Leonard J. French Intellectual Property Law Blog on Lawyers.com

Apple's next version of iBooks, 2, has an authoring tool creatively named iBooks Author. With it, like many Apple releases, came controversy and cries of antitrust. At the heart of the matter is the iBooks Author End-User-License-Agreement (EULA) that requires all selling of books made with the program to be done through Apple, exclusively.

The internets blew up. Ed Bott at ZDNet responded with an article about how "mind-bogglingly greedy" the EULA was. Chris Foresman at ars technica.com seems to think that Apple would gain control of all sales of a work. Microsoft PR chief Frank Shaw took to twitter:

If you write a novel in Word, we promise not to take a 30% cut.
Likewise, if you deliver a speech in PowerPoint, we promise not to take 30% of your speaking fees.
If you manage your finances in Excel, we promise not to take 30% of your income.

I doubt it's nearly that bad. In fact, the offending clause is quite common in the publishing world. Plus, Apple may have some good reasons for this restriction.

Here's the offending section, emphasis mine:

B. Distribution of your Work. As a condition of this License and provided you are in compliance with its terms, your Work may be distributed as follows:

    (i) if your Work is provided for free (at no charge), you may distribute the Work by any available means;

    (ii) if your Work is provided for a fee (including as part of any subscription-based product or service), you may only distribute the Work through Apple and such distribution is subject to the following limitations and conditions: (a) you will be required to enter into a separate written agreement with Apple (or an Apple affiliate or subsidiary) before any commercial distribution of your Work may take place; and (b) Apple may determine for any reason and in its sole discretion not to select your Work for distribution.

As far as I can tell, Apple is not preventing you from copy/pasting your book content into Word or any other program. Apple is not asserting ownership over your copyright and content. All Apple is saying is that when the author uses iBooks to sell a book on the iBooks Store, Apple gets its usual 30%. This is not a problem on the iTunes Store or the App Store. Apple seems to be following the same model that's worked for other markets.

Also, exclusivity agreements are very common in the print publishing world. One author recently found out the hard way that her publisher's exclusivity agreement for print works extended to
electronically-published works as well. With that in mind, while it's important to read and know what's in your contract, Apple's agreement here is no worse than the norm.

And Apple may have some pretty good reasons for the restriction. One, the output of the iBooks program might not work perfectly (or even correctly) on non-approved devices. Two, Apple is providing the Author tool for free, so I really can't
complain about the them wanting authors to stick with their store. Third, the rejection clause is the same for the App Store; if your work isn't up to Apple's standards for quality and content, they won't sell
it. You'll get the same restriction with any other major publisher.

(TL;DR) The short version is this: if you are authoring an ebook and want to sell your work through Apple, go ahead. Do note that you'll need to use a different authorship program if you want to release through Amazon or another market.

As a creative person myself, I'm happy that Apple is making it as easy as possible to make a beautiful, interactive book and release it for free or sell it through iBooks. I have always wanted to make my memoirs multi-touch compatible.

- Leonard J. French