Spotify CEO Daniel Ek Speaks Out on Dispute With Apple Over App Store Policies

[DNichter]

Nothing is stopping Spotify from making their own phone and app marketplace. This is Apple’s platform, their App Store their rules. Don’t like it? Tough, create your own. Your example is trash because that’s government collusion to benefit in the market overall. Not the same thing.

Apple’s App Store is not a free market. Apple built it, runs it, maintains it, supports it, etc. They pay all the infrastructure fees. And when you say split it off, who do you propose pay for the App Store?

The App Store is like a shopping mall. Merchants lease space to be a part of the mall. If the mall developer has a store of their own, of course they would get a preferential deal on the lease payments of their own store because they own the mall. To say that couldn’t be done is ludicrous.

Logic is refreshing.

 

[Marshall73]

If Spotify (the bigger music streaming company by almost double) don’t like it then they should pull the app. Go web streaming only on iOS. See how far that gets them.

Also, Apple have no monopoly position.
Spotify can run audio ads on the free streams which advertise going premium and just how to do that.

What this boils down to is diminishing cash flow due to increasing royalties from a company with a broken business model. Spotify should dump the free streaming option and go paid only if they want to be around in five years time.

 

[olorsha]

I think a lot of people are missing the point here. Many keep making metaphors about buying something in a store or on Amazon and the retailer taking a cut. That's understandable...it's not really what's happening here, though. Imagine going to Walmart and buying a product that requires a subscription to work--an Abobe CC Suite disk, for example. Now imagine Walmart requiring that...

1. You MUST activate the disk with special Walmart kiosks in store. Adobe is not allowed to provide any instructions for activating at home.

and...

2. Each month you pay Adobe for your subscription, Walmart gets 30% of that subscription.

That would be absolutely ludicrous; that is what apple is doing. Walmart has a loyal customer base of millions and has spent the countless prerequisite hours and dollars necessary to create an infrastructure that draws people in and keeps them coming back, but no one would ever suggest their doing so entitles them to a profit of subscription services just because the initial product was purchased in one of their stores.

You want to take a cut of a product bought at the store (an Adobe CC disk or the Spotify app)? That's understandable. You want to take a cut of a service that product provides and you have no part in providing? That's ridiculous.

 

[paul4339]

Both Apple and Google take roughly the same cut... 30% on first year and 15% after.

Does Spotify cost the same on both ecosystems?

On iOS using Apple's payment system, If Spotify charges 30% more ($12.99) because of the 30% apple fee; does it lower down by 15% the next year for the consumer because Apple's fee lowers to 15%?

 

[matc]

So, you are against logic?

Where’s the logic in this? It’s not so much about the 30% but the abuse of power in an unfair competition. We’re lucky apple is not making money with their weather app or we would have a hard time finding good alternatives in the App Store...

 

[Art Mark]

I agree that Apple aren't being fair in this field. Whether or not they can be sued for it is a whole another matter, but we've now reached a point where dozens of high profile companies are trying to dodge around Apple's revenue sharing systems, from HBO to Spotify etc. etc. Even Disney and Pixar are mad, and the latter of those companies was founded by, among others, Steve Jobs

There is no way that Apple receiving a 30% cut is fair in a scenario such as this. Apple is not offering any services other than billing the customer, for which 30% is massively, massively too high. They don't host the music, they don't pay for the bandwidth, they don't offer the catalogue, they don't protect customer nor provider from anything whatsoever. The only thing they've provided is the platform iOS. If Microsoft can have an anti-trust case just by pre-installing Internet Explorer, surely this more than qualifies as an anti-trust case.

Some good pints, but since when does 'fair' have anything to do with capitalism? We makes laws that can try and level playing fields. But the notion that a company isn't 'fair' seems odd. And Apple is offering LOTS of things for that cut - and that's beyond the fact that Apple developed the customer base for the product. And no, Microsoft didn't lose an anti-trust case 'just because' they preinstalled Internet Explorer. But you are missing the BIGGEST point. Apple is not the largest platform for mobile devices. It is dwarfed by Android. So where do you get anti-trust issues against the smaller player in a field?

 

[PlayUltimate]

Take a look at the terms of a bondable triple net lease and then complain about the 30% cut on the App Store.

 

[78Bandit]

Nothing is stopping Spotify from making their own phone and app marketplace. This is Apple’s platform, their App Store their rules. Don’t like it? Tough, create your own. Your example is trash because that’s government collusion to benefit in the market overall. Not the same thing.

Apple’s App Store is not a free market. Apple built it, runs it, maintains it, supports it, etc. They pay all the infrastructure fees. And when you say split it off, who do you propose pay for the App Store?

The App Store is like a shopping mall. Merchants lease space to be a part of the mall. If the mall developer has a store of their own, of course they would get a preferential deal on the lease payments of their own store because they own the mall. To say that couldn’t be done is ludicrous.

