Apple Will Change the Rules for Selling eBooks within Apps
Apple previewed the many changes on the way in the next version of the operating system (version 3.0) for the iPhone and iPod Touch. (Apple says there are now about 30 million devices running this OS). Notably for publishers, Apple will now allow the sale of App Store content from within a paid app.
SVP of iPhone software Scott Forstall said at the preview, “We’ve been listening, and some developers say there are other business models they’d like to support, such as subscriptions. Like magazines who would like to have readers renew their subscriptions, or, for instance, an e-book provider, who would like to sell a generic e-book application. We are supporting all of those in iPhone 3.0. For example, when you buy a game, you can purchase 10 more levels right inside of the game. Or, if you are buying city guides, and you’ve already purchased Chicago, but next you’d like to buy San Francisco. The business arrangement is the same, with 70 percent of the revenue going to the developer and developers are paid monthly. This is for paid apps only, so when a consumer sees a free app, you won’t ever be asked to buy something within the application.”
Exactly what this means for the emerging ecosystem of ereaders and ebookstores focused on the iPhone OS is not yet clear. Certainly it opens up additional opportunities for those vendors already selling paid Apps–like the bestselling Classics compilation, the travel guides mentioned above, and vendors like ScrollMotion, which wraps content and a reader together into an app. And it provides potential business models and incentives for companies that control content to create paid apps which they can turn into continuous channels for selling content–think anything from story or book a week/month to a portal into a company’s list or a genre or type of book.
Apple keeps their traditional thirty percent–good since it means there is no other retail/wholesale middleman involved, or potentially unsustainable if layered on top of another seller’s model. (Also good for publishers if it helps move the discount for selling ebooks in general to 30 percent.) Potentially it leads to conquering the biggest problem so far in the growing ebook-for-iPhone market: a better, more seamless store/purchasing experience. And if it drives enough revenue for Apple, it could incentivize a breakout ebook App Store to improve the search/discover/buy process.
It offers no advantage to those who provide free reader apps–like eReader, Stanza, Kindle and Shortcovers–and then try to sell content for the apps separately (outside of Apple, and with no commission to the company). But it raises the possibility that Apple might try to block these apps in the future, or change the way they do business. It certainly signals that Apple wants their traditional piece of this growing bit of action.
I know we’ll be following closely and participating.
