Spotify crows about Apple being forced to show alternative pricing

AppleInsiderAppleInsider
Posted:
in iOS

The EU's anti-steering measures mean Apple must now let developers tell users of prices available outside of the App Store, and it's a good thing -- but maybe not the victory for democracy that Spotify is trying to claim.

Spotify logo
Spotify logo



Spotify has consistently complained about what it sees as Apple failing to comply with EU rules over the App Store. Now, though, the company has announced that it is going to do what it was previously prevented doing, and show full pricing details.

The company says it is doing this via what Apple calls a Music Streaming Services Entitlement. If a music streaming app developer applies to use this, and they are approved, then within the European Economic Area (EEA), they can link to other ways of purchasing digital goods or services.

This Music Streaming Services Entitlement is in place because of European pressure, but Spotify attempted to join it in April 2024. At that time, Apple told Spotify that it had failed to comply with the requirements for requesting the entitlement.

Four months on from then, Spotify has presumably complied. But Spotify is saying only that "starting today, Spotify is opting into Apple's "entitlement for music streaming services."

Presuming that it means Apple has now approved the update, Spotify says that "iPhone consumers in the EU will now see pricing information for Spotify in the app and the fact that they can go to our website to purchase items directly."

It is certainly better for users to be informed of all buying options. But Spotify won't just take the win, it has to continue complaining about what it insists are "illegal and predatory taxes" that Apple charges App Store developers.

Previously, Spotify has tried spinning the story so that it appears Apple made it impossible to subscribe to the service from within the Spotify iOS app. The company even said that such subscriptions were "outside of our control," when really it was solely that it didn't want to pay Apple's 30% fee.

Apple has not commented on Spotify's opting in to the Music Streaming Services Entitlement. However, it has previously objected to Spotify's arguments, saying that the company wants a free ride in the App Store.

"We provide the platform by which users download and update their app," said Apple in March 2019. "We share critical software development tools to support Spotify's app building. And we built a secure payment system -- no small undertaking -- which allows users to have faith in in-app transactions."

"Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue," it concluded.

In its announcement of being able to show pricing in the iOS app, Spotify says that this is a consequence of the EU concluding that Apple harms consumers. Spotify, whose audience dwarfs that of Apple Music, does not mention that Apple is contesting the EU's $2 billion fine over the issue.




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Comments

  • Reply 1 of 17
    Sequoia.VagrantSequoia.Vagrant Posts: 2member
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    beowulfschmidtdewmewilliamlondonAlex_VForumPostwatto_cobra
  • Reply 2 of 17
    2morrow2morrow Posts: 23member
    So why does it apply to only to digital content? Is this not discriminatory? What about buying a TV online? Should the retailers not be required to list the prices all their competitors sell them for as well? If this a rule for a giant US Corporation should it not also apply to any retailer? 
    dewmenmemacForumPost
  • Reply 3 of 17
    jimh2jimh2 Posts: 654member
    I cannot wait for Spotify to fall and it will happen. We just have to bide our time.
    williamlondontobianForumPostwatto_cobra
  • Reply 4 of 17
    danvmdanvm Posts: 1,464member
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    tobian
  • Reply 5 of 17
    rorschachairorschachai Posts: 62member
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    williamlondondanoxnmemacForumPostwatto_cobra
  • Reply 6 of 17
    danoxdanox Posts: 3,230member
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    A lesson for business school 101 never make your product or service seem free the freeloaders will never thank you........ A price should always be attached.
    edited August 14 nmemacForumPostwatto_cobrawilliamlondon
  • Reply 7 of 17
    danvmdanvm Posts: 1,464member
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.
    tobian
  • Reply 8 of 17
    Alex_VAlex_V Posts: 235member
    I think that Spotify’s stance is down to the fact that they have no choice. Margins are so slim, that simply piping music into somebody’s phone, manufactured by your main industry rival and running their OS and App Store, who will, naturally, want a cut, was never going to be a promising business model. 

  • Reply 9 of 17
    davidwdavidw Posts: 2,096member
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 

    Consumers are not flocking to buy Apple devices because they can get Spotify on it. Not when Apple Music (and other music streaming services) offer almost exactly the same music, for less and in higher rez. Spotify is not offering anything that is truly unique and must have, to Apple consumers.  Apple cost of losing Fortnite players revenue will be 10's of 1000's of times more than any revenue lost from losing Spotify.  


