Spotify on Apple App Store changes: that's nice, but it's not enough

Spotify is not impressed.

Yesterday's news that Apple would be giving a bigger revenue share to app developers if they rope people into long-term subscriptions shook up the software world. But Spotify, which has been vocal in the past about what it calls the "Apple tax," says the changes don't get to the "core of the problem."

"It's a nice gesture, but doesn't get to the core of the problem with the Apple tax and its payment system," said Jonathan Prince, Spotify's global head of corporate communications and global policy, in a statement to The Verge.

"Unless Apple changes its rules, price flexibility is prohibited, which is why we can never provide special offers or discounts, and means we won't have the ability to share any savings with our customers," Prince continued. "Apple still insists on inserting itself between developers and their customers, which means developers will continue to lack visibility into why customers churn — or who even qualifies as a long-term subscriber."

Apple has said that it will now give software developers 85 percent of revenue made from their apps, rather than the standard 70 percent, provided that those app makers are able to sustain ongoing subscribers for longer than a year. This is, seemingly, something that might be more beneficial to companies like Spotify, Netflix, and other services with large subscriber bases. It's also supposed to be a solution for smaller developers who haven't been able to make money from the App Store. In regards to pricing flexibility, Apple has also said that it will now allow developers to offer tiered pricing — 200 different price points across different currencies and territories.

However, there are other App Store features developers have been pleading for that Apple has not addressed — and its unclear whether the company will. These include things like payment for significant app updates, free trials of apps, and in Spotify's case, more flexibility around pricing and discounts.

Stay tuned for more updates on "App Store 2.0" as more developers of popular apps are likely to have different takes as they evaluate the new terms in the App Store.


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Comments

It’s pretty hilarious to hear about Spotify having issues with receiving fair payment.

It’s not what they are saying though.

You’re right. What they’re saying is that they want subscribers to pay them directly. Why do they want to do that? They can say all they want that it’s to offer discounts to their users, but the reality is, by processing payments themselves they’ll drop the 15% fee, collect additional user data that isn’t transparent via Apple’s payment processing, and make it easier to leverage that information with advertisers. It’s about money, and it’s fair enough that they want to make more money. That’s what businesses do. But their stated reasons are disingenuous. Offering discounts is not the priority here, and anyone who believes that is naive.

The 15% or 30% cut is never going to come out of Spotify’s coffers – that’s not how businesses work. So functionally, the subscription they offer on their website is a discounted subscription compared to the one they could currently offer through the app store. Spotify has to charge a higher price if Apple takes a cut, that’s their point.

It’s $9.99 a month wether you sign up through the website or through the app. So functionally it isn’t a difference to the end user one way or the other.

Apple’s point is that their platform, so they set the rules. If Apple would allow zero percentage fee on subscriptions then most of sales would just go to subscription model and Apple will earn almost nothing to cover-up the expenses, which are huge.

Google takes 45% of income they earn on YouTube from other people’s content, and no one screams about since people understand the economics behind it. In case of subscriptions that about third-party data streams such as in Spotify’s case, of course, it is different thing, but still 15% looks quite reasonable already.

If Apple payment is so bad, why doesn’t everyone do what Amazon do and remove purchases from their apps on iOS? Instead force users to make purchases from the website and either redeem it on iOS or have it sync from the web to the phone.

I have been against Apple model for years. And I am glad people are coming around to being against it. Before, people were copying Apple. For years, Apple focus on style over innovation. And then suddenly everyone like Microsoft, Samsung, and Sony started to copy. Making beautiful products that lack any new features. Apple create a closed ecosystem where they ONLY decide what is acceptable. Microsoft then copied that with Windows RT and Windows Phone. Thankfully, they are stopping that.

Personally, I think the Apple’s model should be illegal. Users should be able to unlock their phone to allow non-App Store apps to be downloaded.

why doesn’t everyone do what Amazon do and remove purchases from their apps on iOS?

Probably because Apple doesn’t allow apps to direct new users to their website to sign up there. If Spotify did what Amazon does the first screen of the app would be a login screen with no directions on how to make a Spotify account. This would piss off Spotify’s customers and they would be mad at Spotify, not Apple. Spotify probably wants to avoid that.

I’ve never understood why it isn’t illegal that Apple charges 30% (or now 15%) for music subscriptions like Spotify through its platforms when it doesn’t apply to Apple Music.

Apple basically get away with forcing competitors to charge more for the same service, which to me means abusing your market position to leverage an advantage in a competing market.

But hey ho, guess the EU will do something about it when they’re done with Google. After all it’s Apple’s turn next!

Yes it should be. But they can say apple music on the iphone is $7 plus a 30% tax.

No, it should not be. Just as Google taking whopping 45% (Apple is very modest; none of its rates anywhere achieve such "greediness") of earnings from other people’s content on YouTube is not an issue, even though YouTube is de-facto monopoly on many markets.

Why should it be illegal? What law are they breaking exactly?

Companies can do anything they want with their products so long as they aren’t monopolies (or breaking other laws of course). Given that iOS has less around 15% of the market Apple isn’t close to having a monopoly.

It’s kind of a monopoly, though.

No it isn’t.. How can 15% be a monopoly compared to 80% android marketshare. It probably has a monopoly on rich users though lol.

On Android you have at least the option of using a third party app marketplace, where as App Store is a monopoly on iOS.

Good point. Maybe I should demand that Sony allow me to run apps on my PS4 that aren’t approved by Sony. And maybe I should demand that Acura allow me to install the Lexus infotainment software in my Acura vehicle. Because after all, Sony and Acura have "monopolies" on PS4s and Acuras.

PS4 not running non-certified code is a better analogy and depends on the marketshare, it could be an issue.

The car issue is dumb, you can always install a 3rd party infotainment system in your car.

Yes, and I’m also very upset that I can’t buy H&M clothing at The Gap.

That "option" is in every practical situation a false option. An Android device without Google Play Services is essentially DOA.

If Ford launched a car that required Ford gas or Ford tires, the FTC would probably step in. While this isn’t completely analogous, it’s close enough that it might require scrutiny.

Try installing the Audi infotainment system in that Ford and let me know how it goes.

Not even that. Try demanding that Audi sell you an Audi entertainment system.

It probably has a monopoly on rich users though lol.

I know you are joking, and I’m not fit to comment on the legal part, but if apple devices hypothetically is used by a large majority of the customers buying music subscription services(as opposed to a majority of smartphones in general), one could argue they are in a position where they are misusing a monopoly position in one market to improve another.(both with this and by bundling AM with the phone)

I don’t have a problem with them taking a cut in their own store but the rule saying that apps aren’t even allowed to link out to an alternate payment system is shady.

The company doesn’t have to be a monopoly for a practice to be extremely consumer-hostile.

but you can just get Spotify through the internet. It’s less that they are forcing anything and more just making it mildly inconvenient for the non-techsavy.

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