Spotify, Epic Games, and Others Argue Apple's App Store Changes Do Not Comply With DMA

[Jensend]

How much of your monthly subscription to Netflix/Spotify goes to the artists, and how much is going to the platform developers?

Spotify claims almost 70% of subscription fees go to the rights holders. So if they were to pay 30% to Apple, they'd have nothing left over.

And you're saying Netflix/Spotify is entitled to an ENORMOUS cut of the revenue (they pay almost nothing to artists, keeping the rest)

I think there is some obfuscation there with the word "artists." It may be true that artists may be making a pittance from Spotify, but that isn't because Spotify isn't paying them much, it's because much of the revenue goes directly to the record labels/rights holders.
Also, Spotify has a free with ads tier, and Apple doesn't, so when you read about Apple paying artists more, that accounts for most of the difference, unless you think Apple is paying artists more out of the goodness of their hearts or Apple is worse at negotiating.

 

[AppliedMicro]

Is your argument that Apple should just continue pouring uncounted millions into iOS app features without revenue which makes that work profitable?

Apple makes loads of money from iOS device sales.
And they wouldn’t without third-party apps available for them.
So it’s certainly not “without revenue”.

Apple wrote a HUGE chunk of Netflix/Spotify

Audio playback on modern computing devices is no rocket science,
Apple didn’t “write” those apps either - they merely provide standard tools and APIs that they provide to every developer.

Apple wrote a HUGE chunk of Netflix/Spotify. And you're saying Netflix/Spotify is entitled to an ENORMOUS cut of the revenue (they pay almost nothing to artists, keeping the rest), but Apple deserves none?

They deserve as much as Microsoft deserves for Spotify on Windows. They certainly do not deserve 30% (in my opinion) of a subscription when Spotify pays for all the music rights - and the content delivery.

 

[jgdeschamps]

I remember reading an article that stated Steve Jobs' original idea for the iPhone was for Apple to build first a USA-only cellular network (and depending on success, world wide) where you would buy the iPhone and never pay a dime for the rest of your life for the cellular service. Buying the iPhone was the one-time fee for the service.
If that would have panned out, I can easily picture in today's climate that Huawei, Samsung, Honor, Xiaomi (which, BTW, blatantly copied Mexico City's underground public transportation service logo for their corporate identity) and the like, would be suing Apple for not letting them use the iPhone cellular network with their Galaxy, Mate, Honor, etc. smartphones without paying a dime for it.
Hell, I'm surprised they have not sued Apple (in Europe, of course) demanding them to give them iOS for their devices for free. Include macOS source code and a couple wives for each executive in the surrender, er, sorry, "fair competition" package too, please.

 

[MrTemple]

Apple makes loads of money from iOS device sales.
And they wouldn’t without third-party apps available for them.
So it’s certainly not “without revenue”.

Weird that you edited the quote of me: "without revenue that makes that work profitable". 🤔

Are you suggesting Apple jack the price of iPhones to keep paying the same for all these features apps use?

Obviously that wouldn't be profitable for Apple, the market wouldn't bear it, the devs won't get paid, the apps won't get better at near the pace they have for the past 15 years.

Apple didn’t “write” those apps either - they merely provide standard tools and APIs that they provide to every developer.

This is where your ignorance is showing. I'm not trying to be dismissivve, but you just have no idea the amount of code required to do what every app does on your phone (thanks to the tens of thousands of dev-years Apple has spent the past 15 or so years). This is a lot more than merely provide standard tools and APIs.

Netflix/Spotify apps do a WHOOOOOOLE lot more than merely play audio/video. There is an insane amount of invisible code that goes into an app to make it function the way you simply expect it to.

They deserve as much as Microsoft deserves for Spotify on Windows. They certainly do not deserve 30% (in my opinion) of a subscription when Spotify pays for all the music rights - and the content delivery.

Okay, so now Apple's letting them opt out of that. 🤷‍♂️

Spotify can write its own code (to fetch streams, to save state and background successfully, to rotate their app, to make it work across language rtl/ltr, across date/number formats, in dark mode, to communicate with bluetooth and airplay standards, etc, etc, etc, etc...)

