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.
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.
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.
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.
It would be interesting to see if Apple Music as a business unit has to play by the same rules as Spotify. Do they pay 30% to the AppStore Business unit in Apple?
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?
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.
Alas, those are the rules! Spotify was well aware of the rules.
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.
Here's the gist of Spotify's argument, as I see it.
Think of Spotify as a maker of candy and chocolate bars. It sells its confections to theater chains where movie goers buy it and consume it while watching a movie.
There are two major theater chains,
One that serves low-income geographic areas, where movie goers don't buy much candy, but rather sneak their own in. Another that serves affluent markets. The patrons can afford to pay movie theater snack prices and do.
One day, the upscale theater chain decides to begin offering its own private-branded candy and chocolates along side the Spotify brand. Of course, the theater chain can make the same profit selling its candy at a lower price versus the Spotify Candy Company, because it owns the venue where the candy is sold. Spotify must pay, by selling its candy to the theater chain at wholesale prices, in order to get its candy in front of consumers.
This seems unfair to the Spotify Candy Co, because the theater chain seems to have an unfair advantage. But Spotify neglects to account for the initial and ongoing costs, and business risks, of establishing and running a chain of theaters. If Spotify Candy Co created their own theaters, then they could sell their candies and chocolates at retail prices direct to consumers. Poor, sad Spotify Candy Company. Life is so unfair.
The only flaw to your analogy is that wealthy patrons are notorious for paying nothing: they are equal to or more likely to sneak their own snacks into the theater. The poor person is most likely going to have to limit their purchases and thus not gorge in the theater. This isn't 1975 where people are sneaking into a Drive-In and eating their own snacks.
Wealthy people are notorious pigs at the trough. Go to a Costco some time. You'll notice some of the wealthiest people going from sample to sample and returning multiple times. Just like they don't want to pay taxes, they'll twist reality to get what they want until the line is drawn.
More often than not, poor people aren't going to the movies.
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?
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.
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.
Netflix, being a publicly traded company awarded an astronomical P/E
multiple, may be better able to afford losing money on Apple signups. Maybe they have a better deal. I have no idea. What I do know is that Apple deserves something between Apple Pay levels and 1% for handling subscription billing, and nothing more. What they charge should be commensurate with the value they provide. Why is that so hard for clapping seals to understand?
As for what Spotify did, if Apple had allowed them to link to their web site, as they are able to do on TVs, BD players, Google Play, etc, the situation never would have arose. Before Apple Music, it was merely naked greed on Apple's part. Now, Apple is clearly engaging in anticompetitive behavior, and I hope they get burned for it if they don't hurry up and start behaving.
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.
Weird. Can you tell me what on-demand video service Apple has released? No? Do you know the intricate details of Netflix profitability and sustainability with video vs music streaming companies like Spotify?
Lots and lots of bloviating by the Apple crowd as usual. Stinks when you have and twist and contort yourself to make an argument.
App discovery on the App Store is pretty much a joke.
It’s psychotic. Sorting is nonexistent. Who does Apple have to buy to fix this?! Why is no one at Apple working on this? I should be able to sort educational games by AGE. I don’t want toddler games. I should be able to sort... I’ve been through this a dozen times already.
The Dashboard widget page (which is still up!) had better categorization than the App Store, for heaven’s sake.
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.
Netflix, being a publicly traded company awarded an astronomical P/E
multiple, may be better able to afford losing money on Apple signups. Maybe they have a better deal. I have no idea. What I do know is that Apple deserves something between Apple Pay levels and 1% for handling subscription billing, and nothing more. What they charge should be commensurate with the value they provide. Why is that so hard for clapping seals to understand?
As for what Spotify did, if Apple had allowed them to link to their web site, as they are able to do on TVs, BD players, Google Play, etc, the situation never would have arose. Before Apple Music, it was merely naked greed on Apple's part. Now, Apple is clearly engaging in anticompetitive behavior, and I hope they get burned for it if they don't hurry up and start behaving.
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.
Weird. Can you tell me what on-demand video service Apple has released? No? Do you know the intricate details of Netflix profitability and sustainability with video vs music streaming companies like Spotify?
Lots and lots of bloviating by the Apple crowd as usual. Stinks when you have and twist and contort yourself to make an argument.
Look guys... all I was saying is that Netflix charges the same whether you sign up in the iOS app or on their own website. I believe HBO Now does too... and others as well.
