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Rhapsody won't sing Apple's subscription tune

Hit the fight bell, because here we go -- Harry McCracken reports that Rhapsody is the first company to pass on Apple's new subscription rules, saying in a statement that Apple's arrangement is "economically untenable." Typically, they say, a Rhapsody subscription only costs them a 2.5 percent credit card fee, but with Apple asking for 30 percent of any subscription payments accepted through the app, it just wouldn't work for Rhapsody to offer that service. And in what could possibly be seen as a veiled threat, Rhapsody mentions that it will "be collaborating with our market peers in determining an appropriate legal and business response to this latest development." Legal, you say? Interesting.

In reality, one of two things is likely to happen here -- either Rhapsody will change its mind and decide to take the hit from Apple, or it will not be allowed to release the app on the App Store at all, and it will have to look elsewhere for users. Apple's unlikely to back down from the 30 percent deal -- that's the deal it's seen lots of success with in the rest of iTunes, and I'm sure there are plenty of companies happy to offer subscriptions and let the cut go.

The bottom line, whether Rhapsody likes it or not, is that Apple built this platform up, and it's Apple's prerogative to charge what it wants and allow apps or not based on its own guidelines. If we see lots more companies take this tack, Apple might be forced to change, but as long as others buy into the subscription model, Apple's unlikely to back down first.

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