Apple Accuses Spotify of 'Resorting to Rumors and Half-Truths', Sets Record Straight on App Rejection

[CarlJ]

If the customer is using in-App purchases, then Apple does handle the payment, but Spotify actually wanted to bypass the whole in-App purchases problem altogether, so that no additional payment handling cost for Apple would apply, but wasn't allowed to place the link to a registration webpage.
...
If I make my purchase inside the app but not pay through my iTunes account, why should apple get a share of the revenue?

You're presenting these as almost rhetorical questions, and on the face of it they make perfect sense, but there is a very real reason why Apple won't let developers bypass the in-app purchase system when users are inside the app - the App Store started with apps that had an upfront price and Apple took a cut, in exchange for running the store (just as every store on the planet does). If they had not made a restriction on using non-Apple payment services in the app, eventually pretty much every app would switch to a model where the app was free in the store, and then you paid the developer inside the app, with all that money going to the developer. And then you end up with a store where every item says "free" on the price tag, and the store owner gets no money for running the store. Such a store does not stay in business very long.

Imagine a brick&mortar store which pays for floor space, heating/AC, lighting, employees, shelves, etc., and has its shelves covered with shiny boxes that have big labels saying, "pay nothing at the register, just take this box home and then send a check to the manufacturer". How would such a store stay in business? They couldn't, it's not sustainable. You can't charge "30% of zero" and make it up on volume.

This is why Apple set the rules that you can't advertise/implement alternate payment methods inside the app. This is also why they didn't make in-app subscriptions substantially cheaper than upfront purchases. Personally, I think 30% of recurring charges is pretty steep - apparently Apple agrees, because they've changed it to 15% after the first year (if they didn't have the "first year" restriction there, lots of developers would say "hey, it's cheaper for us (though a worse experience for our users) if we switch our calculator app to a subscription").

Looking at it as just Spotify, just this once, and without the context/background above, your statements sound reasonable. But now imagine every app takes that approach.

(Also, you seem to have lost the /QUOTE tag (and the brackets around it) between the bit your responding to, and your response - makes it look like the other person wrote it all and you're just reposting - if you edit your post and add the tag, it'd make things clearer.)

 

[kdarling]

Various comments:

Re: "It's been a year, and Apple hasn't been charged by the FTC"

As of last week, Senator Warren commented that, "The FTC is (still) investigating those issues and deciding whether to sue Apple for antitrust violations.”

http://www.digitalmusicnews.com/2016/06/30/apple-federal-investigation-music/

Re: "Developers owe Apple for access to the iOS ecosystem"

Of course, that works both ways. Apple owes much or most of its success to all the apps that are available.

If Apple never existed, would developers still have mobile platforms to target? Yes. If developers had never made apps for iOS, would Apple's devices have been as successful? Absolutely not.

Re: Apple only allowing their own app store

The irony of Apple's walled garden, is how Jobs had called carriers "orifices to get to the end user" back in 2005...

And yet he built his own walled app garden that was higher than anything the carriers ever had for smartphones.

He also made the iPhone exclusive to AT&T for years, started out with monthly kickbacks, then switched to subsidy model to get more upfront, and has constantly fought to get the government to make jailbreaking illegal. We also lost the ability to own a smartphone without a required data plan. So much for 'reinventing' the basic cellular market.

Moreover, just like the carriers did with NFC and the ill fated ISIS wallet, Apple has tightly controlled access to the end user by forcing banks for pay for their own customers, on their own phones, to be able to access their own banks' NFC payment apps.

--

Yes, much is debatable, however one thing is for sure... I don't think most people's minds will be changed much by this thread . Especially the ones who are using ad hominems as arguments.

 

[blasto2236]

There is nothing sneaky about it. This background task is the "Spotify Web Helper", which allows to start the player via web links. You can prevent it from running by disabling the option "Allow Spotify to be opened from the web" in the Spotify settings.

Or by removing it from the login items on your Mac/PC. I understand WHY the helper runs in the background, I just wish they were more upfront about it. Especially given that Spotify is such a resource hog in OS X.

 

[OneMike]

Say you wrote a software package that you sold on the web for $29.

You want the same profit, but you want to sell it at Walmart. Walmart takes a 35% cut. Your software must cost around $49 at Walmart to give you the same profits.

Would Walmart have an issue with your software when someone opened the box there was a note that asked you to 'return this to Walmart - save $20 - and buy it over the web for $29'.

This is exactly what Spotify is doing.

That's not a valid comparison.

 

[EricTheHalfBee]

That's not a valid comparison.

No, the valid comparison was already posted earlier in this thread:

Imagine if there was a sticker on the OUTSIDE of the box telling you to go to the online store, where you could buy the item for less.
[doublepost=1467567331][/doublepost]

As of last week, Senator Warren commented that, "The FTC is (still) investigating those issues and deciding whether to sue Apple for antitrust violations.”

