Apple’s new subscription rules would make iOS a no go area for Rhapsody

By February 21, 2011Apple, Google

As you probably saw last week Apple announced new subscription billing rules that are punitive to their developer and publisher partners.  I wrote about them last Thursday arguing that given the rise of Android Apple should be trying to make itself more attractive to partners, not less.

On Friday Jon Irwin, president of the popular music service Rhapsody went on the record saying that after Apple’s new 30% cut they wouldn’t be able to make any money on their service:

Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30 percent monthly fee vs. a typical 2.5 percent credit card fee.

If this means that Rhapsody stops being available on the iPhone/iPad some people will presumably switch to Android or other platforms where it is available, which that would be bad for Apple.  A similar logic applies to services like Spotify and maybe even Lovefilm.  Rhapsody has 750k subscribers, of which apparently a ‘substantial proportion’ use their iTunes app.

In the Techcrunch piece that reported Jon Irwin’s statement they question whether Apple will back down from their proposed subscription pricing, as they did last year over their proposal to limit the activity of third party ad networks on their devices.  I hope they back down this time as well.  Much as I would like to see Android compete more equally with iOS I wouldn’t want to see it happen this way, i.e. at the expense of publishers and developers who have to close off the part of their revenues.  Much better would be for Android to improve as a platform to the point where it rivals iOS.

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