Rhapsody CEO Blasts Apple: New App Store Terms “Economically Untenable”
After Apple announced new 30% commission rates that, as Kyle Bylin wrote, could kill subscription music, I wondered who would risk Apple's legendary rath and speak up. Yesterday, John Erwin, the President of Rhapsody, America's biggest subscription music service with 750,000 subscribers, weighed in bravely calling Apple's new app store terms "economically untenable" and hinting at future legal action. Here's the full text of President John Erwin's statement:
"Rhapsody is the leading digital music subscription service in the U.S.,with 750,000 subscribers. Music fans can access the service using free apps from any Internet-connected device, be it on an Android, Sonos, Tivo, BlackBerry, iOS or personal computer. Today, Rhapsody subscriptions are available for purchase exclusively via Rhapsody.com.
Rhapsody offers a content-based subscription service that makes millions of tracks available to fans pursuant to longstanding partnerships with thousands of rights holders, all of which then distribute revenues to artists and other creators.
Our philosophy is simple too–an Apple-imposed arrangement that requires us to pay 30 percent 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 percent monthly fee vs. a typical 2.5 percent credit card fee.
We will continue to allow consumers to sign up at www.rhapsody.com from a smartphone or any other Internet access point, including the Safari browser on the iPhone and iPad. In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."