Spotify's call for different App Store treatment could help push Apple's revenue cut down

Posted:
in iPhone edited March 14
Actions by Spotify and regulatory bodies could put "more pressure" on the App Store, potentially even leading to Apple lowering its revenue take, Macquarie Research said on Thursday.

Spotify


"With growing calls from more robust regulation, we continue to view app store pricing as an area that could see more pressure," it said in a memo. Both Apple and Google are said to be facing legal, regulatory, and competitive challenges to the 30 percent commission they claim from most app transactions.

On Wednesday, Sweden-based Spotify launched a complaint with the European Commission, arguing that Apple takes more money than it should be entitled to, isn't providing information on customers to vendors, and is unfairly limiting third-party access to technologies such as Siri, the HomePod, and the Apple Watch.

Apple Music has an unfair advantage, Spotify indicated, in that it's not only integrated across Apple's platforms, but doesn't sacrifice the 15 to 30 percent of revenue that third-party services do. At one point Spotify offered in-app subscriptions, but at a higher price than through the Web to compensate for lost revenue. It ultimately dropped the in-app option rather than maintain a discrepancy.

Google wasn't mentioned in the complaint, Macquarie noted, but likely because Spotify has more freedom to work around that platform's restrictions.

"The bottom line is that if the App Store commission structure is lowered to 12-20 percent, our overall '20E EBIT [earnings before interest and taxes] forecast for AAPL would fall 7-15 percent," Macquarie said. That would naturally benefit app developers and publishers.

Spotify isn't the only prominent company to abandon in-app subscriptions. Netflix followed suit in December -- it wasn't charging extra on the App Store, likely putting a serious dent in its bottom line.

Comments

  • Reply 1 of 12
    thrangthrang Posts: 760member
    Lost in all this is that in-app renewals second-year onward are charged only 15% (as of 2016), correct? I don't seem to see this mentioned by Spotify or others.
    edited March 14 jbdragon
  • Reply 2 of 12
    The app developers have a point, but when the revenue is big enough they’re going to leave app purchases anyways.

    Netflix isn’t going to pay out 15% let alone 30% unless their business model changed.  If they started selling movies within the iOS Netflix App that would probably make it worth it to pay Apple 15%.

    Basically, if it’s one payment a year developers will handle payments themselves.  But, if their are micro-payments then the ease of use of Apple is worth it.

    I’d like to see payments at 15% but I don’t know if Apple is eating any credit card charges.
  • Reply 3 of 12
    AppleExposedAppleExposed Posts: 584unconfirmed, member
    Th problem is, when Apple invented iPhone and App Store, no one had a clue how big it would get. Now idiots want Apple to pay a penalty for success. The deal was done in 2007-2008. Don't like it? Don't use it.
    jbdragonn2itivguyteejay2012bshank
  • Reply 4 of 12
    genovellegenovelle Posts: 861member
    thrang said:
    Lost in all this is that in-app renewals second-year onward are charged only 15% (as of 2016), correct? I don't seem to see this mentioned by Spotify or others.
    Also, if the customers were Spotify customers and not Apple’s they would signup on Spotif ‘s site and Apple would get zero. Much like Microsoft 360. Interesteingly, Microsoft decided to use Apple to signup as well because it made sense. 
    bshank
  • Reply 5 of 12
    jbdragonjbdragon Posts: 1,996member
    Th problem is, when Apple invented iPhone and App Store, no one had a clue how big it would get. Now idiots want Apple to pay a penalty for success. The deal was done in 2007-2008. Don't like it? Don't use it.
    What's worse, they are not just complaining about the 30% cut, they want customer Info, something Apple doesn't want to let out as they care about Customers Privacy. So F Spotify!!!!
    n2itivguy
  • Reply 6 of 12
    normmnormm Posts: 545member
    The app developers have a point, but when the revenue is big enough they’re going to leave app purchases anyways.
    This is why Apple should have a tiered approach to their in-app purchase cut.  They should keep their cut low enough so that apps that generate sufficient numbers of subscriptions or digital media purchases give Apple a tiny cut, rather than no cut because they stop providing in-app purchase.  I hate that I can't buy books directly on the Kindle App, and it makes Apple's platform worse.


