It has been obvious for awhile now that Apple is killing multiple markets with its murderers’ row of the iPad, iPhone, and iPod touch. At the heart of Apple’s success lies a constant: the App Store.
The App Store offers consumers access to hundreds of thousands of apps, some free and some paid; Apple currently receives 30% of each paid app sale. Free apps are easily accessible and connect the consumer to the creator through its product. Many free apps give iDevice owners the ability to access magazine, music, and newspaper subscriptions offered by other companies.
Recently, Apple decided to stir the pot and demand its standard 30% App Store cut from these subscription models. For example: Rhapsody offers unlimited access to a digital music library for a monthly fee of $10. To reach more potential customers, Rhapsody created a free app for the iPhone. It is free to download this app to your iPhone, and if you have a Rhapsody subscription, you may access Rhapsody’s music library at your leisure. You pay Rhapsody $10 for this privilege and Apple gets zero.
Apple calls “Foul!” and wants a slice of the action. The change they want to make is simple: the cost for you remains $10, but that $10 now goes to Apple, who turns around and gives $7 to Rhapsody. In addition, Apple would control all subscriber information that is used for valuable marketing purposes.
Google comes along and says, “We can do better than that…Publishers, come hither! The grass is greener on this side.” Those who decide to use Android and its associated devices will get to keep 90% of the subscription cost AND receive greater control over subscriber information. Sounds better, right?
If the threat of competition isn’t enough to force change at Apple, maybe the glare of U.S. antitrust enforcers is.