Apple strikes back at Spotify's claims of unfair treatment in the App Store

AppleInsider · June 24, 2019 3:41PM

Data supplied by Apple says that only 680,000 of Spotify's users are paying 15% of the subscription fee to Apple -- and none are paying the 30% that the music streamer claims.

Apple's filing to the European Commission not only takes issues with Spotify CEO Daniel Ek's claim about the 30% rate, but with the number of customers impacted. The filing says that the 680,000 users paying 15% are out of the company's self-reported 100 million paying users world-wide, and there are no Spotify users currently paying 30%, as Ek proclaimed.

The filing was first spotted by German-language Der Spiegel. The publication also notes that Apple only holds 25 percent of the smartphone market in the EU and Apple Music is not dominant in music streaming, therefore Apple shouldn't be considered a monopoly.

In Spotify's complaint, the company points to supposed unfair treatment such as when Apple rejected multiple Apple Watch app submissions in 2015 and 2016. Apple later added third-party API for music streaming apps on Apple Watch with watchOS 5, which has been used by popular services like Pandora. Spotify has yet to re-submit its watchOS app for review.

Another point of contention is Apple's 30% cut of App Store purchases. For subscriptions, the rate drops down to 15% after one year of continual payments -- a fact glossed over by Ek in his complaint.

Apple's app store cut goes towards Apple's hosting fees, development of the platform and developer resources, payment infrastructure and other expenses. Spotify did not that an option was available to remove the in-app subscription option and allow users to sign up directly from its website -- a route other subscription-based apps have gone.

lkrupp · June 24, 2019 3:55PM

AppleInsider said:

For subscriptions, the rate drops down to 15% after one year of continual payments -- a fact glossed over by Ek in his complaint.

This is news to me. How about you?

StrangeDays · June 24, 2019 4:04PM

lkrupp said:

AppleInsider said:

For subscriptions, the rate drops down to 15% after one year of continual payments -- a fact glossed over by Ek in his complaint.

This is news to me. How about you?

Was a story a year or so ago.

Mike Wuerthele · June 24, 2019 4:05PM

StrangeDays said:

lkrupp said:

AppleInsider said:

For subscriptions, the rate drops down to 15% after one year of continual payments -- a fact glossed over by Ek in his complaint.

This is news to me. How about you?

Was a story a year or so ago.

2016.

https://appleinsider.com/articles/16/06/08/apple-announces-it-will-offer-app-store-subscriptions-take-smaller-15-cut

bsimpsen · June 24, 2019 4:05PM

lkrupp said:

AppleInsider said:

For subscriptions, the rate drops down to 15% after one year of continual payments -- a fact glossed over by Ek in his complaint.

This is news to me. How about you?

Apple made that change three years ago:

https://variety.com/2016/digital/news/appleapp-store-subscription-fees-1201791582/

ericthehalfbee · June 24, 2019 4:10PM

So Spotify was able to successfully get the vast majority of its subscriber base to subscribe through there website.

Their lawsuit just went up in smoke.

macxpress · June 24, 2019 4:16PM

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

Rayz2016 · June 24, 2019 4:39PM

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

n2itivguy · June 24, 2019 4:42PM

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly this!

larz2112 · June 24, 2019 4:46PM

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly. I've been saying this for years. Spotify was founded on an unsustainable business model. You'd think the folks running that company would have figured it out by now.

rogifan_new · June 24, 2019 4:56PM

larz2112 said:

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly. I've been saying this for years. Spotify was founded on an unsustainable business model. You'd think the folks running that company would have figured it out by now.

And the only reason Apple’s isn’t is because they can subsidize it by the profit they make on other things, like hardware. We’re getting to a point where only a few big companies will own everything.

mknelson · June 24, 2019 4:59PM

rogifan_new said: And the only reason Apple’s isn’t is because they can subsidize it by the profit they make on other things, like hardware. We’re getting to a point where only a few big companies will own everything.

We used to worry it was WalMart, now it's Amazon, etc.

mdriftmeyer · June 24, 2019 5:06PM

rogifan_new said:

larz2112 said:

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly. I've been saying this for years. Spotify was founded on an unsustainable business model. You'd think the folks running that company would have figured it out by now.

