Rhapsody bristles at Apple subscription grab
I'm just a poor boy from a poor family ...
Apple's subscription scheme, introduced yesterday, extends to all online content, not just newspapers. Movie and music services and ebooks must pay a tithe to Apple, if they're deemed to be bringing in new customers via the Jobsian platform. Those customers pay a recurring fee.
"Our philosophy is simple: when Apple brings a new subscriber to the app, Apple earns a 30 per cent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 per cent and Apple earns nothing," Jobs said in a canned statement.
There's just one slight problem. For many retailers, the marginal costs are unavoidable: the margin is much lower than 30 per cent (WalMart's margin is under 4 per cent). So gaining new customers on the iPlatform is crippling, and ultimately prohibitive.
Rhapsody has been the first to call foul.
"An Apple-imposed arrangement that requires us to pay 30 per cent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable," the company said in a statement. "The bottom line is: we would not be able to offer our service through the iTunes store if subjected to Apple's 30 per cent monthly fee vs a typical 2.5 per cent credit card fee."
Rhapsody continued: "We will continue to allow consumers to sign up at www.rhapsody.com from a smartphone or any other internet access point, including the Safari browser on the iPhone and iPad. In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."
If your costs are largely fixed – say if you're an insurance company – then 30 per cent cut may be tolerable. It depends how badly you want that new business.
But magazine and newspaper publishers have only themselves to blame. They collectively shunned Project Alesia, a common payment platform, because they didn't trust Murdoch, who wanted to share the technology with rivals. ®
Cupertino called and said they want you back for bathtime ...
They said your bath will only be 70% as full tonight as they believe you find it more convenient for them to fill your bath than for you to run your own ...
What do Apple really want?
Clearly Apple do not want anyone to run a commercial operation over their platform. They are quite happy for hobbyists to write Apps in their spare time, and make a little money on the side, but they don't want other "competitors" to their corporation.
Is this a good business philosphy?
A long time ago, in an office far far away, a thing called a desktop computer was born.
There were two leading competing providors at the time. IBM PC with the rubbish MS-DOS, and Apple with it's simple WIMP interface.
Apple tightly controlled the hardware and OS. IBM Compatibles appeared, and despite IBMs efforts, they ran the Microsoft OS. Like it or not, Microsoft now has >90% of the desktop market.
I guess however that Steve Jobs and the rest of the board of Apple are happy screwing over 5% of the market - they're still billionaires after all.
... why many developers won't touch iPhones. I'm concentrating on Android, then Windows Phone 7 if it takes off.
Apple's control freakery will do them serious damage in the long term.