But Spotify doesn't. They charge a higher price... $12.99 in the iOS app versus $9.99 on their own website. And by doing that... it creates a bunch of pissed of customers who feel like they are being "tricked"
I don't know what Spotify should do. They have a few options.
1. Keep charging $12.99 a month for iOS signups and risk pissing people off 2. Charge $9.99 a month for iOS signups and eat the cost like everyone else 3. Remove all in-app purchases and hope people can navigate their way to spotify.com 4. Exit the iOS App Store entirely
Or they can keep harping on this in the press and hope Apple changes the rules. Best of luck if that's their plan.
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?
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.
No, is not that simple. You don't think most Apple iOS users already know that they can start their account at Spotify website (and save money), without Spotify having to tell them so on their app? You don't think iOS users can get to Spotify website without clicking on a link?
What Spotify is really bitching about is that they have to pay Apple 30% of their subscription fee for iOS subscribers that wants to pay using their iTunes account and that don't want to go to their website to open a Spotify account. Where they have to give Spotify their CC and other info that might result in spam and ads. It has nothing to do with Spotify already being able to process CC accounts.
What Spottily really want is to have access to iOS users that wants to pay for their subscription using an app and their iTunes account, without having to pay the 30% to Apple. Spotify couldn't care less about being able to supply a link to their website in their app. There's not a lot of iOS users that don't already know they can do this. Spotify is not after these uninformed iOS users that are probably only in the millions. They are after the users that don't want to leave their iTunes environment, if they don't have to. These are in the tens or hundreds of millions. It's these iOS users that Spotify wants and they don't want to pay the 30% cut to Apple to have access to them.
I know that if I'm looking for something to buy online, I first check Amazon and then eBay. Why? because I have an account with them and won't have to give out my CC to someone else to make the purchase. And if I can't find the item I want there and I do find several online stores selling it, I will first choose the store that I can pay using PayPal. Even if the item or shipping cost a little more. (So long as it doesn't cost a lot more.) My last resort is to buy it from an internet store where I have to give them my CC. And many of these store require me to open an account with them. And might not be as secure from hackers. People that wants to use Amazon, eBay or Paypal to make their online purchases are no different than those iOS users that wants to use their iTunes account to pay for their app purchases. And it's for the same reasons.
Spotify is the greedy one. They don't want to have to pay Apple for access to the iOS users that only wants to pay for apps with their iTunes account. They charge iOS users more if they wants to pay with their iTunes account because they have to pay Apple to have access to them. Then they bitch about how Apple is anti-competitive because they are force to pass on the expense of having access to these iOS users and thus can not compete with Apple Music. No one is forcing them to pass on this expense of doing business. If they can't make money by having a subscription app in the Apple Store, then don't have one. Let the iOS users that want to subscribe to Spotify, sign up at their website. They already know they can do this. They don't need a link in an app. And Spotify will still get to have their streaming apps in the Apple App Store and not have to pay Apple a cent. (except for the $100 developer fee for the software needed.)
Apple just recently announced a 50% off Apple Music plan for students. If Apple can absorb $4.99 per student subscriber in order to gain some market share, Spotify, the largest music subscription service by far, should be able to absorb the $3.00 per subscriber it cost to sign up iOS users that wants to use their iTunes account to pay for it. It's really that simple.
Edit
Just notice the Spotify also offer a $4.99 subscription service to students. So if Spotify can absorb the loss of $5.00 per student, to attract students and increase their paying subscription market share, why can't it absorb the loss of $3.00 to Apple, to attract iOS subscribers, without bitching about it?
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?
There is huge benefit for being in iOS App Store. Entire businesses started from scratch and became multimillion dollar corporations for being there. If it wasn't that important then you wouldn't see Spotify spending that much effort and making that much noise trying to be in the App Store.
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.
great.. They should have done that from the start.
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.
Weird. Can you tell me what on-demand video service Apple has released? No? Do you know the intricate details of Netflix profitability and sustainability with video vs music streaming companies like Spotify?
Lots and lots of bloviating by the Apple crowd as usual. Stinks when you have and twist and contort yourself to make an argument.
Apple rents older movies through their iTunes Store. So users with Netflix account would not have to rent older movies. Not to mention that people with online video streaming accounts are no longer buying digital downloaded movies because the movies will always be available for unlimited viewing at some online video subscription service.