Do you really think there is an even remote possibility Spotify could build their own hardware platform and app distribution store? Even Amazon, Facebook, and Microsoft couldn't make that work. We are faced with a duopoly, and any attempt to portray a third, fourth, or fifth mobile platform as an option is nothing more than a strawman argument.

If you want the AppStore to remain closed, then maybe it is time to open up iOS to sideloading of apps. That way Spotify could indeed develop, distribute, maintain, update, charge for, and receive payments on its own with absolutely no assistance from Apple.

 

[cualexander]

I think a lot of people are missing the point here. Many keep making metaphors about buying something in a store or on Amazon and the retailer taking a cut. That's understandable...it's not really what's happening here, though. Imagine going to Walmart and buying a product that requires a subscription to work--an Abobe CC Suite disk, for example. Now imagine Walmart requiring that...

1. You MUST activate the disk with special Walmart kiosks in store. Adobe is not allowed to provide any instructions for activating at home.

and...

2. Each month you pay Adobe for your subscription, Walmart gets 30% of that subscription.

That would be absolutely ludicrous; that is what apple is doing. Walmart has a loyal customer base of millions and has spent the countless prerequisite hours and dollars necessary to create an infrastructure that draws people in and keeps them coming back, but no one would ever suggest their doing so entitles them to a profit of subscription services just because the initial product was purchased in one of their stores.

You want to take a cut of a product bought at the store (an Adobe CC disk or the Spotify app)? That's understandable. You want to take a cut of a service that product provides and you have no part in providing? That's ridiculous.

Apple doesn’t charge for services consumed outside of the App. As in Uber. Your analogy is bad, a proper analogy would be the optometrists stores in Walmarts. They pay lease fees for the right to be there. The 30% cut is a lease fee for the right to operate within Apple’s store.

 

[Sandybox]

Pretty silly. Spotify wants to use Apple's platform and customer base, which they have worked hard to develop and cultivate for years, to make money. Yet, they don't want to pay Apple a cut for providing this platform and customer base? If you don't want to pay it, you don't have to, but don't expect to use their platform for free.

Yet if Apple drive away lucrative services they won't sell phones? I would sooner have an android phone and have Spotify keep prices low.

 

[DNichter]

Yet if Apple drive away lucrative services they won't sell phones? I would sooner have an android phone and have Spotify keep prices low.

What?

 

[Cosmosent]

NOT Rocket Science, wrt the iOS App Store:

1.) AAPL likes to "Control the Narrative".

2.) AAPL has a complete & total "Stranglehold on App Discovery".

Nothing will change until Cook, Schiller, & perhaps ALSO Cue, are ALL forced out.

Schiller is a "token" WW VP of Marketing, kept in place to protect Cook (the VP of Marketing is "typically" one of the top candidates to take over for a Failed CEO, but certainly NOT in this case).

Schiller controls the App Store; Cue used to control the App Store.

Those are the two MOST to blame, other than Cook, the man @ the top.

 

[bollman]

Name any other retailer that allows a sold product to advertise that it is cheaper to buy it directly from the manufacturer. Not going to happen.

Easy! Any store that sells magazines!

 

[Wildkraut]

Nothing is stopping Spotify from making their own phone and app marketplace. This is Apple’s platform, their App Store their rules. Don’t like it? Tough, create your own. Your example is trash because that’s government collusion to benefit in the market overall. Not the same thing.

Apple’s App Store is not a free market. Apple built it, runs it, maintains it, supports it, etc. They pay all the infrastructure fees. And when you say split it off, who do you propose pay for the App Store?

The App Store is like a shopping mall. Merchants lease space to be a part of the mall. If the mall developer has a store of their own, of course they would get a preferential deal on the lease payments of their own store because they own the mall. To say that couldn’t be done is ludicrous.

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

 

[DNichter]

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

That would be damaging to their platform, for a number of reasons. I am not sure that is the solution here.

 

[paul4339]

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

Android allows other apps stores... I don't have evidence, but I'm pretty sure most people doesn't use it.

The reason why some people use another method or app store is to by-pass rules (or do something illegal) - and if they can go out of their way to do to another app store then they can just as easy go to Spotify's web page and get their service for $9.99.

Why doesn't people just go Spotify's web page and get a discount? They send out emails tell you how to do that... they stream audio to tell you how to do that.

One reason why i like to use Apple's payment system is because I feel it's convenient and trustworthy and I don't have to go to many web site's (like Spotify) to change my info each time my info or credit card changes.

 

[Uofmtiger]

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

You can just download Spotify from the App store and then go to their site and sign up and Apple won't get a cut. This is safer than going outside the store to download an app. Also, the reason to use Apple to pay for the service is that Apple offers convenience and safety. The less places you share your information the better. For $3 a month, I think Apple is offering something in return.

