FTC Looking Into App Store Rules Regarding Subscription Services

[trifid]

How hard is it to go to Spotify.com and sign up? The easiest way for Spotify to solve this is to remove IAP, just like others have done.

It's not hard, but the entire point of the article is that a user may not know how to do it because Apple is censoring vital information on how to use the product. The real question is how hard is for Apple to let Spotify, Netflix, Hulu etc include a link and/or information on subscription options?

 

[BvizioN]

I asked a fair question.

OK. Let me see what the question was.

Who's getting rich in the App Store?

Let me tell you some.

Steve Demeter, Trism
Ethan Nicholas, iShoot
Dong Nguyen, flappy Bird
Kostas Elefterius, iSteam
Ge Wand and Jeff Smith, Ocarina, Smule
Brian Greenstone, Enigmo
Bart Decrem, Tap Tap Revenge
Joel Com, iFart Mobile (Yes, it's a farting app)

Am not going to even bother with developers from Draw something, Fruit Ninja, Instagram, Minecraft, etc.

Countless is an exaggeration I did. But there are lots and am not gonna sit around finding all of them.

 

[MH01]

No this was recent. I can't link to it as it redirects to a login page for Politico Pro.

Okay . I'll track it down and have a read, thanks.

 

[lowendlinux]

OK when i first read this I was not on Spotify's side Apple charges 30% to everyone no matter so suck it up. Then I read the post that said they take 30% each month, if that's the case then that should be a no-go take the 30% when the service starts and then no more.

 

[MH01]

if apple didn't allow you to visit other stores on your mac/iphone/device then your case for monopoly may be stronger.. like fiddled with the inner workings of the internet pipelines in order to cut off access to potential customers altogether then that, i imagine, would be ruled abusive.

Idevices and macs have different install paths.

Say I want Skype or spotify, on a Mac, I'd just google them, hit the link to the website and download the program. Apple does not review and approve the program.

If I want Skype or spotify on my iPhone, I go straight to the App Store, as I know going to the website is pointless. I therefore accept that if I want that app I have to accept whatever is in the App Store. Apple reviews and approves the program.

I see that as kind of fiddling the inner workings of a internet pipeline, as you have only one pipe, and it needs to be approved. I can actually get the install program for my Mac for spotify and skype from lots of pipelines in the Internet, including the Mac store in my Mac.

For me when it comes to apps, I do not see the Internet, I see one app, the gateway is the App Store on my iPhone. At the same time I appreciate the security that comes with it , though it is policed by Apple , with rules and policies that favour them, and designed to make some extra $$$$ I never think of it as a monopoly, it's a walled garden.

 

[MH01]

OK when i first read this I was not on Spotify's side Apple charges 30% to everyone not matter so suck it up. Then I read the post that said they take 30% each month, if that's the case then that should be a no-go take the 30% when the service starts and then no more.

Even the 30% each month for some comapanies that can absorb the hit in the margins, and still make a profit is fine. Though in this case , spotify would run at a loss if they offered the 9.99 they offer outside of the App Store .

For me the worst case scenario is apple forcing other streaming services out of iOS due to the 30%, just checked Tidal and they are £12.99, where it's £9.99 on desktop. So it's not just spotify.....

This kind of sucks, if I was choosing a new streaming service on my iPhone , apple music is 9.99, the others are 12.00 + . I'm not paying 30% apple tax for no reason....the services are very similar, I'd choose apple music just based on it being the cheapest.

 

[lowendlinux]

Even the 30% each month for some comapanies that can absorb the hit in the margins, and still make a profit is fine. Though in this case , spotify would run at a loss if they offered the 9.99 they offer outside of the App Store .

For me the worst case scenario is apple forcing other streaming services out of iOS due to the 30%, just checked Tidal and they are £12.99, where it's £9.99 on desktop. So it's not just spotify.....

This kind of sucks, if I was choosing a new streaming service on my iPhone , apple music is 9.99, the others are 12.00 + . I'm not paying 30% apple tax for no reason....the services are very similar, I'd choose apple music just based on it being the cheapest.

Even if they can it should still be a one time transaction Apple is not streaming the content from their servers so there is no recurring costs. I'm sure the rule was put in place to nip in app purchases but the rules need to be flexible enough to cover changes in the model.

 

[trifid]

I'd love to see Taylor Swift's opinion on this... Spotify getting 30% cut + Apple getting 30% cut, while artist gets 5-10%

 

[5232152]

For apps that are free, Apple should not get a 30% cut. Obviously.....

