Spotify Submits iOS App Update With Out-of-App Purchase Options

[HighwaySnowman]

Patreon is stealing peoples money too based on your argument.

Patreon provides pretty significant services for what they charge. And they also don't keep creators from advertising their own websites.

Apple provides NOTHING for taking a 30% cut, and until now they blocked letting users know that they had options.

 

[Mrkevinfinnerty]

I was corrected by another forums member - Spotify actually never allowed in-app subscriptions. They forced you to go to their website, circumventing Apple. However, for illustrative purposes, do you really believe that if Spotify, overnight, gained a 30% jump in revenue as a result of this - that you, as the consumer, would ever see a 30% increase in the value of your subscription?

I've used Spotify and Apple Music probably 50-50 over the last ten years and based on my experience it is very clear that Spotify put much more work into the product.

Also your math is not mathing, Spotify would never experience a 30% jump in revenue unless 100% of their customer base was on iOS and they were all using app store billing.

 

[HighwaySnowman]

Who do you think created the App Store in the first place? The developers would have never made a penny had it not been for Apple creating the system.

The developers would have made 100% of sales if Apple hadn't created the slimy app store.

 

[AppliedMicro]

Who do you think created the App Store in the first place? The developers would have never made a penny had it not been for Apple creating the system.

Who do you think makes Apple keep selling iPhones?
Apple would not have a viable iPhone business, had it not allowed third-party developers to make apps for it.
Microsoft Windows Phone and Google Android would rule the world instead.

It goes both ways.

 

[Joshuaorange]

Who do you think makes Apple keep selling iPhones?
Apple would not have a viable iPhone business, had it not allowed third-party developers to make apps for it.
Microsoft Windows Phone and Google Android would rule the world instead.

It goes both ways.

Apple created all of it. Nobody ever bought an iPhone for Fortnite. You’re delusional.

 

[bcortens]

Apple created all of it. Nobody ever bought an iPhone for Fortnite. You’re delusional.

If the iPhone had zero third party apps, how many iPhones would they sell? Would you have bought one?
I personally would not buy an iPhone without third party apps. Which would likely also mean no AirPods, no Apple Watch, no iPad with Magic Keyboard and pencil. That’s at least 4 Apple devices I wouldn’t have bought without third party app support.

I think it is you who is delusional if you think apples success was possible without “there’s an app for that”

 

[jlc1978]

👉 It’s an obviously totally disproportionate charge, totally decoupled from any value (“or facilitation of sale”) Apple provide.

There is nothing illegal with a high commission, and from what I read the decision was about not preventing of site sales, not rates. If Apple went to zero commission and just hiked other fees they could probably push out most competing app stores.

Charging developers 30% on transactions for a service that Apple do not provide is double-dipping,

It's 15% after the first year, and Apple's fee is simply the table stakes to keep the subscription app on the App Store.

People like to point out Stripe charges 2.9%, ignoring the "plus 30 cents/transaction," so a 1 or 2 dollar app would pay more in payment transaction costs than they do for all the services Apple provides. I don't see how a developer who charge less than ~3 to 5$ will make much of a living once they add up all the fees beyond payment costs.

I think it is you who is delusional if you think apples success was possible without “there’s an app for that”

Equally delusional to think developers would be a successful if Apple hadn't made a killer product, it's a symbiotic relationship. If Apple's ecosystem wasn't lucrative developers would abandon it; look at the difference in software for the Mac and Windows as an example; lot of Windows only stuff.

 

[AppliedMicro]

Nobody ever bought an iPhone for Fortnite.

I’m sure there are children that did (or demanded one for birthday/christmas).

 

[HighwaySnowman]

Apple created all of it. Nobody ever bought an iPhone for Fortnite. You’re delusional.

Somebody clearly doesn't remember what iPhones with Fortnite installed were selling for.

Yes. People demonstrably DID buy iPhones for Fortnite.

 

[AppliedMicro]

I was corrected by another forums member - Spotify actually never allowed in-app subscriptions.

I'll correct you again

The did allow it - but stopped in 2016 for new subscriptions (and 2023 for existing customers), shortly after Apple released their own competing music streaming subscription service.

 

[macabrumorsab]

I was corrected by another forums member - Spotify actually never allowed in-app subscriptions. They forced you to go to their website, circumventing Apple. However, for illustrative purposes, do you really believe that if Spotify, overnight, gained a 30% jump in revenue as a result of this - that you, as the consumer, would ever see a 30% increase in the value of your subscription?

My comment was general. I knew that Spotify does not pay 30%.
Concerning your question: of course not, but the developer deserves it more than Apple. That 30% more increases the chance for longer support and more features in long term.
And the main problem with the 30% is that I don't like P.I.M.P.s: the worst species you can find on our planet, be it a person or a company.

 

[bcortens]

Equally delusional to think developers would be a successful if Apple hadn't made a killer product, it's a symbiotic relationship.

