The Apple App Store subscription service may be a boon for newspapers and magazines publishers but not all content companies are happy with the 30% cut that Apple will be taking from subscription services on iOS. Rhapsody is already saying that it won’t abide by this fee and that it may have to drop iOS altogether due to this policy.
As you may know, Rhapsody offers an unlimited music subscription service that allows users to stream and download songs from its catalog for a monthly fee. Of course, if Apple takes its 30% cut with the App Store subscription fee, the company says that it can’t continue to offer the 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,” Rhapsody said in a statement.
The Apple App Store subscription service has already been ruffling some feathers, as the Sony Reader app was blocked from the store as Apple was gearing up for this type of service. Even things like the Kindle app which kicks users out to the browser to purchase content will soon have to have an in-app purchase structure and it’s too soon to know how Amazon will react.
The App Store subscription service will definitely make it easier to get a newspaper delivered to your device but the Rhapsody statement could be an indication that others won’t put up with it. I would think that companies like Rhapsody with high content acquisition costs may find the Apple fee too high – I’m looking at you Netflix and Slacker.
Of course, these companies could always just raise rates a little to make up for it because I don’t know if many companies want to miss out on the more than 100 million iOS users out there.