iFlow calls Apple's in-app purchase rule 'an eviction notice' for e-booksellers

E-bookseller iFlow has gone down blaming Apple's rule change for in-app purchases, which a blog on its site describes as "essentially an eviction notice to all ebook sellers on iOS", and agency pricing.

The blog continues: "We absolutely do not want to do this, but Apple has made it completely impossible for almost anyone but Apple to make a profit selling contemporary ebooks on any iOS device. We cannot survive selling books at a loss and so we are forced to go out of business. We bet everything on Apple and iOS and then Apple killed us by changing the rules in the middle of the game."

The blog continues: "The crux of the matter is that Apple is now requiring us, as well as all other ebook sellers, to give them 30% of the selling price of any ebook that we sell from our iOS app. Unfortunately, because of the 'agency model' that has been adopted by the largest publishers, our gross margin on ebooks after paying the wholesaler is less than 30%, which means that we would have to take a loss on all ebooks sold. This is not a sustainable business model.

"The key point here is that all sellers now get a 30% commission and Apple now wants a 30% fee, which is all of our gross margin and then some."

The iFlow Reader will cease operations as of May 31, 2011.

Indeed Dennis Morin predicted this in these very columns in February:

"For my company, BeamItDown Software, who developed the iFlow Reader, it is death.  If Apple gets away with this scam, it will put us out of business. This is true of every single small ereader developer that put their trust in Apple. Guess wht folks. Apple is not the warm, cute, fuzzy company that you think it is.  It is a voracious shark and it is feeding." 

Other e-booksellers who sell through apps on Apple products face will face a similar challenge, and have until the end of June to comply. At the time it wasn't clear whether services such as the Kindle or Kobo apps would be caught up by the rule change, or whether the current work-around -- redirecting users to purchase e-books via a separate browser window -- would still stand. It seems not, though that does not mean Amazon (and Kobo) are not working on some kind of cunning plan.


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