 

[mejsric]

I'd love to see Taylor Swift's opinion on this... Spotify getting 30% cut + Apple getting 30% cut, while artist gets 5-10%

As if all subscribers is from Apple.. Swift can scream...

Btw.. Thats makes me wonder how many subscribers is from Apple. If 100% subscribers is from Apple then Spotify is screwed... But then again.. They should be thankful for Apple giving them subscribers.

 

[lowendlinux]

As if all subscribers is from Apple.. Swift can scream...

Btw.. Thats makes me wonder how many subscribers is from Apple. If 100% subscribers is from Apple then Spotify is screwed... But then again.. They should be thankful for Apple giving them subscribers.

If they're not getting money from the subscribers then those subscribers are a loss, so why should they be happy?

 

[Mercifull]

Some sort of compromise could be that the 30% cut remains for all one off IAPs but that recurring payments are at a reduced or reducing rate. For example:

App A is a freemium combat strategy game (e.g. Clash of Clans) and is free to download so Apple receives no cut from the initial download. In this game in-app purchases are required to progress in the game or to skip levels, speed up etc. These are individual one off purchases and so apple takes the full 30% cut from each purchase.

• Stack of coins - £0.69 (Apple takes 0.16 of that)
  
• Bag of coins - £2.99 (Apple takes 0.69 of that)
  
• Chest of coins - £6.99 (Apple takes 1.61 of that)
  
• Mortgage of coins - £169k (Apple takes £39k of that)
• etc.

App B is a streaming subscriptions service (Netflix, Spotify). These apps are also free to download and so apple receives no cut from the initial download. You have a couple of options to choose from, recurring or non recurring.
Monthly one off - £12.99 (Apple takes their 30% meaning App B developers get just over £9)
Monthly recurring - £9.99 (Apple takes a reduced 15% cut meaning App B developers get £8.50)

Yes App B developers have to lose a bit more profit from using the App Store systems to process payments but they'd probably be paying ~6% anyway to the banks plus whatever resources it costs them in staff and programmers to organise it all. The bonus is that A) the recurring payment looks more attractive to buyers and thus they are more likely to hold on to customers B) they can take advantage of the built in payment processing of the App Store and because of the lower rate (15%) they continue to make a profit by advertising the same monthly fee regardless if you do it via App Store or direct people to the website.

 

[MH01]

Even if they can it should still be a one time transaction Apple is not streaming the content from their servers so there is no recurring costs. I'm sure the rule was put in place to nip in app purchases but the rules need to be flexible enough to cover changes in the model.

Yeah I agree with that. I'd even be happy if they took a bigger cut in the one off transaction.

 

[MH01]

I'd love to see Taylor Swift's opinion on this... Spotify getting 30% cut + Apple getting 30% cut, while artist gets 5-10%

I suspect Taylor swift does not care at all about the artists, her little outburst I suspect was all staged between her and apple to give apple music and her free publicity. I'm sure she is getting a favourable cut....

 

[thekev]

Yes App B developers have to lose a bit more profit from using the App Store systems to process payments but they'd probably be paying ~6% anyway to the banks plus whatever resources it costs them in staff and programmers to organise it all. The bonus is that A) the recurring payment looks more attractive to buyers and thus they are more likely to hold on to customers B) they can take advantage of the built in payment processing of the App Store and because of the lower rate (15%) they continue to make a profit by advertising the same monthly fee regardless if you do it via App Store or direct people to the website.

6% would be quite high for payment processing.

 

[Lankyman]

It's already open. Otherwise third party apps would be unavailable. Don't like apple's markup? Don't sell your software there.

An open prison is still a prison!

 

[MH01]

How hard is it to go to Spotify.com and sign up? The easiest way for Spotify to solve this is to remove IAP, just like others have done.

If they did that, would apple approve the app?

Has any other streaming service done that?

 

[goobot]

Apple either should reduce its cut from any subscription service down to 5% per renewal or 30% once per customer and never again from that same customer. Not both.

 

[linuxcooldude]

LOL. I freaking LOVE it (and the fact it ticks off the Apple Kool-Aid drinkers so much the better!!!). Too long have they been able to exercise near-monopoly powers in various markets with more money than any other tech company out there including Microsoft (the former Monopoly King).

I think you've been drinking too much of your own kool-aid. What monopoly? A monopoly on their own products?

