App Store demo rules, tax questions clarified

While Apple's App Store virtual storefront is stuffed with so-called "lite" applications--i.e., demonstration applications enabling iPhone and iPod touch users the opportunity to sample an app prior to purchase--the computing giant's official policy has maintained that all demonstration versions must act as fully functional stand-alone entities, not simply as a featured-limited tool design to up-sell the official premium version. According to Ars Technica, the somewhat murky definitions are now significantly clearer based on the case of Expando Free, a puzzle game that seemed to exist for the sole purpose of promoting the title's premium incarnation, in effect violating the spirit of the App Store's rules and regulations--Apple has now said it will not accept feature-limited versions of App Store submissions, mandating that iPhone applications cannot reference features not implemented or up-sell to the full premium version. In addition, developers must remove any reference to demo or beta from the application binary and all supporting materials, or "metadata" in App Store parlance. "Free" or "Lite" versions remain acceptable, although each must still be fully functional and stand independently of the premium app.

In other App Store goings-on, Ars Technica notes Apple will not report App Store payments to the Internal Revenue Service, and will not send developers a 1099 form for the 2008 tax year. According to Apple's iTunes Royalty legalese, App Store payments are considered sales commissions, not royalties, meaning developers are therefore responsible for reporting their own earnings based on App Store revenues. Some developers may have assumed otherwise, given that they were instructed to fill out tax forms and submit their social security numbers as part of the App Store contract.

For more on the App Store demo restrictions:
- read this Ars Technica article

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