Will Apple Approve Rhapsody’s Music Application?

By Saul Hansell
Rhapsody

On Friday, Apple explained to the government why it blocked the Google Voice application from the iPhone App store. Among other reasons, it cited privacy concerns and potential user confusion.

But the company will soon face another decision about an application that could well be construed to compete with one of its core businesses.

RealNetworks is preparing to submit an application that would allow the iPhone to connect to Real’s Rhapsody music service. Rhapsody, which is part-owned by Viacom’s MTV Networks, allows members who pay $14.99 a month to listen to nearly any song they choose on a computer or on a compatible portable player. Until now, however, the service has not worked on iPods or iPhones.

The new application will let users listen to songs that are streamed over a Wi-Fi network or over a cellular data connection. It offers the ability to select songs by searching for them, play existing playlists created on a computer and make new playlists. If users want to purchase a permanent version of any song, the application links to Apple’s iTunes application, where it can be downloaded.

While this application might drive some sales for Apple, the company might also see it as direct competition to iTunes. After all, if you like streaming on demand, you may not need to buy as much music.

There are no on-demand music service applications currently available for the iPhone. There are a number of video streaming applications that both offer music videos and some television programs that Apple sells on iTunes. And there are many Internet radio applications, such as Pandora, that play songs streamed over the air. While those applications let users pick styles and genres of music, they can’t play individual songs.

Neil Smith, Rhapsody’s vice president of business management, said he expects that Apple will approve the application.

“The app store is likely to be bigger than the music store some day, and not approving things for the app store is giving people a reason to say, ‘I’m not going to buy an iPhone,’” he said.

Mr. Smith said that while Real did have conversations in advance about the application with Apple officials, it received no indication whether it would be approved.

“They said, ‘Submit it and see what happens,’” he said.

Real and Apple have had a contentious history. In 2004, Real introduced technology meant to circumvent Apple’s proprietary copy protection systems so that Real could sell protected music that could be played on an iPod. Apple said Real adopted “the tactics and ethics of a hacker to break into the iPod,” and it quickly modified its software to thwart Real’s service.

While Rhapsody competes with iTunes, the two companies also do business together. Real’s game software division has many iPhone applications for sale in the iTunes store. But Apple has not let close ties with other companies prevent it from rejecting iPhone applications. It turned down the Google Voice application and a Google Maps application while Eric Schmidt, Google’s chief executive, was on its board of directors. (He subsequently resigned.)

Apple’s public relations department has not responded to several e-mails asking for comment on the Rhapsody application.

Comments are no longer being accepted.

Phil Leigh August 24, 2009 · 9:49 am

Saul:

This is a profoundly interesting question, for the reasons you note as well as a couple of others.

First, if they *did* permit the Rhapsody application then the record labels would have less of an argument that Apple is undermining their business owing to the fact that the labels have generally preferred a subscription model with recurring revenues.

Second, it would likely lead Napster to submit an application for its subscription service that is only $5 per month *including* five MP3 downloads.

Ken B. August 24, 2009 · 10:48 am

Apple should create an App Store for the Mac and make it the exclusive sales channel for Mac software. They could take a 30% cut of all Photoshop sales or just reject Photoshop because it competes with iPhoto and Aperture, thus “confusing” users. Clearly Microsoft Office for the Mac would have to be blocked because it duplicates functions in iWork.

Let’s get Apple into court as quickly as possible so Steve Jobs can deliver his version of Bill Gates’ infamous deposition. It’ll probably be prettier and more elegant, but not that different and far more expensive.

scot August 24, 2009 · 10:55 am

If our experience can be a guide, don’t expect to see this application any time soon. Although Apple claims that 95% of submissions are reviewed within a couple of weeks, our music streaming app AirBand has been in limbo for almost 3 months now. Combined with mp3tunes.com, you can upload your own music and listen from your desktop or iphone. The app, if it ever appears in the iTunes store will be free and it’s even opensource:
//code.google.com/p/airband/
Apple either sits on these apps or they get stuck in review, possibly with layers of attorneys throwing sand in the gears. Hopefully Real, and their programmers, will get a little faster response.

steve August 24, 2009 · 11:18 am

I think there are 2 parts to the approval calculus. The first is the competiton angle, and you cover it well. The second involves the mechanics of pricing in the app store.

Apple is going to want its 30%, not just of the app price but of the monthly subscription too. Per Apple rules, Rhapsody cannot be free, so will it be $0.99? Will it be $100 and come with a year free? Will it use in app purchases?

I realize that these question are subordinate to “will apple ever allow them in”; however, these are details which could end up deciding the question.

tricky August 24, 2009 · 1:01 pm

Rotten Apple

Apple is a little bit rotten ( to it’s competitors). Where is the Spotify app?

Larry August 24, 2009 · 5:44 pm

How many stories is Apple going to tell? This article says that Apple REJECTED GV for ‘privacy’ reasons. However, this same author (Saul Hansell) had an article in last week’s paper that said Apple ‘hadn’t decided’ yet about GV, and I believe it appeared AFTER the Friday mentioned above.

I doubt Apple is going to approve Real’s app. It will hang in limbo for months at best.

Steve August 24, 2009 · 9:18 pm

I’ve been a Rhapsody subscriber virtually since they began offering the service, but I use it almost NEVER these days. And that would be because….they don’t have an iPhone app.

Therefore I’m hoping Apple approves this, but frankly Real needs Apple SO much more than vice-versa. Perhaps it’s true…they’ll ultimately approve this for appearances alone.

Apple shouldn’t really sweat this one, though. That’s because even after all these years, Rhapsody has never been able to break into the mainstream. Even with approval I think they’ll always be a niche service, but oh man, this will indeed make the iPhone even that much more fun. Fingers crossed.

Ted Todorov August 25, 2009 · 4:04 am

@Phil Leigh (#1) “…the labels have generally preferred a subscription model with recurring revenues.”

And consumers have shown again and again that they have no interest in subscriptions. Those who do are a tiny minority compared to those who love Apple’s a la carte buy to own approach. The sooner the music industry stops thinking about what IT wants and starts looking at what CONSUMERS want, the sooner things will improve for it. The same can be said for tech companies like Real which are more interested in catering to their vendors then their customers.

Enough, give up on music subscriptions already — its just not going to happen, ever.