    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    nmemacForumPostwatto_cobraihatescreennames
  • Reply 10 of 17
    danvmdanvm Posts: 1,464member
    davidw said:
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 
    I agree, Apple is entitled to a share, yet I also get why Spotify would opt out of Apple Store subscriptions. A 15% to 30% cut per user each month seems steep considering Apple's role. Spotify's heavy lifting is handled by AWS and GCP, not Apple's infrastructure

    Also, it's clear that Spotify addressed their issue by moving away from Apple's payment system. I have no idea why they continued to advocate for changes when they could simply bypass Apple's fees.
    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    You are correct in highlighting the number of subscribers. However, millions of iOS devices still use Spotify every month. My point is that for Spotify, the 15% - 30% fee per user per month may be high. Yet, Apple did not object to Spotify opting out of the Apple App Store payment system. I have no idea why Spotify continued to advocate for changes when they could retain the 15% - 30% by other means.
    watto_cobra
  • Reply 11 of 17
    anonymouseanonymouse Posts: 6,945member
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.
    In ordinary circumstances, Spotify's business model just wouldn't be sustainable, and they wouldn't have been able to use an unsustainable business model to carve out and maintain the market position they now have. But, since they convinced the EU to treat iOS and the App Store as a public utility, for their benefit, that Apple isn't allowed to monetize they can continue their monopolistic pricing practices without incurring any significant expense. So, maybe, the EU just used its regulatory power to hand Spotify a subsidy, out of Apple's pockets, to make their business model sustainable.
    edited August 15 watto_cobrawilliamlondon
  • Reply 12 of 17
    lowededwookielowededwookie Posts: 1,161member
    Seeing as Apple doesn’t currently have a free tier is there an alternative service to Spotify?

    I can’t quite afford a music service each month and so a free ad supported one to fill those months would be nice.

    But I refuse to support Spotify when they’re acting like dicks.
    williamlondonwatto_cobra
  • Reply 13 of 17
    davidwdavidw Posts: 2,096member
    danvm said:
    davidw said:
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 
    I agree, Apple is entitled to a share, yet I also get why Spotify would opt out of Apple Store subscriptions. A 15% to 30% cut per user each month seems steep considering Apple's role. Spotify's heavy lifting is handled by AWS and GCP, not Apple's infrastructure

    Also, it's clear that Spotify addressed their issue by moving away from Apple's payment system. I have no idea why they continued to advocate for changes when they could simply bypass Apple's fees.
    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    You are correct in highlighting the number of subscribers. However, millions of iOS devices still use Spotify every month. My point is that for Spotify, the 15% - 30% fee per user per month may be high. Yet, Apple did not object to Spotify opting out of the Apple App Store payment system. I have no idea why Spotify continued to advocate for changes when they could retain the 15% - 30% by other means.

    Actually, what makes the 15% to 30% steep, is the music industry role. It is the music industry that makes streaming music an unsustainable business model with their 70% cut of all subscription revenue. 

    When Netflix movie streaming service first started, they faced the same 15% to 30% commission in the Apple App Store, Google Play Store, Microsoft Xbox and Sony PlayStation. And Netflix wasn't being a dick about it. Unlike Spotify. Even when Netflix decided to cut off payment using Apple iTunes, they allowed their current iOS subscribers at the time (and for many years later) to keep on using iTunes for payment, without being a asshole about it and raising the cost payment with iTunes by 30%. Only new subscribers (and current subscribers that canceled their accounts and joined again or upgraded their service) no longer had the choice to use iTunes for payment. Netflix had never passed on the commission to its subscribers. And yet, Netflix is still very profitable. Why?

    This because of the movie industry streaming model. With the movie studios, Netflix only has to pay a set fee for a license, to stream a movie for a set amount of time. Of course, how many subscribers they had at the time affect the cost of the license. But not the amount of streams in that period of time. This way, Netflix knew how many subscribers they needed to pay for all the licenses they are paying for and once they reach that number of subscribers, any subscription revenue after that belongs to Netflix.

    With the music industry model, the music industry takes 70% of all subscription revenue, right off the top. No matter how many subscribers a music streaming service already have, they still have to pay the music industry 70% of any revenue from new subscribers. No matter how much it cost any of the music streaming services to attract new subscribers. When Spotify invested hundreds of millions of dollars (Euros) to attract new subscribers, the music industry will still take 70% of the subscription revenue from those new subscribers. And they invested nothing. All the music streaming services ...... are essentially bitches for the music industry.

