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

[oneMadRssn]

Spotify has no unfair disadvantage over Apple Music unless Apple decides to lower their price to lower than $9.99. It's up to the customers to choose if they like Spotify or Apple Music or Tidal or Amazon Music and etc. there are so many choices. If Apple decides to stop offering Apple Music that doesn't change the fact that Spotify still have to pay 30% for using their platform. But I do agree that a service requires monthly subscription Apple with millions of users should have a discount like 20-25% but still that's Apple's decision.

If Apple charged everyone 30% and doesn't itself compete in music streaming, that's fine. Everyone is playing on the same field and by the same rules. The problem is Apple is using its market strength in app stores to advantage itself in the market of music streaming because it isn't subject to the same 30% fee and restrictions on advertising.

Just think about the math: Let's say a Content Owners charges $2.50 to anyone who wants to offer it for download, and both Apple and Competitor offer it to download. Apple sets the price at $3. If Competitor sets the price at $3, it has to pay Apple $1, and thus only gets $2. Thus, at the $3 price point, Competitor loses $0.50 per download AND Apple makes $1 for each of Competitor's downloads, and Apple makes $0.50 for each of Apple's downloads. Competitor can't price it higher than Apple, because they would lose customers.

 

[TobyR]

Is it 15% or 30%?

 

[AppleFan1179]

So when Apple decide to not allow porn apps in their store that is also an abuse of monopoly power that should be regulated?
Take your time with your answer....

You should've taken more time with yours.

 

[thasan]

I’d say Apple benefits greatly by being able to offer this brand or other brands. Ask MS how mobile went for them when they couldn’t get such brands to even make apps for their platform.

If you own Apple stock you should be selling. Spotify is only the first. This 30 percent racket won’t last with no ability to allow redirects for payment.

MS was in a different situation then. Did they need to maintain stores? They were also charging customers for their OS.
I support apple because to me, it makes sense. It might not make sense to you and I am fine with that.
I wont be able to sell anything in Amazon for free. Will I?
As for whether I own any stocks of apple or someone elses or not, thats none for your business.

 

[McTool]

It’s all about the money.
Such envy towards a company.
Like Google: pathetic people.

 

[trifid]

We should always look at the "Magazine bought at a Walmart" analogue. If you buy a magazine for $5.00 at Walmart then Walmart takes a sizable cut. The magazines all have an adverts for subscriptions which you can buy through the web or via US mail. Walmart does not get a cut of that subscriptions which are paid through other means. However, if every month you buy a magazine from Walmart then they get a cut every month. Apps like Spotify, Netflix, Hulu, HBO etc. should be able to advertise discounted subscription pricing in their apps and direct these customers to a web site. Apple is being a butthead and should either voluntarily alter their pricing or should be forced by anti-trust action. I subscribe to HBO via the IOS app but would have no problem cancelling and resubscribing thru my browser for a slight discount. I understand why Apple has it's pricing scheme - Apple is a for profit company and can do it so it does. It shouldn't do it and needs to be forced not to do it.

Bingo, this is exactly right.

There is a huge difference between regular apps and subscription apps, and Apple's pricing model was conceived prior to subscriptions, hence it's unfair and outdated.

 

[Baymowe335]

Too bad. Build your own App Store or pull your app.

 

[AlterZgo]

Can't you just run spotify from a web browser? Does it need to be an app purchased through the app store?

 

[threesixty360]

You should've taken more time with yours.

maybe...

I'm just struggling to understand where Apple has a right to dictate terms on a store it owns, especially as the OS it provides software for is not a monopoly.

If they can stop Porn apps they can set prices and other terms. Its their right.

 

[AppleFan1179]

MS was in a different situation then. Did they need to maintain stores? They were also charging customers for their OS.
I support apple because to me, it makes sense. It might not make sense to you and I am fine with that.
I wont be able to sell anything in Amazon for free. Will I?
As for whether I own any stocks of apple or someone elses or not, thats none for your business.

The problem isn't necessarily that Apple charges a fee for their service. The problem is that they are using that fee in an anti-competitive manner. This is actually a similar complaint against amazon selling their own products now, and placing them first in search results. It's anti-competitive. Search for "HDMI Cable" on amazon. First you get folks who PAID amazon to be first, then you get amazon's own cables. You don't see an actual decent cable until page 2.

