Google Play Store Now Letting Spotify Use Alternative Billing for In-App Purchases

[akashagrawal]

Did I read this correctly — Google will charge 4% less than normal? So instead of 30% or 15%, it will be 26% or 11%? I’m assuming Spotify would be in the higher category regardless, so we’re talking 26%. Does anyone think this will make any difference to Spotify? They want ZERO fees — they want to leach off the infrastructure that was built to allow their app to exist in the first place, and they want to pay nothing to support it.

I think it's a bit more complicated than just a percentage fee.

Let's say you build an app, and it's ground-breaking. It quickly becomes a leader on both Apple's and Google's play store. And you charge $9 for it, out of which you keep $6, and Apple/Google keep $3 for the hosting, promotion and infrastructure.

If I develop a similar app, I'll have to compete with you on a similar price point or better features. That's fair competition. We both pay the same fee.

But one day, both Google and Apple both roll out a competitor app with same features as yours (Apple Music), also sold at $9. Now you're in a fix. Not only your biggest competitors don't have to pay a cent in app store fee (they own the store), they also get money off of you.

i.e., Apple/Google get to keep entire $9 plus they get $3 from you. You get $6 only. How are you supposed to keep competing with them at the same price point? For how long is it going to be sustainable, since you're directly financing your biggest competitors?

I think it's fair to either lower their fee considerably, at least for the apps they are directly competing with, or be forced by law to not compete with paid apps. You either get money from app store fee or by selling apps/services on store. Not both. They're trying to have their cake and eat it too.

Btw, Amazon pulls the same tactics. Let a product get popular, then roll out a cheaper, almost exact replica.

In other words, App store owners should promote app developers. Apps should be a sustainable business. Right now, they're kinda using app developers as their test beds. Let some rando validate the app idea and business model and get big, then swoop in and edge them out of the store by unsustainable pricing.

Spotify -> Apple Music
Netflix -> Apple TV
This also applies to other apps. Like how Apple basically killed the apps providing sleep tracking by rolling it out on Apple watch. Or how nobody really needs to buy a reminders app anymore. It's a weird loop. The popular my app gets (yay), the more risk I'm at of completely losing my business to Apple/Google (nay).

 

[Kierkegaarden]

I think it's a bit more complicated than just a percentage fee.

Let's say you build an app, and it's ground-breaking. It quickly becomes a leader on both Apple's and Google's play store. And you charge $9 for it, out of which you keep $6, and Apple/Google keep $3 for the hosting, promotion and infrastructure.

If I develop a similar app, I'll have to compete with you on a similar price point or better features. That's fair competition. We both pay the same fee.

But one day, both Google and Apple both roll out a competitor app with same features as yours (Apple Music), also sold at $9. Now you're in a fix. Not only your biggest competitors don't have to pay a cent in app store fee (they own the store), they also get money off of you.

i.e., Apple/Google get to keep entire $9 plus they get $3 from you. You get $6 only. How are you supposed to keep competing with them at the same price point? For how long is it going to be sustainable, since you're directly financing your biggest competitors?

I think it's fair to either lower their fee considerably, at least for the apps they are directly competing with, or be forced by law to not compete with paid apps. You either get money from app store fee or by selling apps/services on store. Not both. They're trying to have their cake and eat it too.

Btw, Amazon pulls the same tactics. Let a product get popular, then roll out a cheaper, almost exact replica.

In other words, App store owners should promote app developers. Apps should be a sustainable business. Right now, they're kinda using app developers as their test beds. Let some rando validate the app idea and business model and get big, then swoop in and edge them out of the store by unsustainable pricing.

Spotify -> Apple Music
Netflix -> Apple TV
This also applies to other apps. Like how Apple basically killed the apps providing sleep tracking by rolling it out on Apple watch. Or how nobody really needs to buy a reminders app anymore. It's a weird loop. The popular my app gets (yay), the more risk I'm at of completely losing my business to Apple/Google (nay).

You’re forgetting that Apple was selling music through iTunes long before Spotify was even on the map. Moving into streaming seems like a natural progression from where they had been for quite some time.