    As for the 15% to 30% commission. There has always been a cost to distribute music to the consumers. And I'm willing to bet that it cost way more that 30% of the retail cost, to distribute music in the form of vinyl, tape or CD's, in retail or online stores. And if you're an Indie label or made your own CD's, good luck getting any major retail stores to sell your music. Specially if demanding 70% of the retail cost. Even with digital downloads of music, it cost the music industry 30% of retail cost. That left very little profit margin for the online music download stores.  The music industry have known about the cost of distribution to consumers since the first Edison tube. And I bet it has never been below 30% of retail cost. And yet they some how no longer take this into consideration, when demanding 70% of subscription revenue from all the music streaming services.

    Yes, Spotify is stuck between a rock and hard place with this music streaming business model. Not because of the 15% to 30% commission, but because of the 70% of all subscription revenue that the music industry demands. Not 70% of the profit, which still would be generous. But this apply to all paid subscription music streaming services.

    The real reason why Spotify is stuck between rock and hard place is because none of their main competitors are solely in the music business. Apple, Google, Amazon and ByteDance (TikTok) can afford to lose money (or make very little money) from their music streaming subscription service and it won't affect their bottom line. Apple, Google, Amazon and ByteDance can do what Walmart, Target, BestBuy and Costco do, use the selling of music as a loss leader, to attract customers into spending time or money, on other more profitable products. Spotify is the new Tower Records, WhereHouse and Sam Goody.  (The difference being that I still miss Tower Record but will never miss Spotify ... if they suffer the same fate.)
     
    And don't forget, Spotify is one of the most downloaded free app in the Apple App Store. So even though there are 10's of millions of iOS users that are paying Spotify for a subscription, none of them are able to pay with iTunes and been like this since around 2019. (And when they were able to use iTunes between 2016 and 2018, Spotify jacked up the subscription cost by over $3).  And millions more are listening to Spotify free ad supported tier from which Spotify profit from with revenue from ads, of which none goes to Apple. Or Apple will never see a dime from iOS users that eventually decide to pay for a subscription after discovering Spotify using the free iOS Spotify app with Spotify free ad supported tier. (Spotify have admitted that a good percentage of their new subscribers were music listeners on their free tier. And thus it is worth it for Spotify to keep on offering a free tier. This besides the ad revenue.) And yet, Spotify dick of a CEO feels entitled to profit from Apple and iOS, while working his sorry ass off to prevent Apple from ever charging anyone for the use of iOS to profit from.
  • Reply 14 of 17
    gatorguygatorguy Posts: 24,559member
    davidw said:
    danvm said:
    davidw said:
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 
    I agree, Apple is entitled to a share, yet I also get why Spotify would opt out of Apple Store subscriptions. A 15% to 30% cut per user each month seems steep considering Apple's role. Spotify's heavy lifting is handled by AWS and GCP, not Apple's infrastructure

    Also, it's clear that Spotify addressed their issue by moving away from Apple's payment system. I have no idea why they continued to advocate for changes when they could simply bypass Apple's fees.
    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    You are correct in highlighting the number of subscribers. However, millions of iOS devices still use Spotify every month. My point is that for Spotify, the 15% - 30% fee per user per month may be high. Yet, Apple did not object to Spotify opting out of the Apple App Store payment system. I have no idea why Spotify continued to advocate for changes when they could retain the 15% - 30% by other means.

    Actually, what makes the 15% to 30% steep, is the music industry role. It is the music industry that makes streaming music an unsustainable business model with their 70% cut of all subscription revenue. 

    When Netflix movie streaming service first started, they faced the same 15% to 30% commission in the Apple App Store, Google Play Store, Microsoft Xbox and Sony PlayStation. And Netflix wasn't being a dick about it.
    Netflix isn't a great example, since Apple had a secret “special arrangement” with them, only discovered during an unrelated court case. Netflix didn't hav e to pay the 30% first year cut, unlike everyone else, with Apple halving it to 15%. The media streamer feared the agreement would be discontinued sooner than later, which is why they stopped offering new subscriptions in the App Store.

