Apple modifies iPod licensing program

Apple has done away with its "Made for iPod" accessories licensing program and adopted a flat fee system instead. The Cupertino-based company formerly collected a percentage of revenue from all products that connected to an Apple 17-pin iPod connector, charging 1.5 percent at first but raising the cut up to 10 percent for companies such as Bose as the iPod grew in popularity, according to Smart House Magazine. The new system charges a flat $4-per-unit fee, which will favor manufacturers of high-end iPod accessories and appease Bose, which complained about the higher rates when Apple announced the change last year.

"All Apple partners were told of the decision by Apple to increase license fees for the Made for Apple program," Dominique Water said, head of Bose Asia Pacific operations. "This is a massive license fee which will not sit comfortable with many partners. Bose is not happy as the proposed fee is excessive by any standards."

Altec Lansing also spoke up about the rate changes when Apple announced the news to partners.

"We were told of the new port fee by Apple. It is ridiculous," said an Altec Lansing spokesperson. "It is excessive and will result in many partners re-thinking their relationship with Apple. It will also push up the cost of Apple accessories."

Apple recently notified authorized iPod accessory manufacturers that it is ready to take action against several vendors that are not part of the authorized "Made for Apple" program. Evading license fees from Apple allows these vendors to sell products at prices lower than authorized members.

One such successful iPod accessory manufacturer that is not part of the "Made for Apple" program commented on the licensing setup, according to the report.

"My legal advice is that one does not need to pay a license fee to Apple for a 17-pin connection device that connects into an Apple iPod. All one is paying for is the official endorsement of Apple's 'Made for Apple' program and 10 percent was a bit rich. $4 is acceptable if one is selling a product over $100 however it will not work for the low cost sub $100 accessory manufacturers."

Filed under: iPod