There's these and about 150 more that Spotify uses (most of which are invisible to non-devs) that Spotify can whip out or drop a library in (assuming its licenseable for commercial use).

Since you say it's so simple, shouldn't Spotify do this rather than paying for the core tech Apple writes that make their app function to the high level their users expect?

What exactly is the problem with this?

I mean of course other than the obvious, the fact that it would cost Spotify 10x more each year than paying Apple what they pay now.

I'm truly asking. What's your beef here? This article is all about how apps no longer need to pay the 30% cut and STILL get to be in the App Store. They just have to do the simple task of not using all the things apple has developed above and beyond what's required on an OS and framework level to let apps work on an iPhone.

 

[1129846]

I think there is some obfuscation there with the word "artists." It may be true that artists may be making a pittance from Spotify, but that isn't because Spotify isn't paying them much, it's because much of the revenue goes directly to the record labels/rights holders.
Also, Spotify has a free with ads tier, and Apple doesn't, so when you read about Apple paying artists more, that accounts for most of the difference, unless you think Apple is paying artists more out of the goodness of their hearts or Apple is worse at negotiating.

That free tier really explains a lot about differences in level of pay. If anything it might show that Apple is really pocketing a lot more of the money because they dont have an add free teir. Wonder if your broke out the free teir pay out vs the paid teir pay out.

I would not be shocked to see Spotify might be paying out even more if it is just from subcriber level.

 

[AppliedMicro]

Weird that you edited the quote of me: "without revenue that makes that work profitable".

I just shortened it - no malicious intent here (it’s not that easy on a touchscreen device).

Apple’s iPhone business is hugely profitable - they have to have an OS and they can run an App Store to support it.
Even their App Store can and would be profitable under market competition from other stores.

I'm not trying to be dismissivve, but you just have no idea the amount of code required to do what every app does on your phone

I know that it’s tons of code - but the customer has paid for it with their hardware purchase. It absolutely can connect to a streaming server and stream music as all totally free features.

This article is all about how apps no longer need to pay the 30% cut and STILL get to be in the App Store. They just have to do the simple task of not using all the things apple has developed above and beyond what's required on an OS and framework level to let apps work on an iPhone.

There are free apps in the App Store that use much more, complex and expensive code/IP to make money than Spotify. Uber is a prime example.

I'm truly asking. What's your beef here?

Apple’s imposes its fees in a discriminatory manner on digital sales/services only - many of which they’re competing with. Would I have an issue with a fair and non-discriminatory fee/charges? Not so much, no.

Also: Transaction costs. It’s undesirable for the economy and society as a whole if an “upstream” supplier with (nearly) zero marginal costs can charge a downstream supplier for a unilaterally set 30% of revenue. Neither is a “Core Technology Fee” desirable. The Windows, macOS or Linux models of software distribution have proven successful and spurred innovation and progress in software.

Operating system developers provide a sort of infrastructure - and given consumers (and developers’) inclination to converge on two or three systems and firm a duopoly or oligopoly, government should impose limitations on “how much further down” OS developers can charge.

Similar reasoning as for net neutrality (which, somewhat ironically, the EU itself is contemplating to abolish with their “fair share” proposals, by wanting to charge the biggest content companies for IP traffic).

 

[MrTemple]

It's even worse than that. In a world with only 2 cities, Apple built a city with impenetrable walls around it and only one gate, and then wants to charge 30% on any business that is performed in that city. It's an abusive monopoly

You're lying on purpose. Or you didn't read the article you're commenting under.

I'm guessing the latter.

This article is all about Apple saying anybody is welcome to come into the safe secure town square and do business without giving Apple any cut of the sales at all. (Just $99 per year to set up their stall and put out many apps as they want.)

Just so long as they don't use any of Apple's core technology code (none of which is necessary to get an app in the store and get it to work).

What's the problem there? Why does this not completely satisfy your sense of fairness?

 

[MrTemple]

I know that it’s tons of code - but the customer has paid for it with their hardware purchase.

You lost the thread here. There's no sense of reality in that statement.

 

[BaldiMac]

Spotify claims almost 70% of subscription fees go to the rights holders. So if they were to pay 30% to Apple, they'd have nothing left over.

