Apple relaxes rules for media Apps

NEW YORK/SAN FRANCISCO Thu Jun 9, 2011 4:19pm EDT

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NEW YORK/SAN FRANCISCO (Reuters) - Apple on Thursday handed a big victory to publishers by dropping demands they sell subscriptions through its App Store, a rare reversal for the iPad makers.

Apple now allows publishers to set pricing for subscriptions while no longer requiring them to sell subscriptions within the App Store.

IPad and iPhone users can now read magazines and books, or play music and videos bought outside of Apple's App Store as long as there is no button or external link to purchase the content, the company said on Thursday.

Apple will not receive any of the revenues for approved content purchased outside the app.

The move is a huge win for media conglomerates at odds with the tech company over what they considered rigid standards.

"I am a little surprised they took this long," Gartner media analyst Mike McGuire said about Apple's change of heart. "I think it makes sense."

Apple started its subscription service for magazines, newspapers, videos and music in February with little support from major publishers.

Publishers initially blanched at Apple's terms to take about 30 percent of revenue for apps purchased in its store and its control of subscriber data, the lifeline of newspapers and magazines used to entice advertisers to their pages.

Publishers were allowed to set the price and length of subscriptions. They could also offer subscriptions through their own websites, but had to offer the same terms to anyone signing up through Apple. Publishers had until June 30 to comply with the guidelines.

"They could see that, if they continued in their old policy, they could lose a central advantage, which was the iPad becoming a central reading device of our time," said Ken Doctor an analyst with Outsell Research.

In recent months, some publishers, including Conde Nast, which owns titles such as the New Yorker and Vanity Fair, made a deal with Apple to sell subscriptions in the App Store.

Earlier this week, the Financial Times put up a Web-based version of its mobile application for smartphones and tablet computers, essentially freeing itself from the App Store.

"We will be giving consideration to Apple's terms within this context," said FT.com Managing Director Rob Grimshaw. "While it's certainly positive that they have made concessions, the FT still wouldn't be able sell subscriptions within a native app using our own payment system."

(Reporting by Jennifer Saba in New York and Poornima Gupta in San Francisco; editing by Maureen Bavdek, Lisa Von Ahn and Andre Grenon)

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