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Apple 'greed' tax spreads beyond music, movies, magazines

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Apple's recently enacted "give us 30 per cent of your subscription revenue" dictum is metastasizing beyond online magazines, newspapers, music services, and video apps, ensnaring at least one software-as-a-service app as well.

Steve Jobs' App Store police have rejected the iOS version of Readability – an online service that allows you to read online stories stripped of ads, Flash, and other distractions – saying the app's developers provided no way for Apple to take its cut of subscription revenue.

The irony is that Apple uses Readability's open source code to enhance its own Safari browser. And Readability creator Rich Ziade isn't too happy about the turn of events.

"Dear Apple: It’s your friends from Readability. Remember us? You put our technology into your Safari browser last year. We’re writing this open letter because – well – we’re a little upset right now," Ziade writes in an open letter to Apple, reacting to the rejection of his iOS app.

"Before we cool down and come to our senses, we might as well share how we’re feeling right now: we believe that your new policy smacks of greed."

Readability does not offers content, but it does charge a subscription fee of $5 per month for use of its application. According to the company, however, it's not getting fat on that sum: 70 per cent of it goes to the providers of the content you choose to read through Readability's clean interface.

As the company's slogan puts it: "Enjoy Reading, Support Writing".

Which should be amended, in Apple's view, to read: "Enjoy Reading, Support Writing, Send a Buck-Fifty to Cupertino Each Month."

According to Ziade, Apple rejected their iOS version of Readability due to the increasingly notorious section 11.2 of the App Store Review Guidelines: "Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected."

Readability signs up subscribers on its website – which is okay with Apple under its new policy. What isn't okay with the Cupertinian moneymen is that the Readability iOS app didn't include a way that users could alternatively pay that subscription fee through the IAP system – the system Apple uses to take its 30–per cent cut.

What's striking about Apple's rejection of the Readability iOS app – aside from the fact that it snubs the developer of part of its own browser – is how it strictly enforces the third term in section 11.2's "content, functionality, or services" language. The App Store police, it seems, are going after SaaS providers.

Had it been accepted, Readability would have been just a little fish in a big, 350,000-app sea. But there are larger SaaS-y companies with apps in the sacred store that could conceivably find the App Store police knocking on their front doors – think Box.net and Evernote, just to name a pair. It being a holiday Monday in the US, Evernote didn't respond to our question as to whether they had heard from Apple, but Box.net's CEO Aaron Levie replied:

As a provider of a leading subscription-based service and successful iPhone/iPad apps for businesses, we're watching this situation very closely. Apple hasn't reached out to us yet on the matter, but from what we know, we'll be comfortable eventually providing [in-application subscription]–powered billing within our app for our Personal Edition; we're enthusiastic about the convenience and customer experience that Apple can offer users. However, given not every service provider will have the economic proposition or resources to be as flexible, my feeling is that Apple should leave it up to developers to choose how they bill their customers.

Translation: "Our low-end app? Okay, okay – if we have to. But stay out of our high-end billing practices, Apple. And, for that matter, we think the entire 30 per cent system sucks."

The biggest fish in the iOS SaaS sea, Salesforce – with a market capitalization of over $18.5bn – provides access to its business-support systems through iOS apps Salesforce Mobile and Salesforce Chatter. They also didn't respond to our queries in time for this article.

But if Apple decides that an $18.5bn leviathan must play by the same rules as a writing-supporting guppy such as Readability, this section 11.2 brouhaha could become quite interesting, indeed.

One thing is certain about Readability's rejection, however: contributing to an Apple app through open source doesn't buy you any slack from the App Store police. In June 2010, Apple beefed up Safari with Readability's ad-cleansing code – an Arc90 Labs project open sourced under an Apache 2 license. Apple didn't bother to tell the Readability team, but it did add a small mention to the Safari acknowledgement page.

It's clear that Readability's Ziade is a wee bit peeved at what he characterizes as Apple's "greed" – but he does offer one olive branch in a postscript to his open letter: "We'd 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." Dream on, Ziade, dream on. ®

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