Spotify, other music services allege Apple App Store policies anti-competitive
Spotify and other streaming music services are upset with Apple's App Store policies, which they say effectively prevent them from competing with iTunes or Beats Music, a report claimed on Wednesday.
The issue, according to industry sources for The Verge, is the 30 percent cut Apple takes from all App Store purchases, including in-app transactions. In the case of Spotify, the company has to charge $13 a month for a Premium subscription bought through its iOS app to make the same amount of money it does from a $10 fee elsewhere. App Store rules further prevent apps from linking to external storefronts.
More importantly, Apple has been venturing deeper into the streaming world. The company now pulls in revenue from both iTunes Radio and Beats Music, while benefiting from reduced competition on its industry-standard mobile store. Apple is believed to be working on rebranding Beats Music for an on-demand service launching later this year.
"They control iOS to give themselves a price advantage," one of the sources said. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
Similar arguments arose when the App Store first began allowing in-app subscriptions. At the time, however, complaints were mostly from magazines and newspapers. Some publications caved in order to reach the lucrative iPhone and iPad market, but many still prefer that people sign up for a subscription elsewhere and use a login to unlock content. Indeed, music and video services have generally adopted the same model for iOS.
Spotify is believed to be a primary target for Apple. Earlier this week, The Verge claimed that Apple wants record labels to pressure Spotify into dropping its free tier, giving the company an edge with its upcoming service. This and actions involving YouTube have reportedly led to a U.S. Department of Justice probe.
On Tuesday, Bloomberg said the Federal Trade Commission is also looking into Apple's streaming music negotiations. The chance of government intervention could nudge Apple into making changes to its new service before it even launches.
The issue, according to industry sources for The Verge, is the 30 percent cut Apple takes from all App Store purchases, including in-app transactions. In the case of Spotify, the company has to charge $13 a month for a Premium subscription bought through its iOS app to make the same amount of money it does from a $10 fee elsewhere. App Store rules further prevent apps from linking to external storefronts.
More importantly, Apple has been venturing deeper into the streaming world. The company now pulls in revenue from both iTunes Radio and Beats Music, while benefiting from reduced competition on its industry-standard mobile store. Apple is believed to be working on rebranding Beats Music for an on-demand service launching later this year.
"They control iOS to give themselves a price advantage," one of the sources said. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
Similar arguments arose when the App Store first began allowing in-app subscriptions. At the time, however, complaints were mostly from magazines and newspapers. Some publications caved in order to reach the lucrative iPhone and iPad market, but many still prefer that people sign up for a subscription elsewhere and use a login to unlock content. Indeed, music and video services have generally adopted the same model for iOS.
Spotify is believed to be a primary target for Apple. Earlier this week, The Verge claimed that Apple wants record labels to pressure Spotify into dropping its free tier, giving the company an edge with its upcoming service. This and actions involving YouTube have reportedly led to a U.S. Department of Justice probe.
On Tuesday, Bloomberg said the Federal Trade Commission is also looking into Apple's streaming music negotiations. The chance of government intervention could nudge Apple into making changes to its new service before it even launches.
Comments
Their own site then they would have to pay the 30 %. The would have to pay all the marketing and placements plus the credit card processing etc.
These rules have been here forever. Everyone knows that's the cost of doing business in the iOS playground. Nobody is stopping them from creating a web app or going to Android. Apple created their ecosystem and market and now these companies think Apple should just let them play for free. Welcome to business 101.
The piece of crap sound quality of youtube and spotify, etc. is not the experience I want. The spotify's of the world also have limited internation music tracks that are important to my family.
They could make the purchase button in their app say something like:
"Pay $13 dollars here in the app or go to our website and pay only $10."
Let the customer decide.
Spotify has a great service, and if the only way Apple can compete with them is the Walmart or Microsoft way, where by nothing but sheer virtue of size, and keys to the store, then it makes competition impossible, and that's fucked up and always has been. That's why anti monopoly laws were created in the first place.
Oh please. Spotify's payouts to artists are laughably infinitesimal, 0.007cents per play. They are one of the main antagonists towards music artists with regard to revenue.
Regardless, they should all be paying the same royalty rate as terrestrial radio, cause its the same damn thing... a business broadcasting a song. If anything the internet streaming rates should be higher, since their reach exceeds a radio stations broadcast's range.
If a retooled Beats can forward even a tiny fraction of listeners to an iTunes Store purchase is a huge step in the right direction vs Spotify's virtual freeloading off artists work.
I created this account specifically to address redefiler.
You clearly don't know how business works. Spotify does not pay the artist directly. Spotify pays the RECORD LABEL that owns the artists music and the RECORD LABEL pays the artists.
Do you walk into a store and pay the store plus all it's distributors/suppliers? No because that's now how business works. The same principle applies here.
Spotify isn't a free service, you still pay with your time while you listen to ad's the same as any radio station on the planet.
The real problem with Spotify and other streaming services (as recently pointed out by Jason Calacanis when he visited This Week in Tech) is that they are not making money now and will soon have to pay much, much higher licensing fees. Their original agreements contained low music licensing fees and those low rates will expire, essentially putting them into bankruptcy.
There is absolutely NOTHING wrong with Apple's App Store policies. The problem is these streaming services are bad businesses and cannot make money!
The 30% rule is not only for streaming music apps so they need to take this upset-ness somewhere else. Like to Google Play.
Oh wait..they charge 30% too https://support.google.com/googleplay/android-developer/answer/112622?hl=en
I love Apple products as much as anyone, but as Apple gets in the streaming game it is going to HAVE to change. These are serious anti-competitive issues that will not go away. We do not want to see happen to Spotify what happened to EVERYONE under Windows. If Apple doesn't address this, they should get their asses sued big time.
Spotify has a great service, and if the only way Apple can compete with them is the Walmart or Microsoft way, where by nothing but sheer virtue of size, and keys to the store, then it makes competition impossible, and that's fucked up and always has been. That's why anti monopoly laws were created in the first place.
Oh, boy... Blocked.
Anyone else think Spotify sees the bullet headed for their head? I love how everybody tries to play that anti-competitive trump card when they feel threatened.
Ah, no.
They control iOS because they created it.
But a thought comes to mind, didn't Apple make a 15% agreement with HBO?
On a side note, apple needs to have lossless, drm free, inheritable lossless accounts. I am sick of getting cd's and burning the lossless files into my library.
Yeah, you and that other guy.