Spotify Lauds $2 Billion EU Fine, Says Apple Has 'Muzzled' Streaming Music Services

[traveler01]

Putting aside Love and Hate, every musician I know (myself included) utilise Spotify and and praise its usability.
They are not so keen on the streaming model adopted by ALL streaming platforms (Apple included), and wish they could get more money for the music they produce, but they also understand that the world has changed and there is no going back.

I always understood Spotify and other streaming platforms to be a bliss to musicians honestly. Musicians as I understand make the majority of their money with the shows, and album sales are a small part of their income. Then there was the piracy which was a decade old problem, spawning through the vinyl to the CD. With streaming services it just means it won't be worth to people to go to piracy since with 10 USD monthly subscription they can listen to whatever artist they want, and even find new ones. I'm guessing peanuts are better than nothing no?

 

[Abazigal]

Spotify reported a very decent fourth quarter last year, so I don't understand what you mean. Apple its just trying to squeeze any resemblance of profit from iOS and this dumb strategy it's already hurting them on many sides of their business.

That's because they performed a bunch of layoffs and spent less on marketing, and even then, eked out only a very tiny amount of profit (68 million in profit on the back of 3.7 billion in revenue). That's what - barely 2% operating margin?

I have no idea as to the viability of their business. But your original point about debt raising of less than 5% of their market cap didn’t seem very relevant.

My point is that all signs point to Spotify being in worse financial straits than people seem to realise.

Up until now, Spotify could in theory afford to just continue operating indefinitely (so long as you are fine with a business not making any money ever), simply by virtue of collecting subscription revenue weeks or even months before that money is paid out labels (hey, isn't this how a Ponzi scheme works?). This also means that Spotify doesn't really have a lot of free cash left over for a rainy day.

Cue their debt that comes due 2 years from now.

They raised a ton of money, and seem to have very little to show for all that investment. Talk about being treated "unfairly" by Apple all you want. I struggle to see how being allowed to let users subscribe in-app while not paying Apple a cent will help when their costs (ie: money paid to labels) scale in line with subscribers, so they don't really to benefit from economies of scale the same way a video streaming platform like Netflix theoretically would.

This is why I feel this is all one giant red herring. Pointing an accusing finger at Apple is just one way of distracting from the fact that Spotify never had a sustainable business model in the first place, and maybe they never will, DMA or no.

 

[treacher]

Because if they paid Apple 30% of that $10.99 it would absolutely decimate that slim 2% margin.

 

[CraigJDuffy]

I'm not saying you are not. My country has few unicorns a well. And I have friends working in IT living in million euro houses with many expensive cars. But you can't argue that EU silicon valleys are not on the same level as US. Unless I missed some latest numbers?

I don’t deny it, but there is loads of reasons for this.

 

[traveler01]

That's because they performed a bunch of layoffs and spent less on marketing, and even then, eked out only a very tiny amount of profit (68 million in profit on the back of 3.7 billion in revenue). That's what - barely 2% operating margin?


My point is that all signs point to Spotify being in worse financial straits than people seem to realise.

Up until now, Spotify could in theory afford to just continue operating indefinitely (so long as you are fine with a business not making any money ever), simply by virtue of collecting subscription revenue weeks or even months before that money is paid out labels (hey, isn't this how a Ponzi scheme works?). This also means that Spotify doesn't really have a lot of free cash left over for a rainy day.

Cue their debt that comes due 2 years from now.

They raised a ton of money, and seem to have very little to show for all that investment. Talk about being treated "unfairly" by Apple all you want. I struggle to see how being allowed to let users subscribe in-app while not paying Apple a cent will help when their costs (ie: money paid to labels) scale in line with subscribers, so they don't really to benefit from economies of scale the same way a video streaming platform like Netflix theoretically would.

This is why I feel this is all one giant red herring. Pointing an accusing finger at Apple is just one way of distracting from the fact that Spotify never had a sustainable business model in the first place, and maybe they never will, DMA or no.

Due to the economic crisis we're living right now, which is hitting Europe hard (also, one country invading others), Spotify needing to adjust their accounts to get back to profit isn't too surprising. All this considering their losses were not that big, specially considering the fact their subscription prices were due to an increase that took them a lot of time to do.

 

[The-Real-Deal82]

Reading through some of the anti-EU/European comments here is quite embarrassing to be fair. Anti monopoly rules are put in place to prevent companies offering a service and preventing competition. This protection is good for the consumer right, because we get options and things that are better value for money?

Apple are not being targeted because they are American like many of you seem to be claiming. Other companies like Sky for example were trying to buy all the sports coverage for the UK and Europe and we prevented from doing so and quite rightly. We now have multiple options for watching sports and Sky were stopped from expanding their monopoly further. In fact they have lost so much they are seeing subscriptions fall massively.

People have short memories as Apple made an awful lot of money in Europe and have built a $95B a year revenue stream because they were offered loopholes other companies didn't have access to. The likes of Amazon and Starbucks also had this special treatment and guess what, they are American too! They have and continue to make a lot of money out of the EU and this tiny fine is a drop in the ocean and a slap on the wrist to remind them to trade fairly and not rip us off.