Well, then at least that gives you some hope. But I wouldn't count on it going anywhere. Nobody has shown any valid legal reason to state what Apple is doing is wrong. It's all based on emotion, not logic.

 

[burgundyyears]

Lots of people on this thread went to Upstairs Law School, it sounds like. You wouldn't know what "anticompetitive" meant if J.D. Rockefeller came and smacked you around the head and neck area.

 

[thisisnotmyname]

Wow. Reliance. Well, when Apple gets hacked, and they will - no one is immune, you can go cry in your corn flakes.
Myself, I have a very specific cc I use just for on-line retention. I use the same for Apple. They are no different.

My cornflakes will remain quite safe if any vendor - including Apple - that I've used Apple Pay with gets hacked.

 

[WristyManchego]

Say you wrote a software package that you sold on the web for $29.

You want the same profit, but you want to sell it at Walmart. Walmart takes a 35% cut. Your software must cost around $49 at Walmart to give you the same profits.

Would Walmart have an issue with your software when someone opened the box there was a note that asked you to 'return this to Walmart - save $20 - and buy it over the web for $29'.

This is exactly what Spotify is doing.

No, what Apple is doing is asking for 30% on your electricity bill from your power company, because you downloaded an app on Apple store. basically if you sign up using an app, apple wants 30% of what-ever for providing nothing else than the initial download. And you can't add a signup here in your app.

That's not at all what they're doing here, you've grossly under credited the App Store platform and its value, which is exactly what Spotify has done.

bbeagle was on the right track...

What's happening is you sell your hypothetical software on the web for $29.
You also want to sell it at Walmart but they take a 35%, so instead of upping the price to make the same profit selling at Walmart, you've worked out that its much cheaper to just buy ad space and advertise for users to download it from your website. So you approach Walmart and tell them you want to deck out their stores with adverts pointing users to buy the software from your website for $29 but only pay them a flat advertising fee.

It's not what the platform was ever intended for.

 

[gnasher729]

You do NEED Apple's App Store to use Spotify on the iPhone. Don't like it? Then get an android phone. Oh you won't switch an entire platform just to use a music app? Ok.

You need the Spotify app, which you can download from the App Store for free, and Apple gets nothing for it. Once you have two choices: You can go to the Spotify website and subscribe there, with all the money going to Spotify, or you use the app to subscribe, and 30% (15% after a year) goes to Apple. Either way, you can then use the app on your iPhone or iPad. So clearly you can use the app on an iOS device, without Apple seeing any penny of your money, and Apple is absolutely fine with that.

 

[MH01]

Where is Apple "undercharging" the competition? The price for Apple Music and Spotify is identical. It's only more if Spotify wants to use Apple to handle the subscription. Spotify is under no obligation to do so.

Spotify had a choice from day one to make all subscriptions go through their website. They made the choice to go in-App - nobody forced them to. And now that a large portion of their customers are doing so, they want to switch back AFTER taking advantage of Apple to get so many users in the first place.

This is exactly a case of Spotify wanting their cake and eatring I too (access to millions of customers AND keeping all the money for themselves).

In relation of Spotify not being able to match Apple Music at 9.99 In the App Store what would you like to call it?

Care to have a look how the two are competing in the Google play store?

 

[gnasher729]

If an app developer chooses not to use Apple's IAP they should be allowed to tell people where to go to sign up or purchase content.

They are. With a single exception: Not within your app.

 

[jon3543]

And that's exactly the problem. Can you imagine if Microsoft started enforcing a rule where anything you bought using your Windows PC gave them a 30% cut? If you were to sign up for an Apple Music subscription through iTunes on Windows and were forced to use a special "MS in app payment system." And even if you're listening to it primarily on your phone, or Sonos, or any other platform, Microsoft still gets a 30% cut every single month? It's ridiculous. And that's exactly what Apple is doing here.

I'm fine with them taking a small processing fee if it's handled through their payment system. That makes sense. But 30%? No way.

It's the most cut and dried thing I've ever heard in my life.

Spotify has put out a sort of PSA, and I hope it educated a lot of people who Apple might otherwise have tricked into paying an exorbitant recurring tax to Apple at the expense of companies that eat the tax, or themselves for companies that pass it on. In fact, it did educate CNBC anchor Brian Sullivan, who stated at 2:44 EDT Friday that "he was one of the idiots who subscribed to Spotify through iTunes, and he's got to go back and fix that."

 

[gnasher729]

Im reminding you of the rules since you seem to have forgotten them. They've been the same since the beginning. Spotify knew the rules going in. Now they are trying to special treatment.

The rules have indeed all the time been the same for everyone. Spotify's problem is that they have a business model where any sale means large payments to other parties - they have to pay $7 for each subscription. Well, that's their problem. It's like buying cherries for $4 a pound and selling for $3.50 a pound and wondering why you are losing money. There are business ideas that just don't work.
[doublepost=1467570466][/doublepost]

The problem with this is Spotify has no choice but to "piggy back" off of the app store. I'm sure if users could visit Spotify's mobile site, sign - up, click an install banner, and listen to music they would be happy. That would be avoiding the App store and Apples servers all together. Thats the way it should be. Monopolizing on a mobile store and not allowing 3rd party installs is the problem.

