Sunday, February 20, 2011

Tech Note: Apple Aims to Crack iPhone Subscritpion Services

I love how Apple sells their latest maneuver to maintain control of the iPhone, "We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."

Here is the breakdown of their new subscription service and why it is not a service, but a way of slamming the door in the face of their competition to the iPhone marketplace.  Let's say you are Rhapsody and you have an iPhone app, and let's say you allow people to sign up for your service through the iPhone app.  Well if you do, then you must pay Apple 30% of all revenues this subscription brings in. So if you have a $10 monthly subscription fee, then $3 of that goes to Apple every month.

How many companies do you think can afford to give up 30% of their subscription revenues?  Obviously this is not a service Apple is providing to content providers.  It is merely a wall to keep as much purchased content as possible on Apple devices, purchased through Apple's iTunes Store. 

The obvious way around this for subscription services is to require all new subscribers to go through their web site to subscribe instead of through the iPhone App.  Apple is also making this more difficult by setting the restriction that these apps are not allowed to provide a link to the external site. 

It will be very interesting to see how these companies like Rhapsody and Amazon react.  Will they pull their apps completely?  Will they only allow for subscription sign up to occur on their web sites?  Or will they give in and plunk over the 30%?

1 comment:

  1. I think Amazon is going to have some very difficult decisions to make over the next few years.