An Open Letter to Apple on the Readability App rejection

&#62; To be clear, we believe you have every right to push forward such a policy. In our view, it’s your hardware and your channel and you can put forth any policy you like.<p>It isn't Apple's hardware; let us not forget the hardware belongs to the people buying the iPhones and iPads out there. Apple's enforcement of what can and can not run on these devices is not some fundamental property right, but an artificial construct.

If I understand Readability's issue, it breaks down like this:<p>What they want: For a $1 subscription fee, Readability keeps $0.30 and the publisher/writer of the articles viewed through that $1 sub get $0.70<p>What Apple requires: For a $1 subscription fee, Apple keeps $0.30, Readability then has the option of keeping $0.30 (30% of $1) or $0.21 (30% of the remainder after Apple's cut) and then the publisher/writer gets either $0.40 or $0.49, respectively.<p>Why does Readability feel they deserve $0.30 but Apple doesn't? If Apple doesn't deserve $0.30, shouldn't the publisher/writer get the full $1? Without the articles, Readability is worthless. Without Apple, Readability for iOS is worthless.

I'm fairly quick to defend Apple, because a lot of the flack they take is BS, but in this case I'm really struggling to find the upside.<p>Richard says that their 30% would account for a tiny sliver of Apple's overall revenue, but lots of tiny slivers start to add up eventually. The problem though, is that if the cost of those slivers is to drive the developers away from the App Store, then those slivers disappear. Considering that third party apps are possibly the most important feature of the platform, it doesn't seem like a smart idea.<p>The 30% cut on App sales is understandable, because software generally has high margins, but it doesn't sound like the same is true for content subscriptions. Maybe it's a case of trying to keep their policy too uniform (i.e 30% on everything)?<p>Does anyone know where the subscription content comes from? From my understanding, the subscription content will usually come from a third party, rather than Apple's CDN, so there's no marginal cost to Apple.

I really don't understand Apple's moves here. They have a terrific platform, and much of the value of their platform comes from third-party apps. If app devs start leaving for WebOS or Android in droves, much of their traction is going to be lost. I think if they would have gone for 10% or 15% they wouldn't have gotten this kind of response.<p>I predict either reversals or abandonment of their platform. I still maintain that HP or RIM have a great opportunity here to announce that they are going to build app stores that are low fee for subscription apps. I think you'd definitely see a move there from numerous devs.<p>And I too worry that my beloved Instapaper may be going to face trouble soon as well.

I like to think of Apple's side of all the negative stories, but this time, I can't come up with a cogent excuse for what they are doing - save inept App Store policies/reviewers.<p>By this logic, flattr will never get a native iOS app. And when are Apple going to shut the Instapaper app down, when Marco decides to let his one-dollar monthly subscribers[1] receive premium benefits?<p>Apple really hates newspapers and magazines.<p>[1]: <a href="http://www.instapaper.com/subscription" rel="nofollow">http://www.instapaper.com/subscription</a>

Perhaps this will be the one that gets enough publicity to make Apple come to their senses and see the collateral damage being caused by their War on Amazon.

I picked up an iPhone 3GS when they came out with intent of developing iOS apps. Even at that time it was clear that playing in someone else's yard meant playing by their rules, and that it was highly likely that I wasn't going to like their rules. I decided to not make an app. Simple decision really.<p>A lot of developers are now complaining that they're getting burned by what is a reasonably obvious profit motive from Apple. They're not offering an app store because they're good guys. They're offering an app store to make money.<p>They take 30% of purchases. It only makes sense to take 30% of in-app purchases and related subscription services as well. Did anyone honestly believe that apple would fall for the ebay $0.90 purchase with $90 shipping fee-dodging trick? Letting subs through just opens the door for people to ship free apps with subscription "unlocks", thus cutting out Apple.<p>The simple fact is that Apple owns the mountain, and if you want to mine their gold you can expect to pay their taxes.<p>Of course the simple solution is to just build a web app (as these guys have done). Why restrict yourself to Apple's yard and Apple's rules when you can target every device without rules, without restrictions and without a 30% tax? The sooner ever developer realizes this the better off we'll all be.

My satellite TV provider has an app I can only use if signed up to them. Do they now need to offer TV subscription through their app? What about the 37signals Campfire clients? Do they now need to offer Campfire subs via inapp purchase too?

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I wish these open letters said, "we are ebaying our iPhones, removing our other apps from the App Store, and switching to Android and Windows Mobile" instead of "we are going to change our business model just because the default icons you guys pick are so great".<p>Apple does not care about whiney letters. They might care if there are no more apps for or users of iOS.

If the subscriptions policy isn't the absolutely craziest move Apple's ever made, I don't know what is. iOS has converted me into an Apple fan, but not if stuff like this continues.

