Rhapsody CEO Blasts Apple: New App Store Terms “Economically Untenable”
After Apple announced new 30% commission rates that, as Kyle Bylin wrote, could kill subscription music, I wondered who would risk Apple's legendary rath and speak up. Yesterday, John Erwin, the President of Rhapsody, America's biggest subscription music service with 750,000 subscribers, weighed in bravely calling Apple's new app store terms "economically untenable" and hinting at future legal action. Here's the full text of President John Erwin's statement:
"Rhapsody is the leading digital music subscription service in the U.S.,with 750,000 subscribers. Music fans can access the service using free apps from any Internet-connected device, be it on an Android, Sonos, Tivo, BlackBerry, iOS or personal computer. Today, Rhapsody subscriptions are available for purchase exclusively via Rhapsody.com.
Rhapsody offers a content-based subscription service that makes millions of tracks available to fans pursuant to longstanding partnerships with thousands of rights holders, all of which then distribute revenues to artists and other creators.
Our philosophy is simple too–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. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee.
We will continue to allow consumers to sign up at www.rhapsody.com from a smartphone or any other Internet access point, including the Safari browser on the iPhone and iPad. In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."
Good for John. Glad someone is stepping up to Apple. I love their products and services, don’t get it twisted. But this is getting ridiculous. Competition is needed in this industry, DESPERATELY. A move like this is completely unnecessary on Apple’s part. They already have the industry in a full-nelson. Why try to RAPE the industry?!?!
there is a point i can’t understand.
Apple doesn’t force this cooperation to be exclusive one. Rhapsody and spotify will still continue to sell their subscriptions from their “own” website.
Only If they want to use the ap store subscription they will pay that %30.
Am i missing something here?
You’re right Ayhan. The question are, is 30% fair and can will it still be profitable for Rhapsody.
My gut says no to both and that its yet another attempt by Apple to push out competition.
I aggree that there is no way, we can make money with a deal like that. never… Really it’s not even a question for me 🙂
However, everybody is acting like our apps will be denied or pulled out of the system if we don’t use that subscription model. It’s not an obligation as far as i see.
Btw, that price thing also a disaster. For example, you will not be able to offer a price in appstore higher than you offer at your local site. Do they really thing content based services can actually earn any money with a deal like that? I’m not sure.