It is true that Apple building a killer product helped start the mobile app revolution, but that was over 15 years ago now and they have been part of a duopoly since 2015 when Microsoft gave up.

Further more if the iPhone didn't support third party apps we would have one of Blackberry, Symbian, or Windows Phone still around as the other player in the duopoly. I can say that Spotify, Netflix, Patreon, Fortnite, etc... would all be just as successful as they are today if the iPhone had never supported third party apps. I do however acknowledge that it is possible that indie devs would not be doing as well as the iPhone is a much better market for those indie apps.

If Apple's ecosystem wasn't lucrative developers would abandon it; look at the difference in software for the Mac and Windows as an example; lot of Windows only stuff.

It's a chicken and egg problem. Apples ecosystem is profitable because it has a critical mass of consumers, so devs will never abandon it. Similarly, Apple has a critical mass of consumers because devs are on their ecosystem. It is a symbiotic relationship that is in both devs and Apple's favour. If Apple did not control half of a duopoly devs would abandon them, but as long as businesses want to target all customers on mobile they have no choice but to go through Apple. They have no choice when half the market is locked behind Apple's walled garden.

 

[Joshuaorange]

If the iPhone had zero third party apps, how many iPhones would they sell? Would you have bought one?
I personally would not buy an iPhone without third party apps. Which would likely also mean no AirPods, no Apple Watch, no iPad with Magic Keyboard and pencil. That’s at least 4 Apple devices I wouldn’t have bought without third party app support.

I think it is you who is delusional if you think apples success was possible without “there’s an app for that”

The first 2 iPhones had no 3rd party apps. And sold like crazy. Apple created the App Store. Not the other way around.

 

[bcortens]

The first 2 iPhones had no 3rd party apps. And sold like crazy. Apple created the App Store. Not the other way around.

The first two iPhones “sold like crazy” but did not displace either Symbian or blackberry in terms of market share.

 

[Joshuaorange]

Somebody clearly doesn't remember what iPhones with Fortnite installed were selling for.

Yes. People demonstrably DID buy iPhones for Fortnite.

So what you’re saying is there were some folks who wanted Fortnite but had to have an iPhone. If all they cared about was Fortnite, they could have bought anything else but didn’t.

 

[AppliedMicro]

There is nothing illegal with a high commission

Note that reply above specifically referred to @jole 's earlier suggestion of hiking fees substantially - and then only waiving them for developers that conduct all purchases through Apple. Which effectively amounts to just the introduction of yet another anticompetitive new fee.

The new ruling does explicitly take issue with how high Apple's 27% commission rate would have been, namely thatit defies the earlier injunction by making the option completely economically non-viable to developers, thus preventing any meaningful competition (emphasis in the following quote is mine):

"While literally true in one sense, likely the outward facing/public sense—27% is less than 30%—Apple also knew that any such opportunity vanishes in the face of external costs and thus was not viable for developers."

(...)

Apple assessed the external costs developers face when utilizing linked-out transactions (...) With that information, Apple selected a 3% discount on its 30% IAP commission that it knew was anticompetitive. In doing so, Apple willfully set a commission rate that in practice made all alternatives to IAP economically non-viable.

The Court cannot conceive of how any reasonable mind interpreting this Court’s and the Ninth Circuit’s orders would find that structure permissible, because it forecloses competitive alternatives.

This Court previously recognized that “[e]ven in the absence of IAP, Apple could still charge a commission on developers.” Epic Games, Inc., 559 F.Supp.3d at 1042.65 Apple was tasked with valuing its intellectual property, not with reverse engineering a number right under 30% that would allow it to maintain its anticompetitive revenue stream"
👉 My take-away from this is, that another fee scheme designed to achieve these anticompetitive result may land Apple in very hot water.

It's 15% after the first year,

Cancelling and resubscribing has become common, with increasing market fragmentation and pricing particularly for video streaming services.

Apple's fee is simply the table stakes to keep the subscription app on the App Store.

Not anymore.

 

[AppliedMicro]

The first two iPhones “sold like crazy”

They did not really sell like crazy.
They weren't even available in most parts of the world and with most carriers.

Apple just received considerable media hype.

The 1st generation iPhone was in fact the only Apple product I can remember that Apple (had to) adjust pricing down within weeks after release, with Jobs publicly "apologising":

"I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale."

👉 When has Apple ever dropped a product's price two months after going on sale in the U.S.?
And why? Crazy sales?

Overseas sales were described as "sluggish" (see sources Wikipedia)
The 1st gen iPhone certainly was a moderate success (following an intense early adopter hype that rather soon waned off). But the iPhone's success story only really took off with the advent of the App Store.

 

[Rogifan]

It also was priced to attract developers to the platform, propelling sales of hardware devices (iPhones).

Which it did. Very successfully.

