Lodsys, a company based in Texas, has issued notices to several iPhone app developers. The company claims that it holds exclusive patents rights on an in-app purchasing system used on iOS apps and demanding iPhone developers to purchase licences be use the in-app system.

Under the in-app purchase system, an iPhone developer monetizes its app and an app user can buy several products available on the app.

Lodsys official website informs that the company has licensed patents to over 200 companies including Nokia, Apple, IBM and Google.

According to a report in Guardian, Lodsys claims that it owns the rights to four patents relating to in-app purchases including interactive online ads, online help and subscription renewals.

However, it is still unclear on what role Apple will play to resolve the crisis.

For some time, iPhone developers have been using incentivized app download model to promote their apps in the app store. However, last week, Apple rejected a few apps from iOS developers because it was running incentivized app downloads. Now, mobile app distribution service provider Tapjoy has put a cap on such promotions so that an iPhone app cannot top the list in the app store chart through incentivized app download promotion.

Mihir Shah, chief executive of Tapjoy, said “We have put in place a capping mechanism, so no single app can drive the [top 25] charts for another app. That went out Thursday or Friday of last week….That cap is pretty reasonable.”

Shah further said that he and other iPhone developers are in talks with Apple. “We only win if Apple wins,” Shah said. “Apple is the king of the App Store. We need to find a sustainable way to work with them,” he added.
Apple tweaked its App Store ranking algorithms last week. It also rejected apps of some iPhone developers citing clause 3.10 of its developer license agreement, which restricts iPhone developers from any “attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods”.

With over 350,000 apps in app store, it is very difficult for iPhone developers to get good search positions for their apps. The recent policy change from the Cupertino based company will make it further difficult for an iPhone developer to promote his app in the store.

Apple’s latest surprise to iPhone developers of rejecting apps that use incentivized app download may push them to iAd, reports Guardian. Many iOS developers for sometime have been using incentivised app download services to promote their applications where players of a particular game are offered virtual currency in lieu of downloading the other application. The iPhone developer whose game is downloaded pays a fee to the developer hosting the offer in his game.

This way of app promotion became very popular among iPhone developers as mobile users started downloading the offered apps to earn virtual currency for their games. However, last week Apple rejected many apps with service provider Tapjoy claiming that updates to apps have been rejected by the iPhone maker citing clause 3.10 in its developer licence, which restricts iPhone developers from any “attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods”.

Guardian’s report quotes a statement from Tapjoy which reads “It seems there may be a new interpretation of the existing 3.10 clause, which is a bit surprising, as Tapjoy, AdMob, iAd, Flurry, W3i and others all power various forms of app install advertising.We believe there are significant benefits to the advertiser (only pay for what you get), the publisher (monetise users who otherwise wouldn’t pay), and perhaps most importantly to the users, who not only get to discover new, exciting applications, but receive what is essentially a coupon for ad-funded virtual currency inside one of their favorite apps.”

The report further says that it has seen a mail to an iPhone developer from an iAd sales exec, which reads: “I am sure you have been reading about how the ecosystem of how you get ranked is seemingly changing, and it seems as though there is more of a focus of engagement and quality which is something I would like to discuss with you. Driving these quality users and new unique users to your platform will certainly help with driving ranking, but also help on actually having people use the application for what it is intended.”

Apple provides iAd service to iOS developers wherein various offers can be advertised within a app. Based on the above reactions and Apple’s mail, iPhone developers may be left with no option but to use iAd to promote their apps.

Source- Guardian

Reports from Inside Mobile Apps reveal that iPhone maker Apple may have prohibited iPhone developers from practicing pay-per-install. Pay-per-install is a business strategy employed by several iPhone developers to position high in App Store charts wherein they offer their apps in other games. Players can download the apps to get virtual currency for their game and the developer pays for the download.

According to the reports, some iPhone developers have received app rejection notices in the last few days, saying that their apps are prohibited from having offer walls. Clause 3.10 of Apple’s developer agreement, says, “Developers who attempt to manipulate or cheat the user reviews or chart ranking in the App Store with fake or paid reviews, or any other inappropriate methods will be removed from the iOS Developer Program.” And, it seems the company is now using that clause to prohibit iPhone developers from deploying offer walls in their apps. Apple’s recent move has put the fate of thousands of apps with Pay-per-install hanging in balance.

The report further says that the Cupertino based company may be contemplating using additional parameters, in addition to download figures, to rank apps in its charts. The latest move from Apple may compel iPhone developers to change their business model. It would be interesting to see how the developers respond to the latest change in App Store policy.

Via- Inside Mobile Apps

Chimp Studios has announced the release of an app scanner that will help iPhone app developers effortlessly submit their apps to App Store.