 

[Antoniosmalakia]

I'm just annoyed that I can't use Siri on HomePod to listen to my Spotify.

Perhaps we can stop squabbling and make the user experience better? No?? Okay then!

 

[wbeasley]

This is all completely irrelevant. It is anti-competitive if you can stream an artist at $x and everyone else has to be at $x+30%. As consumers we should all be enraged.

But Spotify dont use the app to sell subscriptions.
You download the app for free and sign in with your account details that you subscribe elsewhere.

Spotify want a pop up or some other mechamism to tell people they can buy the subscription elsewhere in the app.
That's it.
If you hadnt already worked that out, perhaps using a smart phone is too hard for you.

Is there a single person using the app who couldnt work out they need an account to signin or create one?
If Spotify's website isnt doing a good enough job convincing people to pay instead of use a free account, how is that Apple's fault?

Should Adobe have to tell customers there are other programs, cheaper, that will open their file formats?
Should Microsoft tell their customers there are free Office compatible apps?

 

[.wojtek]

Spotify thinks they should freeload off of Apple's success instead of risking billions on R&D of their own platform.

Also
They don't want to go web only.
They think Apple should front the server bill to serve billions of copies of their app updated weekly.
They think Apple should run notification servers for free.
They think Apple deserves $0 for putting them on the front page of the App Store which gets half a billion visitors a week.
They think Apple deserves $0 for constantly building/updating not-perfect-but-way-better-than-other-platform developer tools.

Because somehow they think $99/year ought to be enough to cover those costs, right? Nevermind paying the human $20/hr to review their app weekly.

Stop whining Spotify. Maybe you should start paying more to the artists while you're at it, like Apple is doing.

Yawn... "freeloading apple servers"... you are aware that because of the DUMBEST Apple policy of walled garden it's impossible to install app any other way? So dear Apple, finally make it posible to install whichever app I want and alternative stores and no one will be "freeloading" on your precious servers... 🙄

 

[steve09090]

Reading through some of the anti-EU/European comments here is quite embarrassing to be fair. Anti monopoly rules are put in place to prevent companies offering a service and preventing competition. This protection is good for the consumer right, because we get options and things that are better value for money?

Apple are not being targeted because they are American like many of you seem to be claiming. Other companies like Sky for example were trying to buy all the sports coverage for the UK and Europe and we prevented from doing so and quite rightly. We now have multiple options for watching sports and Sky were stopped from expanding their monopoly further. In fact they have lost so much they are seeing subscriptions fall massively.

People have short memories as Apple made an awful lot of money in Europe and have built a $95B a year revenue stream because they were offered loopholes other companies didn't have access to. The likes of Amazon and Starbucks also had this special treatment and guess what, they are American too! They have and continue to make a lot of money out of the EU and this tiny fine is a drop in the ocean and a slap on the wrist to remind them to trade fairly and not rip us off.

1. Every country (or in this case the EU) has anti competitive laws. Nothing special about the EU. Only a few are talking about this being about the U.S. This is about the EU being a protection racket for Spotify.
2. Do you actually know what a Monopoly is?
3. If you aren't actually talking about a monopoly (because you don't know what it means) then I assume you mean this is about having a majority stake. Apple have about a 30% market share and Android have about 70% in the European Union.

So basically I am trying to work out what your point is. Apple are neither a monopoly or have the greatest market share. The difference here is Google did a secret (not so secret any more) deal with Spotify to only charge them 4% instead of 15%.

 

[steve09090]

Yawn... "freeloading apple servers"... you are aware that because of the DUMBEST Apple policy of walled garden it's impossible to install app any other way? So dear Apple, finally make it posible to install whichever app I want and alternative stores and no one will be "freeloading" on your precious servers... 🙄

Yawn... They are doing this... Maybe catch up a bit on the latest news. Because I doubt you will even be aware of this and probably cannot be bothered to find out (given your yawn comment). They are doing this in iOS17.4 this month.. duh...

 

[avz]

Maybe Apple should pull out of the Earth market for a while.

Apple is not interested in keeping the Earth that does not want to keep Apple.

 

[Spooner83]

Thanks Spotify, now the price of all Apple devices will go up 🤦‍♂️

 

[wbeasley]

Apple generates more free cash flow every quarter than they know what to do with.

To all the experts here, what’s Spotify’s game plan for finally being profitable? They squandered all their funding on an ill-fated pivot into podcasting and advertising, they don’t pay google anything and most iOS users subscribe via the website.

Music streaming as a business model is just not financially viable (with or without interference by Apple). It’s just a matter of time before Spotify ends up being acquired. They are living on borrowed time, and they know it.

I just did my small part in protesting today... unsubscribed and changed to a Free account.

You have to click "Yes" about 4 times after you change plans for them to accept you REALLY want to change... always a sign of a bad business. Surprised I didnt have to wait for an emailed link to change it.

Now I will either go back to loading my own music (in FLAC files for quality Spotify never offered) or take another look at Apple Music. And hope their playlist import tool comes out soon...

