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Others likely to follow Kobo in trying to find App Store workaround

With iPhone users no longer able to buy books via Kobo?s application for iOS, the digital book seller is eyeing an HTML5 browser-based version as a way to continue to provide consumers with the ability to buy its digital content.  

The move comes after Apple recently began enforcing rules that require publishers to make subscriptions available for sale inside apps ? as opposed to via a link to a Web site ? and pay Apple 30 percent of each sale. Rather than pay, Kobo said it will fast-track an HTML5 app that was already in development so mobile users across platforms can access the company?s digital content.

?I don?t think this is completely unexpected? said Josh Martin, senior analyst for WMS at Strategy Analytics, Newton, MA. ?Companies are going to experiment ? they aren?t saying they are going to completely forego native apps and neither is Apple saying they are going to kill your app because you are doing this.

?Other companies will do what Kobo is doing and try a dual strategy to see what works because the margins on books are pretty small ? they can?t afford to take the 30 percent hit from Apple and still make money,? he said.

?Right now this is more of an experiment and a necessary experiment because if no one does it, how will we know if it will work??

Digital content sales
While Conde Nast and Hearst have both signed agreements with Apple to continuing selling subscriptions and pay the 30 percent, Kobo is not alone in considering other options.

The Financial Times recently launched an HTML5app as a way to avoid paying Apple?s charges and Amazon and Barnes and Noble both removed purchasing options from their apps.

Additionally, the Wall Street Journal said that it would remove all purchasing options in response to the new rules and Google Books is no longer available via the App Store.

The new Kobo HTML5 app is expected to launch later this year.

?Apple is in full control of their App Store and it sets rules unilaterally ? that?s their prerogative,? said Dan Leibu, chief technology officer of Kobo, Toronto, Canada.

?And, Apple also can change their rules down the road, so the future for all developers creating apps for the App Store is a bit uncertain,? he said.

?Our HTML5 web app approach provides another option, bringing an open platform for users while allowing us to reach a broader base of users worldwide.?

Kobo faces several challenges with its strategy, including that HTML5 is an unfinished technology. 
However, HTML5 currently offers some basic functionality that could be well suited for the selling of digital content.

?HTML5 allows us to add more features and update our popular Reading Life social experience far more quickly, providing an agile method to deliver advanced enhancements to consumers without limitation,? Mr. Leibu said.

?We see a world where HTML5 will be complementary to our native iOS, Android, RIM and WebOS apps, and our HTML5 approach allows us to keep one step ahead of trends, adding new features very quickly,? he said.

Discovery and distribution
Kobo and other publishers that walk away from selling content via Apple?s App Store will also need to address the not insignificant discovery and distribution benefits provided by working with a well-known app store like Apple?s.

The question is without a known distribution channel like the Apple App Store, will Kobo be able to drive enough traffic to its HTML5 Web site, convince mobile users to download the app and then get them to use it to buy digital books.

?Kobo is well known but not as well known as Amazon,? Mr. Martin said. ?If they are capable of demonstrating value and setting up a payment method, this could work.?

The mobile billing element could be a particularly vexing one for Kobo and others that try this. 

?It is harder for unknown companies to do mobile billing,? Mr. Martin said. ?Consumers don?t want to have their credit card numbers out there with a number of different companies.?

Kobo will also need to address how to let consumers store books so they can read them whenever they want.

?Is the HTML5 app going to enable users to pull down books and store them on a phone so they can read them when they are not online?? Mr. Martin said. ?I know you can do some offline caching with HTML5 but I?m not sure what the experience is.?

Final Take
Chantal Tode is associate editor on Mobile Marketer