Spotify CEO on Apple and Google: 'If You Want to Be the Referee, You Can't Also Be the Player'

[RickDEGH]

Despite the anti-competitiveness of the iOS and Android platforms, Spotify is still the number one music streaming service on both. How did that happen?!

 

[wanha]

I really think a lot of this would go away if they just lowered their cut. It really is ridiculous that they think 30% is an acceptable margin for the service apple provides. It's practically free money to them. And when the EU forces side loading, it's going to cause a headache for all of us when many major players bail from the App Store in order to get a larger cut.

Over on Android, most of the major players have NOT gone outside the Google PlayStore. Why is that? Because the PlayStore is where most of the users go to look for and download apps. In the end, it's all about traffic.

I contend that the same will not only hold for iOS, but it will be even more extremely skewed to the App Store than on Android.

 

[Rastapopoulos]

How dares the European Union *checks notes* regulate the European Market to protect the European consumers.

And besides that, the UK (where this story takes place) is not part of the European Union anymore since multiple years already 🙃

 

[NigelGee]

If you charge $10/month for your music service, it is anticompetitive to take 30% of your competitors $10/month music service.

If you owned a store in a mall selling (price-controlled) Rolexes and the mall opened their own store next door to you selling the same Rolexes, you'd cry foul.

But the mall analogy still isn't as bad as the App Store... The mall does incur lost revenue (not leasing finite space to another tenant) with their own store where Apple does not. And you can at least move malls.

If you set up the shop that already sold Rolexes in a mall then do you still complain that it unfair!

 

[Scottsoapbox]

Au contraire. Spotify, like Netflix, could offer sales of their service outside of the the App Store and not pay the 30%. There are many businesses that have apps on the Apple App Store that do not offer financial transactions through the store.

Only after a judge forced Apple to allow it!

 

[Wildkraut]

Well, the best solution is a regulated one, where an OS and Hardware manufacturer must offer a Software Store install (AppleAppStore,Steam,Epic,MS,GOG,etc.) multiple choice dialog on setup incl. additional manual side-loading. Then Apple could even ask for 100% commission and nobody would care.

Competition!

 

[Michael Scrip]

Earlier I posted this chart... and later I remembered something interesting:

As we can see... Spotify had an amazing growth in paid subscribers from 2016 to 2022 to become the largest music streaming service in the world today.

But do you wanna know a fun fact about Spotify in 2016? That's when Spotify stopped allowing new users subscribe to Spotify Premium in the Apple App Store.

Spotify gained all these new paid subscribers on both Android and iOS... but they were not giving 30% to Apple. People had to somehow navigate to the Spotify website to sign up.

In other words...

1. Spotify wasn't paying the "Apple Tax" on new subscribers after 2016. No in-app purchase, no 30% cut.
2. Having people take that awkward extra step to sign up outside the app clearly wasn't the impediment Spotify claims it is. Look at the chart... people obviously found their way.

So I'm really having a hard time feeling sorry for Spotify with their "Apple is mean to us" claims.

 

[BadBuoy]

Spotify easily has the best algorithm for finding new and awesome music I like that I've never heard of and never would have had it been for them. Apple Music suggestions have always been notoriously horrible. But they seriously need to release high definition audio already.

It's also silly to try and make it sound like they're the good guys when they do things like buying exclusive podcasts that nobody is allowed to have (i.e. Joe Rogan, etc.).

Spotify also got their start by streaming pirated music they didn't own the rights to.

Also, release support for the Home Pod already you derps. As much as I love Spotify, they are a frustrating company.

 

[Moka Akashiya]

Au contraire. Spotify, like Netflix, could offer sales of their service outside of the the App Store and not pay the 30%. There are many businesses that have apps on the Apple App Store that do not offer financial transactions through the store.

Isn't this is why Fortnite has been banned?

 

[Tovenaar]

I used to be a big fan of Spotify until they locked my whole family out of the family account for one year because they didn’t confirm their home address within their one week deadline. Spotify, we have better things to do with our lives than respond to your stupid email.

