Spotify Accuses Apple of Using App Store Approval Process as a 'Weapon to Harm Competitors'

[Rigby]

So in what way Apple is not consistent? Netflix did not complain. HBO did not complain.

Probably because they got a sweetheart deal that nobody else got:

https://www.macrumors.com/2015/04/13/apple-15-percent-cut-apple-tv-apps/

 

[waitandwait]

I gave an example. I can buy pizzas and order ubers and meals, etc through apps on the app store and Apple doesn't get a cent.

I already said you don't consumer pizzas on iphone but you do Spotify on the iphone. Isn't that equivalent to licensing 3rd party to access their software?

 

[bushido]

I wish people would actually read what their complaint is about ...

it's about not being allowed to promote the possibility to subscribe from their website and not about Spotify not wanting to pay

 

[nicmart]

Your nose is off if you think revenue and profit smell the same.

Apple kept $6 billion in revenue according to the article. You still need to subtract expenses, taxes and overhead before you start catching the scent of profit.

It's very difficult to debate someone who has no data and doesn't make serious points. No sentient being could imagine that Apple paid anything close to $6 billion in taxes and expenses for the app store. Apple's pretty good at minimizing taxes and maximizing profit. Based on Apple's total tax payment rate and the expectable expenses associated with maintaining an online store, Apple made a handsome profit and your unidentified analysts (if they exist) are incompetent.

 

[truthertech]

Its a very interesting argument, and there are good points and bad points from both camps.

Wearing the Apple Hat:
It costs time and money to develop and provide the App store and App distribution network. Its entirely reasonable to expect that paid apps help pay for this via a portion of their purchase price.

To use the Brick and Mortor storefront analogy into play: Apple is the shopping mall. if you want to run a store in the shopping mall, and use real-estate, you have to pay for that. In return, the Shopping mall takes care of the hydro of the building, access to and from, parking, etc, etc.


Wearing Spotify hat:
After initial App download, Apple isn't involved in the Spotify application or delivery of streaming music. Why should they continue to require 30% of each and every months subscription fee? Apple is not involved in the delivery of content. Its not their network or bandwitdh and its no longer using the App store. Why should Spotify be required to continued to pay 30% of every single user's months subscriptions? Especially since with 30% taken off the top by Apple, There is absolutely no way of staying competitive in the streaming industry when Apple's own music streaming service isn't subjected to a 30% and can afford the 9.99 pricepoint

Your Spotify hat has a hole. Just because someone downloads the app doesn't mean Apple's costs to maintain the App store for updates, maintain and update the operating system that runs the app, or any of the thousands of other costs of maintaining the business that supports the playing of the app go away.

 

[samcraig]

I already said you don't consumer pizzas on iphone but you do Spotify on the iphone. Isn't that equivalent to licensing 3rd party to access their software?

And you haven't explained why one would cost more than the other. What is Apple providing after the transaction for both sets of products that would make a difference?

Is Apple providing the bandwidth for Spotify to stream? Are they paying for the music licensing? I know they aren't making my pizza or sending the uber car over to pick me up...

 

[tkukoc]

Just another example of why I don't mess around with streaming services.. at any moment they might not be able to be updated or just go away all together.. leaving you with nothing. Meanwhile all my cd's are in perfect shape and all my mp3's are backed up in several locations so I don't ever lose them.

 

[CWallace]

You know what's interesting - and I know this is somewhat unrelated... but when Apple wanted to profit off of books - they insisted on taking a 30% cut. But in order for them to do that, they didn't want to diminish their profit - so they colluded to ensure that their profit was maintained as opposed to simply taking less.

The reality of the situation was that the publishing companies were at the mercy of Amazon, who was able to use their market strength to dictate to those companies what Amazon would pay for a book because Amazon wanted low prices to maintain their dominant position.

Those publishers went to Apple because Apple was willing to accept a model where the publishers set their prices, not Apple. Yes, those publishers adjusted that price to reflect the cut they had to give to Apple, but if Apple had not required a cut, the prices would have been higher, anyway.

The irony is that the publishers were able to negotiate deals with Amazon to allow them to set higher prices for e-books (though not without a fight - witness Amazon for a time refusing to carry books by Hachette).

 

[Rogifan]

First off, it wouldn't just be subscriptions that linked to outside the App. All Apps could do this which would cut Apples revenue for running the App Store down to zero. And it would expose customers to increased risk having to sign up to multiple sites for all the different Apps you decided to buy.

