Apple’s Vig: the story so far

I've heard from a couple people that my post yesterday was confusing. Sorry about that; I though everyone had been following this as obsessively as I have. Let me correct my mistake by giving you a summary of what's happened so far. For the sake of being thorough I'm going to have to start in the middle of 2010.

Mid 2010

Various companies have apps and sell content on the iPhone, iPad. Some sell from inside the app and some sell from their website (outside the app). The Kindle is an example of selling ebooks outside the app; Kindle ebooks are sold from a website that Amazon maintain just for iOS. The key detail here: You don't have to sell inside the app. But if you sell inside the app, you give Apple 30%. Apple is fine with either option.

September 2010

Apple changed the developer's agreement again (they do this a lot).  A new rule is added, but (as far as we are concerned) nothing changes in how any rule is enforced. Apps are approved after the new rule is released in exactly the same state as they were before the new rule. Here is the rule:

Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected

January 2011

Apple changed how they interpreted that rule. Now Apple are telling the app makers that if they sell digital content outside the app they must also sell it inside the app. Note: the rule has not been changed since September. Note: Apple did not require in-app sales before January. Remember, if you sell in-app then you must give Apple 30%.  The major ebookstores cannot afford to give Apple 30%.

This story broke in The Wall Street Journal in early February.

This Week

A developer who used to work for Kobo wrote a post and explained why the in-app option won't work for any of the ebookstores. The in-app code is designed to work with at most 3,000 items. That would mean that you could not have an ebook catalog the size of Amazon's (800 thousand titles).

So at this point we have Apple demanding money that no one can afford to pay, and we have Apple insisting that everyone use a system that cannot work for any of the larger ebookstores.

It looks like Apple screwed everyone over on purpose, doesn't it?This leaves out a lot of details, including the responses from various app makers and the fact that Apple is under investigation by the FTC. But this should be enough to explain my post yesterday.

image via Flickr

About Nate Hoffelder (11383 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

3 Comments on Apple’s Vig: the story so far

  1. “Now Apple are telling the app makers that if they sell digital content outside the app they must also sell it inside the app.”

    It is my understanding that Apple made it clear that the content acquisition “outside the app” part *also* includes sales *outside the iPxxx* when they brought the issue up in the context of providing free digital access to subscribers of print editions.

    This means that apps that *don’t* sell content at all, but allow access to personal libraries are also forbidden. If fact, some of the “clarification” quotes I’ve seen from Apple don’t refer to outsides sales at all but rather to “externally acquired” content which means even free streaming services (Pandora, Last.fm) or even Public Library access (Overdrive) and PD Bookstores may be off-limits.

    As presently described *by Apple itself* the intent seems to be to cut off all content access (not just sales) that doesn’t got through iTunes.

    I’m thinking Apple shoud be allowed to do exactly that.

    • Thanks! You caught a point I missed.

      I’m not sure yet if Overdrive will be affected, but I’ll find out.

      • Hi! First time here:

        Under this context of accessing content *outside* the Ipxxxx system I wonder how would a revamped MobileMe service change the way user store and access their content. I mean one of the reason I don’t like Ipxxx is that I am dependent on a PC (and iTune) to store and transfer my contents.

        That’s one of the reason I like my Kindle so much because I am not dependent on my PC to store and transfer my contents.

        Maybe they are forcing out these content aggregators so they will force the consumers to use (the new) MobileMe instead.

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