We sent a letter to Apple VP Philip Schiller in September 2009 to confirm our business model. Apple told us they couldn’t guarantee anything – submit the application and they’d let us know after submission. We submitted our new iFlowReader app Apple in November of 2010 and they approved it a few days later. After approval, we made substantial additional investments in licensing fees, integration fees, and server fees so that we could open our ebook store on December 2, 2010. Two months later, Apple changed the rules and put us out of business. They now want 30% of the sale price of any books, which they know full well, is all of our profits and more. What sounds like a reasonable demand when packaged by Apple’s extraordinary public relations department is essentially an eviction notice to all ebook sellers on iOS. After over three years of developing products for iOS during which we had over six million downloads of our BeamItDown iFlowReader products, Apple is giving us the boot by making it financially impossible for us to survive. They want all of the eBook business on iOS and since they have the unilateral power to get it, we are out of business and the iFlow Reader is dead.
Apparently they could not separate the transactional portion from the read-only portion:
You may still be able to read them using iFlow Reader although we cannot guarantee that it will work beyond May 31, 2011.
This is not good news.
Previously here:
The Apple 30% Vig Loophole Lives — Again!
The Apple 30% Vig Loophole Appears
Three Lessons Steve Jobs Has Forgotten
Mike Cane’s xBlog 
Pingback: Apple’s 30% vig claims its first victim | The Digital Reader
On a technical level, iFlow Reader didn’t have any issue separating transactions and reading. They could read Sony Reader and Adobe Digital Editions books *and* they sold books from their website.
It is possible that their business model was the stumbling block. If the idea was to use their reader app as “advertisement” for their bookstore, Apple’s rumored read-only exception would have still been a problem (an app that can’t even link to the website is a much less effective “advertisement”).
That being said, I still wonder if this is a sign that the rumored read-only exception isn’t all it is cracked up to be.
Looks as if Apple is deliberately propping up Android readers like the Kindle and Nook with this strategy. This would be fine for iPad users if Apple offered or was able to offer all potential titles that would have been available otherwise (monopoly dangers aside for the moment).
It seems to me that Apple is missing a merchant opportunity to provide transaction services for larger companies with their own accounting systems and individuals with their own content to sell. They will likely pay for this with fewer sales of their iPad product.
It is disappointing since the in-app purchase, off-line reading experience is far superior to the web-ordering, streamed-text experience. One assumes those companies still interested in selling to iOS will work on improving that web experience in order to totally bypass the Apple system which runs contrary to Apple’s stated wish to support user purchases in a secure way.
It seems clear to me that Apple is leaving money on the table by doing this. But perhaps they intend to develop more direct relationships with the content creators, production companies, and publishers and by doing so capture any distribution profits for themselves.
If that is the intent, then Apple needs to provide content creators with simple and robust publishing tools that mesh seamlessly with the Apple distribution system. That seems like a recipe for a Store Reviewer Full Employment act to me.