And the only reason Apple’s isn’t is because they can subsidize it by the profit they make on other things, like hardware. We’re getting to a point where only a few big companies will own everything.

And once Ford, GE and ATT, Sears Roebuck, etc., were king of the hill. Ford and GE are fighting to survive, Sears is dead and ATT isn't Ma Bell/Bell Labs, etc. Microsoft was the de facto and IBM before that.

Innovate or die.

mjtomlin · June 24, 2019 5:15PM

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly.

The only way they're going to make money is by adding ads to the subscription tier.

AppleExposed · June 24, 2019 5:40PM

Glad Spotify is panicking. At this rate greedy Spotify is better off dead to Apple. Apple could use those extra millions of subscribers and more artists can get paid.

rogifan_new said:

larz2112 said:

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly. I've been saying this for years. Spotify was founded on an unsustainable business model. You'd think the folks running that company would have figured it out by now.

And the only reason Apple’s isn’t is because they can subsidize it by the profit they make on other things, like hardware.

Doesn't Apple make profit on every subscriber?

anantksundaram · June 24, 2019 6:04PM

It’s being litigated in the EU. Spotify is an EU company.

Sadly, one can pre-connect the dots.

bbdroid · June 24, 2019 6:22PM

The only reason there are no Spotify users on the 30% rate is because Spotify removed the ability to pay via Apple's payment system back in 2016. This also explains why there are relatively few (680,000) users on the 15% rate, since only long-term subscribers who haven't migrated to paying with Spotify directly are still paying via Apple.

While it is misleading for Spotify to gloss over how the 30% rate decreases to 15% after a year, Apple's defence is even more misleading.

If Spotify still offered payments via Apple's in-app payment system, it would undoubtedly have many more subscribers paying that way, and any new subscribers would be paying the 30% rate.

And even though the 680,000 number is small compared to Spotify's overall paid subscription base, it is by no means insignificant.

680,000 users x 12 months x $12.99/month x 15% = $15,899,760

So that means Spotify is currently paying Apple (a direct competitor) roughly $15 million a year to process some payments. And that's only for users still utilising a payment method that was discontinued 3 years ago.

rogifan_new · June 24, 2019 6:27PM

mdriftmeyer said:

rogifan_new said:

larz2112 said:

Rayz2016 said:

macxpress said:

Basically, Spotify is shitting their pants over Apple Music and are doing everything they can to try and survive since they don't make much of a profit. Apple Music has got to be slowly eating into their revenue stream. I think once investors start pulling out, it's game over for Spotify.

The thing is, Apple Music isn’t their problem.

Every user added costs them money, and they’re not making a profit on every user.

Their problem is their business model.

Exactly. I've been saying this for years. Spotify was founded on an unsustainable business model. You'd think the folks running that company would have figured it out by now.

And the only reason Apple’s isn’t is because they can subsidize it by the profit they make on other things, like hardware. We’re getting to a point where only a few big companies will own everything.

And once Ford, GE and ATT, Sears Roebuck, etc., were king of the hill. Ford and GE are fighting to survive, Sears is dead and ATT isn't Ma Bell/Bell Labs, etc. Microsoft was the de facto and IBM before that.

Innovate or die.

This isn’t about innovation. There’s nothing innovative about Apple Music. It’s just another streaming music service. But one that survives because it’s the default music app on all iOS devices and it can be subsidized by other things, like hardware sales.

AppleExposed · June 24, 2019 6:34PM

bbdroid said:

The only reason there are no Spotify users on the 30% rate is because Spotify removed the ability to pay via Apple's payment system back in 2016. This also explains why there are relatively few (680,000) users on the 15% rate, since only long-term subscribers who haven't migrated to paying with Spotify directly are still paying via Apple.

While it is misleading for Spotify to gloss over how the 30% rate decreases to 15% after a year, Apple's defence is even more misleading.

If Spotify still offered payments via Apple's in-app payment system, it would undoubtedly have many more subscribers paying that way, and any new subscribers would be paying the 30% rate.

And even though the 680,000 number is small compared to Spotify's overall paid subscription base, it is by no means insignificant.

