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Last.Fm Founder Criticizes Apple Over Music Subscription Fees
An anonymous reader writes "Apparently not one to mince words, Last.fm founder Richard Jones lambasted Apple for their recently announced App Store subscription rules. 'Apple just ****ed over online music subs for the iPhone,' Jones wrote in IRC earlier this week. Taking things further, Jones angrily theorized that by effectively preventing subscription services like Rhapsody and Spotify from thriving on iTunes, Apple is paving the way for its own music subscription service where it will, surprise surprise, face little to no competition."
Jones argues that music service subscriptions don't operate at margins "anywhere near 30%," and that the dramatic loss in revenue will be tough to survive. Another article suggests that Apple's fee structure will highlight the publishing industry's broken business model. Some analysts expect it to raise antitrust concerns, though the wave of Android tablets hitting the market may stifle that sentiment.
that's what artists say subscription services are doing to the music industry
http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/
Like anyone can even know that
I hate that people are already saying "well don't buy it" or "don't use it." Here is the reality of what happens in the REAL world:
a) Company pulls out of the market
b) Company raises their prices, in some form or another, to cover the cost. Consumer loses. Consumer pays more.
The winner? Ding ding! Answer B. That's what happens. So thanks to Apple, instead of paying, what $3 that Last.fm charges, they'll charge more. It could be $5. Or they could raise it to the competitors like Zune which is $10. I wouldn't bat an eye to pay for $3 for music a month. For $10, I might shop around first and potentially they might lose a sale.
And here is an even bigger problem. That cost will be raised for everyone else too. So you got an Android phone because you don't support Apple being an evil company? Too bad. It's $10/mo for Last.fm no matter what.
And wait, it gets worse! It raises the traditional pricing level for that product. It seems everyone is either in the $3/mo tier, $10. But at least you have a choice. But when Last.fm charges $10 because they can't make it at 3 with Apple's blatantly rip-off policies, now the norm will be $10. Thanks Apple! Now you have no choice--everyone pays $120 per year instead of being able to choose one that's $36 per year.
But alas, I'll get flamed and modded down to hell for this. I really think they enjoy the useful things at reasonable prices being ruined and they like to say "thank you sire, may I have another?"
Actually, the big 4 (Sony BMG, EMI, Warner and Universal who account for something like 99% of the content on the big subscription services) together only make about 5 million songs available. Together they have a back-catalogue of about 200 million songs, most of which you'll never see again in any shape and form because they deem the cost of media transfer and meta-data editing to high in relation to how many they'll sell of each.
Experiments and other stuff
each paycheck you get $1000. you can keep that (ie not put your app on the iDevices)
or instead each paycheck will be $700. but you will get three times as many paychecks.
I was generally with you up until this, because it misses the issue. They aren't taking 30% of the PROFIT. They are taking 30% of the REVENUE.
Each subscriber they take has a cost associated with it. Suppose for each sale that generates you a cheque for 1000 you had expenses of 800, and profit of 200. That much more closely models the situation here.
Apple taking 30% of revenue, means you get a cheque for 700. But your expenses are still 800. So now you are in the hole. Getting 3x as many customers just puts you 3 times deeper into the hole.
If apple was taking 30% of the profit, they could swallow it. But very few markets can really afford a 30% swipe at their REVENUE.
Here's a final comparison:
Apple itself in Q4 had 20B$ in revenue, and $4B in profits. If someone took 30% of Apple's revenue, it would have gone from 4 billion in profits to a 3 BILLION DOLLAR LOSS last quarter. Its shares would be tanking in that sea of red ink.
That's what siphoning 30% off revenue does to a company.