Apple Says Spotify Only Pays 15% Fee on About 0.5% of Subscribers in Response to App Store Complaint

[MacRumors]

Apple has filed a response to Spotify's anticompetitive complaint about the App Store in Europe, noting that Spotify pays Apple a 15 percent commission for only about 0.5 percent of its paying subscribers, according to CNET.

That figure equates to around 680,000 users who subscribed to Spotify through its iOS app, via Apple's in-app purchase system, between 2014 and 2016. This is because Apple only collects a 30 percent commission for the first year of a subscription, at which point the fee drops to 15 percent.

Apple's response comes three months after Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Spotify took particular issue with Apple charging a 30 percent "tax" on App Store purchases, calling it "discriminatory":

Apple requires that certain apps pay a 30% fee for use of their in-app purchase system (IAP) - as is their prerogative. However, the reality is that the rules are not applied evenly across the board. Does Uber pay it? No. Deliveroo? No. Does Apple Music pay it? No. So Apple gives the advantage to its own services.

Apple only charges a commission on in-app purchases tied to digital goods, which is why apps like Uber and Deliveroo are exempt.

Apple also forbids Spotify and other developers from alerting users that they can sign up for a subscription or complete a purchase outside of its iOS app, and disallows Spotify from advertising deals to its customers in the app or by email, as these practices would circumvent Apple's in-app purchase system.

Apple has faced increasing scrutiny as of late over the way it runs its App Store. In response, Apple said the App Store "welcomes competition," noting that it was created to be "a safe and trusted place for customers to discover and download apps" and "a great business opportunity for all developers."

Apple previously labeled Spotify's complaint as "misleading rhetoric" and claimed that "Spotify wants all the benefits of a free app without being free."

European Commission regulators will now review Apple's response as part of its probe.

Article Link: Apple Says Spotify Only Pays 15% Fee on About 0.5% of Subscribers in Response to App Store Complaint

 

[nojkepop]

I can't wait for this complaint to go away regardless of the outcome. I have no horse in this race but Spotify looks so petty over this. I have a hard time believing this is good publicity.

 

[itsmilo]

Apple also forbids Spotify and other developers from alerting users that they can sign up for a subscription or complete a purchase outside of its iOS app, and disallows Spotify from advertising deals to its customers in the app or by email, as these practices would circumvent Apple's in-app purchase system.

I assume this is the issue? just get rid of this passage ...

 

[dannyyankou]

If my math is correct, that adds up to just over $12 million over the course of the year.

 

[cardfan]

So there’s no Spotify users still in first year of subscription on iOS?

 

[realtuner]

Apple just shot down their entire antitrust case.

If the vast majority of Spotify customers are paying through their website, then how can they possible argue that Apple is a monopoly or abusing their position?

 

[mjbadagliacco]

In other words... Spotify has lied to the court! Not good for Spotify!

 

[Rogifan]

This undercuts Spotify’s lawsuit. But it also undercuts the pro-Apple argument that their 30%/15% fee is justified because they’re providing access to a large customer base of users who will spend money. Clearly in the case of Spotify they have no problem acquiring customers outside of the App Store. I’d be curious to know what the numbers are for Netflix.

 

[mcfrazieriv]

Because this is being filled in the EU, the next headline will read "Apple forced to do something because the EU doesn't fully understand what it was they ruled against."

 

[nojkepop]

So there’s no Spotify users still in first year of subscription on iOS?

I think Spotify removed the ability to sign up for premium within the app so no new sign-ups are going through Apple. I'm not positive on this though.

 

[tito2020]

Because this is being filled in the EU, the next headline will read "Apple forced to do something because the EU doesn't fully understand what it was they ruled against."

blame it on the tariffs

 

[thisisnotmyname]

A ruling on this will have long reach for others that want to dismantle the app store model. Spotify wasn't the best test case on this, being the larger provider and now with these stats it doesn't make their position strong.

 

[MacLawyer]

I think the question is, assuming a court knocks down Apple's pricing structure, what would a fair charge be?

 

[DeeeLAN]

So there’s no Spotify users still in first year of subscription on iOS?

That's what I was thinking. If true, that is amazing. There are hundreds of millions of potential subscribers, and they had 0 in the last year? Maybe it was just a negligible amount, less than 10,000 or something.

 

[ksec]

I think Spotify removed the ability to sign up for premium within the app so no new sign-ups are going through Apple. I'm not positive on this though.

Correct.

I think people are overlooking the fact, Spotify is complaining that they cant compete with Apple Music if they had to. There is no "entrance" to Spotify via Apple without going through Web Sign up, and Apple disallow Web Links from Within the Apps. We also don know how many Sportify users are on iOS.

