Music Services Raise Prices, Drop Links To Keep Apple Happy

This guest post comes from The EchoNest's Paul Lamere and Evolver.fm.

Turmoil surrounds the important issue of how iOS developers can sell products and subscriptions within apps. Apple dictates that if you sell stuff within your app, you have to give it a 30% cut [although at least now developers can charge whatever they want elsewhere]. Apple also bars developers from linking to places where users can buy the same stuff without giving Apple its cut.

For many media companies, the profit pie is too small to allow Apple to take 30 percent, leaving them in a quandary about how to provide a good experience without bankrupting their companies.

Many looked to Amazon to see how it would react, because millions of iPad and iPhone owners buy and read digital books on Amazon’s Kindle platform, which includes an Apple iOS app. Amazon’s answer to Apple’s subscription rules was simple: Last week, it removed the Kindle Store button from its Kindle Reader app, so that readers can no longer buy new books there.

Here’s the Kindle app before the change:

Now, the Kindle Store button is gone:

What are music services doing?

Amazon apparently had to make a difficult decision to remove the link to its own store from its own app, even though that means selling fewer books. I wondered, what about music subscription services, which also offer apps that sell content?

Spotify

Spotify followed Amazon’s lead by getting rid of any in-app purchases or subscription links within its app. You can only listen to Spotify mobile if you already have a Spotify mobile account.

When you login to the Spotify app, there is no option to register an account. Spotify just assumes that you have already registered and are ready to login in and start using the app:

Curiously, there is a ‘Get help at Spotify.com’ button on the app’s More page. This opens the Spotify Help web page, which puts you two clicks away from a Subscribe button. The link must cut pretty close to Apple’s rules about linking to web sites, but it’s allowed, for now anyway.

SiriusXM

Like Spotify, SiriusXM removed the “buy” links from its app. Only users who already have a SiriusXM account can use the app:

Rhapsody

It’s the same story for Rhapsody; app users can’t subscribe:

MOG

In July, MOG issued in update that removed links to its subscription portal:

Napster

Until the day day after this article originally posted, Napster eliminated the Register link we’d spotted:

Slacker

Slacker’s app includes a prominent upgrade option to its $4-per-month Radio Plus service. The remaining question is whether or not Apple is getting 30 percent of that.

Update: Slacker spokesman Anders Steele tells Evolver.fm that Slacker can’t pay what Apple is asking: “Slacker cannot afford a revenue share with Apple while holding pricing the same, so in-app subscriptions will be removed.”

Pandora

Pandora lets you create a free account in the app, but I couldn’t find any mention of a premium account or links to Pandora.com:

Last.fm

Like Pandora, the Last.fm app lets you sign up for a free account within the app, making no mention of the existence of a paid option. This must be painful for these services, for which convincing users to subscribe is crucial:

Rdio

When this article first posted, Rdio’s app followed the lead of Pandora and Last.fm by allowing users to sign up for a seven-day free trial account with no mention of a premium option or links to Rd.io:

A recent update lets you purchase a subscription within the free trial version:

This allows you to purchase the Rdio subscription for $15 per month — which just happens to be 33 percent (approximately Apple’s cut) more than an Rdio Unlimited subscription would cost if purchased directly from the web.

Rdio appears to have taken advantage of Apple’s recent relaxation of the rules by experimenting with how more-expensive (they need to be in order to pay Apple) in-app subscription purchases stack up against cheaper, out-of-app purchases that require no such tithe. (A good LA Times article describes Rdio’s approach to dealing with this issue.)

Playme

The latest version of Playme’s app lacks a subscription link. It does, however, display a prominent text link to www.playme.com so you can type the URL directly into your browser, which might be enough of an obstacle to satisfy Apple:

Grooveshark

Grooveshark has never been timid of walking up to the line and stepping across it. For starters, the only way to get Grooveshark on an iOS device is to jailbreak your device. With a jailbroken version, of course, Grooveshark doesn’t need to pay anyone for anything and can ignore Apple’s subscription rules. However, it loses all potential customers who are unwilling to jailbreak their phones.

Conclusion

Apple has typically prided itself on offering an excellent user experience. But when the company had to weigh a good user experience against making 30 percent of every music subscription purchased within an app, it decided to screw over the user — not to mention all of these companies that had to delete links to their main product — and chose the pot of money.

Apple built iOS and can pretty much set whatever rules it wants. But in reality, no music streaming company will ever be able to afford to give Apple a 30 percent cut of every subscription — in fact, we have yet to hear of one attaining profitability even without surrendering that cut to Apple.

Hopefully, Apple will realize that it has made no extra money from applying this 30 percent rule to subscriptions and has instead encouraged app developers to make users jump through unnecessary hoops.

Alternatively, subscription services can simply jack up their prices when selling a subscription within the app, the way Rdio did. If Apple iOS users prefer to pay another 30 percent each month in order to give Apple its due, rather than typing in a website address to purchase the same thing at a far cheaper rate, perhaps we’ll see Spotify, Mog, Rhapsody and the others try the same thing.