the spotify content comes from spotify. Apple also provides - the DRM to trust the app is truly an unadulterated app from spotify - The CDN to download the app. - User notifications that the App has been updated - A comments and review section for marketing the application
Very true. And Apple provides those services for all apps in the App Store.
If I buy a $10 app... Apple gets $3. End of transaction. Apple never asks for any more money because that $3 is supposed to cover the costs of the above services.
But $3 every month?
Other than the monthly swipe of the credit card (which is automated BTW)... what are they doing different than any other app in the App Store?
Alas, those are the rules! Spotify was well aware of the rules.
And ongoing advertising so Spotify can obtain new and ongoing flow of new customers. And ease of use for the Spotify customer still using the app without having to constantly go to a web browser and enter a irk, and sign in again if you didn't click the little box that said "Remember me", along with guarantees against malware... The list goes on and on. If somebody no longer wants to use iOS they can go buy another phone and sign their subscription through other means and not pay for the experience and convenience through Apple. But, yes, month to month Apple provides a premium experience for both consumers and developers, and we all pay for, except those who choose not to and take their business elsewhere. It's a matter of choice and personal responsibility.
It's really very simple. Spotify, like Netflix and others, has its own billing department. It doesn't need Apple to facilitate charging for subscriptions. Their app should be able to send people to their web site to sign up just like when trying to use the app on a TV, BD player, etc.
The problem is, many users aren't aware of the rules. As I wrote earlier, Spotify has put out a sort of PSA, and I hope it educated a lot of
people who Apple might otherwise have tricked into paying an exorbitant
recurring tax to Apple. In fact, it did educate CNBC anchor Brian
Sullivan, who stated at 2:44 EDT today that "he was one of the idiots
who subscribed to Spotify through iTunes, and he's got to go back and
fix that." Good for him!
The clapping seals supporting Apple in these threads are certainly concentrated here but few in number in the real world. Real people who hear about this are outraged and feel like idiots for paying Apple 30% more for nothing. They feel like Apple tricked them. Like Brian Sullivan, they're going to fix the problem.
Spotify raised the price in the App Store versus what they charge on their own website.
Brian might feel like an idiot... but that was a decision made by Spotify. I'm sure he's not the only person who didn't know about the two different prices. But shame on Spotify for even putting their customers into this situation.
Netflix, on the other hand, charges the same in the App Store as they do on their website. They just eat that cost. I haven't heard Netflix complain about it in countless articles... so perhaps they realize this is the cost of doing business.
They don't eat the cost. Netflix reasonably sees it as a cost of doing business and get the appropriate and legal tax write off. Netflix doesn't use it as a way to leverage more money from their customers by writing off the business expense AND needling their customers for a higher fee like Spotify does.
My dentist is great. Not only does he do excellent work, but he's built out a LEED-certified facility (Spodak Dental, Delay Beach, FL, look it up) and he and his staff are very engaged in giving back to the community. They go out to schools and give free exams and procedures to the kids, many of whom come from families that can't afford much dental care. They do beach clean-up Saturdays, and they give back in many other ways. All this costs money, which doesn't come out of my dentist's pockets. Nope, it comes out of mine, and the pockets of his other patients who pay full, or near full price. We are subsidizing his good work and the many free services he provides to a wider community.
So to all those who stick with the myopic argument that Apple is charging 30% merely for payment processing, you need to rethink your position. It's just not the reality of the situation. What Apple is doing is closer to what my dentist is doing. It's charging app developers a fair percentage of the revenue they generate within Apple's universe for all of the many services and benefits app developers receive by selling through the App Store and accessing via the App Store the giant base of iOS users. That's worth a lot and Apple charges a fair price for it.
What you're missing is that these app developers, the ones financially benefitting from the App Store, and more pointedly their customers (who are the ones ultimately funding all of this) are subsidizing availability of the whole iOS ecosystem for those app developers/apps that are available for free. Its simply wrong to flip the script and suggest that the free hosting and access Apple provides has no value and therefore the fees should reflect only payment processing. That would be like me telling my dentist, you provide dental work free to some members of the community, so why should I pay you for that? I should get my dental work here, in your gorgeous and modern facility, utilizing hours of your time and your staff's time, and the benefit of all your years of education and practice, for free.
