Amazon released its Instant Video iPad app Wednesday, but customers can't make in-app purchases due to Apple's guidelines. Could Apple's app payment structure drive away Amazon loyalists?
The free Amazon Instant Video iPad app launched Wednesday, meaning Apple customers with Amazon Prime accounts – and non-members – now have access to the more than 120,000 videos Amazon’s service boasts.
Sound too good to be true? It may be. IPad users who actually want to purchase a movie or TV show from the Instant Video app can’t use the app itself to make transactions. Instead, payments have to be made through a Web browser on a laptop, desktop computer, or the iPad's own Safari browser – an extra step that Apple has indirectly pushed upon Amazon.
Because Apple rakes in 30 percent of every in-app purchase, Amazon apparently opted for the extra step to avoid lost revenue. MacWorld notes that this makes “the movie-buying process somewhat less seamless than using the iPad’s native iTunes store,” and adds that the app doesn’t explicitly say how you can obtain an Amazon Prime membership despite numerous "visual hints.”
This isn’t the first time an iPad Amazon app has been without in-app links. When first released, the Kindle app allowed customers to make purchases with a single tap, but Apple’s revision of its app content guidelines in June 2011 forced Amazon to remove the options.
“Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content,” the guidelines say.
Still, despite any inconveniences, Apple’s 30 percent “commission,” as some pundits have deemed the 30 percent rule, has some positive ramifications for iPad enthusiasts. Because Apple gets so much money from apps with purchasing links, the company can keep the iPad price constant and relatively low.
Some commentators, such as John Gruber of the Daring Fireball tech blog, think Apple’s 70/30 business model is indicative of the company’s competitive nature.
“Apple doesn’t give a damn about companies with business models that can’t afford a 70/30 split,” Gruber wrote. “Apple’s running a competitive business; competition is cold and hard. And who exactly can’t afford a 70/30 split? Middlemen. It’s not that Apple is opposed to middlemen — it’s that Apple wants to be the middleman. It’s difficult to expect them to be sympathetic to the plights of other middlemen.”
For Amazon, suffering a 70/30 split isn’t an option. Time will tell if the Instant Video service will suffer as a result.
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