment.

So when she says in-app and out-of-app, what she means is in- and out-of-app-STORE, so that a users has the ability to expect to be able to pay for content without opening up a new account.

Again, this is specific to purchases made within the app--which is not what the Amazon Kindle app does. Any app that accesses content purchased through a browser or any other method except inside the app is still within the bounds.
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RE: Apple issues statement on ebook sales
Cylon Centurion 1st Feb 2011
With reading the new BTL entry, "E-book sales will outpace app revenue by 2013"

It's no wonder Apple wants in on it. happy

Sneaky, sneaky.
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RE: Apple issues statement on ebook sales
rhonin 1st Feb 2011
@Cylon Centurion 0005
true but Apple really needs to take a hard look at their business model.
I am a prodigious reader and generally prefer e-books.
Since iBooks was launched, I have bought exactly 1 (yes one) book via Apple.
Amazon, B&N and Google have much better selections and better prices.
happy
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Conversely.
matthew_maurice 1st Feb 2011
One could argue that the ease of 1-click, in-app purchasing is worth 30%, if not to the content provider than to the customer, otherwise it's a non-issue. As for differential pricing, either the provider makes the in-app purchase more expensive (to cover Apple's cut) or less expensive outside the app to encourage direct purchase. How is that bad for anyone? If the ease of the experience is worth it to the consumer they'll buy inside at an inflated price, and if it's not they'll go direct which cuts Apple out of the loop. As for Kindle and Nook apps, if they don't have in-app purchasing now, expect quick updates (I'm betting they've been briefed about the change in advance). Finally, it's my opinion that Apple makes most of these types of decisions after pretty careful analysis of what they've done before. It's pretty clear that Apple believes that in-app purchasing is worth 30% to someone either the providers for the ease of retailing or the consumers for the ease of consuming.
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RE: Apple issues statement on ebook sales
fwelsh 1st Feb 2011
@matthew_maurice umm, actually it's 42.9% it you want the two prices to come out the same. Do the math.
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RE: Apple issues statement on ebook sales
Doctor Demento 1st Feb 2011
@fwelsh

We must have posted at roughly the same time...because when I started making my post below I can swear that yours wasn't here....
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RE: Apple issues statement on ebook sales
Rick_K 1st Feb 2011
@fwelsh And where do you come up with that? I could see Microsoft having that, but no one else would charge those types of margins.
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Apple's cut is 30% regardless.
matthew_maurice 1st Feb 2011
@fwelsh Like Apple, I don't particularly care what the content providers have to do to make it work out for themselves. They can price it however they want, it will either sell or it won't.
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I don't understand what the advantage of in-app purchasing would be?
condelirios 1st Feb 2011
@matthew_maurice Kindle book purchasing from the web page is super easy... even from the mobile version... and it automatically pushes the content into whatever kindle app device you want... so you never have to plug in or anything. In app purchase? who cares.... and if it costs 30% more.. NO ONE WILL DO IT. They will Open Safari... click on the amazon kindle store bookmark.. and purchase the book... and wait 30 seconds... open the app and start reading. It isn't like you are purchasing every few minutes... so who cares if you have to go to the website?
Apple... this one is a LOSER for you. Your eBook store has pathetic selection, and if you kill the kindle app... you will definitely help the Android market share, which doesn't really need any help from you BTW.
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people like apps.. the just click the little icon an they are there..
doctorSpoc Updated - 1st Feb 2011
@condelirios.. no bookmarks, no browser.. just a dedicated app that does something that they are interested in..

Apple doesn't lose out in any way shape or form... this way.. the worst it can be is exactly the same as before to better..

Apple is just saying that if you do out of app purchases... you need to have an in-app option through apple system as well.. that's it.. so users can do exactly what they did before.. go the app find a book, click on it and get re-directed to Amazon or NOOK site for purchase or they will now be given the choice to do the purchase in-app through apples in-app system using their iTunes account..

what the hell is the big deal? users don't lose anything.. they now are given another options.. they can take it or not.. what the hell are you guys crying about?
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More of the usual...
oncall 1st Feb 2011
@doctorSpoc

Cut-and-paste whining every time Apple does something. Like the porn argument all over. You know what, Sony and friends don't have to play in the app store, they can make "web apps" just like the porn vendors are doing. But they know the app store is a damn nice place to be, so they whine.
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In-app-purchases would not transferable to other Kindles
rlawler 1st Feb 2011
@condelirios There is a major feature that would be lost through In-App-Purchase. That is the ability to move your Kindle books to other Kindles or Kindle apps on other platforms. This is not allowed by Apple's In-App-Purchase terms. All content purchased In-App may only be used in the app.