The other point is that Spotify probably wouldn’t exist in the first place without the mobile platform that Apple created. If they were web-only, I doubt it would have scaled like it did.

And the Amazon comparison doesn’t make sense — they are constantly putting out private label products based on sales data from their store. Apple is not putting out software based on what is selling in the App Store. If that was the case, why hasn’t Apple released a game of their own? Because I believe games are the largest source of revenue from the App Store.

Most of Apple’s software is offered for free, and have been available for a number of years — iWork suite, GarageBand, etc. And Netflix didn’t want to pay any fee long before Apple decided to get into TV+.

It seems like the only point of contention is Spotify — but I think their goal is to pay no fee, so I don’t think negotiating with them would be productive.

 

[darthgreen]

why its not my system my choice? If you use Apple products, well then its their standards. You cant force change some companies’ standards

 

[wanha]

It's just 4 PERCENT less tho.

So Spotify still pays either 11 or 26% to Google (instead of 15 or 30%), depending on which rate they are on.

That 4% is barely enough to cover the CC processing costs.

The fact that it's just 4% discount should be a bigger news here and more explicitly pointed out in this piece of news.

 

[wanha]

Did I read this correctly — Google will charge 4% less than normal? So instead of 30% or 15%, it will be 26% or 11%? I’m assuming Spotify would be in the higher category regardless, so we’re talking 26%. Does anyone think this will make any difference to Spotify? They want ZERO fees — they want to leach off the infrastructure that was built to allow their app to exist in the first place, and they want to pay nothing to support it.

Exactly.

The article does a criminally poor job of pointing this out.

 

[wanha]

why its not my system my choice? If you use Apple products, well then its their standards. You cant force change some companies’ standards

Meanwhile in the real world, standards are imposed on companies in just about EVERY industry.

Cars, energy, banking, insurance, etc - they all have to adhere to standards.

It's how societies work.

 

[wanha]

A. Will users get any discount?
B. Can we still use Google Play balance to pay?

What discount?

It's just 4% less, meaning Spotify pay Google 26% instead of 30%.

And on top of the 26%, they now need to cover the credit card processing fees and other administrative costs (refunds, etc) that go along with it.

I doubt Spotify is saving any money here.

And even if they did save money, do you really think they'd pass it on to their users?

 

[ytk]

I recently had an old iPhone 11 I only needed to get service on for a couple of weeks, and the easiest way was to just get a new eSIM through the T-Mobile prepaid app. A bit more expensive than other carriers, but boy was it simple. But I noticed that they accepted direct credit card payments through the app, and I was billed by T-Mobile rather than Apple. What gives? Is this a specific exception to Apple's policy about only allowing payment through the App Store?

 

[cupcakes2000]

Cool. So Spotify save 4%. What a boon for consumer rights! Cant wait for Apple to be forced to do this. It's great to see massive companies able to save a bit of money at the same time as eroding Joe Nobodies ability to easily trace and stop a subscription, or know exactly where their financial details are being held. The future looks so bright! Go Consumer Rights!

 

[AppliedMicro]

Spotify? They want ZERO fees — they want to leach off the infrastructure that was built to allow their app to exist in the first place, and they want to pay nothing to support it.

Spotify probably doesn’t want Google leeching off them.

Spotify licensed the music, they built the app, they built or contracted the streaming infrastructure - while Google does pocket a monthly share for doing nothing.

How about internet providers and the power company also charge 20% or so for providing the infrastructure these Spotify and Google depend on? Surely you‘d agree on that?

 

[AppliedMicro]

Sometimes, what a customer wants is only offered by a single retailer, and that is just part of life.

…and often, when they‘re a monopoly or duopoly, they‘ll get scrutinised and regulated by government. That’s part of life.

 

[cupcakes2000]

Spotify probably doesn’t want Google leeching off them.

Spotify licensed the music, they built the app, they built or contracted the streaming infrastructure - while Google does pocket a monthly share for doing nothing.

How about internet providers and the power company also charge 20% or so for providing the infrastructure these Spotify and Google depend on? Surely you‘d agree on that?

