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The Backlash Over Apple’s Subscription Service Begins

Less than a day since Apple unveiled it’s somewhat new subscription rules and unsurprisingly there is already some backlash from publishers and suggestions of possible antitrust investigations. The most prominent content provider that has spoken out so far is Rhapsody, effectively signaling that Apple’s 30% is not economically viable for them after paying music publishers and as a result will not be implementing the new subscription service and policy.

Rhapsody’s president Jon Irwin issued a statement and amongst noting that it would be “economically untenable,” he also noted that they will be “collaborating with our market peers in determining an appropriate legal and business response to this latest development.” This certainly gives the impression of possible legal action if that avenue is open to them and interestingly enough The Wall Street Journal contacted several law professors and reported that Apple’s new policy could potentially “draw antitrust scrutiny”.

One such law professor that was contacted, Shubha Ghosh said that his “inclination is to be suspect” but what is key to any possible anti-trust investigation is whether or not Apple has a dominant enough market position to hinder competitors and whether it exerts “anticompetitive pressures on price”. Antitrust professor Herbert Hovenkamp from the University of Iowa however doubts that Apple does, suggesting that an “antitrust challenge would seem feasible” only if Apple controls 60% or more of all digital subscriptions.

The Online Publishers Association, which includes major publishers including Time, Hearst, Conde Nast and Bloomberg, also raised concerns to Forbes that Apple’s policy doesn’t provide sufficient flexibility to publishers and consumers. As reported earlier it is rumored that developers and publishers will have until June 30 to implement the new subscription service, at this point it seems likely there will be some considerable backlash by publishers who will be hesitant to forgo 30% of subscription sales to Apple.

[Via TUAW, AppleInsider]

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