Apple under fire for subscription share

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Apple’s announcement that it will introduce a new subscription service for the publishers of content-based apps is the subject of heated debate.

The new subscription service presented by Apple will apply to publishers of video, music content, newspapers, magazines, among others. Apple intends to extend the same billing service that it recently incorporated with News Corp’s The Daily app.

The most polarising aspect of the new system is Apple’s decision to keep 30 per cent of all transactions with in-app sold subscriptions, as it does with other In-App purchases.

Although developers will still be able to sell subscriptions through their websites, Apple has made it mandatory for them to sell in-app subscriptions at the same price or lower.

Some developers have complained about what they are calling an abusive initiative by Apple.

Apple seemed to anticipate the controversy, as chief executive (CEO) Steve Jobs defended the decision upon the introduction of the subscriptions initiative.

“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,” he said.

“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, so that customers can easily subscribe with one-click right in the app.”

Some developers don’t seem to agree with Jobs' view, and have complained about Apple’s new subscription service directly.

Among those directly affected is music firm Rhapsody which, in a direct response to Jobs’ statement, has described the situation as “an Apple imposed arrangement that requires us to pay 30 per cent of our revenue to Apple.”

Rhapsody insisted that Apple’s new subscription system would generate an “economically untenable” situation, as they would need to add the 30 per cent that Apple will soon start requiring to the content fees that they already pay to the music labels, publishers and artists.

“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 versus a typical 2.5 per cent credit-card fee,” Rhapsody said in a public statement.

Rhapsody has announced that it will consult its lawyers about the matter, and that it is willing to collaborate with its market peers in determining a response to Apple’s measure, both from a legal and a business perspective.

Apple's App Store recently reached its 10 billionth download milestone.

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