The Economist Bows To Apple Terms As iOS 5 Breaks Its App

The Economist is finally moving to an iPad strategy compliant with Apple’s new developer terms, after what it calls “iOS bugs” under the new iOS 5 broke its non-compliant app edition.

The newspaper’s debut app appears to be non-compliant with Apple‘s summer-time developer terms update because it takes subscription and single-copy payments directly from consumers via the web rather than through iTunes.

Now users who upgrade to iOS 5 find that sharing, bookmarking and swiping features inside the app are broken.

So The Economist has issued a second app to iTunes Store – alongside the original – which is both bug-free and which routes payments through iTunes as required by Apple.

Upon opening the original app, readers are now presented with a hyperlinked message reading: “Please download the new Economist iPad app. This app will be phased out shortly.” But only the latest update to the original app comes with the message. The Economist is facing a challenge to migrate readers to a separate app rather than just upgrade their existing old app. When readers do migrate, they apparently will lose their back issues.

It is convenient for Apple (NSDQ: AAPL) that “bugs” introduced by its iOS 5 appear to have hastened The Economist‘s compliance with its new rules.

But it also says a lot for The Economist that it is allowing for purchases that give Apple a 30 percent cut, rather than just degrading its app so that only magazine subscribers can read it, like many other publishers have done.

Enabling in-app payments likely will benefit rather than harm The Economist. Most of its iPad consumption currently is likely from readers who subscribed in print and who can read on iPad for free.

The Economist is targeting a million digital readers by 2013.

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