Apple’s rejection of the Sony e-Reader app and announcement of App Store subscriptions, in conjunction with The Daily launch launch, seems to have agitated a large number of folks. I’d assumed the implications and resultant response was overblown. But it turns out that I was the one who misread the situation. From Apple CEO Steve Jobs yesterday:
Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing. All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app
I can’t imagine many businesses will suddenly want to pass 30% of their subscription-based income on to Apple in exchange for a place in the App Store. In fact, those running on tight margins, like Pandora or Slacker, now find themselves confronted with a difficult decision — raise rates or abandon iOS.
But something’s got to give. Apple’s iPhone success is largely based on a vibrant ecosystem of third party apps and services. It’s symbiotic… and copacetic. At least it was. And not everyone will take this lying down. As Rhapsody stated in an email release I received:
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. We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development
Indeed. Additionally, the Wall Street Journal wonders if there’s an antitrust case here. For example, it sure seems like Apple could be unfairly stifling (iBooks) competition from the likes of Amazon’s Kindle with this additional new provision:
Publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.
Of course, I’m no lawyer. But a public backlash and threat of legal action may be enough to encourage Apple to adjust (soften) their stance.