Bloomberg News

Apple Reverses App Store Subscription Policy for Publishers

June 09, 2011

(Updates with closing share price.)

June 9 (Bloomberg) -- Apple Inc. reversed a policy that forced publishers to use its App Store to sell subscriptions, removing an obstacle that rankled companies aiming to put newspapers, music and movies on the iPhone and iPad.

The developer guidelines no longer say that publishers offering their own subscriptions must also sell them through Apple’s iTunes-based applications store, where Apple collects 30 percent of the sales, according to a copy of the policy. Apple also had required publishers to offer their lowest subscription rates through the App Store.

Companies that didn’t comply with the rules risked having their applications removed from the App Store. The policy has been criticized by publishers including the Financial Times and music service Rhapsody for making them share revenue with Apple. The U.S. Justice Department and the Federal Trade Commission had begun examining whether the plan violated antitrust laws, people familiar with the inquiry said in February.

Tom Neumayr, a spokesman for Apple, confirmed the policy change. The company’s new guidelines were reported earlier by the website MacRumors.com.

The rule had implications for companies that already offer their own subscriptions, such as magazine publishers and movie- rental service Netflix Inc., because it meant they would have had to offer a similar deal through Apple.

Financial Times App

The Financial Times released a Web-based application on June 7, flouting Apple’s earlier guidelines, to let users of the iPhone and iPad access its content without using the App Store.

The new rules, set to take effect by the end of the month, still bar publishers from putting a link in an iPhone or iPad application that sends users to another website where they could buy a subscription. For subscriptions that are purchased through the App Store, instead of through a media company or publisher’s own website, Apple will still collect 30 percent.

Apple, based in Cupertino, California, fell 75 cents to $331.49 in Nasdaq Stock Market trading. The shares have gained 2.8 percent this year.

The App Store guidelines were also amended to prohibit applications that alert users to the location of police drunk- driving checkpoints. U.S. lawmakers had criticized Apple for approving the programs, saying they help intoxicated drivers evade police enforcement.

Senators including Majority Leader Harry Reid, a Democrat of Nevada, commended Apple for making the changes regarding checkpoint-notification apps.

--Editors: Jillian Ward, Lisa Rapaport.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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