If that is indeed all that Apple provides, it does seem rather simple, except you have to put a value on the venue itself, which of course is valuable. On one hand, the upcoming system is a step in the right direction of fairness for the consumer (the 15% mark-up for subscribers who come via the app-store), perhaps there can be more descending tiers if that customer is in fact continuously loyal (next year 10%, next year 5%, then done - zeroed out). That would be another improvement. If there was a way for there to be a rebate for the first year on half of that 30%, once you hit the mark, that would be even better.
This is such a hot button issue and I admit that I hadn't thought much about it before this recent kerfuffle. I don't think that a company with a questionable business model should be rewarded much, especially if it's true that they totally lowball their content providers (i.e. - the musicians), but I think Apple has to stay ahead of the game and not be seen as gouging.
I still think that if I was in Spotifys shoes I would do what someone said Amazon has done and offer the Kindle app, which when opened informs the new customer that they need an account to use it. The customer goes to their website, signs away their privacy and then returns to the app and logs in. Spotify gets it all, Apple gets nothing. Everyone is happy.
.... As noted elsewhere, Spotify could easily put up a 'free' app and forgo inapp purchases, and sell subscriptions at a web page (e.g. netflix). But they don't. Something tells me that the Apple has created a marketplace that consumers want to shop, and for that, there should be a price of admission for the vendors who want to set up a booth, and use the in store Point of Sale system.
I get Netflix via IAP so they do not forgo that method. Let us note, they also do not complain about the fee. The Kindle app better suits your point and let us note Apple does not complain about that.
Spotify is lazy and likes stabbing its customers in the back.
It doesn't want to do the job of attracting customers to its own website to pay for its services.
It wants to ride free on Apple's work.
Then it charges customers even more if they pay with their iTunes account.
Yup, and charging more via IAP than from their website is a violation of the AppStore rules. That may be what was implied in the article that Apple said was already in violation of the terms.
Apple could have done things differently - shown variety of streaming services (including its own) within the pop up on the Music App, so it was on an equal footing. Instead it only advertises Apple Music. Apple has an inbuilt advantage and actively exploiting it in a way which undermines competition.
I expect, frankly, this cannot continue in the way it is now. I expect the EUropean COmmission to investigate properly and intervene like it did with IE on Windows - it'll take years and may end up a nul and void point, but i think Spotify has a point.
Nope.
Microsoft was forced by the EU to add a program to show alternative browsers, even though usage data showed that IE was already on the slide: consumers had no trouble finding alternatives even without Microsoft's help.
And as others have pointed out, Spotify shows up in the App Store when you search. Do you think Apple should display a full screen ad for Spitify as soon as you tap the Music icon?
The answer is simple: if Spotify wants special treatment then all it has to do is spend billions developing, cultivating and maintaining its own mobile platform.
Why would Apple advertise competition on it's own app? That doesn't make any sense. Apple has every right to advertise its own services on their own apps. There is nothing unfair about that. What is there to investigate? What you are saying is basically like saying Ford should be advertising GM vehicles on Ford's own website.
Well Apple could have made a separate Music app that you download from the App Store vs. updating the stock music app that is installed on everyone's device.
This is a terrible idea from a usability to perspective. If you have a separate streaming app and a separate music app then the user will be forced to execute mental gymnastics every time they want to search for a track:
"Okay, now I'm looking for a track off that old UB40 album. Now which app do I need to search in?'
To Apple and its customers, music is music; only geeks and forum dwellers care where it comes from and how it is stored. This is the same reason why the iPhone enjoys reasonably robust sales, even when folk on the interweb claim the device is useless without a file manager.
Apple could have done things differently - shown variety of streaming services (including its own) within the pop up on the Music App, so it was on an equal footing. Instead it only advertises Apple Music. Apple has an inbuilt advantage and actively exploiting it in a way which undermines competition.
I expect, frankly, this cannot continue in the way it is now. I expect the EUropean COmmission to investigate properly and intervene like it did with IE on Windows - it'll take years and may end up a nul and void point, but i think Spotify has a point.