Charging developers 30% on transactions for a service that Apple do not provide is double-dipping,

It’s Apple saying ‘you wouldn’t exist without us so pay up’. Heck Eddy Cue said as much. He said Uber wouldn’t exist without Apple. So long as the current crop of Apple execs believe nothing would exist without them they are going to fight tooth and nail to extract whatever they can from developers.

 

[AppliedMicro]

It’s Apple saying ‘you wouldn’t exist without us so pay up’.

Yes.
Neither would Apple exist (their iPhone business anyway) without third-party developers.

There's just an imbalance of power in that it's one (Apple) against many (developers).
Smaller developers have little to no negotiating power on their own.
Apple can just play off smaller developers against each other (if they considered leaving).

That's the way any authoritarian tyranny works, really.

 

[Rogifan]

They did not really sell like crazy.
They weren't even available in most parts of the world and with most carriers.

Apple just received considerable media hype.

The 1st generation iPhone was in fact the only Apple product I can remember that Apple (had to) adjust pricing down within weeks after release, with Jobs publicly "apologising":

"I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale."

👉 When has Apple ever dropped a product's price two months after going on sale in the U.S.?
And why? Crazy sales?

Overseas sales were described as "sluggish" (see sources Wikipedia)
The 1st gen iPhone certainly was a moderate success (following an intense early adopter hype that rather soon waned off). But the iPhone's success story only really took off with the advent of the App Store.

Apple has a trademark for ‘There’s an App for That’. And the tag line for WWDC 2010 was ‘The center of the app universe’.

 

[Rogifan]

Yes.
Neither would Apple exist (their iPhone business anyway) without third-party developers.

There's just an imbalance of power in that it's one (Apple) against many (developers).
Apple can just play off smaller developers against each other.

Apple should allow other options and then compete with them. If IAP is the best that’s what consumers will choose. Of course Apple needs to improve the services offered to developers so devs will want to use Apple’s IAP over something else. I’m not sure how anyone at Apple thought the 30% fee would last forever.

 

[AppliedMicro]

I’m not sure how anyone at Apple thought the 30% fee would last forever.

It's still a long way to go for lawmakers and regulators.

Apple will never "concede defeat" by complying in good faith.
They'll never run out of ideas and attempts to undermine antitrust rulings and enforcements before they get to feel the pain.
Malicious compliance should be any lawmaker's, judge's or antitrust regulator's default assumption for Apple's reaction.

Every day with another injunction, another DoJ lawsuit or another European Union fine against Apple, is a good day.

 

[jlc1978]

Note that reply above specifically referred to @jole 's earlier suggestion of hiking fees substantially - and then only waiving them for developers that conduct all purchases through Apple. Which effectively amounts to just the introduction of yet another anticompetitive new fee.

That would be a bad idea, but might get away with a credit for fees collected that way.

The new ruling does explicitly take issue with how high Apple's 27% commission rate would have been, namely thatit defies the earlier injunction by making the option completely economically non-viable to developers, thus preventing any meaningful competition (emphasis in the following quote is mine):

"While literally true in one sense, likely the outward facing/public sense—27% is less than 30%—Apple also knew that any such opportunity vanishes in the face of external costs and thus was not viable for developers."

That is the challenge for Apple, any likely economically viable alternative for most developers would require Apple to charge much higher rates that 30% in the App Store, and lowering them significantly would make alternatives even less competitive.

It's only the big guys that can pull off 3rd party payment schemes that are financially viable, IMHO.

Cancelling and resubscribing has become common, with increasing market fragmentation and pricing particularly for video streaming services.

Which is the streaming service's problem, not Apples.

In the end I think Apple may find legally acceptable ways to tack on new fees to make up for lost revenue, since I doubt any court would say you have to allow access but not be able to charge for it. If I were EPIC, Spotify, et.al, I''d be worried theses decisions will come back to haunt them as their business practices get scrutiny.

 

[jole]

Note that reply above specifically referred to @jole 's earlier suggestion of hiking fees substantially - and then only waiving them for developers that conduct all purchases through Apple. Which effectively amounts to just the introduction of yet another anticompetitive new fee.

This ONLY would be issue if Apple continues to block installing apps to iPhone from outside their store.

My suggestion is to open it up: Allow installing any apps from anywhere with no conditions whatsoever. When that is true, the gatekeeper argument goes away with 0 commissions.

The way I suggested Apple protect their business is that they sell access to their SDK (including tools, libraries, apis, services, store, ...) with the current fee structure OR to avoid any doubts about about fees also allow $1/user/month fee instead of reselling commission.

While blocking access to widely used platform can be considered illegal due to 60% market share, selling SDK to developers should not be illegal regardless of the price tag.

 

[jole]

There seems to be two camps in the discussion:

1. Ones who want Apple to succeed; either they hold AAPL or think that good business leads to good products
2. Ones entitled to dictate how Apple prices their products