You _can_ subscribe from Spotify's website. If you do that, all payments to Apple are avoided.
[doublepost=1467570675][/doublepost]

So if you sign up for spotify through their website and then download the app, you bypass the subscription percentes bs apple charges?

Exactly. Even if you paid through the app store for your first subscription (and money went to Apple), you can get your next subscription through the Spotify website, which is cheaper and no money goes to Apple.

 

[akash.nu]

I wonder, how many of you here are really developers?! Some of the responses here are just hilariously stupid.

 

[jon3543]

The rules have indeed all the time been the same for everyone. Spotify's problem is that they have a business model where any sale means large payments to other parties - they have to pay $7 for each subscription. Well, that's their problem. It's like buying cherries for $4 a pound and selling for $3.50 a pound and wondering why you are losing money. There are business ideas that just don't work.

What doesn't work is Apple exacting an obscene tax on services that exist just fine without Apple. It's offensive.

You _can_ subscribe from Spotify's website. If you do that, all payments to Apple are avoided.

Sigh. The problem, of course, is that Apple prevents Spotify, Netflix, etc from initiating sign-up procedures that are available on TVs, BD players, Android, and all the other non-Apple devices where the apps run.
[doublepost=1467571007][/doublepost]

Some of the responses here are just hilariously stupid.

Not just stupid, but truly bizarre.

 

[SeattleMoose]

An adult admonishing a child pushing the rules.

 

[jon3543]

An adult admonishing a child pushing the rules.

Right on cue.

 

[Michael Scrip]

Then again, unless you are physically traveling to the Spotify office and handing them cash, there are already other companies involved in the process - if you pay by credit card, you're paying the credit card company, who is, in turn, paying Spotify.

Fair point.

So it would be three companies if Apple is involved:

My credit card company... Apple... and Spotify

 

[CarlJ]

Fair point.

So it would be three companies if Apple is involved:

My credit card company... Apple... and Spotify

Yep. It's the same deal as if you buy something with PayPal.

And, arguably, when you're paying Spotify, they're really just a middleman between you and the artists who are making the music, who really ought to get the largest share of the money. I don't think Spotify is recording many tunes of their own. So four entities. Much better to pay the musicians directly .

(As an aside, that has worked on occasion in the past - back in the day, the Grateful Dead would sell most of their tickets - those they weren't contractually obligated to hand over to Ticketmaster because of prior deals with the venues - and they'd sell them by announcing the shows and having folks send in their request on a 3x5 card, along with a postal money order and a self-addressed stamped envelope, to the band's office; their staff would open everything, and use the envelope you provided to send back either tickets if you were lucky or your money order if they'd already sold out - the band got all the money without Ticketmaster collecting a cut, it cut way down on what ticket scalpers could do, the fans were mostly happy, and every show sold out.)

 

[\-V-/]

An adult admonishing a child pushing the rules.

Sums this up perfectly.

 

[burgundyyears]

What doesn't work is Apple exacting an obscene tax on services that exist just fine without Apple. It's offensive.

Sure it works - you just don't like it. Why does it matter if you don't like it?

 

[dk001]

Lots of people on this thread went to Upstairs Law School, it sounds like. You wouldn't know what "anticompetitive" meant if J.D. Rockefeller came and smacked you around the head and neck area.

True. What is interesting is the very thing Apple is doing is something that was similarly covered in one of the many corporate law sessions I had to attend. The message: don't do it. If you see it; report it.

For the curious and the readers: https://www.ftc.gov/enforcement/anticompetitive-practices

 

[thisisnotmyname]

I wonder, how many of you here are really developers?! Some of the responses here are just hilariously stupid.

Or run a business. Or set pricing. Or negotiated a contract. Or read the Sherman or Clayton acts? or...

 

[Rigby]

Or by removing it from the login items on your Mac/PC. I understand WHY the helper runs in the background, I just wish they were more upfront about it.

Not sure what else you want them to do. You can't get any more transparent than putting a setting right in the app. iTunes also installs a background task on both Windows and Mac OS, and it has no setting to turn it off ...

Especially given that Spotify is such a resource hog in OS X.

Spotify is currently playing in the background on my MBP. According to activity monitor, it uses 1.3% of my CPU and 53MB memory. Not sure why you would call this a "resource hog", especially when compared with iTunes, which is required to use Apple Music.

 

[dk001]

In relation of Spotify not being able to match Apple Music at 9.99 In the App Store what would you like to call it?

Care to have a look how the two are competing in the Google play store?

Predatory Pricing is always tough to prove. Still, monopolistic practices by pricing the primary competitor or only competitor out of the specified market (App Store) could be proven. It will be interesting to see if this goes anywhere and exactly what the FTC is investigating.