BeamItDown Software recently announced that their iOS eBook app iFlow Reader will be discontinued, and the company will be shutting down. The stated reason for this is Apple’s policy, implemented this year, that in-app purchases must go through their system, with a 30% fee (which is more than eBook sellers can generally afford to give up). Ben Brooks thinks the effect on BeamItDown Software and iFlow Reader is justified by an evolving market:
It sucks that iFlow can’t figure out an alternative, but it’s not Apple’s job to help iFlow run their business.
That’s true, but it is Apple’s job to support the app ecosystem they’ve created. That doesn’t mean they’re required to cater to every app’s specific model, but changing a policy, when it negatively affects some app publishers so directly, is inconsiderate and anticompetitive (especially since any eBook seller is a direct competitor to Apple, due to iBooks).
To add insult to injury, Ben thinks that iFlow screwed themselves by investing solely in Apple’s platform:
So iFlow, Apple didn’t screw you — you screwed yourselves. Linking your success to being able to sell one app in one market screwed you and it can and will happen to others.
It’s true that it’s a often bad idea to put all your eggs in one basket. This is especially true with networks, like Twitter. But with iOS and the App Store, Apple wants people to make it their exclusive market. Apple wants people to be building and selling only for iOS (and Mac OS X). Is The Daily “screwing itself” by relying entirely on Apple’s platform? Oh right — they’ve got a special deal with Apple. Is that what it’ll take to succeed on the App Store? Or at least, to feel safe that your business model is sustainable? Maybe that’s what Apple wants.
But it’s certainly not fair, and it doesn’t set a very good precedent for future companies deciding where to focus. If Apple wants their closed App Stores to be the best sources of software and services (and it seems they do), developers need to be assured that their business model won’t be pulled out from under them. It’s certainly Apple’s right, but it’s not necessary, and it doesn’t promote innovation, risk-taking, or exclusivity on their platform, or trust among developers (and users).
Furthermore, since Apple requires that the App Store price be equal to or lower than outside prices, even if developers rely on multiple platforms and multiple markets, this still puts them in a situation where, if they choose to remain on Apple’s platform, they need to raise prices outside the store as well. Apple’s policy doesn’t just require companies that can’t currently afford 30% to shift their App Store strategy, but their entire pricing strategy. Whatever the fairness of this, it’s undoubtedly bad for the users.1
This may be one of the first casualties of Apple’s draconian policy, but it won’t be the last. A nonnegotiable 30% cut on all in-app purchases is bad for developers, bad for competition, and worst of all, bad for users.