Spotify and Apple Again Clash Over App Store Rules and Fees

[Rogifan]

Not sure how it is in the US, but here in the UK shops do give the mall a percentage of every sale, on top of the rent.

Sure but there’s lots of shopping malls, right? And businesses have the choice of what mall they want to be in, correct?

 

[vipergts2207]

Sure but there’s lots of shopping malls, right? And businesses have the choice of what mall they want to be in, correct?

Not to mention consumers can also shop at multiple malls without issue. iPhone users can shop at only one mall that Apple controls. Though not in the EU anymore. 😆

 

[AlmightyKang]

Sure but there’s lots of shopping malls, right? And businesses have the choice of what mall they want to be in, correct?

Actually as someone who works for a large investment firm that owns a lot of malls, no they don't really have a choice. The majority of major mall outlets make a loss just to keep the brand present in the mall and they make the profit on low overhead online sales.

Also most of the malls are owned by the same company.

 

[vipergts2207]

Actually as someone who works for a large investment firm that owns a lot of malls, no they don't really have a choice. The majority of major mall outlets make a loss just to keep the brand present in the mall and they make the profit on low overhead online sales.

Also most of the malls are owned by the same company.

Huh, sounds like they’re in need of monopoly regulation then.

 

[oldwatery]

Do you think malls get 30% of everything sold in them?

Hint: they do not. They get a flat rent fee. *Which is exactly what developers have been asking for!!*

Malls do take a cut. I owned a restaurant and every mall wanted a percentage of gross. ended up in a mini mall type location that also took a cut. Facts are good! I am no Apple defender…quite the opposite. But Spotify a nd Epic are the bad guys in this. Apple has every right to charge these weasels!

 

[AlmightyKang]

Huh, sounds like they’re in need of monopoly regulation then.

Yes they probably are.

But it's difficult to even get that heard when there's two big tech companies slugging it out in public over a technicality in comparison and taking all the attention away from actual issues.

 

[ashdelacroix]

What is it with the European Union/Commission/Economic Area/Zone/Region whatever they call themselves and forcing companies to market/advertise for other companies in competition? Who wants to do business with someone who just funnels you to someplace else?

Various large corporations and trade bodies have been lobbying very hard in the EU for Apple to open its marketplace, for the simple reason that that is where the money is and they want a piece of the pie. The EU has sold all of these recent changes as good for consumers, and maybe that's the case, but this has all been motivated by the multiple millions spent on lobbying by Apple's competitors.

Personally, I think Apple's cut of subscriptions was always too much and it was inevitable that they would be brought down a peg or two in legislation or in lawsuits or in monopolisation inquiries, but on the other hand we should accept that Apple is providing a uniquely successful global platform that is essentially very easy to develop and distribute on, it has made many billions for developers of all sizes, and it is essentially secure and consumer-friendly. Apple deserves its success.

However, Apple should still have been wiser and not cut so much into the subscriptions, not least because many businesses have very low margins and do not enjoy the 27% margin Apple has on its products. In this sense, Apple is now having to deal with past greed and a lack of political foresight.

 

[Abazigal]

As I said in a previous comment Apple should modify IAP commission to only apply to games. For other apps that want to use IAP charge them a smaller fee to cover the payment processing and support.

I am not against this suggestion if only for the reason that the bulk of iOS App Store revenue comes from freemium games. The money that Apple is making from non-gaming apps is likely less than 5% of overall revenue. The amount of money given up in exchange for avoiding all that bad PR would be a rounding error on Apple's balance sheet.

That said, why only games? The only reason I can think of is their business model - games, like most other software distributed over the internet, tend to entail high fixed costs and low / zero marginal costs. The very sort of business who can survive being taxed 30% by Apple. And if we use this line of reasoning, there really isn't any reason to carve out an exception for companies like Netflix who face a similar cost structure.

Also if this was so important than why does Apple allow Spotify and Netflix to bypass their IAP system altogether?

My understanding is that this is the result of a settlement with Japan's free trade commission. Apple did not create the reader app rule out of some sense of altruism.

Japan Fair Trade Commission closes App Store investigation

Apple will let developers of “reader” apps around the world link to an external website to set up or manage an account beginning early next year.

www.apple.com

So I am guessing that if Apple had their way, the reader rule wouldn't have existed either.

