I can see having to pay Apple to use the infrastructure for the app store. Each download from the app store and the maintenance of the app store costs Apple money. But Spotify delivers its service over their own infrastructure. Why should Apple get any of that? It costs them nothing, but yet they want 30% of the service cost?
Seems unreasonable to me. They want something for nothing.
Apple doesn't claim any cut of subscriptions Spotify services itself for iOS users.
It only charges for transactions Apple handles. When Apple services a subscription, it manages billing and handles disputes and renewals, etc.
The issue here isn't whether 30% is too high--that is a valid point to make, and Apple has reduced its cut of ongoing subscriptions (slashed in half after a year), where the value of hooking up a new customer starts to fade in comparison to the content/service being supplied by the developer.
The issue here is whether Spotify has any right to use the App Store without paying for it, just because it understands it will make more money by not paying fees related to its business (!)
It's like eating in a restaurant and saying I just want to pay for my food, not the cost you include to cover heating and cleaning tables and paying waiters because I'm getting my food to go. If it's not your business you don't get to stipulate what you pay for the services they offer. If you don't like it you buy your food elsewhere. Spotify demands the App Store operate at its benefit for free, while it competes against Apple in streaming by paying artists less. That's a pretty arrogant order to make.
Is Apple probably difficult and frustrating to work with in such a frenemy relationship? Undoubtedly. Complaining to users that Apple didn't launch HomePod with support for Spotify is getting into really rich territory. I can't imagine that will make Apple want to work with them.
Your argument is that because the App Store cost Apple money to set up and continue to operate that third party app developers like Spotify should not complain about paying for it. I think you are missing the point. Both users and developers would benefit if there were competing app stores that Apple did not operate. Sure you would have to give up some security in order to use a third party app store but perhaps that is a choice people would like to have. You may choose to retain maximum security and pay Apple's 30% fee for apps and services. I may choose less security in order to gain the freedom to access a much broader spectrum of apps that allow me to do things that are currently restricted on the App Store. Perhaps I have one iPhone that I keep secure and another iPhone or iPad that I keep no personal data on but I use to scan my local network (something Apple recently shut down via its SDK).
Your logic is laughable. You are more than welcome to sell your app on Android. As the article clearly describes, Spotify (and you) want Apple to space on the Apple store rent-free.
Your argument is that because the App Store cost Apple money to set up and continue to operate that third party app developers like Spotify should not complain about paying for it. I think you are missing the point. Both users and developers would benefit if there were competing app stores that Apple did not operate. Sure you would have to give up some security in order to use a third party app store but perhaps that is a choice people would like to have. You may choose to retain maximum security and pay Apple's 30% fee for apps and services. I may choose less security in order to gain the freedom to access a much broader spectrum of apps that allow me to do things that are currently restricted on the App Store. Perhaps I have one iPhone that I keep secure and another iPhone or iPad that I keep no personal data on but I use to scan my local network (something Apple recently shut down via its SDK).
This post is insane, and shows a complete disconnection from reality. How many iPhone users REALLY are asking for a secondary appstore, which they can only use on their "secondary", "unsecure" iOS device they have lying around, that they choose to not put any personal info on? This would benefit, what, 0.0001% of users? And you HONESTLY think Apple won't get the blame for security issues, when these happen on THEIR hardware and THEIR software? And in what situations would these devices be used, since they can't be fore anything personal, and they definitely can't be used in business? No, developers and users would definitely NOT benefit by what you're suggesting. Spotify would benefit from putting their app on an appstore that a TINY fraction of people will use?
And really, what kind of things do you really want to do that you can't do with the millions of apps in the appstore? Give us some legitimate use cases, that are not stuff like piracy/pornography/illegal/shady garbage. Your comment is extreme short-sighted.