I run a business. I need to pay for certain things, certain services that I use from other companies. Often they seem 'to do nothing', except I need them in the circumstances. It's the cost of doing business - don't give me 'poor Spotify'. I earn a mere pittance compared to them, but I need to pay my share too. It's the world we live in. You pay Spotify for their service, Spotify pay Google, the artists and whoever for their service. It's how it works the word over. The internet providers and the power companies do charge for providing the infrastructure. It's just built in to the price, as it is for the end user of most products. My clients pay for my costs, as do everyone else's, or no one would make any money.

 

[Michael Scrip]

So it's either 30% to Google... or 26% to Google and 4% to billing. I don't really see a difference.

But why is Spotify even bothering with the Google Play Store in the first place?

One of the nice things about Android is that you can have alternative app stores or offer apps from your website. That's what I always hear when this topic comes up.

So why doesn't Spotify just run their own app store on Android and keep that 26% for themselves? Or let people download the app directly from their website?

On iOS... yeah... you're stuck playing by Apple's rules at the moment.

But on Android? I thought Android was always about freedom?!?!?

 

[ProfessionalFan]

Google will charge 4% less than normal? So instead of 30% or 15%, it will be 26% or 11%? I’m assuming Spotify would be in the higher category regardless, so we’re talking 26%. Does anyone think this will make any difference to Spotify?

That's a significant amount of money when you add up all payments though.

 

[akashagrawal]

You’re forgetting that Apple was selling music through iTunes long before Spotify was even on the map. Moving into streaming seems like a natural progression from where they had been for quite some time.

The other point is that Spotify probably wouldn’t exist in the first place without the mobile platform that Apple created. If they were web-only, I doubt it would have scaled like it did.

And the Amazon comparison doesn’t make sense — they are constantly putting out private label products based on sales data from their store. Apple is not putting out software based on what is selling in the App Store. If that was the case, why hasn’t Apple released a game of their own? Because I believe games are the largest source of revenue from the App Store.

Most of Apple’s software is offered for free, and have been available for a number of years — iWork suite, GarageBand, etc. And Netflix didn’t want to pay any fee long before Apple decided to get into TV+.

It seems like the only point of contention is Spotify — but I think their goal is to pay no fee, so I don’t think negotiating with them would be productive.

Itunes is a completely different ball game, though. Spotify got popular because suddenly you have access to millions of song for a monthly fee, instead of buying music. There are pros and cons for each, for sure.

I don't think streaming is a natural progression from buying outright. Even if it is, both Netflix and Spotify beat pretty much everyone to the punch. They pioneered this, and validate the whole business model for everyone.

I'm not downplaying Apple's role in building one of the best platforms for distribution of apps, but I feel you might be downplaying the role of app developers and the innovations they've done. Sure, Spotify exists because of App store, but it was created by an independent developer, and if Spotify, Facebook, Instagram, Youtube weren't on Apple store, it'd be a different picture, honestly. It's a cycle of dependencies. Apple needs the best apps to be on its store as much as those apps need to be on Apple's store. Windows mobile got killed because it never got traction with app developers.

 

[BaldiMac]

I think it's a bit more complicated than just a percentage fee.

Let's say you build an app, and it's ground-breaking. It quickly becomes a leader on both Apple's and Google's play store. And you charge $9 for it, out of which you keep $6, and Apple/Google keep $3 for the hosting, promotion and infrastructure.

If I develop a similar app, I'll have to compete with you on a similar price point or better features. That's fair competition. We both pay the same fee.

But one day, both Google and Apple both roll out a competitor app with same features as yours (Apple Music), also sold at $9. Now you're in a fix. Not only your biggest competitors don't have to pay a cent in app store fee (they own the store), they also get money off of you.

You're ignoring the elephant in the room. Apple invests billions in maintaining the platform. And, of course, Apple still has the credit card fees and other transactional and distribution costs. So "don't have to pay a cent in app store fee" is misleading.

i.e., Apple/Google get to keep entire $9 plus they get $3 from you. You get $6 only. How are you supposed to keep competing with them at the same price point? For how long is it going to be sustainable, since you're directly financing your biggest competitors?