Apple also forbids Spotify and other developers from alerting users that they can sign up for a subscription or complete a purchase outside of its iOS app, and disallows Spotify from advertising deals to its customers in the app or by email, as these practices would circumvent Apple's in-app purchase system.

I assume this is the issue? just get rid of this passage ...

Again part of the issues this is Anti Competitive and doesn't sit well with EU. Had there been a third OS or Ecosystem this point would have been mute, but unfortunately technology and software is a Winner takes all industry.

 

[jacobh101]

It would be helpful for MacRumors to include Apple's response from March, I am including it below.

Of note: "Spotify wants all the benefits of a free app without being free."

https://www.apple.com/newsroom/2019/03/addressing-spotifys-claims/

 

[H3LL5P4WN]

Does Tim Cook know that he owns Uber and Deliveroo?

 

[realtuner]

This undercuts Spotify’s lawsuit. But it also undercuts the pro-Apple argument that their 30%/15% fee is justified because they’re providing access to a large customer base of users who will spend money. Clearly in the case of Spotify they have no problem acquiring customers outside of the App Store. I’d be curious to know what the numbers are for Netflix.

Not really. We don't know how many customers Spotify was able to sign up in the beginning through their App who later switched to signing up via their website. They could still have relied on Apple to grow their subscriber base, and once that base was large enough only THEN did Spotify start whining.

Regardless, with most of their subscribers signing up directly they have no basis for their lawsuit. It also exposes Daniel Ek as the liar he is by quoting 30% and "leaving out" the fact repeat subscribers drop to a lower 15% fee. Sounds a lot like a politician.

 

[owen.meredith]

Spotify complaining about Apple being greedy whilst their entire complaint is greedy in itself? Yeah, ok. The fact that Spotify pays artists even less, drastically in the free tier, in comparison with Apple is just extra lolz as well. Spotify has been greedy from day 1.

 

[apolloa]

What an utterly pathetic response from Apple, I’d also like to know where it got these facts from? Did they steal them from Spotify? Or make them up or base them on unverified sources?

Oh well if you make a joke of the European competition commission they’ll be more then happy to make a joke out of you!

 

[NexusUser]

It's not surprising the number is only .5%, Spotify is forced to charge more in-App vs online in order to pay the Apple tax. Chances are Spotify is losing customers to Apple music because paying in-app Apple music is cheaper.

$10 million paid annually to Apple is nothing to sneeze at. Looking forward to the EU and hopefully US realizing that Apple has an app store Monopoly and breaking it up.

 

[chazwatson]

This undercuts Spotify’s lawsuit. But it also undercuts the pro-Apple argument that their 30%/15% fee is justified because they’re providing access to a large customer base of users who will spend money. Clearly in the case of Spotify they have no problem acquiring customers outside of the App Store. I’d be curious to know what the numbers are for Netflix.

How does that undercut "the pro-Apple argument that their 30%/15% fee is justified because they’re providing access to a large customer base of users who will spend money"? Do you know the number of iOS users?

 

[Appleman3546]

Apple Music pays 0% to Spotify, but Spotify pays 15% to the competition on users still subscribed (which gets passed along to consumers to make Apple Music a cheaper competitor) and Spotify is forbidden by the App Store executive committee from telling users about a competitive alternative to the App Store subscription that drives up the price (which would level the playing field on competitor pricing)...I guess what Apple is saying is that if you want to play ball on Apple's turf, you have to let the home team (Apple) start with two home runs

 

[chazwatson]

What an utterly pathetic response from Apple, I’d also like to know where it got these facts from? Did they steal them from Spotify? Or make them up or base them on unverified sources?

Oh well if you make a joke of the European competition commission they’ll be more then happy to make a joke out of you!

You need to calm down.

Spotify publicly announced the number of paid users (https://newsroom.spotify.com/2019-04-29/spotify-reports-first-quarter-2019-earnings/), and Apple knows the number of Spotify subscribers on iOS. It's simple math.

This is Apple's response to the court, so if they are lying they would be in a lot of legal trouble.

 

[KidAKidB]

Apple just shot down their entire antitrust case.

If the vast majority of Spotify customers are paying through their website, then how can they possible argue that Apple is a monopoly or abusing their position?

That wouldn't account for any users that didn't end up signing up because it wasn't simple to do within the Spotify app, since this is due to Apple's stupid rules, this case is still extremely relevant.
[doublepost=1561396941][/doublepost]Apple's response is nothing more than PR and full of absolute lies. Apple should be ashamed of themselves.