My understanding is that 70% or so of revenue goes to the rights holder. So, Spotify would still have 30% of a slightly smaller number left over.

Feel free to correct me if you’ve seen different information.

 

[MrTemple]

Spotify claims almost 70% of subscription fees go to the rights holders. So if they were to pay 30% to Apple, they'd have nothing left over.

My understanding is that 70% or so of revenue goes to the rights holder. So, Spotify would still have 30% of a slightly smaller number left over.

Feel free to correct me if you’ve seen different information.

Yup, they kept 30%, about $4B out of $13B in revenue, which is after Apple's cut (that money never goes to Spotify and is not revenue).

So to sum it up:

1. Spotify is taking a 30% cut of the cash they take in for somebody else's music, because they spent a TON of money developing the software which helps users listen to that music.

2. Apple is taking 30% cut of the cash they take in for somebody else's app, because they spent a TON of money developing the software which helps users listen to music on that app.

3. Spotify's argument is that #2 is unreasonable, but #1 is not. 🤔

4. Apple has said, no problem, Spotify is welcome to publish on the App Store with ZERO cut going to Apple, just so long as they don't use the software Apple made in #2 that helps users listen to music on their app.

 

[Jensend]

Yup, they kept 30%, about $4B out of $13B in revenue, which is after Apple's cut (that money never goes to Spotify and is not revenue).

No money goes to Apple because you can't subscribe to Spotify through the mobile app.

So to sum it up:

1. Spotify is taking a 30% cut of the cash they take in for somebody else's music, because they spent a TON of money developing the software which helps users listen to that music.

2. Apple is taking 30% cut of the cash they take in for somebody else's app, because they spent a TON of money developing the software which helps users listen to music on that app.

3. Spotify's argument is that #2 is unreasonable, but #1 is not. 🤔

4. Apple has said, no problem, Spotify is welcome to publish on the App Store with ZERO cut going to Apple, just so long as they don't use the software Apple made in #2 that helps users listen to music on their app.

Apps that do allow subscription through the app often have a higher cost than buying directly from the service's website to make up for the app store's cut. If Spotify offered subscriptions through the App store at the same price as Apple Music, they would essentially be making nothing, because 30% would go to Apple (a direct competitor), and 70% to the rights holder. For subscriptions older than a year, they'd get to keep half of that 30%.

There is no way a music service with the same music library as Apple Music can offer a subscription through the app for the same price as Apple Music and make a profit, at least before the subscriptions are a year old.

I subscribe to some Twitch streamers. Subscriptions cost 20% extra through the Apple app, so I subscribe through the website. Apple's policies make the iPad a less convenient device for me than it would otherwise be. I bought an iPad over another device partly because of ease of use. Apple's draconian policies make the device worse for me. Twitch is still taking a bit of a loss there: they'd have to charge 43% extra to match their revenue from their website (minus a couple percent for credit card processing fees).

 

[Jensend]

2. Apple is taking 30% cut of the cash they take in for somebody else's app, because they spent a TON of money developing the software which helps users listen to music on that app.

Apple would be essentially taking 100% of Spotify's revenue after royalty fees. 50% after a year.

4. Apple has said, no problem, Spotify is welcome to publish on the App Store with ZERO cut going to Apple, just so long as they don't use the software Apple made in #2 that helps users listen to music on their app.

Where has Apple said that?

 

[Ubuntu]

How so?

It's a shared-effort, shared-success model.

Both have a HUGE hand in getting every payment from an app user.

Is your argument that you should get to decide how they share success?

Is your argument that Apple should just continue pouring uncounted millions into iOS app features without revenue which makes that work profitable?

Use your sense.

Your post was 100% focused on one side of the coin; the value that Apple provides for developers. I'm not saying it isn't valid but you make it sound like they're doing us a favour when it's bidirectional - I'm glad you see that.

But I've no idea where you've come up with the other suggestions, that's not quite it, no. I think 15-30% is reasonable; my concern is more with Apple being the gatekeeper while having competing apps in the App Store.

 

[AppliedMicro]

You lost the thread here. There's no sense of reality in that statement.

