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Apple app store: Changes roil users

Apple begins charging 30 percent tax at its app store, which has some app publishers angry.

By Tim GrayiPadNewsDaily assistant editor / February 17, 2011

Apple Inc. CEO Steve Jobs speaks in front of the display showing buttons of various apps during the iPhone OS4 special event at Apple headquarters in Cupertino, Calif., April 8, 2010. New revenue-sharing rules at the Apple app store have angered some app publishers.

Robert Galbraith/Reuters/File

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After nearly a year of seemingly easy cooperation and mutual admiration between Apple and many content providers happy to deliver their services to a new popular platform, Apple CEO Steve Jobs has changed the rules ─ and the resulting backlash could affect what appears and doesn’t appear in Apple's App Store.

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The new revenue-sharing structure unveiled Tuesday (Feb. 15) forces publishers who charge subscriptions outside of the app to either pay up to a 30 percent tax on subscriptions purchased from inside the App Store – or not use the service. In addition, Apple alone will receive customer data, including names and contact information.

"Our philosophy is simple: when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," Jobs said in a statement.

A looming showdown?

The tax, in which content providers essentially pay for the privilege of conducting business in Apple’s network, has already rankled some developers — and could spark an even bigger showdown, pitting the media titans that roam Silicon Alley against the current kings of Silicon Valley.

So far, however, bigwig media publishers have remained mum. But the fact that Apple's press release did not include any launch partners suggests the silence doesn’t represent complacency.

Still, not everyone sees the icy silence as a sign of a looming battle.

“The iPad is a boon for media companies, but not a magic bullet,” Zachary Clayton, managing director at the Emerging Media Research Council, told iPadNewsDaily. “While media companies may complain, giving Apple a 30 percent cut is far cheaper than the costs of postage and printing. Still, the economics of paid general interest content will struggle.”

Clayton said publications such as The Wall Street Journal, which offers highly specialized content, will fare better than The Daily, a general interest publication. In the long-term, he expects the 30 percent fee to be a bargain for publishers, as iPad subscriptions dramatically reduce the costs of serving customers.