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Apple's taking 30 percent of app store subscriptions is an unkind cut

Apple is requiring that media applications cost the same in the App Store as at a company's home site.
Apple is requiring that media applications cost the same in the App Store as at a company's home site. (Apple.com)

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By Rob Pegoraro
Sunday, February 20, 2011

The phrase "30 percent" now amounts to fighting words in the media and gadget industries.

That's the share of revenue Apple will keep from new subscriptions and media purchases made in an iPhone or iPad application through its App Store - part of a feature it launched Tuesday for its mobile devices.

Apple knows a thing or two about smartphones, tablets and getting users to buy things on them through its App Store. So why is this a problem?

Because Apple doesn't just want to offer the store's one-click buying as an option to companies that sell subscriptions or extra content inside programs. It will require that they add App Store transactions - and demand that they offer users the same price in the App Store and at their own Web site.

Developers have until June 30 to correct existing applications.

Further, Apple's news release spells out that an app cannot even include a link to an outside Web store. And Apple won't tell developers who their customers are unless they allow that disclosure, a move guaranteed to infuriate publishers used to knowing their readers.

Essentially, Apple proposes to annex a developer's subscription business - then charge that firm 30 percent for the privilege.

That 30 percent figure is the same share Apple keeps from sales of applications, where it provides valuable hosting services, copious bandwidth and one-click installation and updates.

But in providing subscription billing, Apple won't do much more than move money from one party to another. The fees for that sort of financial convenience, whether you conduct your transaction through PayPal or the check-cashing place a few blocks from my house, tend to be around 2 percent.

Apple cites only one exemption to this new policy: Subscriptions that come free with the purchase of something else, such as a print subscription to a newspaper.

(Web-based applications, meanwhile, remain unaffected by Apple's App Store rules.)

Remember when people in the news business were hoping that Apple was throwing them a lifesaver with the iPad? That device may look more like an anvil after this news.


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© 2011 The Washington Post Company

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