The battle of Apple and Google subscriptions

Two different models and two different philosophies, but which of the US giants will win out?

A fight is brewing between two Goliaths: Apple and Google. The cause of the dispute? Being the first to come up with a system convincing publishers and readers of the viability of paid content online.

But will the move cure the terminally ill press and music industries, for whom this might be the last opportunity for salvation, or will it be the final thrust that finishes them?

Apple rocks the cart

Bitter reactions didn't take long to arrive when Apple launched its new subscription system for content apps earlier this month.

Complaints focused on three supposed major issues with the system, which applies to newspapers, magazines and producers of online streaming audio and video content.

On one hand, Apple's decision to keep 30 per cent of the revenue was something many publishers didn't like. Nor were they too happy with the fact that the new system required publishers to offer subscriptions within their apps for the same price or less than they offer them elsewhere including their own websites.

Another aspect that seems to have ended the honeymoon between Apple and online content publishers was the Cupertino company's strategy of keeping the very valuable consumer information for itself, instead of sharing it with publishers.

Speaking out

The first to react was music streaming company Rhapsody, which responded directly to Steve Jobs' firm in a statement saying the new subscription system would generate an "economically untenable" situation.

Rhapsody said it would not just be able to offer its service through the iTunes store if subjected to Apple's 30 per cent monthly fee, and reminded Apple credit cards also usually keep 2.5 per cent of transactions.

Rhapsody announced it would consult lawyers and look into the matter whilst seeking cooperation from market peers to challenge Apple's subscription system, both in court and from a business perspective.

When contacted by IT PRO, Apple had no comment to make about Rhapsody's accusations, or the announcement that legal actions might be be around the corner.

Along the same line, Steve Purdham, chief executive of We7 - Rhapsody's competitor - said the music subscription market was to become "economically unviable." Richard Jones, co-founder of Last.fm, also expressed a similar opinion.

Although the most successful of online streaming companies, Spotify declined to comment when IT PRO contacted it for a response to the situation.

However, Ben Dury, CEO of 7digital, claimed Spotify risked being derailed by Apple subscription charge.

In an interview with the Daily Telegraph, Dury, whose company is an online music retailer and Spotify partner, said if Apple forced its new subscription service to the likes of Spotify, it will be impossible for subscription music to stay on the Apple platform.

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