Your argument is that because the App Store cost Apple money to set up and continue to operate that third party app developers like Spotify should not complain about paying for it. I think you are missing the point. Both users and developers would benefit if there were competing app stores that Apple did not operate. Sure you would have to give up some security in order to use a third party app store but perhaps that is a choice people would like to have. You may choose to retain maximum security and pay Apple's 30% fee for apps and services. I may choose less security in order to gain the freedom to access a much broader spectrum of apps that allow me to do things that are currently restricted on the App Store. Perhaps I have one iPhone that I keep secure and another iPhone or iPad that I keep no personal data on but I use to scan my local network (something Apple recently shut down via its SDK).
Sorry, I believe you're in the minority. The vast majority of Apple users want an easy place to get apps. Many people are concerned about security and want third-party apps to be secure. Allowing a non-Apple app store would require Apple to open up security, immediately causing malware and ransomware to be easily dropped in by these apps. It's happened on Android stores but of course those users could care less. Nothing is free in this world so Apple hosting the app store as well as the secure billing is well worth it.
Absolutely. If Apple were forced to go the route of the Google play store, I’d go back to using a flip phone. The primary reason why I refuse to use android devices is the lack of security. Apple devices are expensive, But I make a choice because I want to know that my data is secure.
I think the mall analogy is a bit off. It's more like if one company owned 50% of the malls in the entire US, and then started it's own stores while jacking up the rent on competing stores.
Yes, customers can always go to Spotify's website to subscribe, but that's always going to leave Spotify in a disadvantageous position relative to Apple Music.
I can see having to pay Apple to use the infrastructure for the app store. Each download from the app store and the maintenance of the app store costs Apple money. But Spotify delivers its service over their own infrastructure. Why should Apple get any of that? It costs them nothing, but yet they want 30% of the service cost?
Seems unreasonable to me. They want something for nothing.
It costs Spotify nothing if a user signs up for their service via their website or other means then downloads the app from the App Store and signs into their account. Apple only takes a cut when a potential user downloads the app and then subscribes to it via the App Store. In this instance value is added in several ways:
1) Payment processing through a trusted source with clear policies that allow one to cancel service easily should the desire arise. I trust Apple, don’t necessarily trust Spotify, there is tremendous value in having a customer base that trusts you with their credit card data to process payments, just ask Amazon.
2) Apps hosted on Apple’s App Store comply with a certain set of guidelines that ensure privacy and security. Spotify and other constantly update their apps, and so it must be review each time to ensure they are still complying with the guidelines. Is it perfect, no. Does it provide value such that I would not entertain obtaining a version elsewhere, definitely.
There is no basis for monopoly/Anti competition claims here. A Spotify user can subscribe many different ways. IOS has no where close to a monopoly portion of market share in either phone (IOS vs Android) or streaming music (Apple Music vs Spotify).
Your argument is that because the App Store cost Apple money to set up and continue to operate that third party app developers like Spotify should not complain about paying for it. I think you are missing the point. Both users and developers would benefit if there were competing app stores that Apple did not operate. Sure you would have to give up some security in order to use a third party app store but perhaps that is a choice people would like to have. You may choose to retain maximum security and pay Apple's 30% fee for apps and services. I may choose less security in order to gain the freedom to access a much broader spectrum of apps that allow me to do things that are currently restricted on the App Store. Perhaps I have one iPhone that I keep secure and another iPhone or iPad that I keep no personal data on but I use to scan my local network (something Apple recently shut down via its SDK).
Hello 👋..... Google and Amazon have thier own apps store. Customer have these options to go and they have thier options on selecting thier devices too, HELLO
Okay, now to keep with the “shopping mall” analogy: it would ask Apple a 30 percent cut of everything Apple sells. I dont think Apple will stay one second in such a rip off place. By the way, Apple has lots of shops outside a shopping mall or a place which controlls multiple tenants and the added value of such a place is non existent. Now this leads to the second point: Apples added value is marginal, to find someting in Apples store a Google search is often more effective, so Apple can only charge for hosting the App. Apple does this for €100 (or so) per year (this means your app disapears if you doesn't pay!) which is fairly costly. Its reasonable to be able to host your apps yourself (for a way lower cost) and to skip Apple tax of 30% which we just concluded Apple wouldn't pay itself. Before anyone comments “security, impossible, etc etc”, I say hash codes, bitcoin and git as technology analogies needed to implement such a system, of course Apple - and in the future maybe a separate company AppleApp - must still validate the submitted apps, for which they can ask a few cents per approval.