So what you're saying is that Spotify should receive special treatment from Apple because Apple has a music subscription service? And since Apple isn't giving any special treatment to Spotify, Spotify ran home crying to mommy, telling her Apple wouldn't offer it any candy and now wants mommy to do something about it. Well, unless Apple has a monopoly and is abusing it, there's nothing that mommy can do. Mommy aught to change little Spoty diaper and tell it to go out and attract paying subscribers, without depending on any special treatment from the competition. Spotify manage to do OK before Apple Music came on line and is still the largest music subscription service by far. Spotify is to subscription music as Netflix is to online video streaming. But it won't be for long if it has to depend special treatment from their competitors.
So let's say Apple can successfully argue that Spotify has paying customers in large part because of access to the iOS install base. Is that something Apple should get a fee for (outside of cc processing) for the life that someone is a Spotify customer? Or should it be a one time fee they get for every new customer?
Running an app store has ongoing costs so revenue has to keep coming in. You can get an idea of how much Apple has to pay out. Apple's App Store has been around for 7 years. Each data center costs about $1b to build. They will have a couple of thousand staff each so ongoing costs could be $200m/year. They have 30 billion downloads per year. At 100MB per app, that's 3 billion GB of data/bandwidth, which at $0.05/GB network costs would be $150m/year. If we assume they have 5 data centers worldwide, fixed costs are $5b with ongoing costs of $1.15b. Data costs are lower to begin with. Assume all data centers are built at the beginning, in reality they'd be built over time:
Year 1: $6b cost, revenue $300m ($5.7b loss) Year 2: $1.1b cost, revenue $1b ($5.8b loss) Year 3: $1.1b cost, revenue $2b ($4.9b loss) Year 4: $1.15b cost, revenue $3b ($3.05b loss) Year 5: $1.15b cost, revenue $4b ($0.2b profit) Year 6: $1.15b cost, revenue $4b ($3.05b profit)
You can see how long it takes to become profitable with just 5 data centers and they need more. If all apps in the store were free, Apple would have to cover that cost themselves. They could cover this cost as they have the cash but the cash belongs to the shareholders, not Apple's employees. People say that Apple is greedy but Apple acts on behalf of greedy shareholders who question why Apple spends time making their data centers sustainable and asks them to commit to only doing things that are profitable:
The App Store is most likely profitable just now, which is probably why they were able to drop to 15% fee on subscriptions.
Apple's fees are referral fees so a one-time fee like a higher portion of the first month's fee and then nothing after is a valid suggestion but that doesn't cover support of their software in the store until the end of time. If they negotiate a better deal for bigger providers then it hurts smaller competitors.
If 5 million of Spotify's 30 million paying subscribers sign up through the App Store, Apple would be getting about $240m per year from them (will drop to $120m). That is as much as the big games providers, you can see they are listed among the highest grossing apps on the right on the following page beside Netflix, HBO Now, Tinder, Match, Pandora, Tidal, Hulu, SoundCloud:
If Spotify makes no payments, neither would any of them. That's easily 9x $200m = $1.8b in revenue every year. Apple can continue to lower the fee the more that their existing data centers can handle the load but I don't think they can ever make subscriptions free nor make them one-off payments. This just makes it unfair on app developers using IAPs who are left with the higher fees while the subscribing apps pull in similar revenue. This issue isn't exclusive to Apple, Amazon Video isn't supporting Google or Apple because of their business terms. Other platforms like Roku aren't having to support 1 billion users.
The software providers haven't said the issue is the fees anyway, they mention business terms. People can try putting a placeholder product on Amazon that redirects to a 3rd party e-commerce site to avoid their fees and they'll find out quickly what Amazon's terms are. The app store business model is still new (7 years old) so businesses are going to have to negotiate on how best to make it work but the freeloader model isn't it.
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?
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.
You're trying to attribute Spotify's rule breaking (Apple's rules) of charging more for the same service thru the App Store than they do on their website. The problem is Spotify. Not Apple. Like any consumer product, Spotify should have built retailer profit into their pricing scenario, or they should not have ever put an app on the App Store. But apparently they didn't or they need to make more because competition is eroding their profit or customer base. Blaming Apple is just click bait to get some free advertising for Spotify.
