Developer backlash begins: Is Apple powerful enough to dismiss it?

Let the backlash begin.If anyone thought that struggling newspaper and magazine publishers were the only ones who would be impacted by Apple's new 30 percent policy on in-app subscriptions, think again.

Let the backlash begin.

If anyone thought that struggling newspaper and magazine publishers were the only ones who would be impacted by Apple's new 30 percent policy on in-app subscriptions, think again. The rules are also hitting small developers - and at least one is mad as Hell and is taking Apple to the mat in the way that geeks know best: Its execs have penned an open letter to Apple. (Techmeme)

The company is called Readability, an online subscription site that splits the proceeds with the people who actually write the words that are being read. Of the fees, 70 percent go to the writers while Readability keeps 30 percent to reinvest in the ecosystem. And since the company built an iOS app that falls under the new subscription rules, that means that Apple wants 30 percent of Readability's 30 percent cut.

I love how founding partner Richard Ziade acknowledges that his open letter was written in anger, noting that "Before we cool down and come to our senses, we might as well share how we’re feeling right now: we believe that your new policy smacks of greed." On Friday, the company was notified that its app for iOS was rejected because it utilizes a system other than Apple's In App Purchase API. Ziade writes:

Subscription apps like ours represent a tiny sliver of app sales that represent a tiny sliver of your revenue. You’ve achieved much of your success in hardware sales by cultivating an incredibly impressive app ecosystem. Every iPad or iPhone TV ad puts the apps developed by companies like ours front and center. It was a healthy and mutually beneficial dynamic: apps like ours get exposure and you get to show the world how these apps make your hardware shine. That’s why we’re a bit baffled here.

So what's a company like Readability to do? Well, Ziade says it has little choice but to abandon the iOS app and focus its efforts on the Web - but not until laying a bit of guilt and some warnings on Apple.

Ziade warns Apple that staying on this track will only "discourage smaller ventures like ours to invest in iOS apps for our services." But he also recognizes that Apple has every right to impose such a policy because it's Apple's hardware and Apple's channel. Apple can do whatever it wants.

It's hard to sympathize with Ziade because he wants Apple to bend its policies to accommodate Readability's business model when, in fact, the one that may need to reconsider its current business strategy is Readability. If that model isn't working in the channels that will produce the best results for the company, then maybe the company needs to revisit the model.

That doesn't mean that I like Apple's new policy. In fact, I think it's Apple trying to take advantage of the fact that it's pretty much the only player in tablet PCs today, milking every buck out of that segment of the business before competitors jump into the mix.

But can there be enough of a backlash to make Apple reconsider this approach? Certainly, the app developers are important to Apple - after all, look at how heavily the company talks (especially in TV commercials) about the significance of apps in the larger ecosystem. Still, I doubt that Apple would actually budge over one disgruntled developer. Apple is pretty strict with its policies and while it wouldn't be unheard of for the company to reach out to Readability to resolve the matter, I wouldn't hold my breath.

It's Apple's policy - and if guys like Ziade want to be in the Apple ecosystem, it will either have to do things the Apple way or head straight for the highway.