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

[Gasu E.]

<deleted>
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Hope you paid these music artists a lot by going to their shows and buying their merch

I'm wondering where you are going with this, since you declined to suggest he actually buy their music?

 

[31 Flavas]

Except Spotify is effectively free. It's free to operate for Apple, premium or not. Apple isn't doing any of the media serving for Spotify.

Well, why do they even need Apple? Ignore them and drop the app from the platform.

I mean, this is what competition / competitors are for.

Just allow Apple’s products to whither and rot. When Apple customers don't have access to what they desire they can make a decision if their vanity and status symbol of a phone is worth more. Or if they want service and apps that meet their needs, not that of Apple.

 

[erniefairchild1]

How many Android users would be infected by Spotify? The answer is 0. Plenty of installers do autoupdates. Let's not pretend like App Store is the only one that does it.
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They would need to if they banned people from buying groceries anywhere but in their own stores. But they don't do it. People can buy the same products they buy at Kroger stores elsewhere including directly from the manufacturers (if those offer their own retail channels).

I just don’t think these comparisons folks are making actually work. Yes, Apple requires apps to be purchased or downloaded through the App Store. But people don’t have to buy an iPhone. So if a selling point of a different companys hardware is “hey, we don’t make you buy apps through a specific App Store” or “we don’t charge developers a fee, so apps are cheaper”, then this is a valid distinction between platforms. Kind of like a grocery store other than Kroger saying “hey, we offer lower prices on brand name products than Kroger does”.

I just feel that people are stretching concepts and terms, in order to find fault with Apple.

 

[dona83]

Amazon has an Associates program though which is essentially a commission program. If X helped Y get more sales, X should get a cut of that.

 

[erniefairchild1]

App Store is a website. There is nothing inherently wrong with installing apps from the websites. If anything, there is a greater chance of installing some trash from App Store (with millions of apps) than from Spotify web site which would have just one app.
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Yes they can, but they would need an Android phone. Some people find it inconvenient to buy a new phone for each app hence we have a matter for regulation. The lawmakers may help the customers ensure that when they buy a phone/computer they can install whatever software they want on it from wherever they want.

Should Sony be required to allow people to download games designed for other platforms, etc? Is anyone complaining about that? There’s no expectation that I can download/install ANYTHING I want from WHEREVER I want when I buy a device. The singular portal of the App Store is a FEATURE of the phone, one which factors into people’s decisions to buy or not buy an iPhone.

 

[Nuno Lopes]

I always thought that is was not of good customer sense for Apple to charge for things that the App Store does not distribute. The store only distributes / sells apps in technical terms. Anything beyond these kinds of digital assets is value delivered by the third party ... period.

Yet they could still offer their own payment / billing system for those things as an option. I’m sure most software developers would use it as they do now. Not only software developer but developers of other kinds of digital assets. While exempting those for paying for the free app distribution.

Furthermore this payment system could be used for other things but digital assets too ....

... wait a minute ... in a way they are already themselves for this

Now. It’s also smart to try to get away with if the market allows

 

[macfacts]

The Verge article is pure rubbish. Where to start? How about these little gems:




Spotify ended 2014 with 15 million paid subscribers. In September 2016 they had 40 million. I don’t know how many they ended 2016 with, but it’s not a stretch to think they added another 5 million based on their growth rate. So Spotify literally tripled their paid subscriber base between 2014 and 2016 and The Verge wants to pretend that time period is irrelevant because Spotify subscriptions “had years to dwindle”?
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Spotify no longer allows customers to pay through Apple. And even when they did, most customers signed up through their website. Spotify isn’t going to be able to show harm when a tiny fraction of their customers used IAP for their subscriptions. Spotify also won’t be able to show Apple doing any sort of “lock in” by preventing Spotify customers from going outside The App because most of them did.

Over $12 million per year in apple tax.... And you're trying to pretend that is no damage? Lol

 

[realtuner]

Over $12 million per year in apple tax.... And you're trying to pretend that is no damage? Lol

No damage.

Spotify can choose to make $70 million net per year off $82 million in sales per year or they can choose to make zero net from zero sales. As they say, 85% of something is better than 100% of nothing.