So, in your mind Apple is the greedy one. Apple isn't merely facilitating payment, they also developed the tools and programming libraries that make creation of apps for iOS possible. And they developed iOS too. And the hardware it runs on. What Sopify is delivering through the App Store is not equivalent to what Amazon is delivering to its customers through its app. Amazon is merely acting as a seller when it sells a physical product to one of its customers. That's no different from you or I using the eBay app to purchase some old coins from an eBay seller. Of course Apple isn't going to demand a cut of that transaction. This is different and you seem not to be able to recognize or acknowledge that.
It's Spotify who is being greedy by demanding of their own customers an additional 30% on top of the usual price of their service because they don't want to incur the costs of marketing, distribution and fulfillment provided by Apple to their most significant sales channel.
What marketing does Apple do for Spotify?
The four Ps of marketing: price, promotion, product, place.
Apple supplies two of them. The APIs and tools that allow Spotify to create and test the app (the product) or do you think that APIs write themselves. They also promote Spotify (and others) because it turns up when you search for music services. They certainly provide the place where the app is hosted and downloaded.
Should this be an ongoing cost? As long as Apple is processing the payment then yes. Basically, any payment Apple handles involves time and resources, so Apple takes a cut (and also because, for some bizarre and weird reason, they want to make as much money as they possibly can). There are ways around this: Amazon does not allow payments through its apps for example.
Spotify could also promote their service themselves. I have never seen a TV advert for Spotify in the UK, but I have seen ads for Apple's app store. So Spotify is complaining while riding Apple's marketing coat tails, while spending very little on marketing themselves. If Spotify advertises, draws people to their website and signs them up there before giving them a link to the Apple/Android store then they could avoid the fee.
Hell, they could avoid stores altogether by writing a kick-ass mobile site that streams music from the browser. Again, no fee and they wouldn't have to wait for approval to add changes.
Instead, they've taken the route that they knew would get them rejected: trying to hide a subscription page inside the app; I can only guess that they did this to get themselves some free promotion.
Spotify's problem is not Apple, it's that they're running out of time.
the spotify content comes from spotify. Apple also provides - the DRM to trust the app is truly an unadulterated app from spotify - The CDN to download the app. - User notifications that the App has been updated - A comments and review section for marketing the application
But $3 every month?
Other than the monthly swipe of the credit card (which is automated BTW)... what are they doing different than any other app in the App Store?
Apple is charged by the credit cards companies for each transaction. So each time that a subscription is renewed, Apple is charged a fee. There are also other costs associated with processing credit transactions such as the ongoing cost of developing the software that handles it, and also charges made by third-party agencies for credit check, and organisations that monitor changes in credit rules across the globe. Monitoring agencies charge a hefty sub. Having worked for a credit card outfit a while back, I can tell you that the cost of processing these things goes far beyond a single transaction fee.
If you have a credit card and don't use it, the credit card company may withdraw it. Why? Why not let you keep it if costs them nothing to do so? Because it does cost them. It costs them to follow regulations, maintain records, rent infrastructure. Apple is the same.
App discovery through the App Store. The marketing of Apple's devices, it's superior OS, to a premium audience who spend more than any other audience. Are you serious in implying Spotify and others don't benefit from the visibility of the iPhone as a premium device, iOS as a premium experience? That they don't benefit from being associated with that? I suppose we could go back to applications on CDs shrink-wrapped and shipped through the mail. But I'd rather be in the App Store. Maybe that's just me.
Are you suggesting that Apple doesn't benefit from an app ecosystem adding value to their platform, of which they are able to sell hundred of billions worth of hardware product?
Are you saying that Spotify doesn't draw customers by being on the app store? If that's the case then they can simply run their service through a mobile web app.
Other than the monthly swipe of the credit card (which is automated BTW)... what are they doing different than any other app in the App Store?
Apple is charged by the credit cards companies for each transaction. So each time that a subscription is renewed, Apple is charged a fee. There are also other costs associated with processing credit transactions such as the ongoing cost of developing the software that handles it, and also charges made by third-party agencies for credit check, and organisations that monitor changes in credit rules across the globe. Monitoring agencies charge a hefty sub. Having worked for a credit card outfit a while back, I can tell you that the cost of processing these things goes far beyond a single transaction fee.
If you have a credit card and don't use, the credit card company may withdraw it. Why? Why not let you keep it if costs them nothing to do so? Because it does cost them. It costs them to follow regulations, maintain records, rent infrastructure. Apple is the same.
