Working Around Apple

Earlier this year, Apple announced it would take 30% of sales generated from eBooks sold through its stores. That is, if your eBook sells through Apple's distribution, you pay Apple its cut for the sale of your eBook plus, if your eBook provides an in-app link to buy anything else, Apple wants a cut of that sale, too. In February, Steve Jobs said:

Our philosophy is simple -- when Apple brings a new subscriber to the app, Apple earns a 30% share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing.

Whether or not you like Apple's distribution tax, Apple is in a strong position to demand it.

Or maybe not.

Kobo is using HTML5 to work around Apple's distribution tax. So is The Financial Times:

The way browser-based HTML5 apps work is you simply go to a specific Web address on your iPad or iPhone (in the case of the Financial Times it's app.ft.com) and follow the directions to add the app to your home screen. The Financial Times app is optimized for iPad and iPhone but there's no reason it couldn't be optimized for other mobile devices (supposedly, that's in the works).

Other companies are avoiding Apple's tax altogether.

Rhapsody has removed the buy button from its iOS app, calling the 30% fee "economically untenable." Notably, Amazon also has removed the buy button from its Kindle application.

iPhone and iPad users who update their Amazon Kindle apps to today's version 2.8 can still purchase books from their devices, but must open Safari and manually steer to Amazon.com to do so.

Rhapsody and Amazon are betting that Apple will give up its in-app tax. Why? First, Apple users will have a more cumbersome shopping experience, navigating to a website to purchase products rather than clicking on a single button. Second, as market share of competitive tablets (read: Android) increases, so will in-app sales on those tablets. That, in turn, will pressure Apple to lower or end its in-app tax in order to keep 3rd party publishers interested in promoting the Apple platform.