Also if you read the press release Apple put out regarding Spotify it’s quite clear that Apple believes the only reason Spotify is successful is because of Apple. I think that’s ludicrous.

It's also what Apple, in all their self-righteousness, seems to genuinely believe (I assume you are referring to the press release below).

The App Store, Spotify, and Europe’s thriving digital music market

Today, the European Commission announced a decision about the App Store and competition in the digital music market.

www.apple.com

I guess my response would be a somewhat sheepish "Well, Apple isn't entirely wrong, but they aren't entirely right either". Apple has done a tremendous amount of good for developers by them creating the iPhone in the first place, by popularising the concept of an App Store to the mass market, and by continuing to improve on it year after year. You just need to compare it with the Android play store to realise that while not perfect, the current success of the iOS App Store wasn't by chance or luck either. It happened because Apple really invested a lot in developing it, the same way you would tend to a garden.

If there was one criticism to be had of Apple's response, it would be their lack of acknowledgement that developers too have done a lot for Apple and the App Store. I mentioned how I use a number of iOS-only apps, and credit to the developers for pushing the limits of iOS and for not abandoning the platform even when Android came along (though the money on iOS is good too).

Would Spotify have seen the same amount of success today if we were all still using blackeberries and Nokia phones? Who can really say. The issue is that Spotify hasn't exactly been entirely honest or forthcoming with their claims against Apple either.

I dunno about this year's WWDC, but it seems like it might get a tad awkward.

 

[vipergts2207]

Yes they probably are.

But it's difficult to even get that heard when there's two big tech companies slugging it out in public over a technicality in comparison and taking all the attention away from actual issues.

Seems like if there aren't enough people to enforce regulations, we need to hire some more then.

 

[Antoniosmalakia]

The question then is - do you consider $99 a year enough to cover everything, or is it more of an entrance fee so the people actually signing up for a developer account are legitimate ones.

Well, if the estimated number of iOS developers is actually 2.8 million, as google suggests, Apple are making over a quarter of a billion dollars to "check developers' legitimacy", if what you suggest is right.

 

[cocky jeremy]

I hope I live long enough to see Spotify and Epic go out of business.

 

[djphat2000]

What is with this weird sentiment that Apple like owns us or something.

They don't. And for the most part, as a customer. You never need to see how the sausage is made.
This is business to business issues within the EU. How Apple makes its money behind the scenes is really not our business.

So, yes. You pay for the iPhone and any Apple services you decide to purchase.
Apple sells to businesses as well. As Apple has customers that purchase the iPhone. So if a business wants to be on the iPhone. Then they have to purchase something from Apple as well. Be it tools, support, etc.
To cover those developers that want to just get an application out there and they don't want to charge for it.
Apple doesn't charge them for it other than the $99 yearly developer fee. A nice low cost way for anyone to make an app and get it on the store.

If a developer knows their app will make money and they need to make money off the app they make. Then Apple charges up to 30% commission on every sale. As Apple is responsible for the store, for the iPhone, for the tools that make the software and hardware work, etc. They get to profit for their work. It's not a charity and it's not "at cost". It's like a lawyer in some regards. They get paid when you get paid. And as a consumer, you shouldn't care much about this at all. Your iPhone still costs what it costs. Your access to apps are what they are. And the costs for those apps are all part of who gets what cut and profits, yada yada.

Any physical store gets a cut of any sale within that store. This is normal. And no store I am aware of is required to show customers within its store, a price for any good or service that is outside of its stores. Nor is any item or service within that store allowed to advertise a price from outside of the store it is sold in.

The main crux of the argument is that 30% fee. Some feel it's too high. That is certainly arguable. But, then no one is able to demonstrate what would be an acceptable fee. EPIC wants to get to 12% or 15% range. Based on what it charges its customers. OK, that may very well work nicely for EPIC. And it may generate them enough income to support that model. Maybe for Apple it doesn't. Maybe it's more than enough. I don't know and neither does anyone else outside of Apple. But what I think we can all agree on (most of us anyway). Is that free isn't going to work. And that is what Spotify wants. Because the streaming business is pretty cut throat. To make a buck you may have to spend .95c to do it. Again, I don't know and I don't think anyone outside of Spotify can answer that 100%. However, let's be fair here. Spotify doesn't have to pay Apple anything. Just as they have already done. They ride for free as is. As does Netflix. You can't sign up for it via the App. Even at a higher price. Which they do not offer. So any complaining by either is rather silly in my book. If they want to link out, then they have to pay. The argument can then be about how much that should be.