Do you mean to imply that the billing departments of Spotify, Netflix, etc have 30% overhead, so it's a wash whether a user goes through Apple or signs up with the actual provider of the service?
Apple of course just spouted a red herring as a response to Spotify and people think it was amazing. If Apple's device sales begin to nose dive, you better believe Google, Amazon, Spotify and service leaders will be waiting to hold their head underwater and help them to the grave that much quicker. This is the same shit that Microsoft pulled in the 90's except they didn't have as many clapping seals.
Ah, the old 'you disagree with me, therefore you're an mindless drone' argument.
the spotify content comes from spotify. Apple also provides - the DRM to trust the app is truly an unadulterated app from spotify - The CDN to download the app. - User notifications that the App has been updated - A comments and review section for marketing the application
In short, it provides a permanent software marketplace.. 30% is a reasonable amount to showcase your wares, and 15% is reasonable to maintain the customer relationship year over year.
As noted elsewhere, Spotify could easily put up a 'free' app and forgo inapp purchases, and sell subscriptions at a web page (e.g. netflix). But they don't. Something tells me that the Apple has created a marketplace that consumers want to shop, and for that, there should be a price of admission for the vendors who want to set up a booth, and use the in store Point of Sale system.
Everything you mention here is also something Apple provides for free apps. CNN isn't paying Apple anything outside of the developer license fee yet they receive all the benefits you mentioned above. What is Apple providing Spotify that they're not providing CNN (outside of cc payment processing)? This isn't about the things you listed, it's about Spotify being a revenue generating app and Apple feeling they deserve a cut of it. The argument is whether Apple is right and if they are what that cut should be.
Spotify did what they did to get attention. They will re-submit an app removing any redirect out of the App Store but I doubt they will bring back IAP (Audible had it but removed it once Amazon acquired it; I think it was the same with Comixology). Users will sign up in the browser (which they can do now) and Apple won't get a cut of anything.
Well, to begin with, Apple has decided not to charge if you're not making money themselves. They could charge 'rent' for being on the Apple store, whether you make money or not, but that wouldn't go down very well, and I'm sure that Spotify would still complain.
Secondly, as I mentioned earlier, the cost of processing credit cards doesn't begin and end with the transaction fee. (I used to work for a credit card company that went bust because it didn't realise this.)
Thirdly, if Apple is charging too much then they'll be punished for it because that's how the market works.
Apple is charged by the credit cards companies for each transaction. So each time that a subscription is renewed, Apple is charged a fee. There are also other costs associated with processing credit transactions such as the ongoing cost of developing the software that handles it, and also charges made by third-party agencies for credit check, and organisations that monitor changes in credit rules across the globe. Monitoring agencies charge a hefty sub. Having worked for a credit card outfit a while back, I can tell you that the cost of processing these things goes far beyond a single transaction fee.
If you have a credit card and don't use, the credit card company may withdraw it. Why? Why not let you keep it if costs them nothing to do so? Because it does cost them. It costs them to follow regulations, maintain records, rent infrastructure. Apple is the same.
Do you mean to imply that the billing departments of Spotify, Netflix, etc have 30% overhead, so it's a wash whether a user goes through Apple or signs up with the actual provider of the service?
Transaction fees, regulations updates, equipment infrastructure, support staff, training of support staff, buildings to house the support staff, staff to clean the buildings that house the support staff, accountants, auditors, developers, security experts… Now all of this has to cover operations across the globe that takes into account different regulations across the globe.
Now outside of this, there are other costs of running the app store that go beyond credit card processing, and these have to be paid for too. And what's worse is that these costs increase the more countries Apple supports and the more customers they get. There are lots of apps that get hosted for free on the app store too, which somewhere down the line, will incur a cost.
Do I think the billing departments of Spotify, Netflix etc. have a 30% overhead? No, because they don't have as many customers as Apple, do not operate in as many countries in Apple and do not shift as much data as Apple.
And in many cases, their fee processing is handled by Apple.
