David Hyman, founder and chief executive of subscription-based streaming radio provider Mog, isn't a fan of Apple's new subscription policy.
Last week Apple said content publishers are allowed to have a subscription option available in the App Store. Apple said customers will be able to set their own price and length of subscription and have the entire thing hosted on the App Store. In return, Apple CEO Steve Jobs said statement the company would get a 30 percent share of new subscriber revenues.
On a moral level, it irks me, Hyman said. Our margins are less than what they are asking for. When you have spent your life building something, it's a hard pill to swallow to say that they should get a bigger piece of our business than we should get.
Back in 2005, Hyman created Mog after being the CEO of Gracenote. For a subscription rate of $9.99, Mog offers a library of 10 million songs and a million albums through several connected, mobile and desktop platforms.
He said the new policy wouldn't change Mog's business model or even have much financial impact on the company, as most Mog subscribers wouldn't find the service through the App Store. However, it still bothers him.
There are really no positives, Hyman said. The only positive is it's caused Google to come with their own version.
Google rolled out One Pass last week, not long after Apple had made their announcement. It is essentially the same as Apple's policy, with one major difference: instead of the 30 percent cut, Google is only asking for a 10 percent share.
Ten percent is doable, we do 10 percent with a lot of distribution partners, Hyman said.
Like other music subscription providers, Hyman was unsure what to make of Jobs' confusing, short email regarding software-as-a-service companies. In response to a developer email about companies that sell software as a service and the impact the subscription rate might have on them, Jobs said, We created subscriptions for publishing apps, not SaaS apps.
Hyman says he's not sure if music is considered software or publishing. It's all very gray, he says.
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