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Apple Accuses Spotify of 'Resorting to Rumors and Half-Truths', Sets Record Straight on App Rejection
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Here's the big question you have to ask Spotify:
Why did you even allow in-App subscriptions in the first place? Why didn't you force ALL subscriptions to be done via your website instead?
We know the answer to that: Because a lot of people will purchase something if the process to do so is simple and quick. It's the reason Amazon's "1-click to buy" is so popular. It's the reason people buy something in the store on a credit card when they don't have enough in their bank account because they want it now and will pay later.
There is obviously a certain number of people who would open the Spotify App, and upon finding out they have to go sign up somewhere else and enter their credit card information on yet ANOTHER website, would not bother to continue using the App (this goes for new customers interested in trying Spotify out). Being able to simply "subscribe" in the App without any extra effort will cause a certain number of people to change their minds and buy.
Whiny Spotify wants the ease of purchasing in-App to grab all those "impulse buys" that could turn into long term users AND they want the full price of the subscription to go to them.
Why did you even allow in-App subscriptions in the first place? Why didn't you force ALL subscriptions to be done via your website instead?
We know the answer to that: Because a lot of people will purchase something if the process to do so is simple and quick. It's the reason Amazon's "1-click to buy" is so popular. It's the reason people buy something in the store on a credit card when they don't have enough in their bank account because they want it now and will pay later.
There is obviously a certain number of people who would open the Spotify App, and upon finding out they have to go sign up somewhere else and enter their credit card information on yet ANOTHER website, would not bother to continue using the App (this goes for new customers interested in trying Spotify out). Being able to simply "subscribe" in the App without any extra effort will cause a certain number of people to change their minds and buy.
Whiny Spotify wants the ease of purchasing in-App to grab all those "impulse buys" that could turn into long term users AND they want the full price of the subscription to go to them.
I don't pray at the altar hoping for Spotify's bankruptcy, but I don't see Spotify being around in the long term, and it wouldn't be because of Apple. Spotify's business model just never seemed financially viable in the first place. At the end of the day, the simple truth is that what I hope or think really has zero impact on how they go about conducting their daily businesses.
You're right that the terms are applied to everyone, but this is different because music service is the first service that Apple is selling on a platform that hey own.
Both Apple music and Spotify are pretty much the same so both companies should be able to charge the same to be competitive. But since Apple is charging Spotify an extra 30%, Spotify is losing out both on monthly charges and customers (if spotify decides to pass the 30% onto its customers). This to me is anti competitive. Apple will always have the upper hand.
Apple definitely deserves a cut without a doubt. I think the solution is to modify the terms for those products in the app store that Apple decides to compete against to level playing ground.
Exactly. They're losing money on every free ad supported subscriber. And they're not converting enough of them into paid subscribers (where they make money).
Spotify will need to change something. Most likely, they'll have to remove features from the free tier to make it less desirable for people to keep using it, in the hopes they'll upgrade. Remove too much, though, and you risk driving customers away. Spotify is in a terrible position in regards to its ratio of free vs paid, and how to convert them. And they're whining about having to pay Apple when their real problem is their subscriber ratio.
Love it. Take it to them Bruce. Mr. Gutierrez had better ask for a substantial retainer increase. It's about time Apple started punching back at this s***. Don't like the rules, freaking go away. 
This. Spotify is in that painful position that many Internet-based companies get to when they start out by trying to get as many subscribers as possible by having their service seem free, and then try to figure out later how to make enough profit to make a workable business out of it. I don't envy the spot they're in. Lots of other companies reached the same point and died off. It's hard to get people to pay for something once you've set the expectation that it is free, or nearly so (recall all the folks who were outraged when "suddenly" smartphones cost hundreds of dollars when they'd been used to getting phones "for free" from their cellphone carrier). I don't harbor ill will towards Spotify, though I do think they're trying to make their problem (see above) be Apple's problem. And I kind of like that Apple's model is, "we're going to charge you a whole pile of cash upfront, but then, in exchange, we'll build you the best widget we know how." Don't have to worry much about them going out of business.
So iPhone owners are an Apple product that Spotify should pay for the privilege of selling stuff to.
Of course you can't use your own payment method. That defeats the purpose of a marketplace. It's like shopping on Amazon or eBay. Amazon and eBay both take cuts for purchases in their marketplaces because they build the marketplace, bring buyers and process payments.
I feel for Spotify, but Apple did hit the nail on the head here. The App Store percentages have been in place long before Apple started competing with Spotify in streaming. If Spotify doesn't like the percentages, and can't make them work for their margins without increasing prices, they're able to pull their app from the store.