 

[PlayUltimate]

This right here is why I side with Spotify. I understand Apple enforcing the 30% rule because Apple provides billing management and other technical services for that 30%, but to not allow Spotify to let people know they can sign up elsewhere? That feels like a tight grip that has clear competitive implications.

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.

This whole thing sounds completely disingenuous. Spotify and Apple Music have been fighting it out for years and NOW the "Apple tax" is a problem. I would have given this more credibility if Spotify complained when Apple Music was first introduced. But Spotify had such a huge lead, I suspect they did not want to upset the money and market that the iPhone was providing. Now that Apple is catching up, it is unfair.

 

[AppleFan1179]

maybe...

I'm just struggling to understand where Apple has a right to dictate terms on a store it owns, especially as the OS it provides software for is not a monopoly.

If they can stop Porn apps they can set prices and other terms. Its their right.

But they don't offer a porn app. That's the big difference here. The fact Apple offers their own competing service is the crux of the issue. They are using their platform as leverage to get more of the customer's money without necessarily competing on the merits of the service. See also Apple Maps. The default map program is Apple Maps, even though it is nowhere near as good as Google Maps, and you can't change it. Apple isn't competing on the strength of its program/service, it is competing on platform lock-in, and that's wrong.

 

[DNichter]

This is actually irrelevant. In reality how about the credit card processing fees, the bandwidth and servers for the millions of app downloads every month from new installs and updates, the management infrastructure to handle all of this.

A lot of developers like the complain about the 30% cut Apple gets but forget these little details that they don't have to worry about with the App Store vs. if they had to do this all on there own with the way it was before the App Store. The Spotify app on a iPhone XS Max is 90 MB so for just a million installs thats 90 TB of bandwidth someone has to pay for and have infrastructure to deal with. With install base Spotify has they are transferring petabytes a month in bandwidth that they are not paying for.

Does Spotify not think they should have to pay Apple something for this? Because the $99 developer membership did not cover this cost for sure.

I wouldn't say it's irrelevant at all, but yes what you mention obviously factors in as well. Being on the platform with customers who spend the most money on apps is definitely considered also though.

 

[trifid]

Is it 15% or 30%?

It was 30% for several years, then in 2016, Apple due to pressure, announced the rate would be 30% the first year of subscriptions, and then drop to 15% if the person kept that subscription beyond that timeframe. So this is an acknowledgement that Apple knows the 30% for subscriptions was unfair since the beginning.

 

[PlayUltimate]

One solution: no longer allow subscription apps in iOS. Everything has to be single purchase.

 

[DNichter]

Yeah.

You know, like literally every other operating system in the industry. Including the Mac.

Every app platform takes a cut - the Mac App Store, the Google Play Store, the Windows Store. Yes, you can download and install apps on those platforms freely, but if you want to use their specific app platform, there is a cost. No one is forcing you to though.
[doublepost=1552580923][/doublepost]

What exactly do you think would be free in this scenario? Are you sure you understand Spotify's complaint? I ask because Spotify isn't asking for anything to be free.

They are bringing this to the table under the guise of unfair competition, but it all comes down to that 30% cut that they don't want to pay.
[doublepost=1552580955][/doublepost]

Lots of ignorance here. Look up "Monopoly".

Look up Apple's market share. There is no way a platform with a 25% share of the market could be considered a monopoly.
[doublepost=1552581018][/doublepost]

If that is the case, then apple is double dipping. Making customers pay for iOS/the platform and then asking devs to pay again.

Apple doesn't charge for iOS. Developers that are using Apple's platform to sell online services pay a cut, the same as the Windows Store or the Google Play Store.

 

[PlayUltimate]

The problem isn't necessarily that Apple charges a fee for their service. The problem is that they are using that fee in an anti-competitive manner. This is actually a similar complaint against amazon selling their own products now, and placing them first in search results. It's anti-competitive. Search for "HDMI Cable" on amazon. First you get folks who PAID amazon to be first, then you get amazon's own cables. You don't see an actual decent cable until page 2.

It will be interesting if any regulation crops up regarding this. Retail continuously charges extra for enhanced placement. Grocery stores are known for charging more for products on an end cap or at eye-level on the shelves. Notice that the stores brand is usually on the same shelf as the name brand.