Spotify's historical revisionism insists that Apple didn't initially allow apps, but that's not true.
I minor issue, but you are wrong. Apple initially had zero intention of allowing native 3rd party apps. Jobs famously stated web apps could do anything native apps could and there was no need to allow developers to make native apps. Only after public outcry from Mac developers, and seeing the popularity of jailbreaking to install native apps did Apple shift gears and start work on the App Store.
I personally asked Steve Jobs in front of a room of shareholders (at the 2007 shareholder meeting in February) what Apple was thinking about apps, how free third parties would be to create native apps alone or in Apple partnerships in the model of iPod Games, and whether companies would be able to release their own custom internal apps the way Microsoft had been supporting.
He made it clear that Apple was working through a series of issues, including Nokia style app signing. It was obvious that native apps were coming. It wasn't something Apple was blindsided by.
iPhone wouldn't be released for several more months. Tim Cook pulled his out on the stage and was checking it after the event. His was the first one I saw in person up fairly close.
The idea that developers had to change Apple's thinking, or that jailbreaking pushed things over the hill at the end of 2007--just a few months before the App Store was opened, is purely false. And silly. It took a lot of time to work out the architecture. As shipped, the original iPhone OS ran all apps as root--under the same user account. They didn't have an option to just "allow" third party apps and retain any control over security.
Jobs presented web apps publically as the solution because that's all they had ready at the time.
Jobs also once said it would be silly to have video on iPods, shortly before they released it.
And the fact that Apple had signed, FairPlay third party partner apps working in iTunes for iPods back in 2005 makes it clear that it recognized the need for third party apps on iPhone. Maybe it didn't realize the extent to which this would be important or lucrative, but it did deliver it best (beating Microsoft!) and outmaneuvered Sidekick/Palm/Nokia and everyone else that had been dabbling in mobile apps. And it maintained the best app store for phones and the only real app store for tablets.
So no I don't think that's wrong.
The reason for calling Spotify's timeline "revisionism" is that the issue wasn't that Apple "didn't allow" apps, but that it didn't have a viable option to allow native third party apps. But Apple did allow web apps, and Spotify could have used that for music streaming. So Spotify was being excessively sloppy with the facts to make Apple look like a big abusive boogeyman rather than the tiny underdog it actually was in 2007.
No, Steve Jobs envisioned web apps as the future of programs. Possibly rightly so, but just a few steps to early like he was known to do some of the time.
"The streaming music company would seem to have a legitimate complaint. In fact, what Apple is alleged to be doing isn’t all that different from what got Microsoft in trouble with antitrust authorities 20 years ago and what led to a $5 billion fine against Google just last year.
If history is any guide, Spotify’s complaint could lead to a similarly large fine against the iPhone maker. It might also lead to restrictions that could hamper Apple’s services business, which the electronics giant has been touting as its future. And the complaint could spur a parallel antitrust investigation here in the US."
And this one:
“We believe this holds no practical purpose other than to force competitive services into higher cost structures and unfairly tax service activity on the iOS platform,” KeyBanc Capital Markets’ Andy Hargreaves and Tyler Parker said in the note published on March 13. As such, the firm believes Spotify’s complaint has merit and could “carry significant weight” in the eyes of regulators.
If Apple were forced to change its terms as a result of the complaint, it could pose a risk to the revenue Apple earns from subscriptions and in-app purchases.
“We believe the most significant financial risk to Apple would come from a forced requirement to allow first party and other third party payment processing from within apps,” the note read. “This would create competition for subscription and in-app payments that would likely drive the current 30% rate Apple collects down substantially.”
Ben Thompson of Stratechery has described Apple's App Store as "rent seeking," writing that Apple "is leveraging that monopoly [on iOS] into an adjacent market -- the digital content market -- and rent-seeking. Apple does nothing to increase the value of Netflix shows or Spotify music or Amazon books [...]