     I would be surprised if Netflix is the only company who had/has a special deal, but that's the only one I remembered being mentioned off the top of my head. Those things would obviously not be voluntarily revealed anyway.
    edited August 16 muthuk_vanalingamnubus
  • Reply 15 of 17
    tmaytmay Posts: 6,453member
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.
    I looked up Spotify's revenue for last year;

    Spotify Technology revenue for the twelve months ending March 31, 2024 was $15.020B, a 18.88% increase year-over-year. Spotify Technology annual revenue for 2023 was $14.337B, a 16.04% increase from 2022. Spotify Technology annual revenue for 2022 was $12.356B, a 8.02% increase from 2021.

    Spotify’s Q4 revenues for 2023 grew 16% year over year, reaching 3.67 billion euros ($4.05 billion), as a surge in both monthly active users (up 23% to 602 million) and premium subscribers (up 15% to 236 million) beat expectations. 

    After a third quarter in which the streaming company turned a profit for the first time in a year, however, its operating loss was again in the red, at 75 million euros ($82.7 million), albeit better than its guidance; Spotify says that excluding one-time charges its operating profit would have been 68 million euros ($75 million), more than double the 32 million euros ($34 million) in profit it generated in the third quarter of 2023.

    Spotify Premium is $11.99 per month in the U.S.

    In the grand scheme of things, Spotify's fully ending support for Apple in-app purchases won't affect many customers. In a 2019 regulatory filing, Apple said it collected a 15% fee on subscription payments for just 680,000 of Spotify's more than 100 million Premium subscribers.

    ...Spotify's operating profit would have made $75 million in the Q4 of 2023...and that is entirely without any revenue to Apple from Spotify...

    Wherein I note that Spotify is the largest music streamer in the world, still barely profitable, and yet Apple is required by the EU to provide completely free access to its user base.
  • Reply 16 of 17
    davidwdavidw Posts: 2,096member
    gatorguy said:
    davidw said:
    danvm said:
    davidw said:
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 
    I agree, Apple is entitled to a share, yet I also get why Spotify would opt out of Apple Store subscriptions. A 15% to 30% cut per user each month seems steep considering Apple's role. Spotify's heavy lifting is handled by AWS and GCP, not Apple's infrastructure

    Also, it's clear that Spotify addressed their issue by moving away from Apple's payment system. I have no idea why they continued to advocate for changes when they could simply bypass Apple's fees.
    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    You are correct in highlighting the number of subscribers. However, millions of iOS devices still use Spotify every month. My point is that for Spotify, the 15% - 30% fee per user per month may be high. Yet, Apple did not object to Spotify opting out of the Apple App Store payment system. I have no idea why Spotify continued to advocate for changes when they could retain the 15% - 30% by other means.

    Actually, what makes the 15% to 30% steep, is the music industry role. It is the music industry that makes streaming music an unsustainable business model with their 70% cut of all subscription revenue. 

    When Netflix movie streaming service first started, they faced the same 15% to 30% commission in the Apple App Store, Google Play Store, Microsoft Xbox and Sony PlayStation. And Netflix wasn't being a dick about it.
    Netflix isn't a great example, since Apple had a secret “special arrangement” with them, only discovered during an unrelated court case. Netflix didn't hav e to pay the 30% first year cut, unlike everyone else, with Apple halving it to 15%. The media streamer feared the agreement would be discontinued sooner than later, which is why they stopped offering new subscriptions in the App Store.

     I would be surprised if Netflix is the only company who had/has a special deal, but that's the only one I remembered being mentioned off the top of my head. Those things would obviously not be voluntarily revealed anyway.

    Are you thinking about this "secret" agreement during the Epic vs Apple lawsuit?


    If so, then no where in the "secret" arrangement did Netflix not pay Apple their full 15/30% commission.  Apple didn't reach out to Netflix (with this arrangement)  until 2021, when Netflix threaten to completely remove the ability for iOS subscribers to pay with iTunes. AFAIK ... Netflix has always paid Apple the 15/30% commission. Even up to when Netflix stopped new iOS subscribers from paying with iTunes in 2018, they still paid Apple their 15/30% commission on the iOS subscribers grandfathered-in to still use iTunes. (And by the end of 2019, for every one grandfathered-in, Netflix was only paying the 15% commission anyway. And there were no "first year" subscribers since 2020.) And it's only been very recently that Netflix stopped all payment with iTunes, in the US at least.


    Maybe you are thinking of this "secret" arrangement that was exposed during the Epic vs Google lawsuit ....


    The very same kind of "secret" arrangement Spotify made with Google last year.