The scanner will find any private APIs in your code before you submit your app to the App Store. The App Scanner provides many other features including-

• Easy Drag n Drop feature.
• Searches over 24,000 method signatures.
• Lists classes that contain private APIs.
• Scans Mach-O Binary files for matches.
• Comes with Sample iOS App.
• Set filter rates to weed out improbable matches

Source- Chimp Studios

The latest Distimo publication has revealed some interesting insghts for iPhone app developers. The study finds that, within two months of the launch of the Mac App Store, the top 300 Mac apps are already generating half the revenue generated by top 300 iPad apps. Moreover, the average selling price of the top 300 applications is seven times higher in the Mac Store ($11.21) than on the iPhone ($1.57). The average selling price is around three times higher than on the iPad ($4.19).

The Mac App Store has 2,225 apps in comparison to 8,099 apps for iPad roughly two months post-launch.

The Mac App Store has 646 games in this store accounting for 29% of total apps, and 39% of the most popular apps are games. Only 12% of the applications are free in the Mac App Store.

Source- Distimo

TechCrunch reports that software service provider Readability has published an open letter to Apple today addressing its concerns over the rejection of the new iOS application. The app, developed in collaboration with Instapaper creator Marco Arment, offers a subscription based service priced at $5 per month. As per the subscription service, subscrivers will get to view -free versions of online content for easy reading. Apple rejected the application on the ground that it lacks support for in-app purchases, an obligation as per the new subscription policy of Apple for publishers.

Readability is angry with the details the rejection. Readability offers 70 percent of the earnings to publishers of the content and if Apple takes 30 percent as per the new policy then either the publishers earning share will have to be cut-out or Readability has to sustain the losses. The other reason given is that Readability feels it is not actually selling content but simply offering SaaS (software-as-a-service).

Apple’s action against Readability has also put upcoming technology services like SaaS also under trouble. It would be interesting to see how other iPhone app developers who wish to use SaaS react to the issue.

iPhone maker Apple yesterday announced a new subscription service, similar to the billing service for “The Daily” app, for publishers on the App Store. The service will be available for all content-based app developers.

Under the new subscription service, publishers of content-based apps such as magazines, newspapers, video, music, etc., will put the price and subscription time (weekly, monthly, bi-monthly, quarterly, half-yearly or yearly) on the App Store. Interested customers then can pick any subscription period and they will be automatically charged. The new service also allows customers to manage their subscriptions from their personal account page. Apple will keep 30 percent of the revenue from each subscription sold.

“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. All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.” said Steve Jobs, Apple’s CEO.

Publishers who wish to participate in the new subscription service can also employ other methods like selling subscriptions on their website or providing free access to existing customers etc., to get subscribers outside of the app. Publishers can keep all the revenue earned outside the app. However, they have to provide a separate authentication process inside the app for people who subscribe outside of the app. However, Apple’s new subscription policy makes it mandatory for a publisher who chooses to sell a subscription outside of the app to make the same offer available for customers within the app. Moreover, publishers will no longer be able to provide links in their apps to any outside resource which sells subscriptions outside of the app.

Source- www.apple.com

A post on The Washington Post reports that various lawmakers in United States have asked the Federal Trade Commission (FTC) to investigate certain deceptive practices related to in-app purchases. There are some games available on Apple’s App Store that are initially free but the users are charged for buying virtual things related to the games within the application.

The post reports that Rep. Edward J. Markey (Mass.), Sens. Amy Klobuchar (Minn.) and Mark Pryor (Ark.) separetly wrote letters to FTC Chairman Jon Leibowitz, asking the agency to investigate games which allow in-app purchases.

Many parents have complained that free apps that are geared toward children can charge as high as $99 for buying virtual items.  These in-app purchases are protected with a password. However, parents say that these safeguards are not strong enough and steep charges for buying imaginary items should not be part of children’s games.

Companies shouldn’t be able to use smurfs and snowflakes and zoos as online ATMs, pulling money from the pockets of unsuspecting parents,” says Markey. “The use of mobile apps will continue to escalate, which is why it is critical that more is done now to examine these practices. I will continue to closely monitor this issue and look forward to the FTC’s response.”

Markey, a veteran member of the House Energy and Commerce Committee, said “in-app” purchases may be misleading. When a parent downloads an application suitable for young children, they do not expect their children to be faced with purchase options worth of $19 buckets of snowflakes.

FTC conformed that it has received the letters, but declined to comment. Apple was sent a copy of Markey’s letter but declined to comment on the issue.

In-app purchases have been considered as an alternate revenue source for iPhone developers. Many studies have predicted it to become a potent revenue-model for mobile app developers in future. Hence, it would be interesting to see how the FTC investigation goes.