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Rhapsody passes on Apple's "economically untenable" sub plans

technologizer.com

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Re: Rhapsody passes on Apple's "economically untenable" sub plans

#11

Post by jerf »

zach wrote: post #7

Of course Rhapsody can't sell their stuff for a 30% margin. It's not their own stuff! They're trying to be the last link in a chain of 90/10 (or more) splits. They repackage record labels' repackaging of artists' content. Do you think the artists would find 30% economically untenable? The App Store is 70/30 because Apple can take things straight from content producer to customer. When the Apple takes the place of pub…

"Of course Rhapsody can't sell their stuff for a 30% margin. It's not their own stuff!"

Yeah. The original article talks about "calling Apple's bluff" as if this is some sort of choice on Rhapsody's part, but anybody who literally can't make a profit with a 30% cut off the top from Apple isn't "calling a bluff". There's no volition involved.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#12

Post by saturdaysaint »

I'm not happy to have predicted this in comments early today: (some slight paraphrasing)

The current state of affairs - where Apple provides a nice sales channel (marketing in a sense) on their already highly profitable devices and where service providers bring attractive service to the platform - is a fairly even trade. Apple is asking for such a drastic renegotiation of this "trade balance" that I predict services will need to reprice for iOS or abandon the platform. Content services are already struggling enough - and Apple has too many viable competitors! - for me to imagine them simply submitting. Sony's withdrawal of their app was the writing on the wall, I'm afraid.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#13

Post by minalecs »

ajg1977 wrote: post #9

What's going to get really interesting is seeing where Apple draw the line with "subscription apps". The Rhapsody and Magazine apps of this world seem fairly clear cut. Kindle is somewhat less so (since books aren't a subscription service - something most blogs seem to miss). But what about these "Go to my PC", Salesforce.com, or other SaaS sites that basically provide free iOS apps for expensive subscription plans?…

amazon offers magazine subscription for kindle. Besides, I think Apple has been known to ignore or allow exceptions. For these SAAS companies, I imagine Apple will allow them to slide, but by their own terms.. it sounds like they shouldn't. I think their only main concerns are profiting from companies that compete directly with Apple revenue streams, music, movies, and books.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#15

Post by jkincaid »

ajg1977 wrote: post #9

What's going to get really interesting is seeing where Apple draw the line with "subscription apps". The Rhapsody and Magazine apps of this world seem fairly clear cut. Kindle is somewhat less so (since books aren't a subscription service - something most blogs seem to miss). But what about these "Go to my PC", Salesforce.com, or other SaaS sites that basically provide free iOS apps for expensive subscription plans?…

Actually it does affect the Kindle and other non-subscription apps, as confirmed in this report: http://www.computerworld.com/s/article/9209580/Apple_s_new_A...

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#16

Post by zach »

potatolicious wrote: post #10
zach wrote: post #7

Of course Rhapsody can't sell their stuff for a 30% margin. It's not their own stuff! They're trying to be the last link in a chain of 90/10 (or more) splits. They repackage record labels' repackaging of artists' content. Do you think the artists would find 30% economically untenable? The App Store is 70/30 because Apple can take things straight from content producer to customer. When the Apple takes the place of pub…

It's not always this way. Think about, say, a Pandora subscription - thin margins, but provides a real value added service that is well above and beyond that of a mere distributor. Can they afford to give Apple a 30% cut of all revenue? It's completely misguided to characterize all payment through a mobile app as cutting out the middleman. In a great number of cases (i.e. subscriptions) Apple role is nothing more tha…

My point is that Apple doesn't see in-app payments as merely payment processing. They see them as App Store purchases which are delayed in time.

Everyone keeps anticipating Apple becoming a payment processor, but it hasn't happened yet. They're still a platform provider.

This kind of reminds me of some of the TripAdvisor reviews you see on resorts with a championship golf course and all kinds of amenities. There are always people annoyed that because just wanted a simple room and don't want to have to pay for the amenities. They argue they should be able to pay a lower rate. But they just stayed at the wrong place.

A 30% rent is a great rate for what the App Store provides, but if all you want to pay for is a better payment processor, yeah, it does seem outrageous.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#18

Post by jaaron »

zach wrote: post #16
potatolicious wrote: post #10

Earlier quoted context omitted.

It's not always this way. Think about, say, a Pandora subscription - thin margins, but provides a real value added service that is well above and beyond that of a mere distributor. Can they afford to give Apple a 30% cut of all revenue? It's completely misguided to characterize all payment through a mobile app as cutting out the middleman. In a great number of cases (i.e. subscriptions) Apple role is nothing more tha…

My point is that Apple doesn't see in-app payments as merely payment processing. They see them as App Store purchases which are delayed in time. Everyone keeps anticipating Apple becoming a payment processor, but it hasn't happened yet. They're still a platform provider. This kind of reminds me of some of the TripAdvisor reviews you see on resorts with a championship golf course and all kinds of amenities. There are…

No, a payment processor is exactly what they are in this case. Consider what Apple is attempting to do to Amazon's Kindle service: users can purchase Kindle ebooks directly in-app but Apple takes a 30% cut of the payment. Amazon still hosts and provides the content, all Apple does is act like a payment processor like Visa or Paypal. Clearly Apple wants to shove out competition to it's own iBooks, iTunes and movie services.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#19

Post by jaaron »

vizzah wrote: post #17

How's Rhapsody affected, if they don't offer in-app purchases?? quote: "Today, Rhapsody subscriptions are available for purchase exclusively via Rhapsody.com"

If you'd follow the press releases or read the updated app store guidelines, you'd learn that Apple has changed the rules and is enforcing old ones in new ways that will affect Rhapsody, Amazon Kindle, Rdio, Netflix, and so on. The new rules would require Rhapsody to allow new cusomters to optionally sign up via in-app purchase with an ongoing 30% fee to Apple. The rules stipulate rhapsody _must_ make this offer if they offer an app, despite the fact that such an offer is unprofitable to Rhapsody.

Re: Rhapsody passes on Apple's "economically untenable" sub plans

#20

Post by zach »

jaaron wrote: post #18
zach wrote: post #16

Earlier quoted context omitted.

My point is that Apple doesn't see in-app payments as merely payment processing. They see them as App Store purchases which are delayed in time. Everyone keeps anticipating Apple becoming a payment processor, but it hasn't happened yet. They're still a platform provider. This kind of reminds me of some of the TripAdvisor reviews you see on resorts with a championship golf course and all kinds of amenities. There are…

No, a payment processor is exactly what they are in this case. Consider what Apple is attempting to do to Amazon's Kindle service: users can purchase Kindle ebooks directly in-app but Apple takes a 30% cut of the payment. Amazon still hosts and provides the content, all Apple does is act like a payment processor like Visa or Paypal. Clearly Apple wants to shove out competition to it's own iBooks, iTunes and movie ser…

And yet there seem to be a lot of books as apps on the App Store considering there's this 30% cut.

What kind of inside track should Amazon have on the poor shlubs who sell their books as apps?

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