Apple's new 14-day return policy on iTunes could hurt app developers

Apple, Google and Amazon have been forced to change their approach to dealing with refunds on apps, music and other purchases made digitally within European markets. This is following a European Directive made several years ago that only very recently came into affect. This allows buyers to have a 14 day period where they can return an item for a full refund.

Updated Terms and Conditions

Apple has updated their terms and conditions already for certain markets to reflect this change. Their new terms include this passage:

If you choose to cancel your order, you may do so within 14 days from when you received your receipt without giving any reason, except iTunes Gifts which cannot be refunded once you have redeemed the code.

Protecting E-Commerce Shoppers?

The intention behind the change in the law is to allow e-commerce shoppers more time to decide whether they like what they have purchased or wish to return it. In the UK, the consumer rights act provides certain rights to high street shoppers to return items that have usually not been opened and not been used within a reasonable period of time. The goods have to “not be fit for the purpose that they were bought for”. However, if the goods were suitable, just disliked, then it is usually up to the retailer to decide whether to offer a refund or offer gift vouchers for the same store chain. 

Hurting The Smaller Businesses The Most

The problem with the change is that it means that purchasers of mobile apps, desktop software, music tracks or albums, e-books and other items can be accessed, tried out, listened to, read, and perhaps copied, then returned within the two week period with a full refund.

For software developers who rely on the small percentage of people who buy an app rather than using the free version forever, this change in policy will make it even more difficult to know what money they have earned because it can still be refunded later. Albums that were bought mainly for a single track but the purchaser bought the whole album but later disliked it will be free to return the album for a refund. Book authors where it is known that only 10 percent of books are read through to the end could suddenly find refunds going through from buyers who stopped reading partway through.

A Loss For All In The End

The change ultimately leads to a “pay for it, try it, get a refund” approach which sounds good in theory but for small publishers, app developers and musicians it can only spell lower revenues going forward. This will then lead to less diversity of apps, software, music and books with the leaders taking a greater share of the market with even less room in the smaller niches with lower revenue that cannot support the smaller players sufficiently for them to continue their work. The ill-considered European law may be a win for consumers in the short-term but likely will be a loss in lack of diversity in the near future.