And for those that complain that Apple shouldn't get a cut of monthly subscription payments, it's another red herring argument. Apple's rules are what they are and have been this way since Spotify submitted their app. It's not really any different than when you buy a monthly prescription for some drug, where you are paying Walgreen's profit margin month after month.
The fact that ALL businesses can ( and many do) offer their own customer signup online which is accessed in the app, at no charge, makes this entire topic a non issue. There is no "lock in" forcing payment to Apple. The apps can and do advertise this ("go here to signup!") - they simple can't provide a direct web link.
They believe the appstore is so important for them and their business, otherwise they wouldn't be making this massive fuss. At the same time, they're placing the value of Spotify being in the appstore at exactly ZERO, as they offset 100% of appstore fees to their customers. They're not even willing to eat 50%, 10%, or 1% of the cost of doing business and having their app available on the most lucrative devices and appstore on the planet. To me, that is an insane amount of contempt towards their consumers. The cut that Apple takes is the cost of doing business in their stores, which Spotify should cover for their consumers- if not fully, than at least partially. The fact that they're not willing to do that shows their level of selfishness and greed. If they believe the value of the appstore is worth nothing to them, as their appstore pricing implies, then they should pull their app the fuck out of the store. But no, they want to have their cake and eat it too.
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.
App discovery on the App Store is pretty much a joke. Even still how frequently is Apple specifically spotlighting Spotify on the App Store? My guess is next to never (though I don't think Spotify needs it). The only reason I switched from Spotify to Apple Music is because of Apple imposed limitations like being able to sync playlists with my Apple Watch and being able to use Siri. And notice music is not one of the domains approved for 3rd party Siri use. I don't think that's an accident. For me there is nothing inherently better about Apple Music. Spotify's Discover Weekly feature provided me better playlists and recommendations than anything I get with Apple Music. And outside of the Beatles there's nothing I'm streaming on Apple Music that I couldn't stream on Spotify.
Funny because I came across Spotify several times in the App Store before I even knew what it was/did.
The 30% cut Apple takes on the App Store may seem high, but it's considerably lower than what it used to cost to sell software on the retail market, so everybody wins. However, applying that same 30% to everything on the store is greedy, shortsighted, and makes no sense. In the case of Spotify, Apple is only acting as a payment facilitator for the subscription and as such it should be entitled to a payment -- but only something equivalent to a credit card transaction fee, certainly not 30%. Alternatively, they should allow Spotify to reroute the customer to a different payment site, or make payments in a different manner. Amazon, for instance, allows you to make purchases through their app, they just route the payment through their own system and so don't have to pay Apple for anything. It's clear that Apple's heavy handed use of its dominant position has enabled them to establish a system that's drastically biased in their favor; while they were a revolutionary influence and invented this convenient market place, they're acting like a monopolistic bully and in the end it's only hurting the consumer. I find it particularly galling that they won't even let Spotify warn their customers that they can pay less by purchasing the subscription outside of the app. How else can this be interpreted than they want to be able to fleece their customers. I have no intention of becoming a Spotify subscriber, but I'm really appalled at how greedy and nasty Apple can be sometimes.
This reply is so terrible and the Amazon comparison is even worse. I like how you use clickbait phrases stolen from tech sites like "WERE revolutionary".
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.
Spotify can also put up ads in the App Store. In fact Apple's App Store serves as an advertising platform FOR Spotify. Go to the App Store and search 'Music'. Spotify's app is listed. The EU can go eat a bag of d-cks.
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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.
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.
Do they pay 30% to the AppStore Business unit in Apple?
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.
The only flaw to your analogy is that wealthy patrons are notorious for paying nothing: they are equal to or more likely to sneak their own snacks into the theater. The poor person is most likely going to have to limit their purchases and thus not gorge in the theater. This isn't 1975 where people are sneaking into a Drive-In and eating their own snacks.
Wealthy people are notorious pigs at the trough. Go to a Costco some time. You'll notice some of the wealthiest people going from sample to sample and returning multiple times. Just like they don't want to pay taxes, they'll twist reality to get what they want until the line is drawn.
More often than not, poor people aren't going to the movies.
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.
As for what Spotify did, if Apple had allowed them to link to their web site, as they are able to do on TVs, BD players, Google Play, etc, the situation never would have arose. Before Apple Music, it was merely naked greed on Apple's part. Now, Apple is clearly engaging in anticompetitive behavior, and I hope they get burned for it if they don't hurry up and start behaving.