Since Spotify was successful in getting almost ALL of their customers to sign up through their website one has to wonder why there's a few holdouts that preferred to go through the App. I suspect that without that option Spotify wouldn't even have those subscribers, They could, for example, be people without a credit card who use Apple Gift Cards/iTunes Cards to pay for their subs. Or they don't trust Spotify with their credit card number and prefer to use a single point for billing. Whatever the reason, if those customers don't want to sign up at Spotify then they are essentially BONUS customers that wouldn't exist otherwise. Backing up my example that 85% of something is better than 100% of nothing.

 

[ipponrg]

<deleted>
[doublepost=1561479035][/doublepost]

I'm wondering where you are going with this, since you declined to suggest he actually buy their music?

Most artists make money off merch and shows. If you really want to support the artist(s), you go to their shows and/or buy their merch. Otherwise, streaming off Spotify/Pandora/Apple/<insert streaming service> will not provide a significant source of income.

 

[MadeTheSwitch]

Hardly arbitrary. It's actually black & white:

If you buy something that's used WITHIN your App (game credits, subscription to media, software add-ons or plug-ins) then you pay the 30% fee.

If you buy something that's used OUTSIDE the App (food from DoorDash, goods from Amazon, a ride from Uber) then you don't pay a fee. Further, these Apps don't even use Apple to process payments and you set up your payment method directly with the company offering the App.

You misunderstood. The policy itself is arbitrary. There’s no reason to divide things up that way and decide to charge for one and not the other. Hence the use of the word arbitrary. Which it is. Someone just decided to make it that way, out of the air. There’s no technical reason for it. There’s no logical reason for it. Just an arbitrary decision made by someone one day to do things this way.

 

[ksnell]

First please explain to me why Facebook which is way more downloaded than Spotify pays Apple 0.00 dollars in hosting fees beyond base App Store developer fees.
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The addition of more users does for free apps as well.
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You lost me in the first paragraph when you assumed my answer would be nonsense. Hopefully Apple has lawyers with a little more respect. I'll give you more than what that reply deserves, exactly 1 sentence: try to explain to me why apps like Facebook, Instagram, and YouTube thrive off of ads (a self-hosted media that contributes most of their financial income) and pay nothing to Apple while Spotify has to pay 15% to serve music (a self-hosted media that contributes most of their financial income).

Yes, but obviously there is no wherewithal-to-pay for free apps. Spotify could just go ad supported and then there would be no issue right?

 

[ksnell]

Spotify has lost money every day it has been in business. That's not "monetization."

To monetize is to generate revenue. They generate revenue, just not net profit.

https://www.investopedia.com/terms/m/monetize.asp

 

[realtuner]

You misunderstood. The policy itself is arbitrary. There’s no reason to divide things up that way and decide to charge for one and not the other. Hence the use of the word arbitrary. Which it is. Someone just decided to make it that way, out of the air. There’s no technical reason for it. There’s no logical reason for it. Just an arbitrary decision made by someone one day to do things this way.

I find it perfectly logical. It eliminates developers trying to cheat the system by offering “free” Apps and then having users purchase digital items used by those Apps through their own private store so they can keep 100% of the profit.
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Most artists make money off merch and shows. If you really want to support the artist(s), you go to their shows and/or buy their merch. Otherwise, streaming off Spotify/Pandora/Apple/<insert streaming service> will not provide a significant source of income.

You’re moving the goalposts. Spotify pays less to rights holders than Apple Music does. It’s irrelevant whether artists make more money touring or on merchandise it doesn’t change the fact Spotify is paying less.

 

[frogpelt]

Does Apple Music pay it? No. So Apple gives the advantage to its own services.

How would Apple Music pay Apple 15% ?

 

[UBS28]

Because you have to provide proof of harm for any monopoly/antitrust case. Spotify can't prove any harm because they have practically all of their users paying subscription fees to them directly.

Walmart and other retailers promote their own brands along side others they sell. There's is absolutely nothing illegal about that.

Spotify has proven harm as it cannot compete on the App store. It can only get customers outside App store.

 

[realtuner]

Spotify has proven harm as it cannot compete on the App store. It can only get customers outside App store.

Apple's store, not Spotify's store. Are you going to tell Walmart they should give you shelf space for their product AND also allow customers to pay for that product directly without going through a Walmart cash register?