Apple deserves a cut because they are giving you access to hundreds of millions of customers with credit cards on file who can make a purchase as simply as tapping their iPhone. Stores like to take credit cards even though they pay fees. Why? Because people will often buy something on credit and pay for it later. So you can get the sale on a credit card or lose the sale because you don't accept them. Same with The App Store. Customers are going to be more likely to purchase something if it's quick and easy. Why do you think Amazons 1-click ordering is so popular? Because it makes things easy for customers.

This is something we can't measure, because Spotify won't say anything about how many customers sign up through iOS. But I bet it's a LOT, given how much they whine about it. They're happy to get millions of subscribers from Apples user base, but don't want to pay for the privilege. It's really that simple.

So should they not allow Amazon apps on the App Store because they don't allow in-app purchases?

 

[samcraig]

The reality of the situation was that the publishing companies were at the mercy of Amazon, who was able to use their market strength to dictate to those companies what Amazon would pay for a book because Amazon wanted low prices to maintain their dominant position.

Those publishers went to Apple because Apple was willing to accept a model where the publishers set their prices, not Apple. Yes, those publishers adjusted that price to reflect the cut they had to give to Apple, but if Apple had not required a cut, the prices would have been higher, anyway.

The irony is that the publishers were able to negotiate deals with Amazon to allow them to set higher prices for e-books (though not without a fight - witness Amazon for a time refusing to carry books by Hachette).

No

Amazon sold some books at less or no profit. The publishers made the same amount regardless. And even testified that many made more money under the old "rule" than when Apple entered the market. And no - the prices wouldn't have been higher anyway. Apple decided to enter the market and instead of adapting to it - tried to disrupt it through illegal means. They failed.

 

[macfacts]

Common sense and business sense fail.

There are physical servers (infrastructure) and bandwidth, and with that there is maintenance, curation, security, etc. that has to be provided by real people. Employees, that need to be paid. So you want Apple to provide all of that for FREE, and make nothing off of the apps?

Spotify already pays yearly developer fees to Apple, those fees cover app distribution and customer billing.Apple doesn't pay for the servers Spotify uses to stream music.

Are you ok with Walmart demanding 30% from Apple for selling gift cards that let people buy stuff from Apple's app store?

 

[rizzo41999]

Typical European socialist jazz

 

[Rogifan]

So who maintain the app store? Who is approving the updates? Who is building the security around the app store?

Apple is doing all of this for free apps too where they get nothing. Somehow Apple is able to do all of this while the majority of apps on the App Store are free or very cheap.

 

[lah]

Spotify already pays yearly developer fees to Apple, those fees cover app distribution and customer billing.Apple doesn't pay for the servers Spotify uses to stream music.

Are you ok with Walmart demanding 30% from Apple for selling gift cards that let people buy stuff from Apple's app store?

There is no way that Walmart is not making any money off those gift cards. They either get a commission of each card sold or get it cheaper than the face value and make a couple of bucks per card.

 

[flexxsingh]

Spotify and Apple are embroiled in a major dispute, which Spotify is today taking to the court of public opinion. Spotify submitted a new version of its app to the App Store, following a decision to eliminate the option to purchase a subscription through Apple, and Apple has rejected the update.

In response, Spotify wrote a letter to Apple's legal team on June 26, portions of which have been shared by Recode. Spotify's letter, which it shared yesterday with Congressional staff in Washington, D.C., accuses Apple of causing "grave harm" to Spotify by rejecting the app update.

The details on the rejection are somewhat murky, but Spotify claims Apple denied the app update and demanded Spotify use Apple's billing system if it "wants to use the app to acquire new customers and sell subscriptions." Spotify was using its iOS app to highlight a promotion offering new Spotify customers three months of service for $0.99, something Apple didn't like.

Apple reportedly forced Spotify to stop advertising the promotion in the iOS app or face the removal of the app from the App Store. Spotify stopped the advertisements, but also decided to stop offering App Store subscription options, a move that's led to the current disagreement between the two companies.At issue is the 30 percent cut that Apple takes from App Store subscriptions, which has caused Spotify to charge $12.99 for subscriptions purchased through the App Store, a $3 premium over subscriptions purchased on the web and $3 more than the price of Apple Music. Apple does not force apps to use its billing system, but it also does not allow apps to offer other purchase options. As stated in the App Store guidelines:
Apple in the past had a battle with Amazon and other book sellers over its App Store rules, which resulted in Amazon, Barnes and Noble, and Kobo removing an in-app book store purchase options from their apps. Apple has never relented on the issue, even years later.

Apple recently announced plans to tweak its subscription policies to take a smaller 15 percent cut from subscribers who stay subscribed to a service for more than one year, but Spotify says those changes don't "get to the core of the problem."