 

[trifid]

For all of you laughing and ridiculing Spotify, please explain to me how Apple isn't in the wrong when another subscription and icon giant Netflix has exactly the same issue and has actually disabled in-app subscriptions due to this same issue. It seems to me Apple is in the wrong here.

 

[bladerunner2000]

I wonder if any of you that are defending Apple now would have defend Microsoft the same way in the 90s?

 

[78Bandit]

This is actually irrelevant. In reality how about the credit card processing fees, the bandwidth and servers for the millions of app downloads every month from new installs and updates, the management infrastructure to handle all of this.

A lot of developers like the complain about the 30% cut Apple gets but forget these little details that they don't have to worry about with the App Store vs. if they had to do this all on there own with the way it was before the App Store. The Spotify app on a iPhone XS Max is 90 MB so for just a million installs thats 90 TB of bandwidth someone has to pay for and have infrastructure to deal with. With install base Spotify has they are transferring petabytes a month in bandwidth that they are not paying for.

Does Spotify not think they should have to pay Apple something for this? Because the $99 developer membership did not cover this cost for sure.

Then split it into two categories. First would be a fee for hosting and distributing an app on the AppStore. Some fair method would need to be devised, whether it was number of downloads, total size of the data transferred, or just a flat fee per developer. Apply it equally to everyone across the board to cover AppStore costs.

Second would be an optional in-app purchase fee. Those developers that wanted Apple to handle the transactional processing and monetary remittances would pay a percentage of the collections, much as it is now. However, developers who have their own processing facilities would obviously not need these services and would be free to link to their own account sign-up page.

Of course, this would pretty much eliminate the free apps as everyone would have to pay for the use of the AppStore. Some developers of games, like Candy Crush, might be willing to absorb the AppStore fee on the front end because they make enough out of in-app purchases to offset the cost. However, it would much better reflect the reality of the services the consumers are actually receiving through Apple and the various content providers. Apple would get paid for what it is actually providing value, which in most cases is app distribution and payment processing rather than the provision of content.

 

[Knight3]

I'm with Spotify on this. There should be no reason Apple should be taking 30% of Spotify's subscription fees. The same goes for any subscription service that isn't leveraging Apple's own developed apps. If Spotify wanted to charge a fee to buy their iOS client, Apple can get their cut. If Apple allowed Spotify to somehow allow customers to use Apple's Music app, Apple should get a cut. 30% is excessive and should be drastically reduced.

Except for the number, you don't make any sense.

 

[DNichter]

For all of you laughing and ridiculing Spotify, please explain to me how Apple isn't in the wrong when another subscription and icon giant Netflix has exactly the same issue and has actually disabled in-app subscriptions due to this same issue. It seems to me Apple is in the wrong here.

Apple isn't wrong. Apple is a business. They are offering up their app platform for a 30% cut. Netflix doesn't have to abide by it and neither does Spotify. If you don't want to use their app platform, you don't have to.

 

[Defthand]

So much binary thinking in the comments. This isn’t a question of whether Apple deserves compensation for its App Store services. It’s whether Apple owns its customers and its customers’ devices.

It’s one thing to charge developers for promoting and delivering their apps, collecting subscription fees on their behalf, and hosting updates. It’s another thing to prevent equivalent alternatives from existing, or hobbling an app’s use of the OS and hardwares if it doesn’t utilize Apple’s own. Spotify doesn’t want to be a pawn to Apple’s monopolistic system, and it probably knows that the EU court will have the same realization when it ponders whether a middle ground or compromise exists. It doesn’t.

Remember when MacOS was a paid product? And iWorks? And iLife? When Apple decided to make their softwares free, they conned customers into forfeiting ownership of the hardware’s functionality. Since then, you don’t purchase a phone and its operating system. You purchase an “experience”.

 

[Romeo_Nightfall]

What I'm hearing from Spotify is: "Apple did a lot of work creating this fantastic distribution platform and Apple did a lot of work creating a fantastic integration between their Store and their devices and Apple amassed a huge database of satisfied returning customers, but now WE want to benefit from all that for nothing."

Yes and they should be able, because I have already payed apple for it. They have billions, so where’s your argument now?

 

[DNichter]

I wonder if any of you that are defending Apple now would have defend Microsoft the same way in the 90s?

If Apple controlled 90+% of the market, I would probably agree with you here.