Previously, I opined on how Apple was really fighting for the consumer with their new in-app subscription policy.  I may not have been completely clear on that.  While demanding that content providers offer subscriptions through iTunes/Apple =fighting for the consumer, taking 30% of all subscription revenues = taking care of business.  

There has been a big backlash over this 30% figure.  It's not too foreign of a concept as app developers are no stranger to having 30% taken off the top of all their sales.  This really isn't a question of right or wrong or Apple being the evil big business.  There is nothing ethically or morally wrong about charging 30% for operating in their app store.  The question is whether or not it is a smart business move.  

-Will content publishers all flock to Google and whoever else decides to enter the market (we're waiting for you Palm and Microsoft) and cut off Apple?

-Will this force prices out of the range of acceptability for consumers?

In order for Apple to change its policy it needs to feel threatened enough to react.  This will take big guts and an orchestrated effort to pull off.  Essentially all the big content providers will need to back Android and refuse to distribute via iOS.  In essence, having an iPad would then be similar to buying a TV that cant watch network TV.  It would be a real deal breaker for many.  Would this ever happen?  What's the probability of picking a lemon Starburst out of package of Fave Reds?

Record companies faced a similar scenario when they were very unhappy with Apple demanding $0.99 song downloads through iTunes.  Boldly, the record companies.... stomached the price enforcement.  Or at least enough of them did to keep the iTunes ecosystem as the top dog.  Business models were forced to shift.  Just like how the traditional concepts of album sales were thrown out the window, Apple is laying to rest the notion that publishing companies get free access to customer information to market the daisies out of you, .  Not until Amazon and Walmart arose as legitimate competitors did Apple bend it's pricing policy.

Again we are faced with a similar predicament.  Established media companies feel as though they are being bullied by Apple's pricing policies.  And as long as just enough of them comply with Apple (hello News Corp) then Apple will come away looking smart and savvy.

Publishing companies have no choice but to accept their circumstances.  Not only is growth in traditional subscriptions dying out, but each iPad user is already a convert to the dark (digital) side.  These days non-tech savvy consumers simply need to mosy on over to the App Store to see apps like Flipboard and Pulse atop the most downloaded charts.  A taste of the free and increasingly iPad friendly content is all many will need to stop them from shelling out for paid offerings from "big name" publishers.

With all due respect to publishing companies, I feel the issue of greater concern is what the 30% cut will do to streaming media subscription services, such as Hulu Plus, Netflix, and [blank] music streamer that ultimately arises, that aren't as easily substituted.  If Apple demands their 30% is a $7.99 Netflix unlimited streaming plan even feasible still?  These services have 3 choices: 

1) leave the app store 

2) stomach the price increase

3) pass on the marginal cost to the consumer

Scenario 2 kills profitablitiy, and 1 & 3 have worrying effects on the top line.  Even if Netflix raised the price to $9.99, thats still less revenue in their pocket after Apple's cut chops it down to $6.99.  Are consumers willing to pay more than $10 for a Netflix subscription?

Apple also added a very important and stifling detail: the in-app subscription price must be the same as the regular advertised price.  This is a wonderfully veiled tactic to encourage users to use the in-app method and allow Apple to take their 30%.  If streaming companies want to survive, they're going to have to pass on their 43% cost increase to the consumer.  And if they want to comply to app store rules, they will have to coincidingly raise their traditional subscription prices outside of iOS.  Potentially, Apple just made everything 43% more expensive to consumers.  There are probably ways around this, such as "discount codes" that can be applied outside of iOS.  But the MSRP is the MSRP, and it sounds like any service that stays in the app store will require a higher MSRP to stay alive.

This also forces streaming companies to ask themselves if it makes sense to charge Android users a different price than iOS users.  While Apple can enforce iOS and traditional subscription price uniformity, I can't imagine that they could also regulate prices on other platforms.  Would saving a couple dollars a month per subscription be enough to sway users towards Android and put enough competitive pressure on Apple to lower the 30% rule?  I think ultimately subscriptions will be cheaper on Android than iOS.  As different platforms, Android and iOS really are disparate markets.  Just like prices for goods in Europe are often higher than the US due to the VAT, so will prices for subscriptions in iOS due to the "Apple Tax."  Each market essentially is a level playing field with distinct pressures.  While price uniformity across platforms seems to make the most initial sense, with sufficient competition in Android, I would expect prices to largely mimic iOS save for the extra 20% that consumers have to pay to Apple.

The waters get a lot murkier once we consider that Apple is also in the digital media business with iTunes and the very likely scenario that they finally offer a streaming subscription based iTunes.  Perhaps Apple sees Hulu and Netflix as unncessary middle men.  Why go from content --> Hulu/Netflix --> Apple --> consumer?  Apple already has relationships with content providers--time for some disintermediation.  Now we realize though that the playing field isn't level if Apple is competing on its home court.  In this situation, Apple is engaging in some anti-competitive policies as they clearly don't have to deal with their own 30% and consequently could easily undercut the competition.  I am no legal scholar, and while I can confidantly describe this hypothetical as simultaneously "anti-competitive", acute and cunning I cannot pass judgement on its legality.  Still for what it's worth, it would greatly surprise me to see the Department of Justice/FTC interfere while the "market" at question is so nascent.

Apple is jumping a bit to the crazy side on the hot-crazy scale (see video below) in demanding a 30% share of subcription revenues.  You really need to have watched the video I linked to understand what I mean.  Now we consumers get to decide if their products hot enough to withstand the backlash (if any).  If recent iOS App Store vs. Android Market revenue numbers are any indication, $1.7 billion and $102 million respectively), they definitely are.  Also remember that consumers aren't aware nor could they care less about Apple's 30% or Google's more publisher friendly response.  All that they know is that the iPad recently added one-click subscriptions (sweet!), while true Android tablets are yet to exist.  While Apple was kind enough to allow app-developers until June to institute the new in-app subscriptions, it also allows them to sell tens of millions of iPad2s before publishers/streamers react.  By then, there will likely be too much gravity towards iOS for anyone to scare Apple into slimming down the 30% tax. (Prediction: if it gets lowered, I say 20% is the floor).

Make no mistake about it, the iPad and iOS are truly disruptive technologies.  They're disrupting old media and new media alike.