App developers angry at Apple subscriptions

Apple has only just taken the wrapper off of its shiny new subscription service and people are complaining already.

The gadget maker and flogger of all things digital announced yesterday that anyone could jump on the Apple money train with a new in-app subscription service that would allow developers to collect regular payments for updated content.

In his infinite generosity, Steve Jobs announced that anyone who brought their own punters to the party could keep all of the cash, but if they signed up through their iTunes account, Apple would be skimming a tasty 30 per cent off of the top.

Happy days for developers, you might think. They get to use Apple's innovative infrastructure and huge marketing clout to sell their goods and chattels to a captive audience of millions of bright young things with cash to burn.

Online newspapers and magazines rejoiced. Apple could well be the saviour of the publishing industry. Corks popped and journalists went off for the kind of legendary lunches that disappeared in the eighties.

But in a dark corner of the Internet, stirrings were heard.

Music subscription service Rhapsody is the first in what we imagine will be a long line of disgruntled purveyors of digital music queuing up to have a pop at Apple grabbing close to a third of their potential income.

The US outfit, which has 750,000 paying subscribers on multiple platforms, said in a statement: "An Apple-imposed arrangement that requires us to pay 30 per cent 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 per cent monthly fee vs. a typical 2.5 per cent credit card fee."

The problem is, Apple is widely rumoured to be in process of launching its own iTunes music streaming service, and it's not too large a stretch of the imagination to suggest that imposing the levy on apps which will soon be in direct competition with its own is a deliberate attempt to squeeze them out of the market.

Margins in the music distribution world are notoriously thin and many such services are already struggling to turn a profit in a crowded market. And as Apple already utterly dominates downloads of digital media, why would it be prepared to dilute its own earnings by allowing others to set up shop in its own stores?

The short answer to that question is because US lawmakers probably won't be too keen on Apple's heavy-handed tactics when it comes to protecting its own virtual monopoly on digital music.

Rhapsody says it will continue to sign up new subscribers using its own web site, including through the Safari browser on the iPhone and iPad, but will be challenging Apple's policy in court.

"We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development," the statement reads.

And it's not just app developers who are calling Apple's subscription services into question. Anti-trust expert Shubha Ghosh told the Wall Street Journal that he was suspicious about the company's dominance of the market and whether it was exerting "anticompetitive pressure on price".

Every time Apple coughs a lawyer somewhere sits up and listens, and the company is bound to spend the next few years and millions of dollars in legal fees protecting its own position, but at the end of the day it has invested billions of dollars developing the infrastructure that allows it to dominate a market it practically invented.

Although we feel some sympathy for the likes of Rhapsody who will no doubt feel the pinch once Apple moves into the music streaming business, it's a rough old world out there and, if you want to play on the same field as the big boys, you have to expect to get kicked once in a while.