There’s no factual argument in that statement, is it?

Microsoft Windows can run apps and play music/videos just fine. The end user or the PC manufacturer that bundles the OS with its hardware - and Microsoft doesn’t get to charge. So can Linux. So can even macOS. That is reality.

👉 These operating system vendors “wrote a large chunk” of (the code that powers) Spotify, too. And yet they don’t charge third-party software developers a huge chunk of their revenue for that code.

👉 Once paid - and done! The business model clearly works. And yes, it benefits third-party developers (and society). So does the ecosystem of third-party apps they provide benefit consumers (and hardware manufacturers like Apple)

👉 What does not benefit society: the operating system developer weaponising their power to charge fees (by charging fees, prohibiting communication or disable third-party apps, such as revoking their signing certificate) to self-preference their own apps and services over other in ”downstream” markets such as music streaming.

 

[CraigJDuffy]

Wait, so you don't like Apple's first model of getting paid for their work, and you don't like Apple's SECOND model (letting people in the iOS app store not give apple a flat cut of fees, but charing for use of Apple's work more granularly).

And the reason you don't like either of those is because they are letting people who don't use the App Store use this work for free?

How is Apple going to get revenue to pay for the features it provides? These are all funded by people paying for AppStore apps (written in large part by Apple).

The number of frameworks and apis that were built by devs who are literally paid for by app sales is staggering. The cost to develop this code is equally staggering.

The fact that any Mac/iOS developer can use these COMPLETELY FOR FREE is frankly wonderful.

Apple has chosen a way of making that work profitable.

People are suing Apple to force them to make it profitable another way. So Apple said, 'okay, you can stay in the App Stores AND opt out of the percentage cut, but you're still gonna have to pay Apple's development efforts that you're using.'

The fact they STILL are letting the average joe use their work for free in this SECOND model is again frankly wonderful (and of course more profitable for Apple in the long run).

What? Apple in no way lets them use their work for free.

Companies build platforms. Devs build software for those platforms.

macOS and iOS is nothing without third party developers.

 

[CraigJDuffy]

Are you honestly asking me how is it justifiable to charge monthly for the use of software?

Don't be naive.

How much of your monthly subscription to Netflix/Spotify goes to the artists, and how much is going to the platform developers?

Apple wrote a HUGE chunk of Netflix/Spotify. And you're saying Netflix/Spotify is entitled to an ENORMOUS cut of the revenue (they pay almost nothing to artists, keeping the rest), but Apple deserves none?

Please explain that.

Or are you saying you should get to decide exactly the model that Apple gets to use to recoup the massive, utterly MASSIVE costs they spend each year solely to improve the apps of app developers?

Are you saying Apple gets poor value of of developers and would be struggling financially if they paid developers fairly? For a multi-trillion dollar company, they can afford to pay their devs better.

 

[CraigJDuffy]

I remember reading an article that stated Steve Jobs' original idea for the iPhone was for Apple to build first a USA-only cellular network (and depending on success, world wide) where you would buy the iPhone and never pay a dime for the rest of your life for the cellular service. Buying the iPhone was the one-time fee for the service.
If that would have panned out, I can easily picture in today's climate that Huawei, Samsung, Honor, Xiaomi (which, BTW, blatantly copied Mexico City's underground public transportation service logo for their corporate identity) and the like, would be suing Apple for not letting them use the iPhone cellular network with their Galaxy, Mate, Honor, etc. smartphones without paying a dime for it.
Hell, I'm surprised they have not sued Apple (in Europe, of course) demanding them to give them iOS for their devices for free. Include macOS source code and a couple wives for each executive in the surrender, er, sorry, "fair competition" package too, please.

If Apple had built and was gatekeeper an entire cellular network which they then used to lock you into the platform then they should have absolutely been sued for that.

We all benefit from open standards.

Imagine the internet worked this way.

 

[CraigJDuffy]

Apple would be essentially taking 100% of Spotify's revenue after royalty fees. 50% after a year.

Where has Apple said that?