My dentist is great. Not only does he do excellent work, but he's built out a LEED-certified facility (Spodak Dental, Delay Beach, FL, look it up) and he and his staff are very engaged in giving back to the community. They go out to schools and give free exams and procedures to the kids, many of whom come from families that can't afford much dental care. They do beach clean-up Saturdays, and they give back in many other ways. All this costs money, which doesn't come out of my dentist's pockets. Nope, it comes out of mine, and the pockets of his other patients who pay full, or near full price. We are subsidizing his good work and the many free services he provides to a wider community.
So to all those who stick with the myopic argument that Apple is charging 30% merely for payment processing, you need to rethink your position. It's just not the reality of the situation. What Apple is doing is closer to what my dentist is doing. It's charging app developers a fair percentage of the revenue they generate within Apple's universe for all of the many services and benefits app developers receive by selling through the App Store and accessing via the App Store the giant base of iOS users. That's worth a lot and Apple charges a fair price for it.
What you're missing is that these app developers, the ones financially benefitting from the App Store, and more pointedly their customers (who are the ones ultimately funding all of this) are subsidizing availability of the whole iOS ecosystem for those app developers/apps that are available for free. Its simply wrong to flip the script and suggest that the free hosting and access Apple provides has no value and therefore the fees should reflect only payment processing. That would be like me telling my dentist, you provide dental work free to some members of the community, so why should I pay you for that? I should get my dental work here, in your gorgeous and modern facility, utilizing hours of your time and your staff's time, and the benefit of all your years of education and practice, for free.
Well, that's the problem with the service industry as a whole isn't it? If you can't actually see the product then it obviously cost nothing to produce. This is why even now, people still use this excuse to justify piracy.
I remember someone here saying that ebooks shouldn't cost twelve dollars because no ink or paper is needed to produce them. Pretty much the same argument is being used here: you can't physically see the app store, therefore it doesn’t cost anything to run.
Everything you mention here is also something Apple provides for free apps. CNN isn't paying Apple anything outside of the developer license fee yet they receive all the benefits you mentioned above. What is Apple providing Spotify that they're not providing CNN (outside of cc payment processing)? This isn't about the things you listed, it's about Spotify being a revenue generating app and Apple feeling they deserve a cut of it. The argument is whether Apple is right and if they are what that cut should be.
Spotify did what they did to get attention. They will re-submit an app removing any redirect out of the App Store but I doubt they will bring back IAP (Audible had it but removed it once Amazon acquired it; I think it was the same with Comixology). Users will sign up in the browser (which they can do now) and Apple won't get a cut of anything.
Well, to begin with, Apple has decided not to charge if you're not making money themselves. They could charge 'rent' for being on the Apple store, whether you make money or not, but that wouldn't go down very well, and I'm sure that Spotify would still complain.
Secondly, as I mentioned earlier, the cost of processing credit cards doesn't begin and end with the transaction fee. (I used to work for a credit card company that went bust because it didn't realise this.)
Thirdly, if Apple is charging too much then they'll be punished for it because that's how the market works.
Spotify would prefer not to use iTunes billing (and thus pay Apple 30%) but Apple gives you no other option so you either use it or force people to sign up outside the app. What's consumer friendly about me having to pay $3/mo more for a service or in the case of, say, books, having to go to the browser every time I want to buy an ebook? On Android you can buy books directly from the Kindle app. Seems to me that's a better user experience.
Comments
So to all those who stick with the myopic argument that Apple is charging 30% merely for payment processing, you need to rethink your position. It's just not the reality of the situation. What Apple is doing is closer to what my dentist is doing. It's charging app developers a fair percentage of the revenue they generate within Apple's universe for all of the many services and benefits app developers receive by selling through the App Store and accessing via the App Store the giant base of iOS users. That's worth a lot and Apple charges a fair price for it.
What you're missing is that these app developers, the ones financially benefitting from the App Store, and more pointedly their customers (who are the ones ultimately funding all of this) are subsidizing availability of the whole iOS ecosystem for those app developers/apps that are available for free. Its simply wrong to flip the script and suggest that the free hosting and access Apple provides has no value and therefore the fees should reflect only payment processing. That would be like me telling my dentist, you provide dental work free to some members of the community, so why should I pay you for that? I should get my dental work here, in your gorgeous and modern facility, utilizing hours of your time and your staff's time, and the benefit of all your years of education and practice, for free.
Microsoft was forced by the EU to add a program to show alternative browsers, even though usage data showed that IE was already on the slide: consumers had no trouble finding alternatives even without Microsoft's help.
