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RAIN 2/16: On-demand music services bristle under new App Store terms

Posted on: 02/16/2011

AFTER APPLE’S 30% CUT, SERVICES WILL LOSE MONEY ON EVERY NEW SUBSCRIPTION

We portrayed yesterday’s announcement of Apple’s plan to allow app developers to offer subscriptions inside the App Store as a positive for webcasters — one-click bundled access may mean more overall subscribers (RAIN coverage here).

But on-demand music services that depend on subscriptions today say Apple’s new policy puts them in serious trouble. Or, as TechCrunch’s Michael Arrington puts it, “They’ve been keelhauled.”

The problem is that Apple requires any service with an app offering subscriptions on their own site (like Rhapsody) to also offer the same subscription in the App Store at the same price. Except there, Apple gets a 30% cut. Something Rhapsody and others can’t afford, “because they don’t have 30% margins to begin with,” writes Arrington. Labels and publishers take about $8 of the $10 subscription fee. Thus, Apple would be the only company that could profit from a music subscription service on its devices.

“We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development,” responded Rhapsody.

“The labels are going to have to absorb this,” one music service exec told Billboard. “Otherwise nobody is going to be able to have an app. The margins that all of us make are smaller than 30%. We can’t lose money every time somebody signs up.”

Read Billboard here, and TechCrunch here.

SIRIUS XM CHIEF OFFERS MORE DETAILS ABOUT 2.0 SERVICE

In a conference call about Q4 performance, Sirius XM CEO Mel Karmazin spoke more about the satellite radio broadcaster’s coming 2.0 service. It will include an electronic program guide, the ability to pause and replay content and other features. Find past RAIN coverage of Sirius XM 2.0 here.

Karmazin also said that Sirius XM may offer an online customizable music service like Pandora, “if subscribers want it.” Twice.com has more coverage here.

CNET ROUNDS UP BEST WI-FI RADIOS

Let’s face it, writes CNet, “for many people, local AM/FM radio is essentially unlistenable.” Fortunately there are dozens of tabletop radios that stream Internet radio. But which one to pick?

CNet provides a quick run-down of the best options, including the Logitech Squeezebox Touch, Sonos ZonePlayer S5, devices from Grace Digital and even some gadgets we hadn’t heard of before. Check out the whole list here.

DASHBOARD TAPE DECK OFFICIALLY DEAD

As Internet radio continues to establish a foothold in car dashboards, the tape deck has officially left them. The last car to offer tape decks as a factory-installed option, the Lexus SC 430, will not include the device in its 2011 model. Another milestone in dashboard entertainment.

Laments Engadget (here): “The rattling of naked cassettes in the glove box. The crunching of plastic cases in the footwell. That satisfying clunk when a tape got pulled down into the dash. For those who drove in the ’80s and ’90s those are memories of in-car audio, the ubiquitous tape deck, and it’s now dead.”



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