The controversy is over Apple’s requirement that any subscription service must use Apple’s subscription feature in addition to their own web alternatives. Any in-app purchases would earn Apple 30 percent. So while Amazon and Pandora Radio can still sell products and subscriptions on their website, where they keep 100 percent, they must offer iOS users the same options in the app. Because of the convenience of the in-app purchase, it is likely many users will use Apple’s offerings. There is significant ambiguity in the rules: Netflix, for example, has already received a special exception, likely because it adds so much value to Apple products.
Music subscriptions are rightfully angry about this. The iPhone and other portable devices have made music subscription services useful. Record labels squeeze any business built on their music for every possible penny. Pandora Radio reports 45 percent of its revenue went to SoundExchange in 9 months of 2010, and that doesn’t count the licensing dispute its still having with the ASCAP. Take 30 percent off the top for Apple and music subscription doesn’t look very viable.
But this is part of the problem with relying on others for your business. Apple loves to control its business, and it’s within its rights to (Claims of antitrust on Apple are completely unfounded. Apple does not have a monopoly. It has significant competition in all areas of its business.). But newspaper, magazine, and music publishers have all been looking to iTunes or the iPad to save them or fix their problems (such as people paying for content). This is a poor way to grow a business. If Apple decides to alter course or Google changes its search algorithm, it could hurt or destroy your business.
Newspapers and magazines eager to charge users for content have linked their fates to the iPad. The Daily, while impressive solely for its exclusivity to the iPad, does nothing that couldn’t have been done in a web browser. As a web app, the Daily would have sacrificed some hype and sleekness compared to an iPad app. But it also could have had full control over its fate.
This is not to say building iOS apps are bad for business. Just like you never want only one revenue stream, you never want your business beholden to just one company, whether it be Google, Apple, Microsoft, or another. The web opens up these options and the more inventive and innovates your business is, the more control and freedom you will have.