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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
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?
Spotify's problem is that they have to use Apple's service- they are not allowed to have their own payment processing, or even link to a signup page.
30% cut to Apple was fairly low for selling low volume software on a phone when it was launched. 30% recurring (15% after one year) for large, established services who have have their own signup and payment options - not so much. Competing against them in a market where the margin just isn't 30% makes this an even larger point.
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.
This is literally how one defines an issue as "moot."
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
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?
Spotify's problem is that they have to use Apple's service- they are not allowed to have their own payment processing, or even link to a signup page.
30% cut to Apple was fairly low for selling low volume software on a phone when it was launched. 30% recurring (15% after one year) for large, established services who have have their own signup and payment options - not so much. Competing against them in a market where the margin just isn't 30% makes this an even larger point.
They are allowed to have their own payment processing. This is how they got around not paying Apple or their millions of subscribers.
"30% cut to Apple was fairly low for selling low volume software on a phone when it was launched. "
Oh Boo Hoo. 30% is 30 whether it's one customer or 100 million. Maybe Spotify should cancel 90% of their subscriber accounts to fix this issue?
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.
This is literally how one defines an issue as "moot."
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
He's from the "Apple is greedy" camp and expects Apple to give everything away.
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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
I think you may be missing one important point.
This an earlier response from an Apple spokesperson:
"Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue"
There is quite a bit in that response which the EU might take issue with if the investigation widens a little.
The fact that no one is allowed to offer competing (store, payment, distribution, etc) on the platform might itself be a platform on which the EU can construct an argument.
The term 'our' customers might not have been the best choice as it has two interpretations. I would have left it out completely.
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.
This is literally how one defines an issue as "moot."
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
But Apple isn’t applying this across all apps, only digital media. So Uber can enjoy all the benefits of the iOS platform and access to hundreds of millions of people with an Apple ID and not have to pay Apple one cent because they’re not digital media. I can enjoy the convenience of ordering something from the Panera app or GrubHub on my iPhone and Apple doesn’t get a cent. But somehow Spotify is in the wrong for complaining. And when they have a service that Apple directly competes with? What is Apple going to do when they have their own self driving ride sharing service? Are they going to force Uber and Lyft to give them 30% or 15% of every transaction?
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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
Wouldn’t this apply to all kinds of apps not just digital media? If Apple brought users to Spotify they sure as hell brought them to Uber and Lyft (among many other iOS apps). Apple said 85% of apps on the App Store are free. Items 1-5 certainly apply to free apps. Another point: the BOM + R&D for an iPhone isn’t $1,000 (or more). Surely Apple hardware sales subsidize some of the cost of running the App Store. Just like they subsidize the cost of the operating systems, Apple Music and other apps like iWork.
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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
I think you may be missing one important point.
This an earlier response from an Apple spokesperson:
"Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue"
There is quite a bit in that response which the EU might take issue with if the investigation widens a little.
The fact that no one is allowed to offer competing (store, payment, distribution, etc) on the platform might itself be a platform on which the EU can construct an argument.
The term 'our' customers might not have been the best choice as it has two interpretations. I would have left it out completely.
So, you’ve been reborn as an EU antitrust legal expert now?
LOL.
I’ll just go with the more likely path, and assume FUD.
Ireland fought for Apple here, but Apple is paying these retro-back-taxes because they are a good global citizen, despite the constant "tax dodger" claims by "others".
Just like in the US, "Apple is the world's largest tax payer."
As others have said in here, Spotify's business model was built on balsa wood, and in their panic they are suing like some many others.
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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
I think you may be missing one important point.
This an earlier response from an Apple spokesperson:
"Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue"
There is quite a bit in that response which the EU might take issue with if the investigation widens a little.
The fact that no one is allowed to offer competing (store, payment, distribution, etc) on the platform might itself be a platform on which the EU can construct an argument.
The term 'our' customers might not have been the best choice as it has two interpretations. I would have left it out completely.
I don't see a problem with the "our users" bit. Spotify claims that it has its own customers, after all. But the EU has indeed been very aggressive about defining anti-competitive behaviour, so I think Apple will have a difficult fight on its hands.
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.
This is literally how one defines an issue as "moot."