Cancelled the subscription immediately. There are too many options out there.

Imagine treating your customers like thieves and then trying to make money. Not sure that works.

 

[Contact_Feanor]

So lets say a large group of White males came together, and decided to build a Bus Company, they then used their skills to construct the bus, planned the routes, installed the bus stops, and once up and running, they said only white people could use their bus.

Black people complained this was not fair on them.

You are saying that as the Bus system isn't the creation on these black people, then the black people should "create their own and make their own rules?"

As a society we have agreed this behaviour is not acceptable.

Do you still feel that "if you don't like something then make your own" is a fair system to run the world by?

This analogy is terrible. If you really want to go with the “white people come together and make a bus company”, it would be more like “and the founders of the company ride the bus for free, while everyone else has to pay a fee”. Suddenly it’s not at all problematic anymore, since company owners almost always have special perks.

 

[Skyscraperfan]

If Spotify costs $10 per month and Apple takes 30% of that, it basically means that Apple charges YOU 3$ per month for using a third party app on YOUR iPhone that you bought for a lot of money. It is funny that Apple users defend that. It is not Spotify who pays that fee, it's the users. Some subscriptions are even more expensive on an iPhone than on the web. Tinder for example.

 

[Antoniosmalakia]

If you charge $10/month for your music service, it is anticompetitive to take 30% of your competitors $10/month music service.

If you owned a store in a mall selling (price-controlled) Rolexes and the mall opened their own store next door to you selling the same Rolexes, you'd cry foul.

But the mall analogy still isn't as bad as the App Store... The mall does incur lost revenue (not leasing finite space to another tenant) with their own store where Apple does not. And you can at least move malls.

People don’t have to develop applications for the App Store, and if they do, they’ve obviously read and accepted the terms and subsequent fees associated with that.

 

[SanderEvers]

If Spotify costs $10 per month and Apple takes 30% of that, it basically means that Apple charges YOU 3$ per month for using a third party app on YOUR iPhone that you bought for a lot of money. It is funny that Apple users defend that. It is not Spotify who pays that fee, it's the users. Some subscriptions are even more expensive on an iPhone than on the web. Tinder for example.

Hosting an app in an App Store is not free. For that 30% Apple:
1. Pays handling of credit / debit cards (already 5-10%)
2. Pays hosting of the data.
3. Handles customer support.
4. Tests the software before it's allowed on the store (this removes 99,99% of all malware)
5. Offers great support for developers.
6. Allowes Apps to be offered free of charge (no listing fees) on the App store.
7. Advertises Apps on the App store
8. Directs more users to the apps on the app store.
9. Protects the users from misbehaving apps.
10. Gives the users a uniform system for payment, subscriptions, etc.

I'd rather pay 30% more and have a trusted party handle everything, than pay 30% less to a company that isn't going to allow me to cancel with one click, is going to spam me with a lot of e-mail and sells my data to advertisers.

If you take the 30% away, or force Apple to allow non-iAPP purchases of digital content (hosted by Apple), it will be the end of free apps on the App store. And prices will only increase.

 

[nexusrule]

Europe has internalized that the referee can't be a player on so many levels in the world, high-tech and military just two of them. They love to tell others what to do.

Enjoy deregulation and all the good things it brings to fields like pharmaceutical, health , prisons, privacy, private data usage, weapon circulation etc.?

 

[iZac]

Playing Devils advocate here, but I wonder what the revenue from Apples own App Store services is, as a percentage of the entire App Store revenue? Sure, Spotify is a company that decided to put a music service on the App Store. But it’s one of millions of apps. In addition they have a perfectly serviceable HTML 5 version where users can add the bookmark to their desktop just like an App.

I personally use Spotify over Apple Music because I prefer their automatic playlists and artist pages that show lifetime play numbers. Web apps can be advantageous too, to lock down tracking a bit, depending on your browser. I also used Instagram web because for the longest time it served zero adverts.