    The irony being that it was these type of "secret" arrangements that Google made with developers of very profitable Google Play Store apps, that Epic used to convince the jury that Google was behaving like an illegal monopolist. And Sweeney stated that he couldn't do the same with Apple because ..... Apple didn't write anything down. So if Sweeney couldn't find evidence of any "secret" arrangements (concerning the reduction of Apple commission rate) with Netflix, that he would have surely used against Apple in that lawsuit ..... how did anyone else find out about one?



    It's very unlike you to make such an error, that resulted in putting Google and not Apple ...... in the bad light. :)









    muthuk_vanalingam
  • Reply 17 of 17
    gatorguygatorguy Posts: 24,559member
    davidw said:
    gatorguy said:
    davidw said:
    danvm said:
    davidw said:
    danvm said:
    danvm said:
    Imagine opening a shop in a mall and telling your landlord you don’t want to pay rent. Oh the great injustice!
    Spotify could argue that AWS and GCP act more like landlords, rather than the Apple App Store. Apple simply provides a platform for users to download the app. And I don't think that advertisements in the App Store provide them with any substantial benefit, considering Spotify's widespread popularity.

    I think Apple deserves their cut for hosting the Spotify app.  But 15% - 30% every month is too much just to distribute Spotify app. 
    Apple provides a suite of developer tools entirely for free. They also provide hundreds of frameworks with thousands of APIs that are tested and regularly updated. Not to mention the developer technical support that only costs $99/year.

    How much is Spotify willing to pay for all that? Because the developer program used to start at $500/year and had multiple tiers. 
    That's a good question, and only Spotify have the answer. Consider this, Spotify boasts nearly 250 million subscribers. Assuming an average subscription fee of $10.00, this translates to a monthly revenue of $2.5 billion. From this, Apple could be raking in anywhere from $350 million to $750 million just for offering app hosting, developer tools, and handling payments. Plus, Spotify has to cover costs for cloud services from Amazon and Google. Maybe Spotify's argument that Apple's charges are too high might be justified.

    There's more to it than just paying to be hosted in the Apple App Store (and the processing of payments). You're forgetting about the commercial use of  iOS. AFAIK .... iOS is not public domain nor considered a public utility. iOS is still Apple IP and Spotify is using iOS for commercial gain. There is no "fair use" here. Apple deserves to charge a fee to anyone profiting from the use of iOS. No different than a songwriter getting paid a royalty for the commercial use of the songs they own the copyrights to. No matter how much they already profited from any of the songs they wrote, no one has the right to say that they already made too much and can no longer charge for its commercial use, regardless that they still own the copyrights to them. I have no doubt that Spotify would cheat artist and songwriters out of their royalties, if they can find a way to get the government to help them. 

    Apple spends billions developing, maintain and improving iOS. Apple do not charge Apple device customers for any of the iOS upgrades that their Apple devices are still capable of utilizing. And Apple spends billions in PR, software and hardware, to attract consumers to use Apple products. It has been shown that consumers that uses Apple products tends to spend more than average, on apps and subscriptions services. This customer base has its value. It's like the difference between opening a retail store in a Beverly Hills shopping mall and a strip mall in a middle class neighborhood. One expects to pay a lot more rent to be in a Beverly Hills shopping mall because having access to the wealthy customers the mall attracts, will more than make up for the extra cost.

    Google (for over 10 years) been paying Apple about 33% of their search ad revenues generated on iOS devices and iOS accounts for more than 50% of Google mobile search ad revenue. Even though iOS is only on about 20% of the global mobile devices.  (It was revealed that Microsoft offered to pay Apple 90% of their Bing search ad revenue, if Bing was made the default search on Apple devices.)  No way that Spotify should think that they should be able to profit from Apple iOS customer base .... for free. Or what that idiot CEO of Epic Games claims ....... that Apple should not be charging to access iOS because Apple already makes billions selling iPhones. While Microsoft is justify in charging 30% because they make very little profit selling Xbox hardware.) 
    I agree, Apple is entitled to a share, yet I also get why Spotify would opt out of Apple Store subscriptions. A 15% to 30% cut per user each month seems steep considering Apple's role. Spotify's heavy lifting is handled by AWS and GCP, not Apple's infrastructure