And as others have pointed out, Spotify shows up in the App Store when you search. Do you think Apple should display a full screen ad for Spitify as soon as you tap the Music icon?
The answer is simple: if Spotify wants special treatment then all it has to do is spend billions developing, cultivating and maintaining its own mobile platform.
6-3-4
Syllables rule.
This is a terrible idea from a usability to perspective. If you have a separate streaming app and a separate music app then the user will be forced to execute mental gymnastics every time they want to search for a track:
"Okay, now I'm looking for a track off that old UB40 album. Now which app do I need to search in?'
To Apple and its customers, music is music; only geeks and forum dwellers care where it comes from and how it is stored. This is the same reason why the iPhone enjoys reasonably robust sales, even when folk on the interweb claim the device is useless without a file manager.
Apple supplies two of them. The APIs and tools that allow Spotify to create and test the app (the product) or do you think that APIs write themselves. They also promote Spotify (and others) because it turns up when you search for music services. They certainly provide the place where the app is hosted and downloaded.
Should this be an ongoing cost? As long as Apple is processing the payment then yes. Basically, any payment Apple handles involves time and resources, so Apple takes a cut (and also because, for some bizarre and weird reason, they want to make as much money as they possibly can). There are ways around this: Amazon does not allow payments through its apps for example.
Spotify could also promote their service themselves. I have never seen a TV advert for Spotify in the UK, but I have seen ads for Apple's app store. So Spotify is complaining while riding Apple's marketing coat tails, while spending very little on marketing themselves. If Spotify advertises, draws people to their website and signs them up there before giving them a link to the Apple/Android store then they could avoid the fee.
Hell, they could avoid stores altogether by writing a kick-ass mobile site that streams music from the browser. Again, no fee and they wouldn't have to wait for approval to add changes.
Instead, they've taken the route that they knew would get them rejected: trying to hide a subscription page inside the app; I can only guess that they did this to get themselves some free promotion.
Spotify's problem is not Apple, it's that they're running out of time.
Apple is charged by the credit cards companies for each transaction. So each time that a subscription is renewed, Apple is charged a fee. There are also other costs associated with processing credit transactions such as the ongoing cost of developing the software that handles it, and also charges made by third-party agencies for credit check, and organisations that monitor changes in credit rules across the globe. Monitoring agencies charge a hefty sub. Having worked for a credit card outfit a while back, I can tell you that the cost of processing these things goes far beyond a single transaction fee.
If you have a credit card and don't use it, the credit card company may withdraw it. Why? Why not let you keep it if costs them nothing to do so? Because it does cost them. It costs them to follow regulations, maintain records, rent infrastructure. Apple is the same.
Ah, the old 'you disagree with me, therefore you're an mindless drone' argument.
Wins every time.
Said no one.
Ever.
Well, to begin with, Apple has decided not to charge if you're not making money themselves. They could charge 'rent' for being on the Apple store, whether you make money or not, but that wouldn't go down very well, and I'm sure that Spotify would still complain.
Secondly, as I mentioned earlier, the cost of processing credit cards doesn't begin and end with the transaction fee. (I used to work for a credit card company that went bust because it didn't realise this.)
Thirdly, if Apple is charging too much then they'll be punished for it because that's how the market works.
Transaction fees, regulations updates, equipment infrastructure, support staff, training of support staff, buildings to house the support staff, staff to clean the buildings that house the support staff, accountants, auditors, developers, security experts… Now all of this has to cover operations across the globe that takes into account different regulations across the globe.
Now outside of this, there are other costs of running the app store that go beyond credit card processing, and these have to be paid for too. And what's worse is that these costs increase the more countries Apple supports and the more customers they get. There are lots of apps that get hosted for free on the app store too, which somewhere down the line, will incur a cost.
Do I think the billing departments of Spotify, Netflix etc. have a 30% overhead? No, because they don't have as many customers as Apple, do not operate in as many countries in Apple and do not shift as much data as Apple.
And in many cases, their fee processing is handled by Apple.
I remember someone here saying that ebooks shouldn't cost twelve dollars because no ink or paper is needed to produce them. Pretty much the same argument is being used here: you can't physically see the app store, therefore it doesn’t cost anything to run.