Rhapsody calls in lawyers over Apple subscriptions

Music firm Rhapsody is considering legal action in response to Apple’s new subscription model.

Rhapsody calls in lawyers over Apple subscriptions

After the launch of The Daily news app earlier this month, Apple has applied its subscription model across the board.

It allows subscriptions to be sold in-app, but 30% of the revenue goes to Apple. Developers can still sell subscriptions via websites, but if they do so, they now must also sell in-app subscriptions at the same price, and they won’t be able to link to an external sign-up page via the app.

an Apple-imposed arrangement that requires us to pay 30% of our revenue to Apple… is economically untenable

“Our philosophy is simple — when Apple brings a new subscriber to the app, Apple earns a 30% share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing,” said Steve Jobs, Apple’s CEO, unveiling the system.

Rhapsody, a subscription-based music streaming service, isn’t convinced. It offers free apps to listen to music, with all subscriptions via its website – a set-up which must change under the new rules.

“Our philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30% of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable,” the company said in a statement.

“The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30% monthly fee versus a typical 2.5% credit-card fee,” it added.

Rhapsody said it will keep letting its customers, including iPad and iPhone users, sign up over the internet – but will consult its lawyers, too. “In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development,” the company said.

The music service’s concerns come as others raised antitrust concerns over the subscription system, saying it could leave Apple wielding too much power over the market.

“My inclination is to be suspect” about Apple’s new service, Shubha Ghosh, a University of Wisconsin law professor, told the Wall Street Journal.

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