 

[Coconut Bean]

Because you have to provide proof of harm for any monopoly/antitrust case. Spotify can't prove any harm because they have practically all of their users paying subscription fees to them directly.

Walmart and other retailers promote their own brands along side others they sell. There's is absolutely nothing illegal about that.

They chose to remove iAP, that’s why no one is paying there. Think about it this way.. It is about a company (Spotify) connecting to its clients (subscribers). Now this can be direct, paying thought Spotify’s website or via an intermediary, in which case Spotify should have the ability to choose this intermediary, or select not to have one. Some of the clients are of a population are only reachable by one intermediary (Apple) and it happens to be a direct competitor as well (Apple Music). Apple is thus harming the interaction between one of its competitors and clients.

Of course this is based on the question of whether Apple customers are more than customers, a population, I’d argue and the EU will surely agree, that with a market penetration of say 30% (don’t know the actual figure), you have to enable companies and clients to interact by other means than your own one. I’d guess it will lead to policy change about the sign up link.

I know this arguments is hard to accept with a corporate American mindset, but this ruling might set a precedence where you have way worse outcomes, thanks to corporate greed. Amazon disabling the credit cards on certain services or charging much, much higher fees on non-Amazon online purchases. Especially now when tech is moving into finance regulators have to stay sharp.

An interesting article in these lines is:
https://ftalphaville.ft.com/2019/06/24/1561376706000/A-pound-of-flesh-for-your-Libra-inclusion-/

 

[macfacts]

Spotify pays less to rights holders than Apple Music does

Apple can pay more royalties cause they don't have to pay the 30% apple tax.

 

[DeepIn2U]

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?

Shots fired Shots Fired!!

 

[realtuner]

Apple can pay more royalties cause they don't have to pay the 30% apple tax.

Since >99% of Spotify customers sign up through their website, Spotify can't use that lame excuse to cheat artists out of royalty payments.

And in case you missed it the umpteen times it's been posted, those few customers are paying 15%, not 30%. Repeating a falsehood over and over doesn't make it true.

 

[Abazigal]

Apple can pay more royalties cause they don't have to pay the 30% apple tax.

You speak as though every single one of Spotify’s subscribers are subject to the 30% cut. It’s a minority of the total number of subscribers that Spotify has, and goes as low as 15%. What about users on android or windows? What’s their excuse?

Spotify is looking more and more dishonest by the moment.

 

[theotherphil]

First please explain to me why Facebook which is way more downloaded than Spotify pays Apple 0.00 dollars in hosting fees beyond base App Store developer fees.
.

Because Apple's terms and conditions are quite clear that free apps and those without subscriptions pay nothing to Apple. Those apps that are MAKING MONEY off of the Apple store pay Apple to do so. This model allows small app developers to grow which benefits everybody and "increases competition".

Those terms and conditions are actually quite important - it's a contract that Spotify has agreed to in order to have their app listed on the App Store. If they don't like those terms and conditions, they are free to choose to go elsewhere. That's just business.

 

[ipponrg]

You’re moving the goalposts. Spotify pays less to rights holders than Apple Music does. It’s irrelevant whether artists make more money touring or on merchandise it doesn’t change the fact Spotify is paying less.

It changes the fact when you look at things at a macro level vs micro level.

 

[theotherphil]

It’s more expensive if you’re paying through Apple

Staying in a hotel is more expensive if you use an intermediary.
Booking a holiday is more expensive if you use a travel planner.
Having a wedding is more expensive if you use a wedding planner.

Everybody wants their cut in this world and everybody wants to limit how much they pay. Sometimes convenience and privacy is worth paying for. Having Apple handle payments means only Apple has my CC info.....instead of hundreds of companies who's apps I have installed - each of which is an attack vector.

 

[macfacts]

Apple's store, not Spotify's store. Are you going to tell Walmart they should give you shelf space for their product AND also allow customers to pay for that product directly without going through a Walmart cash register?

I can buy a magazine at Walmart. Inside the magazine I can find a subscription mail in card. The payment info I include on the card goes directly to the magazine owner. Walmart only gets a cut of the original magazine purchase. Not 15 % forever.