Last night I got confirmation that he is correct. Apple's in-app system can't handle more than 3,000 items. This means that it simply won't be possible for any of the ebookstores to use it.Their in-app purchasing system only allows 3000 or 3500 distinct items to be in your catalog (depending who you talk to). Kobo and Amazon each have around 2.5 million titles. Judging by the title of Kobo’s app, 1.8 million are public domain (or otherwise free), so some 700’000 are paid titles, which they are under obligation to the content owners to make available for sale to all their users.
I already knew they wouldn't; they can't afford it. But now we know it's impossible. So what is Apple trying to accomplish here?
I've no clue, but I do know a couple other details. For example, this new rule about in-app purchases was only added to the developer agreement in September 2010. I've seen notes from a conversation with an Apple rep that clearly indicated that out of app purchase was fine and that there was no requirement to have in-app purchases. This conversation took place in October, and it wasn't until January that Apple changed the interpretation of the developer agreement. One of my sources also said that Apple changed the rule literally over night. Apple went from being friendly in late December to actively hostile in January. Another reported getting an app approved (under the old rule) as late as 20 December.
No one understands it (and that includes the big boys). At this point everyone is resigned to the fact that Apple will pull the apps come June. Amazon, B&N, and Kobo are stuck.
And yes, I have off the record confirmation that they're going to let Apple pull the apps. What else can they do?
One final note: What's even worse is that this new rule will probably drive a number of smaller iOS devs out of business. A number of the smaller developers survive on making apps for the smaller ebookstores and other content providers. Those ebookstores can't afford to pay Apple's vig, so they won't be hiring anyone to make an app.