I also believe the EU allows for the fee by Apple to be collected even if it is not from the AppStore. The cheapest option is to have your own store. Which is now allowed under EU rules within the EU. At which point the cost is now half a euro per download over 1 million.

 

[hans1972]

Yes, it is. The Developer Fee is the equivalent of rent. The fee covers, among other things, the Xcode developer tools and app distribution.

Choosing a Membership - Support - Apple Developer

developer.apple.com

About the Apple Developer Program

If you’re interested in creating apps for distribution on the App Store, Apple Business Manager, or Apple School Manager, join the Apple Developer Program.* Membership includes access to beta OS releases, advanced app capabilities, and tools needed to develop, test, and distribute apps and Safari Extensions.

View attachment 2371593

It's a membership fee, but it doesn't cover App distribution for free.

You and developers should really read the contract(s) they agree to.

 

[djphat2000]

Replace Spotify with McDonald's, Starbucks, Uber, Amazon, Netflix, Target, Walmart, etc. They're all on the App Store and they don't pay Apple anything beyond the Developer Fee just like Spotify.

Perhaps McDonald's, Starbucks, Uber, Amazon, Target, Walmart, and everyone else should be removed from the App Store.

Everything with exception to Spotify provides a tangible service or physical good. For which the rules were made to allow those as exemptions. Same for banks and financial services. Spotify and Netflix (and others I'm sure) don't allow you to purchase via the App. So in turn they pay nothing to Apple anyway. They have no argument, as they get exactly what they want. A FREE RIDE. All they lack is a convenient way to allow the end user to link out and pay them directly for a subscription. And in the words of Cricket Green, "I must say NO!". They seem to be doing just fine without having the ability to subscribe via the app. Everyone seems to be able to sign up for their services just fine on their own without a link out from the App. There is no problem.

 

[vipergts2207]

Everything with exception to Spotify provides a tangible service or physical good. For which the rules were made to allow those as exemptions. Same for banks and financial services. Spotify and Netflix (and others I'm sure) don't allow you to purchase via the App. So in turn they pay nothing to Apple anyway. They have no argument, as they get exactly what they want. A FREE RIDE. All they lack is a convenient way to allow the end user to link out and pay them directly for a subscription. And in the words of Cricket Green, "I must say NO!". They seem to be doing just fine without having the ability to subscribe via the app. Everyone seems to be able to sign up for their services just fine on their own without a link out from the App. There is no problem.

Based on whatever the EU's response is to Spotify, we'll soon find out whether or not there's a problem. Their response to this will go a long way in telling how they meant for the law to be applied. It's not a given that Apple is in the legal right on this, nor Spotify for that matter.

 

[ApAx]

Various large corporations and trade bodies have been lobbying very hard in the EU for Apple to open its marketplace, for the simple reason that that is where the money is and they want a piece of the pie. The EU has sold all of these recent changes as good for consumers, and maybe that's the case, but this has all been motivated by the multiple millions spent on lobbying by Apple's competitors.

Personally, I think Apple's cut of subscriptions was always too much and it was inevitable that they would be brought down a peg or two in legislation or in lawsuits or in monopolisation inquiries, but on the other hand we should accept that Apple is providing a uniquely successful global platform that is essentially very easy to develop and distribute on, it has made many billions for developers of all sizes, and it is essentially secure and consumer-friendly. Apple deserves its success.

However, Apple should still have been wiser and not cut so much into the subscriptions, not least because many businesses have very low margins and do not enjoy the 27% margin Apple has on its products. In this sense, Apple is now having to deal with past greed and a lack of political foresight.

Thanks for that background info. A legislative body that has sovereignty over other/multiple nations and entertains a corporate lobby is quite a different experience than here in the U.S., so it a bit confusing to see how all this power is dictated to subordinate countries.