 

[falainber]

That would be like mandating that Airlines show the price of a ticket at other locations. Or grocery stores showing you who has the cheapest cereal. I mean it sounds good, but there is zero incentive for retailers to cut into their profit margins to help a competitor.

Lets be honest, Spotify wants access to Apple's customers without having to give Apple a cut. Spotify also does not want to pay musicians more money, which Apple has.

https://www.nme.com/news/music/spotify-and-amazon-sue-songwriters-after-row-over-royalties-2459832

So Spotify wants more money from Apple customers and wants to pay musicians less. How nice for them right? C'mon now, they're just doing all they can to maximize profits.

Wrong. You are assuming that iPhone owners are Apple customers. In some sense they are but as far as Spotify is concerned they are not. Spotify is perfectly capable distributing their own app. They do not need Apple store for that.

And the reason Apple is OK with paying more to musicians is because they do not need to pay 30% tax (and Spotify has).

 

[iSayuSay]

Do you think governments should tax people that way?

Well tax incentives are common measure of the government to make sure all those big companies paying their taxes properly. You can't expect a company with billions of dollars in revenue to pay the same percentage of tax as common people with a mere $10K on his/her bank account.

More revenue = less cuts percentage. This is not uncommon

https://www.theverge.com/2018/11/30...rketplace-revenue-split-new-rules-competition

 

[Heineken]

Where’s the logic in this? It’s not so much about the 30% but the abuse of power in an unfair competition. We’re lucky apple is not making money with their weather app or we would have a hard time finding good alternatives in the App Store...

What power abuse? The rules are the same for all devs in the apps store. You make no sense. There is no competition here. Spotify is apples customer (a developer) like many others.
[doublepost=1552591420][/doublepost]

Wrong. You are assuming that iPhone owners are Apple customers. In some sense they are but as far as Spotify is concerned they are not. Spotify is perfectly capable distributing their own app. They do not need Apple store for that.

And the reason Apple is OK with paying more to musicians is because they do not need to pay 30% tax (and Spotify has).

So when you open a store can i come and use your shelf and storage space for free? Sell my stuff for pure profit ...

 

[olorsha]

Apple doesn’t charge for services consumed outside of the App. As in Uber. Your analogy is bad, a proper analogy would be the optometrists stores in Walmarts. They pay lease fees for the right to be there. The 30% cut is a lease fee for the right to operate within Apple’s store.

With a straight face, you're going to tell me apple is entitled to 30% cut of profits from an app that they take no part in developing, maintaining, or assisting with any customer experience? The lunacy of this is staring you right in the face and you can't see it. What more is Apple doing with the Spotify app than it is doing with the Uber app which would justify taking a 30% profit from Spotify and not from Uber? Whether the service is consumed outside of or within the app is entirely irrelevant; the work--or lack thereof--is the same for Apple.

 

[Heineken]

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

Forced? WTF. On what grounds?

 

[falainber]

Apple doesn’t charge for services consumed outside of the App. As in Uber. Your analogy is bad, a proper analogy would be the optometrists stores in Walmarts. They pay lease fees for the right to be there. The 30% cut is a lease fee for the right to operate within Apple’s store.

Wrong. Spotify streaming service does not operate within Apple's store. That's the real issue here. Apple is demanding a tax on a service that has nothing to do with them.

 

[cualexander]

I get your point and understand both sides.
Anyway, personally I find that Apple is very close to monopole here and thats the big problem.

For customers an option to install apps outside from App Store would be very positive, e.g like macOS.
Spotify are not the only ones who ran into AppStore problems.

Apple needs to be forced to allow App installs from outside the AppStore, then i see the problem as solved.

You actually can install apps from outside the App Store, it’s just that it’s overly complicated and requires a Mac and Xcode to sign the app. I’ve installed a N64 emulator on my iPad before. It can be done, just only temporarily unless you have a development account.

But I don’t know that would solve Spotify’s issue honestly. You can already pay Spotify directly on their website and use the app from the App Store. Spotify wants it to be a one-click affair and use Apple’s infrastructure to make it simpler for users to pay the monthly fee. Sideloading doesn’t really accomplish that.

Android already offers this ability, and allows for more openness in this regard, but the reason Apple doesn’t is you can’t control the user experience that way. It’s much easier to support Apple products than Android because there are way less variables. Opening their phone up would complicate things for Apple support and cause security vulnerabilities.

 

[mad4erit]

Apple has paid $120 Billion to developers since 2008. I don't think any of those developers would call the other 30% "a competitor tax."

Build a must-have phone.

Build a peerless developer platform.

Build real customer loyalty.

Apple has spent billions of dollars developing their hardware, software, and services portfolio over the last 12 years - the app store didn't assume a dominant position overnight, and Spotify should praise Apple for allowing them to reach hundreds of millions of PAYING customers.