    Also, it's clear that Spotify addressed their issue by moving away from Apple's payment system. I have no idea why they continued to advocate for changes when they could simply bypass Apple's fees.
    BTW- your Apple revenue projection is off. Apple only collects a commission on the Spofity subscriptions paid for with an iTunes account. Apple gets nothing from subscriptions paid for on Android or on Spotify own website.  So unless all 250M Spotify monthly subscribers are using iOS and paying with iTunes, Apple is not going to be raking in anything close to $350M to 750M, a month. The way to look at it is .....  if Spotify was not on iOS, would Spotify still have 250M monthly subscribers?  (Not to mention the over 400M music listeners using Spotify free ad supported tier. From which Spotify generate revenue from ads.). How many subscribers and users of their free ad supported tier, would they lose if Spotify was not available on iOS?  
    You are correct in highlighting the number of subscribers. However, millions of iOS devices still use Spotify every month. My point is that for Spotify, the 15% - 30% fee per user per month may be high. Yet, Apple did not object to Spotify opting out of the Apple App Store payment system. I have no idea why Spotify continued to advocate for changes when they could retain the 15% - 30% by other means.

    Actually, what makes the 15% to 30% steep, is the music industry role. It is the music industry that makes streaming music an unsustainable business model with their 70% cut of all subscription revenue. 

    When Netflix movie streaming service first started, they faced the same 15% to 30% commission in the Apple App Store, Google Play Store, Microsoft Xbox and Sony PlayStation. And Netflix wasn't being a dick about it.
    Netflix isn't a great example, since Apple had a secret “special arrangement” with them, only discovered during an unrelated court case. Netflix didn't hav e to pay the 30% first year cut, unlike everyone else, with Apple halving it to 15%. The media streamer feared the agreement would be discontinued sooner than later, which is why they stopped offering new subscriptions in the App Store.

     I would be surprised if Netflix is the only company who had/has a special deal, but that's the only one I remembered being mentioned off the top of my head. Those things would obviously not be voluntarily revealed anyway.

    Are you thinking about this "secret" agreement during the Epic vs Apple lawsuit?


    If so, then no where in the "secret" arrangement did Netflix not pay Apple their full 15/30% commission.  Apple didn't reach out to Netflix (with this arrangement)  until 2021, when Netflix threaten to completely remove the ability for iOS subscribers to pay with iTunes. AFAIK ... Netflix has always paid Apple the 15/30% commission. Even up to when Netflix stopped new iOS subscribers from paying with iTunes in 2018, they still paid Apple their 15/30% commission on the iOS subscribers grandfathered-in to still use iTunes. (And by the end of 2019, for every one grandfathered-in, Netflix was only paying the 15% commission anyway. And there were no "first year" subscribers since 2020.) And it's only been very recently that Netflix stopped all payment with iTunes, in the US at least.


    Maybe you are thinking of this "secret" arrangement that was exposed during the Epic vs Google lawsuit ....


    The very same kind of "secret" arrangement Spotify made with Google last year.


    The irony being that it was these type of "secret" arrangements that Google made with developers of very profitable Google Play Store apps, that Epic used to convince the jury that Google was behaving like an illegal monopolist. And Sweeney stated that he couldn't do the same with Apple because ..... Apple didn't write anything down. So if Sweeney couldn't find evidence of any "secret" arrangements (concerning the reduction of Apple commission rate) with Netflix, that he would have surely used against Apple in that lawsuit ..... how did anyone else find out about one?



    It's very unlike you to make such an error, that resulted in putting Google and not Apple ...... in the bad light. :)









    You were crowing about Netflix not complaining about paying Apple a 30% cut in the App Store. There was a reason they didn't: Apple cut a deal with them to omit that first year 30%. "What about Google" wasn't part of your reasoning, but in order to give the impression you won, I suppose it's convenient to try now. :)

    Of course both companies have done special undisclosed deals on rare occasion. Apple did the same for Amazon Prime Video, with Amazon returning the favor to Apple. Yay, they're not competitors any longer.  But they wouldn't negotiate for a lower percentage with Spotify.

    Since they didn't treat Netflix the same as they do Spotify, of course the two companies would have different reactions. 

    Your followup post doesn't make your initial comparison between Netflix and Spotify comments any better just because you pivot to whaddabout Google, Epic, the Northern Lights or ocean currents. Netflix wasn't a great example for you to use in the first place, just as I tried to tell you. Surely you aren't the type of person who can't admit when they've made even a relatively minor mistake? 
    edited August 17 avon b7muthuk_vanalingam
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