Also Apple has to approve all content offered through In-App-Purchase. Any content Apple considers unacceptable would not be allowed in the app.
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Horrible Mathematics
Doctor Demento 1st Feb 2011
I find the really horrible arithmetic here to be annoying.

If Apple takes a 30% cut, then in order to maintain the same level of profit the price per app would have to be increased by approximately 43%, NOT 30%.
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RE: Apple issues statement on ebook sales
fwelsh 1st Feb 2011
@Doctor Demento Great minds and all that stuff happy
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It's not bad math, it's apathy.
matthew_maurice 1st Feb 2011
@Doctor Demento Pricing is their problem, not Apple's-or mine. It's roughly akin to what WalMart does with their suppliers. They say "we want to sell your product for x so we'll pay you y, you make your numbers work, or don't-it's all the same to us."

Kinda crappy for the supplier yes, but that's what happens how business works. Nobody forces you to sell through WalMart or Apple, the fact that people do is because both companies command big markets.
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RE: Apple issues statement on ebook sales
Doctor Demento 1st Feb 2011
@matthew_maurice
It is bad math, people keep saying 'this will result in a 30% price increase'....when in fact when you do the math, which is EASY by the way, third grade math really, the real increase would have to be around 43%.
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RE: Apple issues statement on ebook sales
rlawler 1st Feb 2011
@matthew_maurice Of course Apple does care about the pricing. Apple and News Corp. were instrumental in moving publishers to the agency model that Amazon and Sony now use to license ebook content from many publishers.

Under the agency model publishers set the prices for ebooks and that price has to be the same everywhere -- In-App and web. Since the margin is typically 30% that means In-App would be at zero margin for the app vendor -- Sony and Amazon in this case.

Apple may laughing today, but I suspect we haven't heard the last laugh.
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I still don't see how this impacts the Kindle
oncall 1st Feb 2011
There is no shopping or purchasing of ebooks through the Kindle app. There is a link button that closes the app and points the web browser to the Kindle web store where you can buy shop for ebooks and push them to any compatible ereader you own. The WORST case scenario is they have to remove this link button. On an aside, someone is going to have to explain to me how Apple could police or enforce anything beyond this when there are hundreds of reader/office/music and other apps that access cloud based content that may or may not be purchased or free.
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RE: Apple issues statement on ebook sales
hoaxoner 1st Feb 2011
@oncall
If the only way to purchase is in-app, Apple gets 30% of that purchase.
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Since that is "unenforcable" with cloud based content...
oncall 1st Feb 2011
@hoaxoner

I am going to suggest that is not the correct interpretation of what's going on.
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Apple is just saying that in-app purchase must be an option..
doctorSpoc 1st Feb 2011
@hoaxoner ..that's it.. if you want to allow users to buy your stuff outside of the app you need to ALSO give them the option to do it within the app using in app purchase mechanism..
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RE: Apple issues statement on ebook sales
hoaxoner 1st Feb 2011
@oncall - it is enforceable from the standpoint that cloud purchased functionality could be removed from the app. Especially to guarantee functionality in iOS.

@doctorspoc - how long until the ONLY way to purchase anything from within apple is to use the IAP system thereby restricting apps and their developers further and gashing them in price.
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Agreed
oncall 1st Feb 2011
@doctorSpoc

I am sure Apple is acutely aware that that the good folks at Sony and Amazon are selling ebook readers at or below cost then turning around and charging the publishers 30% for "distribution" to make up for their "costs" which amount to almost nothing if the ebook reader buys an iPad and slaps the free iTunes distributed Kindle app on it. Meanwhile, there is no iBook app on the Kindle or Nook or Sony's offerings, devices that can handle apps. Then they go crying "Oh boo-hoo the free ride may be over", a tad bit of hypocrisy I think.
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but the only way to purchase is NOT in app..
doctorSpoc 1st Feb 2011
@hoaxoner they are saying that if you have out-of-app purchases.. you need to have in-app through apples system as well.. users have to option to use the in-app OR the out-of-app method.. if you want to use your iTunes account and have the process be a little more direct then you do the in-app.. if you want to possibly save a little money do the out of app.. i'm trying to see what the big deal is but i'm not seeing it..
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RE: Apple issues statement on ebook sales
hoaxoner 1st Feb 2011
My question is this: will customers still be able to access content they bought from other media (computer, other devices) on the iPad? Will customers be able to choose which method to use to purchase content (with-in or without)? Or is this just the beginning in a strategy to make iWhatevers the new credit card machines to just use their platform to make transactions.

