Co-Founder Blasts Apple’s 30 Percent Cut


Rhapsody has probably garnered the most attention for speaking out against Apple’s new subscription plans, but co-founder Richard Jones probably takes the cake for most direct denunciation. Speaking in an IRC chat, Jones said “[A]pple just f****** over online music subs for the iPhone.”

Jones suggested that Apple was preparing to launch its own streaming music subscription service later in the year, which would account for the new policy. He argued that “many services can’t survive a 30 percent loss of revenue,” specifically referring to Spotify by name, saying he didn’t imagine its “margins are anywhere near 30 percent.” Jones’ comments echo statements made by streaming music company We7 CEO Steve Purdham, who told that a 30 percent cut to Apple “makes music subscriptions economically unviable.”

Apple still has yet to comment beyond Steve Jobs’ initial statement that “[o]ur philosophy is simple – when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.” On the surface, it seems fair, but Jones points out that, “basically, people on the iPhone will *always* subscribe using iTunes, because it’s easier.”

If there’s enough evidence to support the accusation that Apple is squeezing out competitors in the music subscription business to make room for its own streaming service to be launched at a later date, then it’s possible that the company could be setting itself up for an anti-trust investigation. Similar problems could arise with books and video, where content providers operating on the iPhone — like Netflix and Amazon — would compete with Apple’s own products while having to pay licensing fees, which could be too much to swallow.

Ironically, itself actually only recently became subject to Apple’s new policy. Until Feb. 7,’s streaming radio features were free to registered users, on the web and in the company’s mobile apps. Now, streaming radio requires a paid subscription, meaning Apple will expect a cut as of Jun. 30.

While large-scale distributors and publishers might have a hard time swallowing Apple’s new rules, I’ve argued that the new system might actually be a boon to other developers and the App Store economy at large. Jon Crowley also has a good counterpoint at his blog to those quick to dismiss Apple’s move as nothing more than the product of unbridled greed. What’s your take?

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