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
But Apple isn’t applying this across all apps, only digital media. So Uber can enjoy all the benefits of the iOS platform and access to hundreds of millions of people with an Apple ID and not have to pay Apple one cent because they’re not digital media. I can enjoy the convenience of ordering something from the Panera app or GrubHub on my iPhone and Apple doesn’t get a cent. But somehow Spotify is in the wrong for complaining. And when they have a service that Apple directly competes with? What is Apple going to do when they have their own self driving ride sharing service? Are they going to force Uber and Lyft to give them 30% or 15% of every transaction?
Why exactly is it wrong for Apple to ask that anyone who wishes to use their platform to compete directly with them should share in the costs of doing so?
Uber - at least so far - is not competing with Apple for business. So in this case, Uber has a symbiotic relationship with Apple. Apple's device and platform probably helps Uber more than Uber's existence helps bring customers to Apple, but it's symbiotic, nonetheless. Plus, the easiest way to pay for Uber on an iPhone is with Apple Pay. So even though Uber isn't competing with Apple, they're still providing them with a small piece of the action.
Spotify, on the other hand, created a business that competed first with iTunes and later with Apple Music. So how would it be fair for Apple to spend billions in hardware and software development, only to have a competitor spend a tiny fraction to come in after that, create an app that competes with an Apple service, and demand that Apple host what amounts to a parasite for free?
That bank's branch office in the front of your grocery store probably has pretty good lease terms for them to be there. It's mutually beneficial for both businesses. An independent butcher or produce market, however, is probably not going to get the same sweet deal to open up in a similar space. Should the grocer be forced to give floor space or shelf space to a competing vendor and then also be required to process their transactions through the grocery store's cash registers, for free or next to nothing? That hardly makes any sense, does it?
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.
Boohoo.
Spotify clearly did not have a problem with Apple's guidelines when they offered that subscription choice via the App Store. They made that choice and they knew the costs and fees to do so and that was even before Apple changed their policy of lowering fees to 15% after a year.
You can argue all you want about how much Apple takes or whether they deserve that cut or not, but it comes down to the FACT that Spotify MADE THAT DECISION. Just as they made the decision to no longer offer direct sign-up via Apple's platform.
One huge MISLEADING fact you forgot... There are many, many, many more iOS users of Spotify's service who download their app for free. Spotify doesn't pay Apple a thing even though Apple has to support those users just as much as they have to support those 680,000 paying users. The costs balance out.
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.
This is literally how one defines an issue as "moot."
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
But Apple isn’t applying this across all apps, only digital media. So Uber can enjoy all the benefits of the iOS platform and access to hundreds of millions of people with an Apple ID and not have to pay Apple one cent because they’re not digital media. I can enjoy the convenience of ordering something from the Panera app or GrubHub on my iPhone and Apple doesn’t get a cent. But somehow Spotify is in the wrong for complaining. And when they have a service that Apple directly competes with? What is Apple going to do when they have their own self driving ride sharing service? Are they going to force Uber and Lyft to give them 30% or 15% of every transaction?
Why exactly is it wrong for Apple to ask that anyone who wishes to use their platform to compete directly with them should share in the costs of doing so?
Uber - at least so far - is not competing with Apple for business. So in this case, Uber has a symbiotic relationship with Apple. Apple's device and platform probably helps Uber more than Uber's existence helps bring customers to Apple, but it's symbiotic, nonetheless. Plus, the easiest way to pay for Uber on an iPhone is with Apple Pay. So even though Uber isn't competing with Apple, they're still providing them with a small piece of the action.
Spotify, on the other hand, created a business that competed first with iTunes and later with Apple Music. So how would it be fair for Apple to spend billions in hardware and software development, only to have a competitor spend a tiny fraction to come in after that, create an app that competes with an Apple service, and demand that Apple host what amounts to a parasite for free?
That bank's branch office in the front of your grocery store probably has pretty good lease terms for them to be there. It's mutually beneficial for both businesses. An independent butcher or produce market, however, is probably not going to get the same sweet deal to open up in a similar space. Should the grocer be forced to give floor space or shelf space to a competing vendor and then also be required to process their transactions through the grocery store's cash registers, for free or next to nothing? That hardly makes any sense, does it?
So if Apple gets into the ride sharing business they can start taking a cut of Uber and Lyft transactions? Also if Apple deserves a cut of Spotify revenue because they compete with an Apple product/service then why do they allow Spotify to bypass IAP? In fact why does Apple allow so-called reader apps at all? Of course we know why. Apple doesn’t want the anti-trust/App Store policy scrutiny (even though they’re getting it anyway). No doubt if Apple thought it could get away with taking a cut of Uber and Lyft transactions right now it would.
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.
Boohoo.