I dunno, does this dictate that Apple should sell barebones phones with nothing but a Settings app and App Store? (With a 90s browser war style option to select your own preferred App Store) Does the phone app provide an unfair advantage over a VoIP service? SMS Messages app compete with hundreds of different direct messaging services?

It’s hard to know where to draw a line in the sand.

 

[Sophisticatednut]

And so Netflix, by being a marketplace of other content, shouldn't also produce their own? Where's that crackdown?

It’s all owned by Netflix, and isn’t a marketplace for consumers.

So, I was just having a moment… thinking to myself “Why is he complaining? Spotify CURRENTLY is not paying any money to Apple because people can’t subscribe through the app (the only way Apple would make money off them), so where’s this complaint coming from?”

Yes because they can’t afford loosing 15-30% of their sale to Apple who keeps 100% of the sale.

They would need to have a higher price. And they aren’t allowed to tell them about subscribing outside the store gives them gives them a discount

Your post made it clear, he really REALLY wants just wants access to Apple’s customers directly again. Apple’s millions of customers that, due to the way Apple’s built the experience, have credit card numbers ON file and are actually willing to spend money to subscribe for things. The customers that Apple has spent billions of dollars on researching and building devices, developing the OS and App Store for those devices, and shipping devices all around the world AND setting up a payment system that works in every country Apple does business for these users to securely and confidently purchase digital goods and services.

Every single person with an Apple device in their hand has that device due to the immense effort that Apple has taken to make that device desirable to them. And Spotify finds no value in that work and at the same time, finds tremendous value in that they, for some reason, badly wants access to those customers but not under the same terms that everyone else has access to them.

Yea that’s the classic Apple entitlement to believe a user is owned by them, instead of understanding the user is independent people who should be free to pursue

So either Apple would charge itself 30%, in which case they would be putting money from its left pocket into its right; or there could be an argument that Apple charges 30% less then it otherwise would. Passing the savings onti the customer. (lol)

Spotify is just trying to argue that there should be two less players in the game.

Or apple charges itsel 0% and Spotify is charged 0%

 

[genovelle]

They have every rignt to tell others what to do in the European market.

But Apple does not have the right to tell others what to do in a market they created and continue to invest billions to maintain?

 

[genovelle]

That's beside the point. Sure, not offering transactions through the store is a possibility, but it still puts those developers at a disadvantage when at the same time Apple can offer transactions through the store without paying a fee.

The entire fact that Apple dictates a singular way to access apps is just wrong.

Imagine a single company controlled the only way you could install software on your computer. That would sound ludicrous, wouldn't it?

Nothing is free?

 

[Sophisticatednut]

Playing Devils advocate here, but I wonder what the revenue from Apples own App Store services is, as a percentage of the entire App Store revenue? Sure, Spotify is a company that decided to put a music service on the App Store. But it’s one of millions of apps. In addition they have a perfectly serviceable HTML 5 version where users can add the bookmark to their desktop just like an App.

I personally use Spotify over Apple Music because I prefer their automatic playlists and artist pages that show lifetime play numbers. Web apps can be advantageous too, to lock down tracking a bit, depending on your browser. I also used Instagram web because for the longest time it served zero adverts.
It’s hard to know where to draw a line in the sand.

It’s extremely easy to draw the line in the sand if you actually know what it is you want to achieve or prevent

I dunno, does this dictate that Apple should sell barebones phones with nothing but a Settings app and App Store? (With a 90s browser war style option to select your own preferred App Store) Does the phone app provide an unfair advantage over a VoIP service? SMS Messages app compete with hundreds of different direct messaging services?

No it just say Apple can’t get in the way for a business to provide a service to their consumer without Apple trying to force themselves to being the middleman in every interaction.

But Apple does not have the right to tell others what to do in a market they created and continue to invest billions to maintain?

Exactly, what’s hard to get?