I'm all for keeping corporate greed in check (and it certainly does seem like Apple needs constraints). But it seems like regulatory policy should focus on price caps for Apple's cut on distributed/hosted software and services and not "you must advertise and direct users to your competition." This smells like the other companies get a kickback for every user whose business transaction/download is a result of Apple's forced redirect.

 

[bobbie424242]

**** Apple.

 

[djphat2000]

Based on whatever the EU's response is to Spotify, we'll soon find out whether or not there's a problem. Their response to this will go a long way in telling how they meant for the law to be applied. It's not a given that Apple is in the legal right on this, nor Spotify for that matter.

If they have an issue it would be for the 27% and or half a euro fee. Since the barrier for entry is gone.
And I am not sure if they can force a price of any kind.

 

[thejadedmonkey]

It is my opinion that the App Store does play a role in facilitating a transaction between the company and the consumer. Apple put in a lot of effort in getting users to trust in the safety and security of the App Store. They make it easy to pay using iTunes and biometrics and convenient to create a new account via Sign in with Apple.

I am not sure how relevant that still is today. I guess we could debate till the cows come home as to what a reasonable cut entails, but the point is that Apple does deserve something over and above that users have already paid for their hardware.

Those are all part of the iOS and macOS platform, not the app store itself.

The only truly exclusive part of the app store is their review process to weed out duplicate apps and malware, which makes the app store trustworthy, but again, that's no different than what Google (supposedly) and Microsoft do.

 

[Rogifan]

I am not against this suggestion if only for the reason that the bulk of iOS App Store revenue comes from freemium games. The money that Apple is making from non-gaming apps is likely less than 5% of overall revenue. The amount of money given up in exchange for avoiding all that bad PR would be a rounding error on Apple's balance sheet.

That said, why only games? The only reason I can think of is their business model - games, like most other software distributed over the internet, tend to entail high fixed costs and low / zero marginal costs. The very sort of business who can survive being taxed 30% by Apple. And if we use this line of reasoning, there really isn't any reason to carve out an exception for companies like Netflix who face a similar cost structure.


My understanding is that this is the result of a settlement with Japan's free trade commission. Apple did not create the reader app rule out of some sense of altruism.

Japan Fair Trade Commission closes App Store investigation

Apple will let developers of “reader” apps around the world link to an external website to set up or manage an account beginning early next year.

www.apple.com

So I am guessing that if Apple had their way, the reader rule wouldn't have existed either.


It's also what Apple, in all their self-righteousness, seems to genuinely believe (I assume you are referring to the press release below).

The App Store, Spotify, and Europe’s thriving digital music market

Today, the European Commission announced a decision about the App Store and competition in the digital music market.

www.apple.com

I guess my response would be a somewhat sheepish "Well, Apple isn't entirely wrong, but they aren't entirely right either". Apple has done a tremendous amount of good for developers by them creating the iPhone in the first place, by popularising the concept of an App Store to the mass market, and by continuing to improve on it year after year. You just need to compare it with the Android play store to realise that while not perfect, the current success of the iOS App Store wasn't by chance or luck either. It happened because Apple really invested a lot in developing it, the same way you would tend to a garden.

If there was one criticism to be had of Apple's response, it would be their lack of acknowledgement that developers too have done a lot for Apple and the App Store. I mentioned how I use a number of iOS-only apps, and credit to the developers for pushing the limits of iOS and for not abandoning the platform even when Android came along (though the money on iOS is good too).

Would Spotify have seen the same amount of success today if we were all still using blackeberries and Nokia phones? Who can really say. The issue is that Spotify hasn't exactly been entirely honest or forthcoming with their claims against Apple either.

I dunno about this year's WWDC, but it seems like it might get a tad awkward.

I think apps that are basically just wrappers for web services shouldn’t have to pay a commission to Apple. And apps like Facebook and Instagram don’t because they’re free to use. For Apple this seems less about access to dev tools and support and more that Apple believes anyone who buys an iOS device is their customer and if Spotify wants them as a customer they have to pay Apple for the privilege. But without my ISP & cell provider none of this would work so should Apple and Spotify be paying them?

Apple introduced the reader category in 2016.

 

[callen_v1]

Right now Spotify informs subscribers "You can't upgrade to Premium in the app" so subscribers have to manually go to spotify.com to upgrade from Free plan. Apple gets $0.00 using this method.

