Under Apple's App Store Review Guidelines, there is sometimes no choice but to use Apple's in-app purchase mechanism. Assuming you are dealing with a situation where there is a choice, what are the considerations you should think about. Here are a few you may like to consider.

• Price. You can only choose from the list of prices provided by iTunes. You cannot make up you own price. This tends not to be a serious issue as there are quite a few pricing 'tiers' you could choose from. However, this may mean that you need to align the pricing of your products with the pricing tiers offered by Apple - i.e. forcing you to set your pricing strategy to fit the Apple’s framework.
• Commission. A commission will need to be paid to Apple and currently is 30% of the price. This is not insignificant.
• Other transaction costs. One other costs that are not quite obvious (in the sense that it is difficult to quantify) is the potential effect of exchange rates if you sell the products outside your home country as most developers do. Admitted, I have not researched the detail mechanics adopted (if it is even published) but potentially there could be multiple exchange rates conversion by the time the money hit your bank account. It is quite likely that each of the conversion is performed with Apple’s best interest in mind; the corollary is that the conversion is not likely performed in your favors. This could all costs you money.
• When do you get your money. Under the present practice, Apple only forward payment to the developer once the amount has reached a certain threshold. At the moment, it is around $US150. And keep in mind that this is the amount payable to you so it is not the same as the total sale amount, i.e. this is net of Apple's commission. This may not be an issue if your sales volume is large, but it is something to keep in mind. In any event, the point to note is that there can be delay between the sale of your product inside the app and you seeing your money in your bank account. In operating a business, the timing of cash flow is an important issue.
• Customers' record. Apple's system will supposedly keep track of the items purchased by each users. However, it is unclear what happen in situation in which people changes phone or install the app on another device. Anyhow, we consider that it is best practice that the vendor also keep track of the items purchased by each person/device (of course, the extent of the tracking required would depend on the nature of the contents sold), meaning that you will need to implement your own database solution.

We were (and still are) struggling with this issue in an iOS app project. This project, which is still in its infancy, would eventually involve the sale of various music related contents including possibly sheet music (i.e. musical scores), music files and other related elements. What we are trying to work out is whether we can sell contents in the form of sheet music and music files in an iOS app without using Apple's in-app purchase mechanism (the Apple Mechanism)?

We have nothing against the Apple Mechanism, which definitely has its advantages. However, for reasons that will be become more apparent below, using the Apple Mechanism does not seem to be practical in respect of the present project.

Apple's App Store Review Guideline (the Guidelines) currently  contains the following relevant guidelines: (based on version accessed on 10th February 2012)
11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected
11.3 Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected
11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected
11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app.

The practical application of these guidelines are not entirely clear. The following practical explanation is found on stackoverflow.com:

• Digital goods, upgrades or subscription: Your only choice is Apple's In App Purchase.
• Charity donation: You must redirect the user to a website using Safari, you CAN'T use a UIWebView inside the app.
• Physical goods: you CAN'T user Apple's In App Purchase, you need to use a website or any other method, for example the new PayPal Library.
• Personal donations: (like the famous "express your gratitude and buy me a cup of coffee") you are again in item (1) and NOT on item (2).

This seems fairly accurate. This would suggest that the contents in question must be sold using Apple Mechanism. This consequently would mean we must use the Apple Mechanism in our project. However, after stumbling across an app by VirtualSheetMusic.com I am less sure. That app is quite similar to the features that we have in mind (although the type of the music is different). Importantly, they are are not using Apple Mechanism. If they could get their app approved without using Apple Mechanism, it gives us hope that we could too.

What I am trying to understand is why their app got approve? What distinguishes it from the guidelines noted above?

Admittedly, one possibility is that their app was approved before this current guideline. I have no idea as I don't know the history of the guidelines (but I am aware that it has changed and will change from time to time). Nor do I know the history of their app, but it seems that their app has been on the app store for awhile (inferred from the fact that it is currently version 2.7).

One possible distinguishing factor seems to be contents that could be used both within the app itself and also used outside the app.

These are the characteristics of the contents that we are considering in this project. The sheet music and music sound files in question can be consumed outside the app. More specifically, it is envisaged that the users could purchase these contents inside the app and outside the app (e.g. through a web site or by more traditional means like a physical shop or by fax, etc). Once they have purchased the contents, the users could access the sheet music and music sound files from within the iPhone/ iPad app, as well as from their computer, or possibly in the future even other devices. From an implementation perspective, it seems more efficient to adopt a purchase and payment mechanism that exists outside the app so that we can have a single mechanism rather than multiple mechanisms, which would raise technically complex issues of trying to synchronizing all the data.

That contents used both within the app itself and also used outside the app may be able to be purchased using a non-Apple Mechanism could well be consistent with the Guidelines. Guideline 11.2 says that we must use the Apple Mechanism to purchase content, functionality, or services in an app. Guideline 11.3 says that we cannot use Apple Mechanism to purchase physical goods or goods and services used outside of the application. But if the contents can be used both inside the app and also outside the app, what is Apple's position? This is unclear. Although, it seems that in this situation we may be able to use either Apple Mechanism or something else. This appear consistent with the VirtualSheetMusic.com example.

Further, this would seem consistent with the broad approach described in Guideline 11.13. Under Guideline 11.3, we are prohibited from linking "to external mechanisms for purchases or subscriptions to be used in the app" and we draw attention to the fact that this is talking about using the content inside the app here.

The overall impression seems to be that contents consumed within the app must be purchase using the Apple Mechanism. Whereas contents that have an external elements may be able to be purchase using a non-Apple Mechanism.

However, a concern is Guideline 11.4, which says that "[a]pps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app as long as there is no button or external link in the app to purchase the approved content." This clearly means that we could access the externally purchased sheet music and music files within the app, but does this means we cannot provide a means to purchase these items within the app? Does this only apply to magazines, newspapers, books, audio, music, and video? If so, may be sheet music can be purchased within the app?