Apple has come a long way since it launched the very first iPhone. The company has already shipped millions of iPhone and iPad units and has quite a reach among consumers. Many content publishers have taken advantage of this powerful platform to reach people in a whole new way. But Apple’s controversial move to put a 30% content tax on content sellers is forcing some to rethink their strategy. Rhapsody is one of many content sellers that has a big issue with Apple’s new rules:
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.
Apple has every right to impose some tax on content sellers. But the way it has gone about doing it seems to be too much to take. The tax issue is only one part of the issue. Apple is also forcing app developers to change the way their apps behave. Even PayPal is not impressed with Apple’s approach:
With Apple’s subscription service, publishers lose both these controls and have few options. They can charge consumers more, withdraw from the Apple apps store or continue status quo, knowing they’ll make far less money. This simply doesn’t work in the long run.. All I’m saying is that publishers deserve a better deal and consumers deserve the choice to get their news in the format they desire. I can’t wait to see what’s unveiled at the Yerba Buena Center in San Francisco on March 2nd.
says Sam Shrauger, PayPal’s vice president of global product and experience. People are very excited about iPad 2, and there is a good chance millions of people will pick this device up. What Apple does not want is a boycott or revolt by publishers. Services such as Spotify simply can’t afford to comply with Apple’s demands:
If Apple forces this change on to Spotify, it would become loss-making as it and other digital music subscription services, cannot afford to pay Apple 30 per cent of their revenues.
From the looks of it, Apple has every intention of going ahead with its move. But we shouldn’t put it past Apple to change its course in the very near future if some major content sellers leave for other platforms.