680,000 users x 12 months x $12.99/month x 15% = $15,899,760

So that means Spotify is currently paying Apple (a direct competitor) roughly $15 million a year to process some payments. And that's only for users still utilising a payment method that was discontinued 3 years ago.

Are you bit**ing that Spotify has to pay Apple to use their service? Heck, only .5% of their users at that?

bbdroid · June 24, 2019 7:23PM

AppleExposed said:

bbdroid said:

The only reason there are no Spotify users on the 30% rate is because Spotify removed the ability to pay via Apple's payment system back in 2016. This also explains why there are relatively few (680,000) users on the 15% rate, since only long-term subscribers who haven't migrated to paying with Spotify directly are still paying via Apple.

While it is misleading for Spotify to gloss over how the 30% rate decreases to 15% after a year, Apple's defence is even more misleading.

If Spotify still offered payments via Apple's in-app payment system, it would undoubtedly have many more subscribers paying that way, and any new subscribers would be paying the 30% rate.

And even though the 680,000 number is small compared to Spotify's overall paid subscription base, it is by no means insignificant.

680,000 users x 12 months x $12.99/month x 15% = $15,899,760

So that means Spotify is currently paying Apple (a direct competitor) roughly $15 million a year to process some payments. And that's only for users still utilising a payment method that was discontinued 3 years ago.

Are you bit**ing that Spotify has to pay Apple to use their service? Heck, only .5% of their users at that?

Of course. That's what this whole issue is about. Just because the number of users is relatively small, doesn't mean that the issue becomes irrelevant. And the number of users would be much larger if payment via Apple was still a possibility for new subscribers.

Should Spotify have to pay Apple something to use its payment system? Absolutely.

But should it be 30%, then going to 15% after a non-stop year? I'm not so sure.

And should Spotify be forced to use Apple's payment system if it wants to allow people to subscribe to its service from within its app? I don't think so.

As Spotify's Daniel Ek notes, apps that provide physical products or services (like Uber or Deliveroo) can use their own payment systems. Yet apps that provide digital services (like Spotify) have to use Apple's payment system and follow Apple's rules. It's a complicated issue.

AppleExposed · June 24, 2019 7:35PM

bbdroid said:

AppleExposed said:

bbdroid said:

The only reason there are no Spotify users on the 30% rate is because Spotify removed the ability to pay via Apple's payment system back in 2016. This also explains why there are relatively few (680,000) users on the 15% rate, since only long-term subscribers who haven't migrated to paying with Spotify directly are still paying via Apple.

While it is misleading for Spotify to gloss over how the 30% rate decreases to 15% after a year, Apple's defence is even more misleading.

If Spotify still offered payments via Apple's in-app payment system, it would undoubtedly have many more subscribers paying that way, and any new subscribers would be paying the 30% rate.

And even though the 680,000 number is small compared to Spotify's overall paid subscription base, it is by no means insignificant.

680,000 users x 12 months x $12.99/month x 15% = $15,899,760

So that means Spotify is currently paying Apple (a direct competitor) roughly $15 million a year to process some payments. And that's only for users still utilising a payment method that was discontinued 3 years ago.

Are you bit**ing that Spotify has to pay Apple to use their service? Heck, only .5% of their users at that?

Of course. That's what this whole issue is about. Just because the number of users is relatively small, doesn't mean that the issue becomes irrelevant. And the number of users would be much larger if payment via Apple was still a possibility for new subscribers.

Should Spotify have to pay Apple something to use its payment system? Absolutely.
But should it be 30%, then going to 15% after a non-stop year? I'm not so sure.

And should Spotify be forced to use Apple's payment system if it wants to allow people to subscribe to its service from within its app? I don't think so.

As Spotify's Daniel Ek notes, apps that provide physical products or services (like Uber or Deliveroo) can use their own payment systems. Yet apps that provide digital services (like Spotify) have to use Apple's payment system and follow Apple's rules. It's a complicated issue.

So Apple inventing the App Store must have been a bad idea. Spotify is lucky Apple even gave them a market.

Let's look at the reality. Spotify wants to use Apple for free.

Uber should pay apple for using their platform, everyone should unless your app is truly free and offers a free service.

Apple strikes back at Spotify's claims of unfair treatment in the App Store

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