Apple's Subscription Plan Is Actually A Great Deal, Says CEO Of Streaming Music Company

Apple has every right to take a 30% cut of subscriptions sold through the App Store, says the CEO of online music company Wolfgang's Vault, and music services who have a problem with that are pursuing the wrong business model.

Wolfgang's Vault owns the rights to more than 14,000 live concert recordings, including many from big-name rock and jazz artists. The company lets users listen to some of these concerts for free, but hardcore fans can sign up for a VIP level of membership for $48 per year and get benefits like unlimited streaming to their iPhone. The company also owns Daytrotter, which focuses on new music and has its own mobile apps, and sells concert memorabilia.

Other music subscription companies say that the new rules are unfair, and that Apple should charge something like 2.5%, the standard fee for a credit card.

But Wolfgang's Vault CEO Bill Sagan explains, "iTunes is much more than a transaction processor like a credit card company. It's a store -- a massive store. Stores, whether it's Nordstrom or Wal-mart, take 45% and 55% of the share as the revenue stream." Even pure online stores like Groupon takes 50%, he notes.

Plus, Apple does a great job making app downloads easy. "It's probably the easiest commerce I've ever done. The way they have that set up, they do it extraordinarily well."

The reason Spotify and other subscription services have such a problem with the new fees is that they don't own any of the music they're selling to consumers -- they're simply renting the music from record labels and publishers.

Wolfgang's Vault owns its music and is willing to pay a distribution fee to help sell it. "Our business model accommodates a cost for distribution. Apple's price of 30% fits within our business model," Sagan says.

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See Also:

• Rhapsody Slams New Apple Subscription Rules
• Spotify Halfway To U.S. Launch

Apple's Subscription Plan Is Actually A Great Deal, Says CEO Of Streaming Music Company

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Comment on Apple and the Rise of the Subscription Economy by Ed

the argument re developers needing subscript[on services is a valid one and one that I would accept. they need a flow of money to maintain and improve the app. But I see no justification for Apple skimming 30% off the top. that is far too much for the minimal investment Apple has in any individual App. If Apple were selling their software thru, say, Amazon and Amazon took 30% off the top, Apple would scream blue murder and all the fan boys supporting Apple in this controversy would be blasting Amazon.

Comment on Apple and the Rise of the Subscription Economy by Ed

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Netflix Not Affected By Apple's New Subscription Plan (AAPL, NFLX)

Netflix will not be affected by Apple's new subscription billing plan, we are hearing from a source.

Yesterday Apple rolled out a new policy saying that if an app maker offers digital content then it has to give users an option to buy that content in the app.

If the user chooses the in-app payment option, Apple keeps 30% of the sale.

In other words, Netflix would have had to give its users an option to sign up for a Netflix account inside its iOS apps. If the user took that option, Apple would collect 30% of the sale, which is clearly not something Netflix wants.

This is great news for Netflix, but it's only going to cause more confusion for publishers who aren't getting the same kind of favored treatment.

More to come on this story, click here for the latest as we update the post.

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Netflix Not Affected By Apple's New Subscription Plan (AAPL, NFLX)

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Steve Jobs Responds To All The Cry-Baby Publishers About Apple's Subscription Payments (AAPL, AMZN, NWS, NFLX)

Apple just rolled out its sweeping new subscription payment service for the App Store.

App Store users will now be able to pay for all digital content with one click within apps. Publishers will set prices and durations of subscriptions.

So, The Daily, for instance, can offer users a one click option to pay for a week of the newspaper at $0.99, or for a year at $40.

While publishers will have to offer the in-app subscription payment option, they will also be able to offer users the option of buying the exact same subscription on their own website. However, the price for the web subscription must be the same as the price for the in-app subscription.

It appears the new subscription plan won't just affect publishers like The Daily, or the Wall Street Journal, but all app makers that offer digital content, including companies like Netflix, and Amazon. In the release, Apple says the new subscription system will apply to, "magazines, newspapers, video, music, etc."

This is great for consumers who will have an easier time buying digital goods like newspapers and books in their applications, but it's somewhat worrisome for developers and publishers.

If an app user opts for Apple's simple in-app payment system, Apple keeps 30% of the sale. If a user goes through the publisher's website -- a more complicated process -- the publisher will keep 100% of the sale.

If this is applied across the board to companies like Netflix and Amazon, it could be a problem.

Right now, Amazon kicks users to its website where they buy a book. Amazon gets 100% of that sale. If it has to offer users the in-app payment option, then it risks losing 30% of the sale.

That's a hefty premium for Amazon to pay just to sell books on iOS devices. (We're emailing Amazon and Netflix for comment, and will update you if they say anything.)

Beyond Amazon, publishers like Time Inc. probably won't be happy with Apple having so much control over the customer experience. Users control their subscriptions through an iTunes account page making it easy to cancel a subscription whenever they want.

To any publishers, or developers concerned about paying the 30% Apple tax, Steve Jobs has a message -- deal with it, it's not a big deal.

Here's the more detailed, nuanced answer from Jobs in Apple's press release:

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO. “All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. 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.”

Don't Miss: Apple Just Declared War On Amazon Kindle

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Steve Jobs Responds To All The Cry-Baby Publishers About Apple's Subscription Payments (AAPL, AMZN, NWS, NFLX)

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Mobile Music Download Store Gigaboxx Dumps Subscription Charge For Artists And Labels

Gigaboxx, the UK mobile music download platform targeting artists and record companies who want to set up shop to sell direct to fans, has dumped its monthly subscription charge to make the bulk of its B2B service free. This actually makes a lot of sense since the startup gets a kick back for every track sold, so why charge for the razors? Furthermore, Gigaboxx says that it's seen 1,000 new sign-ups since it quietly switched to free last week. As we reported when the service was first outed in April at TechCrunch Europe's GeeknRolla, it has a particular emphasis on live events – hence the mobile component – offering artists a “suite of marketing tools”, including their own store URL, QR codes and a SMS reply service that they can feature in promotional material and share on social networks.

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