Lots and lots of bloviating by the Apple crowd as usual. Stinks when you have and twist and contort yourself to make an argument.
The Dashboard widget page (which is still up!) had better categorization than the App Store, for heaven’s sake.
But Spotify doesn't. They charge a higher price... $12.99 in the iOS app versus $9.99 on their own website. And by doing that... it creates a bunch of pissed of customers who feel like they are being "tricked"
I don't know what Spotify should do. They have a few options.
1. Keep charging $12.99 a month for iOS signups and risk pissing people off
2. Charge $9.99 a month for iOS signups and eat the cost like everyone else
3. Remove all in-app purchases and hope people can navigate their way to spotify.com
4. Exit the iOS App Store entirely
Or they can keep harping on this in the press and hope Apple changes the rules. Best of luck if that's their plan.
No, is not that simple. You don't think most Apple iOS users already know that they can start their account at Spotify website (and save money), without Spotify having to tell them so on their app? You don't think iOS users can get to Spotify website without clicking on a link?
What Spotify is really bitching about is that they have to pay Apple 30% of their subscription fee for iOS subscribers that wants to pay using their iTunes account and that don't want to go to their website to open a Spotify account. Where they have to give Spotify their CC and other info that might result in spam and ads. It has nothing to do with Spotify already being able to process CC accounts.
What Spottily really want is to have access to iOS users that wants to pay for their subscription using an app and their iTunes account, without having to pay the 30% to Apple. Spotify couldn't care less about being able to supply a link to their website in their app. There's not a lot of iOS users that don't already know they can do this. Spotify is not after these uninformed iOS users that are probably only in the millions. They are after the users that don't want to leave their iTunes environment, if they don't have to. These are in the tens or hundreds of millions. It's these iOS users that Spotify wants and they don't want to pay the 30% cut to Apple to have access to them.
I know that if I'm looking for something to buy online, I first check Amazon and then eBay. Why? because I have an account with them and won't have to give out my CC to someone else to make the purchase. And if I can't find the item I want there and I do find several online stores selling it, I will first choose the store that I can pay using PayPal. Even if the item or shipping cost a little more. (So long as it doesn't cost a lot more.) My last resort is to buy it from an internet store where I have to give them my CC. And many of these store require me to open an account with them. And might not be as secure from hackers. People that wants to use Amazon, eBay or Paypal to make their online purchases are no different than those iOS users that wants to use their iTunes account to pay for their app purchases. And it's for the same reasons.
Spotify is the greedy one. They don't want to have to pay Apple for access to the iOS users that only wants to pay for apps with their iTunes account. They charge iOS users more if they wants to pay with their iTunes account because they have to pay Apple to have access to them. Then they bitch about how Apple is anti-competitive because they are force to pass on the expense of having access to these iOS users and thus can not compete with Apple Music. No one is forcing them to pass on this expense of doing business. If they can't make money by having a subscription app in the Apple Store, then don't have one. Let the iOS users that want to subscribe to Spotify, sign up at their website. They already know they can do this. They don't need a link in an app. And Spotify will still get to have their streaming apps in the Apple App Store and not have to pay Apple a cent. (except for the $100 developer fee for the software needed.)
Apple just recently announced a 50% off Apple Music plan for students. If Apple can absorb $4.99 per student subscriber in order to gain some market share, Spotify, the largest music subscription service by far, should be able to absorb the $3.00 per subscriber it cost to sign up iOS users that wants to use their iTunes account to pay for it. It's really that simple.
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Just notice the Spotify also offer a $4.99 subscription service to students. So if Spotify can absorb the loss of $5.00 per student, to attract students and increase their paying subscription market share, why can't it absorb the loss of $3.00 to Apple, to attract iOS subscribers, without bitching about it?
There is huge benefit for being in iOS App Store. Entire businesses started from scratch and became multimillion dollar corporations for being there. If it wasn't that important then you wouldn't see Spotify spending that much effort and making that much noise trying to be in the App Store.
So what you're saying is that Spotify should receive special treatment from Apple because Apple has a music subscription service? And since Apple isn't giving any special treatment to Spotify, Spotify ran home crying to mommy, telling her Apple wouldn't offer it any candy and now wants mommy to do something about it. Well, unless Apple has a monopoly and is abusing it, there's nothing that mommy can do. Mommy aught to change little Spoty diaper and tell it to go out and attract paying subscribers, without depending on any special treatment from the competition. Spotify manage to do OK before Apple Music came on line and is still the largest music subscription service by far. Spotify is to subscription music as Netflix is to online video streaming. But it won't be for long if it has to depend special treatment from their competitors.
