Rhapsody lashes out at Apple subscription plan

Grace Robinson
16 February, 2011
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With the release of Apple’s new App Store Subscription plan, which entitles the company to a 30 percent cut from publishers who sell content from their apps, there were bound to be strong reactions.  One content provider, Rhapsody, has issued a statement lashing out at Apple and the new system,  labelling it ‘economically untenable.’

The full statement from Rhapsody President, Jon Irwin was posted on Cnet yesterday:

‘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.’

Rhapsody is one of the first content providers to publicly respond to Apple’s new App Store Subscription plan.  It remains to be seen what the big players (Amazon, Barnes and Noble) will do.

Repercussions of Apple’s enforcement could see a number of providers pulling their apps from the App Store and pursuing legal action against the company.

One thing is certain, the contention has only just begun.

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