Except, in reality, Spotify doesn't currently pay Apple anything on new transactions. Just 15% on some legacy subscriptions. Big difference when you stop talking in hypotheticals.

 

[Unregistered 4U]

You’re forgetting that Apple was selling music through iTunes long before Spotify was even on the map. Moving into streaming seems like a natural progression from where they had been for quite some time.

Right, all these points always start with “Ok so, while I don’t know how they got there, Apple has very likely always existed just as they are (probably since the 1900s, I don’t know, before I was born), in their current state. It’s not like Apple had to actually had to WORK at creating a popular OS and hardware combination and deal with the IMMENSE risks that entails, not to mention the acquisition of massive amounts of manufacturing, development, security, legal talents required to ensure that everything keeps working. Developers, though, in creating a small set of software ONLY features on top of this… THEY’RE doing work. THEY have to exert effort to gain popularity but, you see, in an entirely different way than Apple had to exert effort to gain popularity.”

 

[CapitalIdea]

Agree. I too think there are all sorts of ways Apple can effectively dip a toe in this pond and still manage to monetize the experience. As you mention, aspects like convenience and security are legit features they could (and do) tout - but in this instance as a way to sway users to go with them as opposed to app dev's site. Seems almost inevitable and should prove pretty interesting.

The way to monetizing it is simple enough. Apple will likely just start charging hosting and delivery fees for the app itself, with a metered bill for every download from the App Store, and probably will also ask for money from devs providing a free app as well.

 

[votdfak]

Wait a minute, they’re still taking 26-27% commission instead of 30%, and Spotify hails this as “leveling the playing field?” That extra 4% really makes all the difference?

This is clearly just posturing. I don’t know what their real motive is, but being Spotify they probably are just happy to have your credit card number because they make it very difficult to cancel.

Difficult to cancel? How?

 

[votdfak]

It's Android. Security doesn't exist there.

That's like second grade statement.

 

[compwiz1202]

So it's either 30% to Google... or 26% to Google and 4% to billing. I don't really see a difference.

But why is Spotify even bothering with the Google Play Store in the first place?

One of the nice things about Android is that you can have alternative app stores or offer apps from your website. That's what I always hear when this topic comes up.

So why doesn't Spotify just run their own app store on Android and keep that 26% for themselves? Or let people download the app directly from their website?

On iOS... yeah... you're stuck playing by Apple's rules at the moment.

But on Android? I thought Android was always about freedom?!?!?

Exactly why do these well-known companies have subs in the app stores anymore? Little guys definitely benefit because it's a central store with exposure. People should know by now they can sub on the site too.

 

[alfonsog]

Apple/Alphabet should relax those rules saying you can't advertise or allow outside clicks to a web browser to buy in app purchases and they should just drop in-app purchases fees to under 10% which would probably shut down all these lawsuits pretty fast... before they are made to do it anyway... Credit card fees are <4%

 

[boyarka]

It's Android. Security doesn't exist there.

Oh, that's right: "security". Like blocking users from installing anything outside of AppStore, while "curated" apps there every now and then are shown to be malware. "Security" just like when Uber had an app that managed to track/reveal law enforcement who were trying to catch tax-evading drivers ... an app that Apple willingly ignored all the way until Cook had a private chat with Uber's CEO.

This shtick with security is like jedi mind tricks on a Toydarian - don't work.

What is however happening is that other platforms like Android are wising up to the fact that not everyone liked it in the fruity narcissistic ecosystem and they are opening their doors wide for those that want to jump ship, and furthermore EU is prepairing its big (but slow) stick of rectal punishment that wilm be forcefully inserted deep and hard, to make such shameless anticompetitive monopolies toe the line.

 

[dk001]

Dang! That's something Apple would never allow into the App store. But they may no longer have a choice anymore in the future.

Also, curious about how secure is the transaction is.

Why?
There are a lot of apps that allow alternative payment options.
Delivery, Food, etc...

Not sure how this is different.

 

[Kierkegaarden]

That's a significant amount of money when you add up all payments though.

But I believe Spotify would have to pay credit card processing fees in this scenario, so it’s probably a wash.