View attachment 2371586

But if Spotify were to put a link in the app instead of the above message, that'll cost them 27 percent of subscription revenue. For a link? WTF?

I'm going to caveat all the following with, "Maybe phone app stores shouldn't work like this, but this is kinda how they work now, minus the whole, to use said product you have to be "on the device" and you have to switch devices to use said product somewhere else. Maybe they should be more like streaming services or game platforms where platform owners pay the app developers/studios to have their apps/movies on their platforms, sometimes resulting in exclusivity deals. Ultimately worse for the consumer. Though, if your app is garbage, no one will want it, forcing better development. But, that's super complex, like, who determines if it's bad, does it get limited time to showcase before fees are negotiated etc. Not sure i want that nightmare."

Look at Amazon. They have multiple layered fees and take a cut from every single purchase. They built up a platform that every retail seller wants to be part of. That's not free. Nor should they be forced to make it free. Companies aren't in the business of subsidizing your business. There are costs involved, every company pays them, they pass that cost onto the customer so they can make a profit. If they think it's too expensive on one platform, do it on another. How about another example. Grocery stores. They make around 20% on every product sold. They will also have different rates depending on location on the shelf. It's not free to put your product in a grocery store. They aren't entiteled a spot on the shelf. They also market their OWN BRANDS on the shelf. GASP! OH NO! THE DEVIL! Capitalism. It's why we have nice things. If companies were forced to offer products and services for free, you wouldn't have good, quality products and platforms that people wanted to be part of. Target? yep. Walmart? Yep. Doordash, Uber, Lyft, Grubhub, etc. Every retail business it the world, takes a cut from every product sold, online and in their stores. Spotify is a product. The subscription, is a product. Apple isn't giving their retail platform away for free. Now, maybe a Govt. agency, for example, the FTC, finds this fee to harm the consumer. Maybe they step in and force Apple to reduce it from 27%. But free? No. Forcing Apple to remove fees completely, will have a cascading affect with crushing economic reprecussions. Across the entire retail market. Maybe it should be done, maybe not. Not for me to say.

There is also a reason I left Android for Apple. Me personally, i think it's garbage. The Apps are garbage. The platform is garbage. I don't want Apple to be forced to be what Android is. I don't care about other opinions. This one is mine. They have 60% market share for various reasons.

 

[robvalentine]

So Apple tracks you like google, and stifles competition? Why am I not surprised. Apple sell the hardware and operating system, and then force you to use their marketplace. I'm getting really tired of the apple taxes, such as only being able to use Siri to switch on my front door light if I'm connected to my home wifi, unless I fork out on an Apple TV or HomePod which I don't need as I have google nests which work with any operating system. and now they want 27% of Spotifys income from a click, whilst doing nothing to serve the content?

Everyone is saying apple should leave the EU, but if Spotify quit iOS I think there would be a bigger effect as most people in UK at least seem to use Spotify.

I look forward to laughing at the downvotes.

 

[brofkand]

Perhaps this in part explains why Spotify would like all transactions & money fly under the radar – you know, not being tracked by any third party such as Apple.

Why is it Apple's business how many paying customers Spotify has, other than what is essentially corporate espionage to feed data to their Music division?

 

[brofkand]

So Apple tracks you like google, and stifles competition? Why am I not surprised. Apple sell the hardware and operating system, and then force you to use their marketplace. I'm getting really tired of the apple taxes, such as only being able to use Siri to switch on my front door light if I'm connected to my home wifi, unless I fork out on an Apple TV or HomePod which I don't need as I have google nests which work with any operating system. and now they want 27% of Spotifys income from a click, whilst doing nothing to serve the content?

Everyone is saying apple should leave the EU, but if Spotify quit iOS I think there would be a bigger effect as most people in UK at least seem to use Spotify.

I look forward to laughing at the downvotes.

A lot of people globally use Spotify vs. Apple Music, if nothing else because Spotify has a free tier and Apple Music doesn't.

 

[JordanCautious]

Lol. Spotify is sounding more and more like a bum. Let's not forget they pay the artists on their platform the worst per stream. ******* company honestly. Apple Music is only worse in music discovery. Everything else is way better