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Price Check in Aisle 5: Apple Angering Devs Again?

If you love someone, set them free. But if you want them to write apps for you, fence them in with razor wire. At least, that seems to be the guiding philosophy at Apple Computer, where some iPhone and iPad developers, again, face draconian rules in the Apple App Store.

As Keith Ward reported for our sister Web site Application Development Trends (Developers Unhappy with New Apple App Rules; Antitrust Investigation Possible), Apple recently instituted a new App Store Subscription policy that essentially ensures that App Store-based subscriptions will always be priced in parity with that of the same subscriptions offered through other channels. The key language:

"Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a Web site, for example) which allow the customer to purchase content or subscriptions outside of the app."

Remember, Apple gets a 30 percent cut of everything that moves through its App Store. This is a huge disincentive to third party developers hoping to leverage the iPhone's seamless experience to drive subscription purchases. For those too beholden to the platform to just walk away, the policy will impose some tough pricing decisions. Do you push up prices across the board to account for Apple's 30 percent take, or do you make your iPhone/iPad sales at a cut-rate margin? In some cases, the 30 percent cut can completely undermine existing business models.

The larger question, of course, is whether this is a smart way to treat your developer ecosystem. Apple just six months ago backed down from its strict rules on the tools and platforms developers can use to write iPhone apps sold on the Apple App Store. Now Apple is telling many of these same developers how they may price and sell their subscription services. No surprise, mobile competitors like Google are more than happy to fill the gap.

What do you think of Apple's actions with regard to its App Store subscription service and what does it say about the company's commitment to its developer community?

Posted by Michael Desmond on 03/01/2011 at 12:35 PM


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