Rhapsody: Apple has gone too far

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney) -- Apple has made content publishers mad as hell, and at least one isn't going to take it anymore.

Online music provider Rhapsody said Wednesday that it will pull its streaming service from iPhones and iPads unless Apple amends the new subscription model it announced Tuesday.

Rhapsody's issue: Apple wants 30% of all sales generated through its platform. And now, publishers can no longer provide links in their apps to let customers buy content outside of the app.

"It's pretty simple math: they're asking us to sell a product for less than it costs to deliver it. Rhapsody is not going to choose to do that," says company president Jon Irwin.

"Before the official announcement we weren't entirely clear about the terms. Well, it's certainly clear now," he added.

For $10 a month, Rhapsody users can download as many songs as they like and listen to them on multiple devices. Apps are available for the Android and BlackBerry platforms in addition to Apple's.

"The whole point has been to let our customers listen to whatever, wherever," Irwin says. "But Apple has created a situation that is economically untenable."

Rhapsody already shells out money to copyright holders, music publishers and artists, Irwin says. The company can't afford to lose a third of its subscription revenue to Apple -- and its competitors can't either.

"Our peers operate under the same cost structure, so we are all in the same boat," Irwin says. "Apple needs to create a model that makes sense, that balances the costs."

Irwin is hoping to pressure Apple by banding together with "market peers" to figure out "legal and business responses" to the subscription announcement.

And if Apple isn't willing to ease up, Rhapsody will pull out of the App Store.

"There are other platforms out there," Irwin says. "That structure would definitely be manageable."

Google (GOOG, Fortune 500) is banking on that attitude. A company blog post Wednesday announced Google One Pass, a service that "lets publishers set their own prices and terms for their digital content." A Google spokeswoman told Fortune the company will take only 10% of the revenue.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,098.45 18.88 0.11%
Nasdaq 4,580.27 22.57 0.50%
S&P 500 2,003.37 6.63 0.33%
Treasuries 2.34 0.01 0.39%
Data as of 11:10pm ET
Company Price Change % Change
Bank of America Corp... 16.09 0.08 0.50%
Apple Inc 102.50 0.25 0.24%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.82 0.96 1.31%
General Electric Co 25.98 -0.03 -0.12%
Data as of 4:04pm ET

Sections

The deal would value Vice at $2.5 billion. The online media company would also create content for the cable network, delivering a wider audience. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

The Coolest Cooler is the most successful Kickstarter campaign in the site's history, raising $13.3 million from over 62,000 backers. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.