Can they ever answer the question.

Oh, and, "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." implies that something has changed. Nice misdirection Apple.
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because the rules were already there.. they were just not being enforced..
doctorSpoc Updated - 1st Feb 2011
@hoaxoner
11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected
11.3 Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected

in fact they are still being kind of lenient in that they are allowing purchases made not using IAP to be used within an app..
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Intended to cause FUD, no more no less
terry flores 1st Feb 2011
Apple basically says: "Give us our cut or complicate the customer experience needlessly. You choose."

Many app developers benefit from iTunes infrastructure for merchandising and processing payments. The cut is worth it to them instead of setting up their own storefront and backoffice. But for companies like Amazon, B&N, Sony, etc., they already have the infrastructure available via Web. They don't need or want Apple in the middle of the transaction, *and* taking a bite.
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RE: Apple issues statement on ebook sales
mikies 1st Feb 2011
Easy stuff. If I am B&N or Amazon, I do the in-app thing for 10 times the price so nobody in their right mind buys it and off we go. Have all the people who bought iPads and other Apple gear now yell that (1) they paid super high prices for underpowered hardware and technology solution and (2) need to pay more than other products to get the content they want. Seems like Apple continues its slide downward.
0 Votes
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How are guys missing the point here?
Pete "athynz" Athens 1st Feb 2011
You all got click-baited once again by a typical ZDNet Anti-Apple post... and you once again fell for it. Apple's Statement, thoughtfully provided by Adrian:

?We have not changed our developer terms or guidelines. 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.?

The relevant part here is this: that the same option is also available to customers from within the app

All Apple is doing is telling the devs to provide an option for in app purchases if their app allows for out of app purchases. Why is this so difficult for you ABAers to understand?
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Not only that
wackoae 1st Feb 2011
@athynz I haven't read a single line that talks about Apple getting a cut out of the in-app purchases.

But that doesn't stop FUD from happening.
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TRUTH!
BallmerFanBoy Updated - 1st Feb 2011
The ZuneBook is coming soon!
Wait for MS people!


http://fakesteveballmer.blogspot.com
0 Votes
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RE: Apple issues statement on ebook sales
gguybr 2nd Feb 2011
I'm a bit at a loss here. Everybody says, the app, what app? Apple's app or any 3rd party app? Can't Amazon have his own app and comply with this without having to make their users pay 30% more?
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RE: Apple issues statement on ebook sales
chethammer 2nd Feb 2011
To me this proves why Apple is willing to price the Ipad/Ipod Touch so "reasonably". Its a hook to get you in so they can rape you with the extra charges for their apps. It isn't the device that is going to cost you. There must be some information that tells us how much profit the on average each customer apple gets from the app store. I know I used to be hooked on it.
The beauty of Android is that all the money goes to the people who developed it. Android is a wonderful community of people.
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RE: Apple issues statement on ebook sales
Pete "athynz" Athens 2nd Feb 2011
@chethammer Right so they can get the devs to offer the choice of an in app purchase AND purchases outside of the app. Do you people even bother to read the articles and get the right information before posting and looking like idiots?

Check out my post above where I explain why I'm saying you look like idiots.
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RE: Apple issues statement on ebook sales
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RE: Apple issues statement on ebook sales
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RE: Apple issues statement on ebook sales
FAULKNE 13th Oct
Good day to confirm this comment I would appreciate T h e b e s t o f Z D N e t d e l i v e r e d your website very nice to everyone Yes, Oracle is the only one with shared-disk architecture, but that is there advantage. It means you can add or remove nodes and the database lives on. In a shared nothing architecture, if you lose a node, you lose the system. I'm sure Oracle appreciates EMC highlighting their advantage.I also desire to signal in your RSS feeds. Thank you as soon as once again and maintain up the great operate Awesome post! Thank you very much || thanks for nice content this is really benefit to me.

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