Archive for February 15th, 2011

Apple’s in-app subscription rules are anti-competitive

And now Apple wants 30% cut of every subscription carried out through an iOS app. And apps are not allowed anymore to include a simple link to load a web browser page and let a new user subscribe through it either. In other words, if you need to sign-up new users, and your service is not free, you either have to have existing customers that don’t need to sign up, or pay Apple a 30% cut.

At first, this doesn’t sound that bad. I mean, apps can increase their prices so they can afford to pay up Apple. But there is a specific kind of app that it’s simply impractical to do that. See, there are some companies that serve their own content, and these can compensate. But there are other companies, who license the serving content, that can’t.

I’m talking about the music streaming subscription services, like MOG, RDIO, Rhapsody, Napster 2.0, Thumbplay, Spotify etc. And then there’s Netflix, Kindle too. These apps already pay a heavy price to RIAA or studios, so their margins are very small, in the already competitive market of entertainment. It’s very possible that these companies don’t make more than 10% per song streamed, maybe much less! And now Apple wants 30% off of a $10 subscription? How could these companies survive?

Increase prices from $10 to $15, you say? How are they gonna stay competitive when iTunes Streaming is coming this year for possibly no more than $10? Yes, it IS coming, it’s the natural evolution of the music market and gadgetry/networks. This is clearly anti-competitive, because Apple will be able to offer the same service for less, by squeezing the other guys out with mafia tricks. There are anti-trust issues, as WSJ noted.

AAPL, just like RIAA and MPAA (all the AAs, it seems), are dictators. And they all take decisions that only benefit their shareholders in the very short term. Because, I can tell you right here right now, that developers will be forced to give Apple the finger, and move to Android — even if they might not like Android as much as iOS.

Talk about Apple shooting its own foot. I think this great documentary, on Netflix Instant, asks the right question to corporations: “how much is enough money, where would you stop?” A highly recommended documentary.

Sometimes I keep thinking of Apple, particularly of Steve Jobs, and how he keeps making the same mistakes over and over. Mistake in the ’80s with the Mac clones and an open ecosystem, and exact same mistakes now. Some people never learn. Either that, or he finds the eventual minuscule market share, “cozy”.