On Tuesday, Apple announced new terms for their App Store for content publishers. The terms will affect video sites like Hulu and Netflix, music streaming services like Rhapsody and Rdio, and magazines and newspapers like The New York Times.
There are a few basic pieces to the new App Store terms. If a content-publisher opts-in to Apple’s new terms, they will be required to offer sign up for their service within the app. If a new subscriber signs up for the app from Apple’s App Store, Apple will share in 30% of the revenue. If the user comes to the app from outside the App Store, the content publisher retains 100% of their revenue. The content publisher will also be required to offer sign up for the service outside of the App Store for the same price – or, at least, no less – than the price offered in the App Store.
What is Apples’s reasoning? “Our philosophy is simple,” said Apple’s CEO Steve Jobs in a press release. “We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers.”
But economists and business journalists are already using words like monopoly and antitrust.
One of the first in the music space to speak on Apple’s new terms was Rhapsody’s President, Jon Irwin, who e-mailed a statement to news media outlets that called Apple’s new subscription terms “economically untenable.”
But, as TechCrunch points out in a complete analysis of Apple’s new subscription terms, “It may finally be the answer for getting people to pay for content such as magazines, online.”
And, as always, there really are two sides of the story. Both the content publishers and Apple bring a lot of value to each other. Apple has been doing loads of free marketing for content publishers with their insanely-popular App Store, and have taken many content publishers to places they probably never would have dreamed of going by themselves. But, without the content, Apple’s app store isn’t very sweet at all, is it?