Though Apple has rejected Spotify's update, options to purchase Spotify subscriptions in the Spotify app for iOS devices have been gone since the end of May, removed via a backend update. At the current time, it is not possible to purchase a subscription through the Spotify app, and the Spotify app is not able to direct customers to purchase a subscription on the web.

Article Link: Spotify Accuses Apple of Using App Store Approval Process as a 'Weapon to Harm Competitors'

 

[Futurix]

It already is. Keep your customer for a year? Drops to 15%.

Except they probably know that many people don't keep subscriptions for a year! I know a lot of people who unsubscribe / resubscribe regularly.

And there are 200 different pricing options that Spotify can use. Is that not enough for them to get the terms they want?

That's irrelevant. Apple still gets 30% of any of the options.

 

[AdonisSMU]

Last week Spotify was bragging that Apple actually helped to get them more customers. Now they are saying Apple is hurting them. they need to make up their minds.

 

[samcraig]

Apple is doing all of this for free apps too where they get nothing. Somehow Apple is able to do all of this while the majority of apps on the App Store are free or very cheap.

And while many of these other app developers make money from ad networks without paying Apple a cent.

 

[Crzyrio]

This is the most ridiculous pro-apple response regarding this dispute. Why people continue to repeat it is beyond me.

At the end of the day it is an Apple Product that Apple sells. Apple isnt showing preferential treatment to anyone.

Heck, theoretically Apple could shutdown the entire App store and sell iPhone and then there would be no spotify.

 

[samcraig]

At the end of the day it is an Apple Product that Apple sells. Apple isnt showing preferential treatment to anyone.

Heck, theoretically Apple could shutdown the entire App store and sell iPhone and then there would be no spotify.

There would be no Apple.

 

[waitandwait]

Is Apple providing the bandwidth for Spotify to stream? Are they paying for the music licensing? I know they aren't making my pizza or sending the uber car over to pick me up...

I hope you know what's Spotify's complaints these few years. For your convenience:

Apple turned down a new version of the app while citing “business model rules” and demanded that Spotify use Apple’s billing system if “Spotify wants to use the app to acquire new customers and sell subscriptions.”

In Spotify’s case, the company has used Apple’s billing system for years, but passed on Apple’s fee to customers by charging $13 a month instead of the $10 a month the service sells for outside Apple’s store. Last year, after Apple launched its own music service, Spotify became more vocal about encouraging users to pay for the service outside of iTunes.

Last fall, Spotify started a new end-run via a promotional campaign offering new subscribers the chance to get three months of the service for $0.99 — if they signed up via Spotify’s own site. This month, Spotify revived the campaign, but Gutierrez says Apple threatened to remove the app from its store unless Spotify stopped telling iPhone users about the promotion.

-----
Apple is providing their secured billing, engineers to maintain the app store, support service blah blah. Yes, some people like you may think Apple is not justified to earn $3 of the $13. Then don't use iPhone.

FACT ONE: Spotify has control over their pricing.
FACT TWO: Spotify can decide ditching iPhones
FACT THREE: Consumers can ditch iPhone is Spotify is such an important part of their lives.

Why complain about Apple earning that $3 if you as consumers and Spotify, as developers have their choices

 

[Rogifan]

You just don't get it. What Apple and the App Store provides to developers isn't just credit card processing. That's just the tip of the iceberg. Servers, bandwidth, man-power to maintain the infrastructure, curation, security, and provide customer service, etc., and countless other costs that I can't think of or imagine. All of that costs money.

You want Apple to provide all of that for just the typical % cut of a credit card transaction???

Outside of credit card processing is there something unique Apple provides for subscription services like Spotify vs. free apps like CNN? All the stuff you mentioned applies to all apps, not just paid or subscription apps. So going by your logic there should be no free apps in the App Store because all of the infrastructure Apple provides costs money. Is none of that cost built into the price of an iPhone?

 

[waitandwait]

There would be no Apple.

That's Apple's choice.

 

[hydr0gen]

Apple should have some leverage should Apple Music actually be a good service. Where it stands now, Apple Music is a nightmare.

 

[justperry]

It's because it's true. Apple pays for server space for the App Store, Apple pays developers to continue updating the operating system, Apple pays people to approve apps, and all of those services make the App Store possible. We're supposed to believe Apple should offer all of that for free so Spotify can make money, especially for a service which Apple itself directly competes? It's not a pro-Apple response, it's a pro-"how to run a business" response.

So, it costs $3 for every single person who uses Spotify, no way it costs that much, I bet if they charge $0.01 they still make a profit.
30% is way too much now, in the beginning when the Appstore started it could have been fair but not so anymore.