 

[genovelle]

Nothing is free! Every courtesy has a price. I would prefer to get all of the Apple services for free with my purchase. Remember also, Apple jump-started the whole digital music mobile industry with iPod. People forget that before there was Spotify there was Apple’s iTunes Radio which streamed music via stations kind of like Pandora but it was free like podcasts. There were no subscriptions. You could also stream your personal catalog to your devices if they were backed up in iCloud and still can.

 

[mrochester]

Isn't this is why Fortnite has been banned?

No, Epic tried to direct users within their app to an alternative payment method, which is expressly against Apple’s App Store guidelines.

 

[dkvlnk]

First off stop complaining about the 30%. It is 15% after the first year. Second: a sound strategy would be to convert the gazillion free users to paid ones and/or increase advertisement revenues by selling ads in all countries aggressively to finance the free tier which might become even more lucrative than the paid ones. Yes, Spotify will make all radio stations angry because they will take away their advertisement revenues, oh the irony.
Third, make your product better and better. From what it seems the interface and algorithm are already better but the sound quality isn't. Fourth, make Spotify available EVERYWHERE. For small businesses, car makers, strike deals left and right, event outside the App Store...

But, I guess, whining seems to be a faster strategy. I really doubt that, if apple takes away their cut, Spotify would instantly turn a profit. And, should Apple Music stop existing, in three months Spotify would increase its prices dramatically. The business model as it stands doesn't seem to be viable. And Spotify INVENTED it. Why can't they turn a profit? You are the BIGGEST player, and Android in Europe has a much bigger market share than Apple. And yet, for some reason, your whole business strategy is in shambles because of a 15% cut on transactions?

Even if Spotify charges directly without App Store fees, they would incur in credid card fees, so we are talking about a difference of 10% between App Store fees and card fees. On top of that they would have to figure out a pricing, conversion rates, manage VAT % and payments and so on and so forth. I doubt the costs of running it "alone" would be much less than 15% of the transactions between card fees and added management costs.

All of that for the platform which, in Europe, has the smallest market share.

I am baffled at how much the press eats up only one version of the story.

So just you say - Europe is a small part, but all of that talks of Spotify CEO leads us to US market, to get more $ there if they could change so in Europe.

BTW I don’t like Spotify for its interface - I really like to operate with my library in old-style, so Apple Music provide that to me (like in old iTunes days). And recomendations not so bad in AM if you ’teach’ it. I use Spotify before AM came out and it was novice, like other opportunity to listen to music, not primal. But now in steaming era…I just couldn’t use Spotify apps. And there are no similar services (like Deezer or Amazon Music is not really competitors).

And by the way, Deezer is French service (and it’s not so huge as Spotify) but I never saw complaints from it.

 

[DougieS]

Isn't this is why Fortnite has been banned?

No, Fortnite tried to avert IAP and took alternate payments directly in the app. Spotify just said can’t buy in app and made them to go a website.

 

[Sophisticatednut]

Well from Apple’s perspective being a player is problematic.

1. If I charge $3 more than spotify to make it fair, my business suffers, nobody subscribes and I make close to $3 per subscriber.

2. If I charge the same, then some will use mine and some will use theirs and I make about $6 per subscriber and spotify complain about the fee.

3. If I charge even 10% less than spotify at $9, I still will end up making between maybe $7 but be called a predator.

Which means there is no way to win when you own the marketplace and also sell your own product in a monopoly.

Yes there is a simple way to win.
4. charge no fee for Spotify and any business that you directly compete against.
Allowing them to have access to exactly the same thing as your first party alternatives.
This makes you competitive on the merits of the product

But iOS isn’t a monopoly. Android also offers spotify. So another choice for customers is to not buy iOS at all.

So Apple will claim that there is a 20-30% fee to be featured on a popular platform but nobody is forcing you to subscribe through Apple’s payment system or buy an iPhone at all. In fact, you can get an otherwise better phone than entry level iphones for 1/2 the price on Android.

The AppStore is a monopoly of iOS customers. Appl