They haven’t said that because you aren’t allowed to write an iOS app which doesn’t use Apple APIs

 

[jgdeschamps]

If Apple had built and was gatekeeper an entire cellular network which they then used to lock you into the platform then they should have absolutely been sued for that.

We all benefit from open standards.

Imagine the internet worked this way.

You are as locked-in to Apple's imaginary cellular network or actual products way, way less as you are locked in to everything that surrounds you... your college or job, your partner in life, kids, clothes, vehicles, house, etc. And you can get out of any of those if you decide to do so, too. This notion that evil corporations have you in their hands is taken out of proportions more often than not. A very boring hyperbole.
Standards benefit the production process more than to actual end users. I couldn't care less what type of messaging protocol WhatsApp or Messages use... and look at the mess Thunderbolt 3, 4 and USB-C made for audio interface products. What a wonderfully confusing cesspool for the users to dive into thanks to the push for standards unification.
EDIT: And by the way, you don't get access to internet if you don't "lock in" to an ISP for a minimal amount of time, so...

 

[CraigJDuffy]

You are as locked-in to Apple's imaginary cellular network or actual products way, way less as you are locked in to everything that surrounds you... your college or job, your partner in life, kids, clothes, vehicles, house, etc. And you can get out of any of those if you decide to do so, too. This notion that evil corporations have you in their hands is taken out of proportions more often than not. A very boring hyperbole.
Standards benefit the production process more than to actual end users. I couldn't care less what type of messaging protocol WhatsApp or Messages use... and look at the mess Thunderbolt 3, 4 and USB-C made for audio interface products. What a wonderfully confusing cesspool for the users to dive into thanks to the push for standards unification.
EDIT: And by the way, you don't get access to internet if you don't "lock in" to an ISP for a minimal amount of time, so...

These comparisons are such false equivalencies I’m not even going to engage with them.

You pay an ISP but can access all of the internet.

 

[jgdeschamps]

These comparisons are such false equivalencies I’m not even going to engage with them.

You pay an ISP but can access all of the internet.

Those comparisons are not false equivalences. They just don't fit the narrative that Apple is a big bad company that abuses everyone, everywhere. If they did that, free market and demand would have pounded them to the ground years ago.
PS: And you can't access all of the internet by paying your ISP. Another hyperbole, but whatever. Enjoy your life.

 

[BaldiMac]

Apple would be essentially taking 100% of Spotify's revenue after royalty fees. 50% after a year.

Again, that's not how math works. Spotify pays 70% or so of their revenue to the music industry, so they would still keep 30% of the 70/85% that they would receive from Apple.

 

[Jensend]

Again, that's not how math works. Spotify pays 70% or so of their revenue to the music industry, so they would still keep 30% of the 70/85% that they would receive from Apple.

Here's how I understand it:
$11 Spotify subscription, if it were to go through Apple:
$7.70 to the rights holders
$3.30 to Apple

$11 Apple Music subscription:
$7.70 to the rights holders
$3.30 to Apple

Here is what it seems like you are saying:
$5.39 to the rights holders
$2.31 to the Spotify
$3.30 to Apple

But why would the rights holders accept a smaller portion of that original $11?

Can you clarify how much money you think would go to each party?

 

[MilaM]

This is where your ignorance is showing. I'm not trying to be dismissivve, but you just have no idea the amount of code required to do what every app does on your phone (thanks to the tens of thousands of dev-years Apple has spent the past 15 or so years). This is a lot more than merely provide standard tools and APIs.

Aren't they doing most of the work anyways to have a functioning OS with standard apps?
Why can they offer access to those APIs on macOS, but not on iOS?

 

[BaldiMac]

Here's how I understand it:
$11 Spotify subscription, if it were to go through Apple:
$7.70 to the rights holders
$3.30 to Apple

$11 Apple Music subscription:
$7.70 to the rights holders
$3.30 to Apple

Here is what it seems like you are saying:
$5.39 to the rights holders
$2.31 to the Spotify
$3.30 to Apple

But why would the rights holders accept a smaller portion of that original $11?

Can you clarify how much money you think would go to each party?

Everything I read said rights holders get a percentage of Spotify's revenue (your third option), not a percentage of the subscription price. For example. Feel free to post other information if I'm wrong.