 

[whsbuss]

For me the EU is nothing but a shakedown organization, regardless of Apple.

 

[The-Real-Deal82]

1. Every country (or in this case the EU) has anti competitive laws. Nothing special about the EU. Only a few are talking about this being about the U.S. This is about the EU being a protection racket for Spotify.
2. Do you actually know what a Monopoly is?
3. If you aren't actually talking about a monopoly (because you don't know what it means) then I assume you mean this is about having a majority stake. Apple have about a 30% market share and Android have about 70% in the European Union.

So basically I am trying to work out what your point is. Apple are neither a monopoly or have the greatest market share. The difference here is Google did a secret (not so secret any more) deal with Spotify to only charge them 4% instead of 15%.

I can’t get past the sarcastic tone of your post to me to respond, sorry, not for me Jeff.

 

[wbeasley]

Yawn... They are doing this... Maybe catch up a bit on the latest news. Because I doubt you will even be aware of this and probably cannot be bothered to find out (given your yawn comment). They are doing this in iOS17.4 this month.. duh...

And perhaps the original poster doesnt realise but they wont be loading any app they like. Apple still gets to sign them so all those game emulators and porn apps they thought they were getting still wont be in alt app stores.

 

[treacher]

Apple wants to get paid.

 

[wbeasley]

I'm just annoyed that I can't use Siri on HomePod to listen to my Spotify.

Perhaps we can stop squabbling and make the user experience better? No?? Okay then!

But is it Siri's fault or Spotify?

Netflix have not released an app for Vision Pro (yet). Havent ruled it out. But it is the app company, not Apple, who didnt release it.

Same for Apple Watch. they can create apps but often dont bother.

 

[truthsteve]

Only because Spotify has a free ad-supported radio option and Apple doesn't.

so your claim is basically artists are giving up more money just so that users can get something for free?

gee, didn't we all bash apple for making artists front the bill for Apple Music trials?

 

[TimFL1]

So, it’s not about Apple alerting people about Spotify’s prices. It’s about Apple preventing Spotify from posting in their own app, hey we offer it for a dollar cheaper on Spotify.com due to the 30% we have to pay Apple when you subscribe.

I disagree with the decision, but I can see where it has some merit.

They even went as far as to outright forbid you to talk subscriptions etc., even via mail, if you want to publish via the App Store. Anything that helped steer users away from IAPs on iOS was a no-go (although I think they canned that, since even the US blasted them for it a year ago).

Discussion here sounds like people think Apple is taking 30% cut of Spotify's revenues? This is not true.

Apple cut is exactly 0: Spotify only sells Premium on web and do not pay a cut to Apple.

Instead Apple provides all their services and platform for free to Spotify.

Considering that Spotify is 3x larger than Apple for music streaming in Europe, it should be Apple complaining about the situation, not Spotify.

Such a non-statement. Spotify would love to directly monetize iOS users but they can‘t without giving up 30%, so they don‘t.

Apple Music on Google Play also uses their own payment processing for in-app subscriptions, and keeps the price $10.99, implying that they too, have a deal with Google, since this is normally prohibited under Google Play terms.

I think Google is way smarter about this, they afaik have a no-compete clause for apps that provide services that Google also offers. That‘s the smart thing to do (0% cut for Spotify and Apple Music due to Google rolling their own competing music streaming services).


The real issue at hand is the competition between Apple Music and Spotify. Spotify calls foul due to AM existing and getting premium / first class treatment on Apple platforms (Apple can‘t pay 30% to themselves, so they essentially keep 100% of their streaming revenue, AM also gets to skirt loads of App Store rules like being able to advertise offers via Notifications etc… the app also comes prominently preloaded on iOS).
I‘m sure they could‘ve evaded this ruling entirely if they treated competing services the same and went ahead „yeah sure, we directly compete with you so you get to use IAPs without giving us a cut or tell people about external payment methods“. But they didn‘t they effectively stifled any potential revenue growth direct iOS userbase monetization could‘ve produced. That‘s the point that breaks their necks now.

 

[steve09090]

I can’t get past the sarcastic tone of your post to me to respond, sorry, not for me Jeff.

Yeah it was probably a bit sarcastic. I shouldn't respond to harsh criticisms that are factually so far from correct.

 

[treacher]

so your claim is basically artists are giving up more money just so that users can get something for free?

gee, didn't we all bash apple for making artists front the bill for Apple Music trials?

Radio. Radio is free. Do you know what radio is. Have you ever, in your life, accessed free radio. Perhaps you gave iTunes Radio a spin.

Artists make about 6x more from Spotify than Apple Music. It's not even close.

 

[steve09090]

Apple Music on Google Play also uses their own payment processing for in-app subscriptions, and keeps the price $10.99, implying that they too, have a deal with Google, since this is normally prohibited under Google Play terms.

I don’t know. I’ve seen nothing to suggest they have.

 

[treacher]

I don’t know. I’ve seen nothing to suggest they have.

It's right there in the app, and in Google Play policy, if you'd like to have a look at both.