Spotify CEO Daniel Ek on Apple's EU Changes: 'They Think the Rules Don't Apply to Them'

[AppliedMicro]

The assumption is that lower fees equals developers lowering prices

It at least leaves room for them - and competition.
The rest is up to competition.

Maybe Apple should still take a 50% cut and just rebate 5% of tehir cut to the purcahser?

I'm not following... how's that different than 45% in the first place?

Can an independent App Store attract enough developers and paying customers to cover fixed costs of running a site on a smaller than 30% commision?

How big are FastSpring, Paddle and others?

Of course they can. Payment processing is about 3% or less, hosting and web traffic is dirt cheap. And signing is free. Customer support will be left to the developers themselves (just as Apple does). And the taxes are a question of scale - but in the EU they'd benefit from the EU's one-stop shop regime.

Real side loading would require no Apple signing for sideloaded apps.

I do still consider installing signed apps on my Mac a form of "sideloading".

I suspect a lot of Whack a Mole in the future.

Agree.

 

[jlc1978]

It at least leaves room for them - and competition.
The rest is up to competition.

My point was after Apple dropped the commission rate the consumer did not see a corresponding price drop, the developers simply pocketed the difference. That tells me developers are not all that interested in competing on price but just want to add a 15% developer's tax.

Another data point is subsccription prices dn't drop after year one despite Apple lowering their cut then.

I'm not following... how's that different than 45% in the first place?

My post got mangled somehow. I deleted the screwed up section.

What I meant was, a real benefit to the consumer would have been for Apple to, when they cut developer fees, rather than give the extra 15% to developers rebate that to customers at time of purchase. Developers still get what they decided they wanted when they priced their app and consumers get a price cut.

How big are FastSpring, Paddle and others?

And how much do they charge? I've seen them as a backend processor but not running an App Store like Apple's.

Of course they can. Payment processing is about 3% or less, hosting and web traffic is dirt cheap.

There is a lot more to running an App Store. You need staff to develop and maintain the web site, advertising to get noticed, verify apps etc. In addition, if you allow free apps to use it for free then you are losing money on them.

In addition, why would the most popular apps with millions of d/ls go to a third party store? They are likely to be in the best position to go it alone, and likely are the very apps that bring in the most revenue and drive a stores profitablity. If the 90/10 rule didn't apply, Apple would not be looking for ways to still charge them.

I'm not saying it's not possible, just that the margins are likely small enough that less than 30% will be tight for anyone other than a large company with other revenue streams.

IMHO. the most likely scenario is some of the major players, such as EPIC and Spotify, move to distribute their app on their own site. EPIC might start an App Store just to stick it to Apple and continue to whine about paying Aple to be on their's. Spotify will try to figure out how to make money and not go under. A few developers will offer d/l and sales through their site but most will stick with Apple because, well, it's very lucrative. They may try other stores but not leave Apple.

And signing is free.

I'm not sure Apple will continue to do that for apps they don't host. I could see it mimic the Mac model and the non-app store apps get the unknown dveloper warning.

Customer support will be left to the developers themselves (just as Apple does).

However, the hosting site has developrs as customers that will need tech support.

And the taxes are a question of scale - but in the EU they'd benefit from the EU's one-stop shop regime.

However, many other jurisdictions are more complicated so unless you stay in the EU or pay someone you have a big headache to deal with.

I do still consider installing signed apps on my Mac a form of "sideloading".

I do as well. I was refering to allowing unsigned apps to run.

 

[MacFarmer]

haha, this is hilarious. This douche wants to have his cake and eat it too and with new policy hope they will be paying even more: D

 

[killhippie]

I'm totally confused the UK abides as much as it wants to in EU affairs because its a spoilt brat after it left the European Union, but we are in Europe, nobody took a specially made nuclear powered hacksaw and cut us off the continental shelf and towed us to warmer climates! So Apples new app store rules for the EU (yay I get to have real Firefox and Ublock origin too I thought) wont happen in the UK (boo).

That's just stupid because the UK hides behind some by privacy laws with the EU namely data protection, but Apple wont give the UK the same update as the rest of Europe even though we are in Europe, or is it just we are not part of the EU Bloc gang with their Prosecco, Roquefort cheese and Prada gear?

This countries electorate are mostly stupid and giving them the right to vote on something hugely important which they thought meant we could have newspaper wrapped around the outside of our chips again (true story listen to James O' Brian on LBC Radio) and the next day after the damage was done most of them googled 'what's the EU' so that was a great move (thanks to David Cameron now a Lord just so he can be back in parliament again who ran scared from the highly right wing and Fascist Nigel Farage and his mate Tommy ten names which then caused this mess) "Sighs" and all I wanted were real browsers to make my iPad feel useful.