Arcane policies that prevent anyone else from offering better hardware using their OS. Maybe next they'll look into their restrictive licensing on being able to use OSX on non-Apple hardware. Le Roi est mort et il est bon!

Yes, its called Windows. Apple is not in the business of selling operating systems. They sell hardware. If you want an OS on better hardware you can design your own OS from freely available source code just like Apple did.

It's about time JUSTICE caught up with these greed mongers.

I didn't know being successful was against the law.

 

[Mercifull]

Bit of quote confusion there, I wrote that statement.

Kickstarter charge 5% + a payment processing fee of between 3-5% depending on what method you choose, PayPal, BACs etc

Stripe and PayPal charge between 1.9 and 2.9% but also charge a fixed 20p per transaction also.

You also need to factor in the operating costs of the app store as a platform not just the pure cost of processing the payment. That's why Kickstarter take their 5% cut on top and why Apple should be able to do the same.

Can you imagine if Apple took a smaller percentage but then took a fixed amount per app. What would that do for Apps which are 69p or regularly reply on small micropayments for their income.

Currently the app developer gets around 53p on a 69p app (with Apple taking 30%). In contrast if apple went down the similar route with a substantially reduced percentage cut of 5% but taking a flat amount per transaction the developer would only get 47p.

Smaller developers would lose out a lot more than larger developers as the greater the price of the app or IAP the more that percentage cut makes a difference.

£9.99 would equate to around £8.55 for developers instead of £7.69

 

[theluggage]

For me the worst case scenario is apple forcing other streaming services out of iOS due to the 30%, just checked Tidal and they are £12.99, where it's £9.99 on desktop. So it's not just spotify.....

...and that is the only real issue here. 30% mark up + ~$100/year fee for the privilege of selling your stuff through a high-profile store & distribution chain is a fair deal (buy through a middleman - pay extra - nothing new).

The problem starts when (a) the store owner launches its own competing subscription service which, surprise surprise, undercuts its competitors by the 30% margin; (b) you don't have much control over the price of your service (It's pretty clear that $9.99/£9.99* is the going rate for streaming services and, because ultimately they're all selling the same music from the same rights holders, there isn't much room for downwards manoeuvre) and (c) although you can sell subscriptions directly, the store won't let you advertise this in the app.

The question for regulators is whether there is enough competition in the market to leave this to "the invisible hand" to sort out. After all, the big market is phones, there are more Android phones than iPhones and people change phones regularly, Forcing Spotify et. al. off iOS - or doing anything else to restrict the choice of Apps available in iOS - ought to be a risk for Apple.

Personally, I think the line would be crossed if Apple tried to object to Spotify et. al. emailing customers directly to suggest they subscribe directly rather than via Apple.

My proposed solution would be to set a minimum price for Apps, above which they could link to a 3rd party website for in-app subscription purchases.

(* exchange rate? what exchange rate?)

 

[theluggage]

Apologies for the multiple post (deleted)

 

[theluggage]

(Apologies for the multiple posts apologising for the multiple post - deleted)

 

[ggibson913]

I dunno, when I subscribed to Spotify or any steaming service I never did so through the App store, always online because i knew it was cheaper.

 

[MH01]

...and that is the only real issue here. 30% mark up + ~$100/year fee for the privilege of selling your stuff through a high-profile store & distribution chain is a fair deal (buy through a middleman - pay extra - nothing new).

The problem starts when (a) the store owner launches its own competing subscription service which, surprise surprise, undercuts its competitors by the 30% margin; (b) you don't have much control over the price of your service (It's pretty clear that $9.99/£9.99* is the going rate for streaming services and, because ultimately they're all selling the same music from the same rights holders, there isn't much room for downwards manoeuvre) and (c) although you can sell subscriptions directly, the store won't let you advertise this in the app.

The question for regulators is whether there is enough competition in the market to leave this to "the invisible hand" to sort out. After all, the big market is phones, there are more Android phones than iPhones and people change phones regularly, Forcing Spotify et. al. off iOS - or doing anything else to restrict the choice of Apps available in iOS - ought to be a risk for Apple.

Personally, I think the line would be crossed if Apple tried to object to Spotify et. al. emailing customers directly to suggest they subscribe directly rather than via Apple.

My proposed solution would be to set a minimum price for Apps, above which they could link to a 3rd party website for in-app subscription purchases.

(* exchange rate? what exchange rate?)

When it comes to apple, and the UK, exchange rate = swapping $ for £ he he