This may be a stupid comment to make, but one I feel should be added to the conversation. Why are people so willing to develop for Apple when Android is now the larger platform, and has a far easier barrier to entry?

I haven't heard anything about this subscription model and Netflix. Will Netflix be able to continue to provide their iOS apps without giving a cut to apple? Seems crazy that they would have to.

Apple, I bought an iPad <i>because</i> I could watch movies in Netflix and read bookmarks in Instapaper, news in Reeder, and books in Kindle. Please send each $37.50 (30% of the iPad sale shared four ways) to each developer for bringing you a customer.<p>Or, optionally, stop acting like you, as a middle man, provides more added value than the developers that make your platform so damn profitable.<p>P.S. WebOS still looks pretty damn nice.

The reason this doesn't work is because Apple had to pick a number - 30%. For some businesses, that makes perfect sense. for others 1% or maybe 70% might make sense. But rigidly adhering to 30% (no doubt because of the massive complexity of the alternative) is going to cut lots of business out just because it doesn't make sense. Apple needs to rethink this - it's clumsy.

I believe what Apple is trying to do is to head off the possibility of being scammed: app writers can give away their apps for free, but unlock the full potential only when you "buy" a (lifetime) subscription. This way the writer can keep 100% of the price of the app, instead of just 70%.<p>Do I agree with Apple? No. But I think this is where they're coming from.

As a developer I made the decision a few years ago to move away from Apple's platforms because of their capriciousness, their extreme secrecy, and their lack of respect for their developers.<p>I don't know how people invest in their platforms, I'd be constantly scared that Apple would turn around and screw me over.

I'm not impressed with anyone here...<p>Readability was trusting enough to release their code with a license which allowed Apple to put the code in their product and then freeze readability's product out of Apple's store.<p>And now the readability folks don't seem inclined to admit their trust was a might miss-placed.<p>But perhaps that's because the readability model is aiming for a kinder, gentler version of Apple's monopoly. They distributed a "product" that reworking website in a manner that steals the original site's advertising revenue. And then they "offer" to give the authors a different revenue source (along with "offering" a lack of choice concerning how their product is presented).<p>Edit: And problem with readability isn't in it just distributing a web-site-rewriter in itself but it doing that AND then asking revenues from content providers...

I don't understand why Apple is putting themselves in this situation.. Bad for business. Apple HAD the market, then Google came along with Android, now they're being snobs and just forcing their own users to switch to Android powered phones just because of this exact thing. Shame really.

The App Store does have the potential to drive a massive amount new business for an app like Readability. Apple believes they should be paid for that publishing and marketing service and it's hard to argue about that, particularly when comparing to the relative poor performance of other "app stores."<p>If the App Store fails to bring these developers new business then it doesn't cost the developers anything. If the App Store does bring them new business then it's up to the developers to weigh the cost of the App Store vs. the new business it brings.<p>Is 30% the right price? Ultimately the market will decide that, because if there's one thing this industry doesn't lack, it's competition.

What a slap to the face. Apple uses their technology then tells them they can't use it themselves without offering in app purchases?!?!

Why do these types of letters have to start with the headline "An Open Letter to...". If you're publishing it, it's obviously open.

I tend to agree with Apple's right to do this, but I can't tell if it's a genius move or a stupid move.<p>I think this move could further empower Apple, in as much as to put people like Rhapsody out of business. On the other hand, it makes sense to create a hospitable ecosystem, and right now it feels like they are carpet bombing what was once a nice place to hang out.<p>More of my thoughts here (podcast) <a href="http://bluerize.com/free-market-anarchy-020-apple-subscription" rel="nofollow">http://bluerize.com/free-market-anarchy-020-apple-subscripti...</a>

We don't like it, but Apple's got every allowance and reason to do this. Either Readability will cave to Apple's pricing model, or somebody else will come in with the same technology and do so. Apple believes that the competitive position they have attained allows them to dictate pricing terms. The market will decide whether they are correct.<p>The only argument against Apple that holds water is abuse of monopolistic power, but I don't think that will fly given that the whole market of Android and Windows and other phones also exists.

So basically: "We totally think your policies are right and groovy, but please make an exception for us"?