The problem is, they know they don't have the leverage to do that kind of thing, subscriptions would take a hit. I expect a fair portion of their customers are more loyal to their iPhone than to the music service, so if Spotify went away, many users may just flock on over to Apple Music instead of changing phones.
The reality is we've had a race to the bottom on the value of music content, and the margins are slim enough to where Apple's percentage cut really makes things tough for competition. Either you take a bath on each account (Good luck staying afloat), you pass along the markup (which means you can't compete price-wise), or you try to circumvent in-app purchases (which keeps your app from being approved, which we see here).
On one hand, I'd like to see them drop the baseline down to 15% to Apple, 85% to the developers, but on the other, in 2 more years you'll have companies with slimmer margins complaining about even giving up 15%. There will be complaints no matter the percentage used as long as someone else is taking a piece of the pie.
The root problem is Spotify's margins. Let's say Apple did give them a exemption and did 15% across the board for their subscribers. What happens when the labels go and stick it to Spotify, raising their rates again, and then Spotify can't afford Apple's 15% and we're back to square one with the complaining?
Ultimately, Apple's platform, Apple's rules. Don't like it, don't develop for it, make your own phone and app store. Go to Android and enjoy your 15% across the board. If you need Apple for your business model, then don't complain about the terms that you're willingly engaging in.
As an aside -- as a developer, I would like to see Apple adopt the 15% baseline like Google did. After a year is better than nothing of course, and I play by Apple's rules because iOS users buy at a better rate than on Android, and many of my company's clientele use iPhones, so it's where we need to be. I'm not all Pro-Apple in this, but I do think Spotify is being a bit disingenuous about the situation.
The problem is, they know they don't have the leverage to do that kind of thing, subscriptions would take a hit. I expect a fair portion of their customers are more loyal to their iPhone than to the music service, so if Spotify went away, many users may just flock on over to Apple Music instead of changing phones.
The reality is we've had a race to the bottom on the value of music content, and the margins are slim enough to where Apple's percentage cut really makes things tough for competition. Either you take a bath on each account (Good luck staying afloat), you pass along the markup (which means you can't compete price-wise), or you try to circumvent in-app purchases (which keeps your app from being approved, which we see here).
On one hand, I'd like to see them drop the baseline down to 15% to Apple, 85% to the developers, but on the other, in 2 more years you'll have companies with slimmer margins complaining about even giving up 15%. There will be complaints no matter the percentage used as long as someone else is taking a piece of the pie.
The root problem is Spotify's margins. Let's say Apple did give them a exemption and did 15% across the board for their subscribers. What happens when the labels go and stick it to Spotify, raising their rates again, and then Spotify can't afford Apple's 15% and we're back to square one with the complaining?
Ultimately, Apple's platform, Apple's rules. Don't like it, don't develop for it, make your own phone and app store. Go to Android and enjoy your 15% across the board. If you need Apple for your business model, then don't complain about the terms that you're willingly engaging in.
As an aside -- as a developer, I would like to see Apple adopt the 15% baseline like Google did. After a year is better than nothing of course, and I play by Apple's rules because iOS users buy at a better rate than on Android, and many of my company's clientele use iPhones, so it's where we need to be. I'm not all Pro-Apple in this, but I do think Spotify is being a bit disingenuous about the situation.
Apple isn't stopping Spotify users from subscribing over the Internet on their own initiative; what they are disallowing is the ability for Spotify to deliberately circumvent the subscription process in the app itself. Clearly Spotify isn't confident enough that users of the application can be bothered to do because those users can continue to use the free tier willy-nilly.
Every other app developer follows those rules; a free game is played until the user wants more content. The developer is free to charge for more content (IAP) but pays a commission to Apple for distribution through the App Store. Apple doesn't stop the user from obtaining more content over the web should the developer choose to do so; they simply require that distribution through the App Store include a sales commission and that the developer not openly try to circumvent that.
Why is that so hard to understand?
Every other app developer follows those rules; a free game is played until the user wants more content. The developer is free to charge for more content (IAP) but pays a commission to Apple for distribution through the App Store. Apple doesn't stop the user from obtaining more content over the web should the developer choose to do so; they simply require that distribution through the App Store include a sales commission and that the developer not openly try to circumvent that.
