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

I've just realized what Apple is up to here - it took me a day, and some of the excellent comments on HN - but I now get it.

My inability to see what was going on, was that I couldn't see how Netflix/Amazon/Rhapsody/etc... could operate, profitably, under this plan. The 30% cut would eat their entire margin (and more).

And the plan is brutally straightforward and honest, if you just mediate on it for a few days.

Apple isn't interested in hosting Amazon Kindle, Netflix, Pandora, Rhapsody, or _any_ of the middlemen that have been selling their content on the iPad. Effective today - those sellers no longer have a business model. They are middlemen, and, in fact, they'll need to seek other pastures to sell their wares. They will all be removed from the ipad with 3-6 months. Gone.

So - what will replace them - well, let's see what's leaving:

  o Music -  Itunes
  o Movies - Itunes
  o TV Shows - Itunes
  o Books - iBooks

This is the master plan, and I'm surprised we didn't realize it immediately. Apple will get their 30%, because _they_ will be the platform providing this content, NOT netflix/rhapsody/Pandora/Amazon.

I suspect all of those vendors realized this in about 5 minutes, much faster than us "Customers."

Apple is going for the whole enchilada, and will henceforth be dealing directly with the publishers, labels, and studios.

What's staying?

  o App Developers
  o Newspapers
  o Magazines

Basically, anybody who creates _original_ content, will be okay with the 30% cut (they already pay that much or more through other channels), though they may gripe a little at the lack of customer information (That's the bone that Apple tossed in todays release - the "option" for customers to let the publishers know their user information.)

This is nothing more, or less, than the continuation of the Apple "Walled Garden" philosophy, where Apple is able to control the entire experience. Jeff Bezos realized this when he ensured that Amazon had a platform of their own to deliver content to the customer.

It's customer centric, and, if they pull it off (With a good streaming, book reading, and content delivery platform) - brilliant.

I have a huge investment in the Kindle, and it's books - so I'm still unclear on how I'm going to respond as a customer. I would have _never_ purchased a book through iBooks (I like the ability to read books on my e-ink Kindle, and Apple has no comparable platform, yet). I also have both an extensive list of cultivated Pandora Stations, and, have a Netflix AND Hulu Plus account - all of which I'm going to lose on the iPad. If Apple doesn't come up with a compelling alternative for me - I'll actually consider an Android Tablet. They'll be able to replace Netflix, and Pandora, I'm certain - but I do love my Kindle(s) - so, I don't know what my next step is going to be.

What I _do_ know is Apple has unambiguously signaled what they will be doing. They don't have a great streaming solution yet, for music, or movies. So they have some gaps in their portfolio of offerings - if I'm correct, we'll see a Netflix and Pandora competitive application being offered fairly quickly - possibly in the next release of IOS.

I would be surprised if the thought of using in-app purchasing for subscriptions even moved their needle of interest at Netflix.

Again, if you're just providing a conduit for your subscription service, all this means is that you can't provide a direct call to action in your app.

They seem like the prototypical example of an company that couldn't care less about using the App Store as an app-based advertisement or purchasing platform.

How is effectively booting popular services from their devices in the interest of their customers?

"It's customer centric, and, if they pull it off (With a good streaming, book reading, and content delivery platform) - brilliant."

I don't see how this is customer-centric in the traditional idea of the term at all. Customers want to be able to listen to Pandora and sync with their Kindle. Customers do not want restrictive DRM and policies that lock them into a given company for eternity.

I thought we were headed in a more open direction regarding the ownership of digital property. Thank goodness for Android.

It is important to draw a distinction between "the Kindle" (the hardware device sold by Amazon) and the "Kindle Store" (Amazon's e-book sales platform).

The Kindle Store, yes, is all about the DRM. And it's the "platform" accessed by the Kindle app on assorted devices.

However, if you're talking about the hardware device then it's entirely reasonable to ignore the DRM issue. You plug it into your computer and it mounts as a USB drive, onto which you can drop books in a variety of non-DRM'd formats (annoyingly not ePub). You can purchase said books from a variety of vendors who are happy to sell you non-DRM-encumbered products.

Amazon obviously really wants you to use these two things together, and the Kindle (device) is well set up to work with the Kindle Store. But they're not forcing you to use only their DRM with the hardware you bought.