News Corp recently introduced The Daily to the iOS world. Sony tried to publish an eReader app at about the same time. Apple blessed the first for doing everything right, and banished the latter for not pleasing them. It’s been long-standing policy (in that anything related to the App Store is long-standing) that any purchases of content allowed within an iOS app use only Apple’s in-app purchase system. They get their cut, developers get to use an established payment mechanism, and users have some modicum of protection with respect to their financial information. However, as Apple was issuing this reminder to the developers of apps, they let loose a much bigger bombshell. Content purchased outside of an app (like a pre-existing subscription or ebooks purchased on the web) can no longer be made available in-app.

[So here's the way we seem to understand it now: If an app offers access to paid content, that content must be offered via Apple's in-app purchase. It may also be offered for purchase via the web or other mechanism, but if it's paid and available in an app, you must have the option to buy it via in-app purchase.]

I see two very significant problem areas with this further restriction in the ever-darkening walled garden that is the iOS market. One is business-related, one is a matter of pure ethics.

The business case is one explored elsewhere in some depth and from several perspectives, but in a nutshell, content must get a lot more expensive to justify selling something through a mechanism that takes 30% off the top. Margins on some products such as game levels or subscriptions to large information sources may allow for an instant 30% off the top, but when the realities of the ebook marketplace enter, it’s simply not feasible. According to the Washington Post, Amazon sees an operating margin of 15-20% for ebooks. Amazon is a well-oiled book machine and even assuming this margin is a little better now (the data is from 2008) it’s very, very hard to imagine that Amazon, let alone many other ebook sellers, would be able to take 30% off the top and still make a penny. Many of us wondered how Apple was going to treat ebook readers in the app store once iBooks was launched. I think we finally have our answer and it’s a bit insidious if you ask me. Also, it’s important to note that, unlike the apps themselves, Apple does not host purchasable content for apps on their servers. It must be hosted on the publisher’s own server, using their own bandwidth so there is much less value provided by Apple than for full app purchases. There are certainly transaction fees Apple takes care of with money handling, and the ease of not needing a merchant account or payment gateway is nice, but factor in Apple’s policies regarding actually paying devs (which is worth an entire additional post) and the exorbitant percentage cost and the value is greatly diminished.

I also wonder how things such as paid web-site access with existing subscriptions or digital extensions of physical subscriptions will work in this new world. Since in-app purchases can’t be used for physical items, a newspaper can’t sell a subscription to their physical paper in-app. But many offer access to paid content online and via apps for their physical paper subscribers. With the new policies, it seems that will be forbidden since parity between in-app purchases and alternate channel purchases cannot be maintained due to Apple’s own policies. How will my purchase of something via in-app be synched to my apps and devices in other channels? I may have the option to buy a Kindle book on the web, a physical Kindle or via in-app on iOS, but if I choose to buy it in-app via Apple, do I have any mechanism to sync that purchase up to my Amazon account or will devs have to roll-their-own?

Business issues aside, I think there is a much bigger potential problem with this new policy. Apple tries to keep the app store as clean and free of anything edgy, controversial or “objectionable” as they can. There are understandable arguments for this, though my personal feelings differ. However, if Apple is suddenly given the go/no-go decision over not just apps, but content available in those apps as well, we could be looking at an extremely difficult ethical position not just for Apple, but for those who choose to make potentially objectionable content available through any source. For instance, if a particular graphic novel, say, is available for purchase via Marvel’s web site, if that content can be viewed in their iOS app it must also be purchasable in-app via Apple. What if that graphic novel contains nudity or depictions of violence, or deals with sensitive subjects like sexuality or politics in ways that Apple doesn’t like? If Apple rejects the content and will not allow it to be purchasable in-app, can Marvel still make that content available for purchase elsewhere and viewable in the iOS app? Does the entire world of iOS become some squeaky-clean parody of the real world? And how long until we also find that Apple requires in-app purchases to be priced the same as alternate channel content purchases? If I were Amazon, all Kindle books purchased in-app would be 30%, 40% or even 50% more expensive than via other channels. Discouraging customers to make their content purchases in-app may actually be a good move for some apps.(UPDATE: unsurprisingly, this is forbidden by Apple)

As far as I can tell, there seems to be no absolute answer as to whether Apple reviews in-app purchase content in-line with the app store submission guidelines or whether they apply the iTunes/iBooks “standards”. (Apple claims not to review books or music and encourages you to use those media if you want to incorporate potentially objectionable material.) Indeed, I can’t find verification as to whether the in-app content is reviewed at all. Whether it is currently being reviewed or not, once Apple is taking a cut of a significantly larger pool of content, I can absolutely imagine it a strong possibility. Apple seems to want to stay out of the loop when potentially legally-encumbering actions are taken (note their policy on charitable giving via app) and actually *selling* what may, by some, be considered objectionable content can be a big legal encumbrance in some jurisdictions. I can’t believe that they won’t protect themselves and that could mean refusing to carry specific content.

This is a terrible move on the part of Apple and continues a disturbing pattern of Apple tightening and restricting their world more and more, making everyone play by a very tight and innovation-stifling set of poorly defined rules. These are not the actions of the Apple that broke into the mainstream a few years ago by giving consumers something they wanted. These are the actions of a company continuing to reduce choice, stifle progress and greedily chomp up every penny they can without regard to what is right or even intelligent behavior.