Why is that so hard to understand?
i dont think thats an acceptable answer from a company that has 90%+ profits in the mobile market
Walmart comparison is close but not quite right. The best comparison would be a country comparison. A gov chargers everybody equally a VAT Value Added Tax of 30%. (That's App Store). If you buy some service in tax heaven thru Internet and pay no tax that's ok and gov lets you do it, but you cannot go to a "brick and mortar" shop and the seller tells you if you pay me cash it costs 12.99 but here is our offshore website please pay there 9.99 and I will give you the goods here. That's tax avoidance and normally would be punished with fine or inprisonment. But Apple gov is great and tells you in advance if changes you want to do comply with the law.
Does that make sense?
You want to do bussiness in this country(App Store)- pay your taxes. If you don't like it then go and do biznes in another country with no taxes.
But you won't because in this country a customers are the best and have money.
Apple Music in this case is a gov service and as such non-taxable.
To make a more literal example: you have private hospital and gov hospital. You have to pay tax and gov doesn't. Service is similar and cost are similar but a custumer have a choice. But you want to screw gov and ask custumers you pay bill to your offshore account.
Does that make sense?
You want to do bussiness in this country(App Store)- pay your taxes. If you don't like it then go and do biznes in another country with no taxes.
But you won't because in this country a customers are the best and have money.
Apple Music in this case is a gov service and as such non-taxable.
To make a more literal example: you have private hospital and gov hospital. You have to pay tax and gov doesn't. Service is similar and cost are similar but a custumer have a choice. But you want to screw gov and ask custumers you pay bill to your offshore account.
Sorry, you are wrong. I'd suggest you do some research on what consitutes a monopoly and on free trade. Judging by the contents of this thread you are not alone but you have a highly inaccurate picture of each in your head.
You want an analogy?
Spotify comes along to Apple and sells their product. For every sale, they earn $9.99 and Apple earns $3. Everyone is happy. Apple then creates a poor clone of Spotify and places it everywhere in the store. As they own the store, they do not need to pay the additional $3, so they can charge $9.99 instead of $12.99. Spotify is very upset.
"These rules have been in place since the inception of the App Store" says Apple. Unfortunately, they do not play by the same rules. When it comes down to it, Apple is just screwing over the consumers. Spotify is better than Apple Music but will die because Apple will force us to use their post-Steve/Scott junk.
Apple is the new Microsoft.
Spotify comes along to Apple and sells their product. For every sale, they earn $9.99 and Apple earns $3. Everyone is happy. Apple then creates a poor clone of Spotify and places it everywhere in the store. As they own the store, they do not need to pay the additional $3, so they can charge $9.99 instead of $12.99. Spotify is very upset.
"These rules have been in place since the inception of the App Store" says Apple. Unfortunately, they do not play by the same rules. When it comes down to it, Apple is just screwing over the consumers. Spotify is better than Apple Music but will die because Apple will force us to use their post-Steve/Scott junk.
Apple is the new Microsoft.
If Walmart is doing all the support and distribution sure? Comparing app stores to retail stores for subscription services isn't reasonable.
Walmart isn't going to allow someone to sell a product for $1 in their store that has a $50 monthly fee. Walmart would require the retail price be substantially higher or that the seller subsidizes the price substantially or cuts them in on a percentage of revenue and these deals do absolutely happen in brick and mortar retail.
You are paying $40-$60 for that game a swam art is taking a big cut. If the game seller retailed it for a $1 with a huge backend revenue stream they will not sell it.
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This is the case in 90% of retail stores who have store brands and generics.
If a customer that regularly shops at one store wants to buy a certain item that isn't stocked, they can easily go to another store which stocks it. App Store is the only way to download iOS apps other than jailbreaking. "Go to Android" is a little extreme. Imagine if your town only had a single store with all of the stuff that you like to purchase and the next closest store would require that you moved to a different country. The store then replaced all of the brands with their own inferior products. Would you be happy about it? Of course not. But people could open their own stores and compete.
Except the store is run by the government and it won't allow anyone else to build their own shops. See the problem?
Is it really that hard to understand? It's not about software, it's about services and subscriptions to which Apple contributes as much as Walmart.
So, back to Walmarts and other store analogies. It looks like some people here are arguing that if you buy, say, a Bluray player in Walmart then when you use it to watch Netflix, you have to pay to Walmart monthly (30% of Netflix subscription). How about Verizon plans? I think it's a perverted point of view.
I had both services. No longer, as of yesterday before Apple even responded. Spotify has been behaving a little desperate lately and, frankly, there is nothing about their service that has enticed me to keep them over Apple. Despite being a subscriber since they launched.
Apple is the 800lb Gorilla in the room. They do what they want, when they want, how they want.
The rest of the story is minutiae.
The rest of the story is minutiae.