Year 1: $6b cost, revenue $300m ($5.7b loss)
Year 2: $1.1b cost, revenue $1b ($5.8b loss)
Year 3: $1.1b cost, revenue $2b ($4.9b loss)
Year 4: $1.15b cost, revenue $3b ($3.05b loss)
Year 5: $1.15b cost, revenue $4b ($0.2b profit)
Year 6: $1.15b cost, revenue $4b ($3.05b profit)
You can see how long it takes to become profitable with just 5 data centers and they need more. If all apps in the store were free, Apple would have to cover that cost themselves. They could cover this cost as they have the cash but the cash belongs to the shareholders, not Apple's employees. People say that Apple is greedy but Apple acts on behalf of greedy shareholders who question why Apple spends time making their data centers sustainable and asks them to commit to only doing things that are profitable:
http://www.businessinsider.com/tim-cook-versus-a-conservative-think-tank-2014-2
The App Store is most likely profitable just now, which is probably why they were able to drop to 15% fee on subscriptions.
Apple's fees are referral fees so a one-time fee like a higher portion of the first month's fee and then nothing after is a valid suggestion but that doesn't cover support of their software in the store until the end of time. If they negotiate a better deal for bigger providers then it hurts smaller competitors.
If 5 million of Spotify's 30 million paying subscribers sign up through the App Store, Apple would be getting about $240m per year from them (will drop to $120m). That is as much as the big games providers, you can see they are listed among the highest grossing apps on the right on the following page beside Netflix, HBO Now, Tinder, Match, Pandora, Tidal, Hulu, SoundCloud:
https://www.appannie.com/apps/ios/top/
If Spotify makes no payments, neither would any of them. That's easily 9x $200m = $1.8b in revenue every year. Apple can continue to lower the fee the more that their existing data centers can handle the load but I don't think they can ever make subscriptions free nor make them one-off payments. This just makes it unfair on app developers using IAPs who are left with the higher fees while the subscribing apps pull in similar revenue. This issue isn't exclusive to Apple, Amazon Video isn't supporting Google or Apple because of their business terms. Other platforms like Roku aren't having to support 1 billion users.
The software providers haven't said the issue is the fees anyway, they mention business terms. People can try putting a placeholder product on Amazon that redirects to a 3rd party e-commerce site to avoid their fees and they'll find out quickly what Amazon's terms are. The app store business model is still new (7 years old) so businesses are going to have to negotiate on how best to make it work but the freeloader model isn't it.
You're trying to attribute Spotify's rule breaking (Apple's rules) of charging more for the same service thru the App Store than they do on their website. The problem is Spotify. Not Apple. Like any consumer product, Spotify should have built retailer profit into their pricing scenario, or they should not have ever put an app on the App Store. But apparently they didn't or they need to make more because competition is eroding their profit or customer base. Blaming Apple is just click bait to get some free advertising for Spotify.
And for those that complain that Apple shouldn't get a cut of monthly subscription payments, it's another red herring argument. Apple's rules are what they are and have been this way since Spotify submitted their app. It's not really any different than when you buy a monthly prescription for some drug, where you are paying Walgreen's profit margin month after month.
Yes, it is that simple.
They believe the appstore is so important for them and their business, otherwise they wouldn't be making this massive fuss.
At the same time, they're placing the value of Spotify being in the appstore at exactly ZERO, as they offset 100% of appstore fees to their customers. They're not even willing to eat 50%, 10%, or 1% of the cost of doing business and having their app available on the most lucrative devices and appstore on the planet. To me, that is an insane amount of contempt towards their consumers. The cut that Apple takes is the cost of doing business in their stores, which Spotify should cover for their consumers- if not fully, than at least partially. The fact that they're not willing to do that shows their level of selfishness and greed. If they believe the value of the appstore is worth nothing to them, as their appstore pricing implies, then they should pull their app the fuck out of the store. But no, they want to have their cake and eat it too.
This reply is so terrible and the Amazon comparison is even worse. I like how you use clickbait phrases stolen from tech sites like "WERE revolutionary".
I'm not even gonna reply, never mind.