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Is Apple Stifling Competition?

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.

The logo reminds me of Tron and the associated domineering mindset.

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.

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  • John, do you not see the contradiction within your own post? If Google came out with a competing plan only one day after Apples announcement; and if Google is taking 20% less than Apple, how can Apple’s move be anticompetitive?

    How about we let Apple run Apple’s store and we let Google run Google’s store and may the best business model (or both?) win.

    • John McMahon (VastManatee)

      I am unsure of the exact timeline of Apple’s announcement vs. Google’s.

      I agree; Google’s plan may draw more publishers to its side, and the situation will fix itself. Apple has also included other caveats (from the Wall Street Journal article http://online.wsj.com/article/SB10001424052748704409004576146613997208194.html):

      “A magazine that wants to publish its content on an iPad cannot include a link in an iPad app that would direct readers to buy subscriptions through the magazine’s website. If publishers sell digital subscriptions outside the Apple orbit they must allow Apple to offer the subscriptions at the same price or less.”

  • I can see where this is going….. Apple want 30%, Google want 10% …
    Here’s what it will force the content providers to do …
    If you want to consume content on an iSomething and buy it through iTunes or an Apple App then that will be a 30% premium over the normal web subscription.
    If you want to consume content on an Android device and buy it through Android Market or an Android App then that will be a 10% premium over the normal web subscription.
    Everyone else (PCs, Netbooks, Laptops, Kindle etc.) pays normal price.
    At the time of subscription you indicate which devices you use (Apple, Android, Other) and will be charged accordingly. A flag in the content will then prevent it being visible on the devices you haven’t paid for.
    For web based content a check will be made to see which type of device you are using to access the content and the ones you haven’t paid for will be blocked.
    Welcome to the new business model for content. Wonder how long the average Apple owner will suck up paying 30% extra for their content?