Just about everyone on the Internet now knows that some folks are really upset over Apple’s recently announced subscriptions for iOS apps. In case you missed the news, Apple is now allowing publishers to implement subscriptions for content-based apps using the same iTunes payment method customers rely on for their App Store purchases, but Apple keeps a 30% cut off every recurring subscription. As you can guess, several publishers think a 30% cut off a minimal monthly (or yearly) fee is too much, making it impossible to break even. In fact, music service Rhapsody has already announced it won’t offer subscriptions for iOS devices. And it looks like other publishers will follow if they think a business model can’t be built upon Apple taking its 30% on every transaction.
While the fact that Apple takes a cut on purchases made through its App Store doesn’t come as a total surprise, the 30% number does as many, including yours truly, initially thought subscriptions would feature a lower cut from Apple. Still, this is happening right now and what we can do is wait and see what publishers and content providers like Amazon and Netflix will do. But in the meantime, it appears that Last.fm co-founder Richard Jones isn’t really excited about these subscriptions, either. “Excited” is actually an euphemism, considering that in a private IRC chat posted by GigaOM he says “Apple just f****** over online music subs for the iPhone”.
While we can’t verify on the authenticity of IRC chat, there’s more coming from Mr. Jones. He suggests Apple might have come up with these high terms to leave room for its own music streaming service later in the year, which will surely make some companies like Spotify and Rdio struggle to find their way between affordable consumer prices and Apple’s cut on subscriptions. Oh, and what about Last.fm? They announced their very own subscription-based service two weeks ago, and now if they want to keep their app in the Store it looks like they’re going to have to rethink the whole strategy. Or perhaps Last.fm will simply pull the app from App Store, as Jones believes “people on the iPhone will *always* subscribe using iTunes” because it’s easier.
So far, Apple’s subscription service hasn’t been a popularity success among publishers. But we believe we’ll hear the actual results of this new functionality in a few weeks, when customers will get used to the advantages of iTunes-based subscriptions and some publishers will (likely) see the first promising numbers coming in. If Apple will have to change its stance on subscriptions, you can bet they will. Now, we wait and see how the publishing industry reacts in the App Store.