Apple doesn't have to "add value" to "Netflix shows or Spotify music or Amazon books" in order to charge for access to its store infrastructure, its installed base, or its billing systems. Facebook and Google don't have to "add value" to your advertising message in order to charge you to advertise it using the digital infrastructure they've built.
Bingo. Ben Thompson is on Gruber's podcast a lot, IMO he's kind of a moron. He routinely demonstrates a failure to understand iOS and Apple principles. I don't know what he did when he worked at Apple, but I certainly can believe he worked at Microsoft.
Retailers such as Target, Walmart, Walgreens, and every big grocery charge product manufacturers "rent" for access to their store shelves, known as "slotting fees". They do not charge this rent to their own in-house brands, which are often clones of name-brands, but cheaper. Where is the moral outrage? Doesn't exist. It's just a cost of doing business.
From my perspective, it should be a hard case for Spotify to win.
Spotify has other distribution methods (i.e. a customer can sign up on their website and then download the app)
Spotify chooses to use Apple's App Store as one of its distribution methods
Apple gives Spotify the same terms as everybody else
Of course, the EC can be a little crazy with their antitrust decisions.
Your point 3 is just wrong. Apple Music has clearly
different terms then Spotify. In fact it is the main reason why Spotify is
going to the EU commission
That's as stupid as complaining that Kroger's doesn't charge its bakery division rent for being in their grocery. It's...their property. As there is no monopoly on all grocers, they are free to do this. You can't have a monopoly on your business. Is McDonald's anti-competitive for not letting Burger King sell Whoppers in their store?!
Yes, customers can always go to Spotify's website to subscribe, but that's always going to leave Spotify in a disadvantageous position relative to Apple Music.
Yeah man, that's business (and life) -- finding oneself in a disadvantageous position, and trying to build a more advantageous one. It won't always be "fair", but as long it's legal that's OK.
Do you think Nyquil thinks it's "fair" for Target to sell a generic in-house brand they copied, stuck right next to theirs on the shelf, without paying the slotting fees to be there? But they know that's just tough bananas.
I think it's short sighted for Apple to not have a tiered cut for subscriptions and digital media purchases. If they charge so much that large entities don't offer in-app purchase at all, then this hurts both Apple revenues and customer convenience. It's a pain in the butt that I can't just buy a book on the Kindle App.
I also think there's an issue here similar to net neutrality. If you have a sufficiently dominant platform, you shouldn't be able to favor your own content (e.g., Book App versus Kindle App). The history is irrelevant.
StrangeDays said: Retailers such as Target, Walmart, Walgreens, and every big grocery charge product manufacturers "rent" for access to their store shelves, known as "slotting fees". They do not charge this rent to their own in-house brands, which are often clones of name-brands, but cheaper. Where is the moral outrage? Doesn't exist. It's just a cost of doing business.
That's all true, but selling software in a digital store isn't really an exact parallel to selling physical goods in a brick/mortar retail store. For one thing, the "platform" for physical goods from a brick/mortar store is really the town you live in, not the stores themselves. Live in a larger town and you've got more choice for brick/mortar purchasing. Live in a smaller town and you've got less. If you live in the United States, your choice in the App Store is always the same regardless of what town you're in. I'm not trying to argue in favor of Spotify per se, but the expansiveness and monolithic nature of digital stores does deserve scrutiny from government. It's all a relatively new dynamic within global economies.
Comments
It only charges for transactions Apple handles. When Apple services a subscription, it manages billing and handles disputes and renewals, etc.
The issue here isn't whether 30% is too high--that is a valid point to make, and Apple has reduced its cut of ongoing subscriptions (slashed in half after a year), where the value of hooking up a new customer starts to fade in comparison to the content/service being supplied by the developer.
The issue here is whether Spotify has any right to use the App Store without paying for it, just because it understands it will make more money by not paying fees related to its business (!)
