MOG Mulls Higher Prices and Other Options as Apple's Subscription Rules Loom

By  |  Sunday, February 27, 2011 at 1:11 pm

With Apple declaring that subscription-based iOS apps must offer in-app sign-ups and hand over 30 percent of the subscription revenue, streaming music service MOG is considering every option — even a price hike.

MOG costs $10 per month for unlimited mobile access to its on-demand streaming music library, the same price as competitors Rdio, Napster and Rhapsody. After the music labels and publishers get their share, and after MOG pays other fees for things like bandwidth, hosting and reporting of listening data, the company will lose money on every in-app subscription if Apple takes a 30 percent cut.

“We don’t understand why Apple should get more from our business than we get,” MOG’s founder and chief executive David Hyman said in an interview.

MOG’s dilemma is similar to that of all subscription-based music services doing business in the iOS App Store. After Apple announced its subscription policy in mid-February, Rhapsody President John Irwin said the arrangement is “economically untenable.” He added that “we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development.”

Hyman didn’t mention legal action to me, but he said higher prices are “certainly an option.” MOG may also try to convince record labels to pay a portion of Apple’s cut, but Hyman wouldn’t comment on whether those negotiations are happening now. When I asked if MOG would consider an exodus from iOS, Hyman said “I don’t know the answer.” But to illustrate how MOG doesn’t rely on iOS, he listed all the other platforms on which MOG is available, including Android phones and Roku set-top boxes. The company recently struck a deal with Verizon Wireless to get pre-loaded on Android handsets with optional carrier billing.

For now, Hyman is avoiding any decisions on iOS until he’s clear on how Apple’s rules apply. A supposed e-mail from Steve Jobs to an iOS developer said Apple created the in-app subscription policy for publishers, not software-as-a-service. Hyman’s not sure under which category MOG would fall.

“They cast a wide net and some people get caught,” Hyman said. “I think that’s why you’re starting to see revised statements from them.”

Apple has reportedly given publishers until June 30 to implement in-app subscriptions, or else they’ll be booted from the App Store. As Harry said, the next four months are going to get really interesting.


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7 Comments For This Post

  1. morphoyle Says:

    What is there to mull over? Just pull your iOS app and put it up on Android. If enough publishers do it, Apple will have to change their stance or lose out on money, and have to explain why to the shareholders.

  2. David Says:

    Sure. When people complained about the 30% for the app store and look at how that worked out.

  3. @ecr80 Says:

    I agree with morphoyle, if all the apps i use ( i have like three subscription apps) jump ship. i'm moving with them, and i love my iphone but services are integral to a platform.

  4. Kevin Says:

    “We don’t understand why Apple should get more from our business than we get.”

    Because you can't build your own platform and devices?!/counternotions/status/42089

  5. @virtualvip Says:

    The answer is "because they can". But his whine is incredibly disingenuous; when he raises his prices Apple will STILL get more than he does.

    Jeff Yablon
    President & CEO
    Answer Guy and Virtual VIP Computer Support, Business Change Coaching and SEO Consulting/Search Engine Optimization Services

  6. David Chartier Says:

    There is language in Apple's documentation that suggests streaming content services will not fall under the subscription rules. We're trying to get Apple to clarify this language and these rules to get more definitive answers.

  7. Arnum Says:

    Hehe, I love the comments in this blog just as much as the articles.

    Personally I don't see any problems here. Stick with Apple, maybe raise your prices, or flip to Android. Make a business decision , it shouldn't be that hard.