New Apple App Subscription Model under Investigation by Government

Feb 18 2011, 12:55am CST | by Luigi Lugmayr

Apple launched this week their digital content subscription model for iPad and iPhone apps. The proposed business model raised a lot of controversy. Apple keeps 30% of the subscription fees and Apple also requires that apps cannot link to the content outside of the app. Additionally if the publisher sells digital content outside of the Apple eco-system, they need to offer it for the same price or less in the Apple universe.

The Wall Street Journal reports that U.S. Antitrust enforcers are already looking at the Apple subscription offering. The EThe issues that could trigger regulators to ask for change are the restrictions of offering outside links and selling content at any price outside the iTunes eco-system. What is not going to be an regulatory issue is the 30% cut Apple takes. Google takes 10% in Google One Pass. It is a business decision how high the cut is unless it is really excessive. The music streaming apps like Rhapsody have a really big issue with the 30% as their content cost is really high. For Apple that is a nice side effect of the subscription mode that music services go away and only iTunes remains.

I am not a lawyer, but my take is that nothing will come out of this investigation. If it would than the whole iTunes eco-system would be questionable. I only see Apple change their model if the content offering suffers and publishers stay away from iTunes.

Meanwhile the first iPad magazines are avaiable for subscription including Popular Science and Elle.

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Luigi Lugmayr
Luigi is the founding chief Editor of I4U News and brings over 15 years experience in the technology field to the ever evolving and exciting world of gadgets. He started I4U News back in 2000 and evolved it into vibrant technology magazine.
Luigi can be contacted directly at ml@i4u.com. Luigi posts regularly on LuigiMe.com about his experience running I4U.