FMQB: Could Apple’s Subscription Policies Hurt Pandora?

February 22, 2011
A number of online services have reportedly been upset lately that Apple‘s new digital subscription plan will take a 30 percent bite out of payments made via its App Store. According to today’s New York Post, Apple’s new policies could seriously affect Pandora‘s future, as the popular streaming service receives a large number of its paid subscriptions via the Apple App Store.

In fact, one source tells the Post that the payments to Apple could even “delay the Pandora IPO,” which was announced earlier this month. The source added, “Apple has crossed the line. They are either going to have to walk this back, or face enforcement action or a lawsuit.”

Yesterday, the Wall Street Journal reported that the Department of Justice and the FTC have begun a preliminary look into Apple’s new policies, which could affect other digital music services such as Spotify, Rhapsody and Last.fm. The Post notes that these services rely heavily on subscriptions and after a 30 percent cut to Apple, there would be little cash left after royalty and rights payments. Pandora is less reliant on subscriptions as its competitors, but the 30 percent cut to Apple would still hurt.

“Apple, in this instance, and in a few other instances, is being more anti-competitive than Microsoft ever was,” Ted Cohen, managing partner of digital media consulting firm TAG Strategic told the Post.

Another source suggested Apple is trying to hurt streaming music services before launching their own, telling the Post, “Removing Spotify as a competitive threat is certainly convenient for Apple. They want control of everybody in the Apple ecosystem. If Rhapsody or Spotify goes out of business, well, that’s just roadkill.”

Courtesy FMQB: http://www.fmqb.com/article.asp?id=2116424

Posted by Ted • Tuesday, February 22, 2011 .