MacWorld has an interesting analysis about the new subscription pricing for iTunes.  Overall, in a nutshell, most competitors are charging between 40-60% plus data transfer charges for their subscription plans…

Here take a look.  Analysis: How Apple’s new subscriptions stack up to the competition

But, I was very disappointed about one of the comments to the article:

Think you have missed an important point about this model.

Where Apple or others are finding the customer through their store then the premium rate is accepted as they are doing some of the go to market work. However, where they are not doing the go to market work, why should they command any moe than a credit card company?

This is disappointing looks like they are being greedy.

Apple indeed has costs associated with services, after all the Cult of Mac estimated that iTunes would cost over $225,000,000,000 ($2.25 Billion) to operating by the end of 2011.

The issue here is are we referring to the iBooks?  Or a software subscription package, or something else?

Here are some of the costs that might apply:

• Most credit card transaction processors charge a per transaction fee of $0.20 – $0.30.  This is per transaction.
• The “discount rate” for an internet transaction is 2.04% – 2.27%.  So Apple is losing around 2+% percent of the transaction just due to the credit card transaction.
• Bandwidth, I’ll assume it is roughly $0.10 per Gb, based off an estimate from 2008.
• Licensing Fees, certain products (eg. ebooks, films, music, music videos, Television shows, Movies, Movie Rentals, etc)
• Bandwidth cost of this promotional content (eg. Ebook sample chapters, TV previews, Movie Previews, Music Previews, etc)
• Operating costs of the Server Farm  – Unknown, but distributed throughout iTunes Store operating costs
• Operating Costs of the CDN  – Unknown, but distributed throughout iTunes Store operating costs
• Advertising, both Television, and website…  Keep in mind any application, e-book, etc, that has been seen on TV has had a large spike in demand..  Consider this commission for lead generation, or an affiliate program.
• Cost of Labor to review submissions to the iTunes/App/eBook/etc store(s).

These fees and rates are pure estimates, and I have no information on what Apple is actually charged.  I am sure there lawyers can negotiate a better deal than I could…

Something that no one seems to have considered is that the company will be making 100% profit, of their 70%.  Apple absorbs all the transport fees, processing fees, bandwidth cost, and so forth.  Amazon, and Barnes & Noble charge bandwidth charges on the data transfers to the Application publishers, and transaction fees, along with comparable percentages…

Is this too much of a cut for Apple?  I really don’t believe so, Apple is assuming a large portion of the risk for the service, the publisher is getting 100% profit.  Yes, I think that maybe a sliding scale based on subscription cost might have been easier to accept, but pricing is Apple’s right to set.

Do you disagree?  Do you agree?  Please feel free to comment…

Updated on 2/20/2011, as Inquisitr.com has stated:

Donald Melanson at Engadget says “Apple’s new subscription policy has already drawn plenty of criticism — not to mention the eye of the FTC and DOJ” then another Engadget writer Laura June stated “So, what does that mean? Well, these kinds of pre-investigations are pretty common, so it could mean nothing at all. Or, it could lead to a more formal investigation into if the policy violates antitrust laws.” The truth of the matter is, Apple is in NO VIOLATION of any U.S. laws, they provide their own platform in which developers agree to follow Apple’s own Terms Of Service (TOS) when publishing apps. If publishers have a problem with the company’s software they can wait for a new iOS to arrive with even more stringent guidelines that exclude their practices, at which point they will be forced to leave the iOS platform behind, program their apps to meet requirements or move onto a new platform such as Google Android.