I posted this to my blog a few days ago, but I think it's worth repeating here because it applies directly to this open letter:<p>While apps and content are just break even businesses for Apple, they are instrumental to the company's financial success. The iPod, iPhone, and iPad are each technology platforms that bring together consumers, apps, and content. The value of each platform (iPod, iPhone, and iPad) to consumers hinges on the availability of apps and content; and the value of each platform to app developers and content publishers hinges on the number of consumers that have adopted the platform.<p>In short, there is a virtuous circle in effect; hardware sales to consumers attract more app developers and content publishers, and more apps and content drive more hardware sales to consumers.<p>Apple’s new subscription model might strain or even break this virtuous circle. First, since Apple is only requesting 30% of revenues if content is subscribed to through iTunes it will likely cause content publishers to encourage consumers to bypass iTunes and purchase content directly. Over time this may reduce the relevance and significance of iTunes. Second, this 30% cut will compel app developers and content publishers to find alternative, less-expensive distribution channels. Google is the natural alternative given Android and the Android Market, and the company has already launched the “One Pass” payment system, which charges a lower fee (10%).<p>If this new subscription model is potentially damaging to Apple’s financial success, then what’s motivating Apple to launch such a model?<p>It’s possible, though very unlikely, that Apple failed to consider the implications of the model and the strain it would place on app developers and content publishers. A second, more likely scenario is that this subscription model reflects efforts by Apple to generate greater revenues and profits from its apps and content business. A third likely scenario is that Apple is trying to create barriers to entry for competing distribution platforms, such as Netflix and Amazon, which will find it cost prohibitive to offer their service through iTunes given the 30% in fees. These barriers may give Apple time to further develop its own content distribution business. The immediate risk that content publishers will turn en masse to Android is low given the delay of Android-based tablets and other connected devices (e.g., connected TVs).<p>This subscription model may boost iTunes revenues and profits, and it may create a barrier to entry for competing distribution platforms, such as Netflix and Amazon. That said, I believe this move is a strategic mistake. There may be some short-term benefits to Apple, but overall it will strain the company’s relationship with app developers and content publishers. Over time this will reduce the selection of apps and content available via iTunes, reducing the value of Apple products to consumers, thus putting downward pressure on hardware sales. In the meantime, partners and resources will migrate away from Apple, towards Android. Over time this will add further energy to Android adoption for app developers, content publishers, consumers, and hardware producers. Android is already emerging as a force in smartphones. With the launch of Motorola’s Xoom and other tablets, Android will soon gain significant share in the tablet market as well.

DHH, if you're reading, is this what you were talking about?

<i>P.S. We’d we be glad to deliver Readability for iOS – with in-app purchasing – if you’d carve out 70% from your 30% fee and share it with writers and publishers, just as we do.</i><p>This will never happen, but if it did I'd be ecstatic. It could be a great PR move and really help Readability's goals to fund independent content producers online.

Believe you me, I want these guys to succeed as much as anyone else, but... wouldn't keeping the payment processing for subscriptions OUTSIDE of the iOS app solve the issue? I must be missing something critical to the functionality of the app?<p>There are no non-profit or even strictly business-related terms under the umbrella of the App Store as far as I know. There are no corporate/business iTunes purchasing accounts, no escalation to root-level privileges allowed for apps in the MacAppStore(postponing backup and other more powerful apps). This seems like another oversight on Apples part due to treating it as a lower priority.<p>And although they have every right to be proud of their achievements, it seems a bit like "you owe me" to remind Apple that they used the Apache-licensed Readability tech for Reader. Their proposed app could stand on its on.

I think Apple may have decided to enforce an untenable rule, simply so it can be used as a reasonably large concession when the antitrust machinery slides into gear.<p>If you are going to be required to give up ground - you might as well grab all the ground you can prior to any punitive action.

I don't understand the legal ownership fuss of their decision. If they had decided to take 5% instead of 30% there would be no discussion here. The only difference between 5% and 30% appears to be whether or not it's a good business decision. It does alienate a number of applications that have less than 30% margin, but that appears to be Apple's motivation. I would not go so far to say this should be expected, but it's a risk you take when you play with a company that likes to own such a large portion of the experience.

Avoiding a lot of the discussion here to make a quick but important observation: I suggested in a comment I believe I posted here months ago that Apple would add its "Reader" to the iOS platform.<p>This is a calculated move on Apple's part to make sure that when they deploys Safari Reader for the iPhone it is /their/ idea and not the folks at Readability.<p>Shame, shame, shame. I know you're name.

I think they might have a point, but their ineffective communication style and adversarial tone will surely guarantee they are ignored this time around.

I think it is worth noting, because everyone seems to have forgotten, that this has always been the rule. I remember it from the very first reading of the terms and conditions (back when they were under NDA).<p>It has always been against AppStore rules to monetize apps outside of the AppStore. Apple has been lax in enforcing it, <i>primarily</i> because Apple didn't offer a subscription mechanism.<p>Now they offer a mechanism, and so now people can comply with the rule, and so now they are enforcing it.

Through all of this I wonder if they knew there'd be so much angst and now they will "concede" to something like 15% with that being their plan all along. When you make a policy that's really really really bad to then scale it back to just being really bad, people think they're getting a deal.