Developers: Don't bet your future on Apple
The problem isn’t that Apple is forcing developers to implement in-app purchases, it’s that Apple is whacking companies with a 30% tax for doing business through the App Store. You see, Apple snarfs a 30% cut out of sales through in-app purchases. Which means that companies that sell, say, ebooks are out of luck.
One of the companies that’s being hit by Apple is BeamItDown Software — the company behind an app called iFlow Reader. The company also sells books for the reader, and will lose the ability to make money completely once the Apple Tax kicks in:
Apple is now requiring us, as well as all other ebook sellers, to give them 30% of the selling price of any ebook that we sell from our iOS app. Unfortunately, because of the “agency model” that has been adopted by the largest publishers, our gross margin on ebooks after paying the wholesaler is less than 30%, which means that we would have to take a loss on all ebooks sold. This is not a sustainable business model.
Where did the agency model come from and what is it? The agency model was created by Apple who made it a requirement for any publisher who wished to sell books through Apple’s iBooks app.
Basically, Apple is doing two things in one fell swoop — making it impossible for companies competing with its ebook offering to make a profit, thus essentially kicking them off iOS altogether. It’s also taking a handy 30% cut of other business that might be done on the iOS platform — just for the privilege of existing on iOS.
I’ve heard the suggestion that Apple “deserves” its cut, because it created the platform and distribution — but I call shenanigans on that. Apple’s already getting its cut through carrier deals, hardware sales, and the cut it gets on sales of apps through the App Store.
It wouldn’t be quite so galling, though, if companies weren’t forced to implement the feature to allow Apple to tax them on the platform. If it were an optional feature that companies saw as a value-add, it’d be OK. But the way Apple is going about this is dead wrong — and frankly raises a lot of questions about how Apple will conduct business as it sucks more and more developers and users into its platform. Want a taste for how Apple deals with developers now? Here’s the take from the iFlow Reader staff:
We put our faith in Apple and they screwed us. This happened even though we went to great lengths to clear our plans with Apple because we did not want to make this substantial investment of time and money blindly. Apple’s response to our detailed inquiries was to tell us that our plans did not infringe their rules in any way, which was true at the time, but there is one little catch. Apple can change the rules at any time and they did. Sadly they must have known full well that they were going to do this. Apple’s iBooks was already in development when we talked to them and they certainly must have known that their future plans would doom us to failure no matter how good our product was. We never really had a chance.
As someone who owns and loves an iPhone and iPad, this really bugs me. As closed as they are, they’re also far nicer to use than Android right now — sorry, but it’s true. But stories like this make it very hard to keep supporting a company that doesn’t want to make room at the table for its partners. Just for novelty’s sake, it’d be nice to hear of a case of Apple not taking the most-draconian, least-friendly policy for users and developers.
