RIP Pandora, Kindle on the iPhone (and many other content services)

Apple today announced that they now require subscription services to fork over 30% of revenue to them if they want to run on the iPhone.

This, I fear, for several types of content, is a bridge too far. The problem is pretty basic. Many types of content businesses dont have 30% of margin to play with. In books, Amazon doesn’t have 30% margins to give to Apple and remain in business. In music, services like Pandora probably don’t even have 5% of margin to play with. Given that Pandora has just released financials in preparation for going public, someone with a bit more time on their hands could go through their recent filing and figure out what the specific numbers are.

But Apple is not stupid, so they have certainly run the numbers. And so it seems that they have decided that they now have a platform that is so popular, that the services that can’t afford to pay them 30% are not needed anymore. In fact, perhaps it might be more accurate to say, these services aren’t *wanted* any more. Clearly Apple has iBooks, which they want to be the bookseller on the iPhone. And obviously, with the Lala purchase last year, and their primary position in the music ecosystem, Apple feels comfortable being the only music service on the platform.

On the other hand, services like News Corp.’s The Daily, and other newspapers and magazines *do* have margin to play with. And if Apple can help them to build their businesses (or save their businesses), the 30% cut might be well worth it.

The biggest issue I see here is Apple’s total disregard for the consumers here, who have invested in the iOS platform *because* they believed they could use a broad array of content services like Amazon Kindle, Pandora, Slacker, etc. For those customers that have investments in non apple content, what are they to do? Would they have bought an iPhone or an iPad if they knew that Apple would attempt to become the single source for important categories of content. I know in my case there is no way I would have bought an iPhone if I couldn’t use Kindle or Slacker.

Yes, Apple is trying to do right by its investors in its stock. But once again, Apple is showing total disregard for investors in its products.

Post Author: Ruby H. Rosenbaum

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