    edited March 14
  • Reply 7 of 12
    I really can't think of an example where a company has created a chain of stores at great cost, and then had manufacturers (aka developers) successfully demand terms for selling in their stores. If you have created the infrastructure, you get to have a big say on how much they pay to use your stores. Spotify provides a great service but it wants  'premium' Apple customers because it does not make any money from its Android users. Isn't that just the result of their bad business decisions rather than a basis for anti trust?
    bshank
  • Reply 8 of 12
    i suggest that Spotify create their own store and own phones, tables, watches, speakers and computers to put their app on. 

    Apple have built from the ground up over the past 40 years their entire system and it's provided as a service for a cost if other vendors wants to use it, so vendors have a choice.
    The choice is simple. Pay to access to Apple's customers which has taken decades or build their own end to end solutions, like Apple has done.  

    They are providing an opportunity for vendors to display their wares for customers to purchase, that's similar to a retailer who licenses store space for "shop within a shop" so if they're not interested in participating, then tough.

    Apple is not preventing other vendors having access to their customers, they providing everything they've built for a per transaction fee. 

    The EU came down on Microsoft in the 90's because the softies were involved in monopolistic practises and forcing other vendors to exclude MS competitors from the platform (Windows), this is a completely different perspective.
    Apple simply says here's what we built, if you want to use it this is the cost, we're not excluding you but we're acting as a distributor for you and I think if you check what distributors and retailers normally change, 30% is reasonable.

    Not convinced? Markup's are everywhere otherwise you'd be buying sneakers for under a $1 a pair since they cost about 50c to make.




  • Reply 9 of 12
    bulk001bulk001 Posts: 452member
    normm said:
    The app developers have a point, but when the revenue is big enough they’re going to leave app purchases anyways.
    This is why Apple should have a tiered approach to their in-app purchase cut.  They should keep their cut low enough so that apps that generate sufficient numbers of subscriptions or digital media purchases give Apple a tiny cut, rather than no cut because they stop providing in-app purchase.  I hate that I can't buy books directly on the Kindle App, and it makes Apple's platform worse.


    Curious how many forum members only have apps on their Mac that are 100% downloaded from the Mac App Store? I personally have a mix but can see it useful for some developers to run it all through Apple. Apple warns me when an app I am downloading is not recognized by them and gives me an option to override that warning. What is wrong with doing this on iOS? They will probably say privacy and security but why not give me the choice - security and privacy if downloaded through the App Store or I am on my own if I choose to download it directly from a developer’s site. I suspect it has a lot to do with money, data they collect and control over users and developers. 
  • Reply 10 of 12
    bulk001bulk001 Posts: 452member

    Apple simply says here's what we built, if you want to use it this is the cost, we're not excluding you but we're acting as a distributor for you and I think if you check what distributors and retailers normally change, 30% is reasonable.





    Apple excludes a lot of apps from the App Store, not just for security or privacy reasons but because they have set themselves up as the morals police of content on the platform. 
  • Reply 11 of 12
    bulk001bulk001 Posts: 452member
    jbdragon said:
    Th problem is, when Apple invented iPhone and App Store, no one had a clue how big it would get. Now idiots want Apple to pay a penalty for success. The deal was done in 2007-2008. Don't like it? Don't use it.
    What's worse, they are not just complaining about the 30% cut, they want customer Info, something Apple doesn't want to let out as they care about Customers Privacy. So F Spotify!!!!
    Don’t use Spotify. Your apparent problem is solved. Those who want to and are okay with letting Spotify have access to their information can and it doesn’t have to bother you at all. 
  • Reply 12 of 12
    SpamSandwichSpamSandwich Posts: 30,748member
    Spotify isn’t calling the shots here. They really have an inflated view of their conpany’s Influence.
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