 

[AppliedMicro]

the developers simply pocketed the difference. That tells me developers are not all that interested in competing on price but just want to add a 15% developer's tax

Even if they did, it increases developers’ revenue and earnings that they can use to improve their app/service and invest in innovation.

Counterquestion: 👉🏻 does Apple use half of commissions to compete on App Stores? Certainly no.
Do they use it to invest in their product - or are they merely pocketing the difference?

And how much do they charge? I've seen them as a backend processor but not running an App Store like Apple's.

While I don’t know much about their customised pricing, Paddle advertise 5% + 50c per transaction. Which seems very reasonable if you cost it up starting from card payment transaction fees/costs.

The hosting is a non-issue in terms of cost, and support is too. There isn’t much if any overhead compared to the App Store - in fact, I’ve had more installation and update issues with Apple’s Mac App store compared to (signed!) third-party apps purchased from developers web sites.

 

[roar08]

What if the player is breaking the rules?

What if you just don’t like the rules? Or the game?

 

[jlc1978]

Even if they did, it increases developers’ revenue and earnings that they can use to improve their app/service and invest in innovation.

I really don't care about developers' revenue, ending Apple's control of app distribution is supposed to benefit the consumer with price competition. People claim lower fees will benefit the consumer with lower prices yet that was not the case when Apple lowered its fees. I doubt we'll see lower prices with the new EU rules.

Counterquestion: 👉🏻 does Apple use half of commissions to compete on App Stores? Certainly no.
Do they use it to invest in their product - or are they merely pocketing the difference?

For me, what Apple does with the money is irrelevant, as long as the App Store works.

While I don’t know much about their customised pricing, Paddle advertise 5% + 0.50c per transaction. Which seems very reasonable if you cost it up starting from card payment transaction fees/costs.

It appears to be 5% plus 50 cents, which kills any of the low priced apps with higher transaction fees alone.

The hosting is a non-issue in terms of cost, and support is too. There isn’t much if any overhead compared to the App Store - in fact, I’ve had more installation and update issues with Apple’s Mac App store compared to (signed!) third-party apps purchased from developers web sites.

An App Store certainly would have overhead costs to run the store way beyond hosting. My point isn't about develoers, but the challenge of starting a competing App Store. It's more than just getting a cheap Amazon hosting account, setting up Paddle to handle transactions or let developers go it alone. I question whether such stores will get enough traffic to cover fixed costs at a lower comison rate than Apple. If you look at a developer using their own transaction system, you're capped at something less than 25% to compete with Apple on price, and probably lack the customer base to be an attractive alternative.

As I said, I just don't see a bunch of new 3rd party app stores flourishing, but only a few of the big players having a go at it and charging close to what Apple does. YMMV

One upside will be the possibility of interesting side loaded apps; although I fear the rise of more subscription vs one time buy apps if piracy becomes a problem.

Either way it'll be interesting to see how the EU system plays out because it portends what may happen elsewhere.

 

[AppliedMicro]

Apple's control of app distribution is supposed to benefit the consumer with price competition. People claim lower fees will benefit the consumer with lower prices yet that was not the case when Apple lowered its fees

This was against a trend of continuously rising app prices in general. Apps cost much more than 5 or 10 years ago, even adjusted for inflation - especially when taking into account many apps that changed to subscription pricing.

It appears to be 5% plus 50 cents, which kills any of the low priced apps with higher transaction fees alone.

Of course - I meant to write either 50c or 0.50. They do explicitly ask advertise to contact them for custom pricing when selling products below $10. That said, even at the advertised pricing, even a single month of a Spotify subscription would be about 10% - compared to Apple’s 30% (and Spotify would presumably get custom pricing too, given their volume).

An App Store certainly would have overhead costs to run the store way beyond hosting. My point isn't about develoers, but the challenge of starting a competing App Store

My point was about developers that sell from their own web site, not application stores.
The concept of a “store” that carries multiple vendors and allows “discovery of apps” seems largely obsolete to me, unless they’re operating in a niche or aggregating specific types of apps (e.g. games, apps for creative professionals, etc.).

Spotify certainly don’t need a larger store on which they can be “discovered”.

As I said, I just don't see a bunch of new 3rd party app stores flourishing, but only a few of the big players having a go at it and charging close to what Apple does.

In the end, they make the biggest, most popular apps.
And 20 percentage points less than Apple would be considerably savings.
Which will, in many cases be passed on (at least partly) to customers.
Certainly, when there’s fair competition and over the long term.

I mean, what would happen if Apple increased their first-party store commissions to 50%?
Developers surely wouldn’t just bear those added costs and keep prices the same, would they?

👉 If a reduction from 30% to 10% transaction costs doesn’t have an impact on consumer pricing at least over the longer term, it just shows how deeply anticompetitive the system really is today.