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Radio streaming on the iPhone has, up until now, been typically free (or low-cost) and without subscription. These apps have also been incredibly basic and limited. It’s a bit difficult for truly innovative new music streaming companies to make it big on the iPhone simply because Apple doesn’t make it easy for them to become part of the club.

Grooveshark and Spotify, for example, sit with apps quietly waiting somewhere in Cupertino for someone to approve them for use in the App Store; it is believed Grooveshark won’t be approved due to shady legal issues, though Spotify has at least a better chance with offering a subscription service.

Enter the latest contestant in this particular contest to come out with the best radio streaming possible: Rhapsody, produced by Real Networks. This particular offering to the 80 full-time reviewers on staff at Apple (according to the company’s official response to the FCC in regards to Google Voice’s rejection) will be rather telling for the App Store’s future. If Rhapsody can make it, there’s no reason Spotify can’t. And no reason for any other music streaming service to not make it through either.

That’s the hard part about a situation like this. Apple faces a conundrum — accept Rhapsody and set a precedent for future music streaming apps, or reject the app and not have to worry about appearing inconsistent when it rejects all other similar apps.

As for what Rhapsody will offer when accepted, the app itself will be free with a $14.99 per month subscription charge to access the account via iPhone. This is on top of any Unlimited plan you would already have with Rhapsody, mind you (You can still have the iPhone subscription without signing up for the online service though). It offers access to a library of over 8 million songs, its radio stations, and the ability to create playlists as well as sync your iPhone account with your standard Rhapsody account wirelessly.

According to Gdgt, Rhapsody will not support offline functionality and connectivity until version 2.0 comes out. This means no storing or caching music to play later when a 3G or WiFi network isn’t available, which will make it more difficult to compete with Spotify, which enables offline support already.

We’re not sure if this will be rejected yet, but sadly we must be skeptical. Whenever we hear about an app that’s extraordinary and over the top, it’s almost too good to be true. If Apple continues to reject apps like these that would bring the iPhone up to a higher level, there will ALWAYS be a limit to what the iPhone is capable of doing; there will always be a ceiling. There are so many things that can be done using the iPhone’s platform that haven’t been done yet, but how can innovation reign in a limited world? It may be possible, but it takes a lot longer to accomplish it.

Rhapsody will be available on Android’s platform in the coming months.

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