It's like eating in a restaurant and saying I just want to pay for my food, not the cost you include to cover heating and cleaning tables and paying waiters because I'm getting my food to go. If it's not your business you don't get to stipulate what you pay for the services they offer. If you don't like it you buy your food elsewhere. Spotify demands the App Store operate at its benefit for free, while it competes against Apple in streaming by paying artists less. That's a pretty arrogant order to make.
Is Apple probably difficult and frustrating to work with in such a frenemy relationship? Undoubtedly. Complaining to users that Apple didn't launch HomePod with support for Spotify is getting into really rich territory. I can't imagine that will make Apple want to work with them.
Yes, customers can always go to Spotify's website to subscribe, but that's always going to leave Spotify in a disadvantageous position relative to Apple Music.
1) Payment processing through a trusted source with clear policies that allow one to cancel service easily should the desire arise. I trust Apple, don’t necessarily trust Spotify, there is tremendous value in having a customer base that trusts you with their credit card data to process payments, just ask Amazon.
2) Apps hosted on Apple’s App Store comply with a certain set of guidelines that ensure privacy and security. Spotify and other constantly update their apps, and so it must be review each time to ensure they are still complying with the guidelines. Is it perfect, no. Does it provide value such that I would not entertain obtaining a version elsewhere, definitely.
There is no basis for monopoly/Anti competition claims here. A Spotify user can subscribe many different ways. IOS has no where close to a monopoly portion of market share in either phone (IOS vs Android) or streaming music (Apple Music vs Spotify).
By the way, Apple has lots of shops outside a shopping mall or a place which controlls multiple tenants and the added value of such a place is non existent.
Now this leads to the second point: Apples added value is marginal, to find someting in Apples store a Google search is often more effective, so Apple can only charge for hosting the App.
Apple does this for €100 (or so) per year (this means your app disapears if you doesn't pay!) which is fairly costly.
Its reasonable to be able to host your apps yourself (for a way lower cost) and to skip Apple tax of 30% which we just concluded Apple wouldn't pay itself.
Before anyone comments “security, impossible, etc etc”, I say hash codes, bitcoin and git as technology analogies needed to implement such a system, of course Apple - and in the future maybe a separate company AppleApp - must still validate the submitted apps, for which they can ask a few cents per approval.
"The streaming music company would seem to have a legitimate complaint. In fact, what Apple is alleged to be doing isn’t all that different from what got Microsoft in trouble with antitrust authorities 20 years ago and what led to a $5 billion fine against Google just last year.
If history is any guide, Spotify’s complaint could lead to a similarly large fine against the iPhone maker. It might also lead to restrictions that could hamper Apple’s services business, which the electronics giant has been touting as its future. And the complaint could spur a parallel antitrust investigation here in the US."
And this one:
“We believe this holds no practical purpose other than to force competitive services into higher cost structures and unfairly tax service activity on the iOS platform,” KeyBanc Capital Markets’ Andy Hargreaves and Tyler Parker said in the note published on March 13. As such, the firm believes Spotify’s complaint has merit and could “carry significant weight” in the eyes of regulators.
If Apple were forced to change its terms as a result of the complaint, it could pose a risk to the revenue Apple earns from subscriptions and in-app purchases.
“We believe the most significant financial risk to Apple would come from a forced requirement to allow first party and other third party payment processing from within apps,” the note read. “This would create competition for subscription and in-app payments that would likely drive the current 30% rate Apple collects down substantially.”
Retailers such as Target, Walmart, Walgreens, and every big grocery charge product manufacturers "rent" for access to their store shelves, known as "slotting fees". They do not charge this rent to their own in-house brands, which are often clones of name-brands, but cheaper. Where is the moral outrage? Doesn't exist. It's just a cost of doing business.
Typical Apple-hater nonsense.
Do you think Nyquil thinks it's "fair" for Target to sell a generic in-house brand they copied, stuck right next to theirs on the shelf, without paying the slotting fees to be there? But they know that's just tough bananas.
Anyway, an OS update further and your app isn't compatible anymore and inoperable.