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More tablet wars for Apple and Google

Convention attendees use Samsung Galaxy Tab Android tablets at the 2011 International Consumer Electronics Show at the Las Vegas Convention Center.

TEXT OF STORY

Kai Ryssdal: Apple announced this week it's going to let media companies sell subscriptions for the iPad. Long awaited is a fair characterization for that development.

But Marketplace's Steve Henn reports a lot of publishers aren't happy about it at all.


Steve Henn: If you buy an app like Angry Birds for your iPhone or iPad, Apple takes a 30 percent cut of the price right off the top. But buying on iTunes is incredibly easy. So video game publishers embraced the system and many made fortunes.

Now Apple wants to apply similar rules to subscriptions for magazines, streaming video services like Netflix and music offerings like Rhapsody. Even book purchases made through Amazon's Kindle app will be affected.

James McQuivey is at Forrester Research.

James McQuivey: From the consumer's perspective, this makes so much sense. 'I am already here in the app -- you want me to read this new book? Why not do that just by clicking on this button?'

Thing is, when you buy anything through an iTunes app, Apple takes 30 percent. So companies like Amazon and Rhapsody that were already selling subscriptions through their apps and keeping all the money are furious. Starting in June, if they want to have an app, they'll have to give Apple's its slice.

Shubha Ghosh, a law professor at University of Wisconsin, says Apple maybe violating anti-trust laws.

Shubna Ghosh: So it's tying access to the platform to these terms. It's saying take it or leave it essentially.

And Apple dominates the tablet market. But analysts like McQuivey say it may have just made things easier for its fiercest competitor -- Google Android. Google announced its own subscription plan today, telling publishers:

McQuivey: We are to give you more flexible terms than Apple will and all we are going to ask is 10 percent, which positively seems peachy at this point.

Getting publishers to turn their backs on Apple completely may be impossible. The real question is whether Google can create enough competition to force Apple to back down.

In Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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