Spotify clearly did not have a problem with Apple's guidelines when they offered that subscription choice via the App Store. They made that choice and they knew the costs and fees to do so and that was even before Apple changed their policy of lowering fees to 15% after a year.
You can argue all you want about how much Apple takes or whether they deserve that cut or not, but it comes down to the FACT that Spotify MADE THAT DECISION. Just as they made the decision to no longer offer direct sign-up via Apple's platform.
One huge MISLEADING fact you forgot... There are many, many, many more iOS users of Spotify's service who download their app for free. Spotify doesn't pay Apple a thing even though Apple has to support those users just as much as they have to support those 680,000 paying users. The costs balance out.
How is Apple’s support of Spotify users any different than their support of, say, someone who uses the Weather Channel app (also a free app). Apple said 85% of the apps on the App Store are free. Who’s paying to support all those apps?
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.
It's great that you can multiply some numbers. No. They are not paying only for that. They pay Apple for: 1. Users it brought to them. 2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site) 3. Distribution of the updates 4. Development of Swift, Xcode and SDK 5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify 6. For processing the payments, 7. For providing the report on downloads, payments etc. Moreover, they pay apple, because they agreed so, when they brought their app to App Store. And I probably miss something.
Wouldn’t this apply to all kinds of apps not just digital media? If Apple brought users to Spotify they sure as hell brought them to Uber and Lyft (among many other iOS apps). Apple said 85% of apps on the App Store are free. Items 1-5 certainly apply to free apps. Another point: the BOM + R&D for an iPhone isn’t $1,000 (or more). Surely Apple hardware sales subsidize some of the cost of running the App Store. Just like they subsidize the cost of the operating systems, Apple Music and other apps like iWork.
With digital media, the user consumes it on an iOS device and Apple directly controls the user experience on that device. When you pay for a loaf of bread at Panera, using an app on an iPhone, Apple did not supply Panera with the recipe nor ingredients for that loaf of bread. Nor do Apple offer any sort of guarantee that the buyer will get a fresh loaf or not get a loaf with bugs in it. Same with Uber. Apple do not offer any sort of guarantee that the rider will not encounter a traffic jam or the driver will not get involved in a crash with another car, after paying for their share ride with an app.
With the digital media meant to be consumed on an iOS device, Apple guarantees the user experience on that iOS device. Apple keeps iOS devices updated with new iOS's, security updates and add new features (both with hardware and software), whenever possible, on new and older iOS devices. Apple also supply the developers with all the software needed to develop apps for those new iOS's, updates and to take advantage of any new features. Plus offer support. When developers develop for the newest version of iOS, they can be sure that their app will be working on 80% of iOS devices, in a short order of time. (Unlike like developing for any new version of Android.) Apple also offer security and guarantee to the iOS users, that the digital media they get for their devices from the Apple App Store, will work and be virus and malware free. That doesn't always happen, but at least Apple is trying their best and have a decent track record. Apple can only supply this service with digital media purchased from their Apple App Store. Not with any other purchases paid for using an app, on an iOS device.
Plus I would think that the commission Apple collects from paid apps, subsidizes most of the cost of maintaining the app store. Specially for the cost of the 85% of apps that are free. That's the way it should be. And Spotify has two free apps in the Apple App Store. Their app for their ads supported streaming service and their app for their paid subscription service, where the subscribers pays for their subscription outside the App Store. Spotify has paid Apple nothing to have these apps in the Apple App Store and yet, I bet many iOS Spotify paid subscribers, first started listening to Spotify on their iOS devices by using Spotify's free ad supported music streaming service. Spotify essentially got free advertising in the Apple App Store with their free app. Which is the case with many of the free apps in the Apple App Store. They are essentially free advertising for a paid version of an app, being free because they're a "lite" version, trial version, only the first level of a game or a version with ads.
And Spotify still wants to bitch about paying a 15% "Apple tax" on less than 700,000 of their 100M paid subscribers. While tens of millions of iOS users, that are paying for their Spotify subscriptions outside the Apple App Store, enjoy using a free Spotify app on their iOS devices. Not to mention the iOS users that are using the free app for Spotify ad supported music streaming service.
The rule is, if you charged customer x amount of dollars, 15% goes to Apple as fee. Fair and square. Spotify knew it, agreed with it and signed it. Now they acted like a bunch of kiddies.
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.
What is stopping Spotify from making “other things” it can make a profit?
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.
So what if Spotify is making a loss on each subscriber. EK’s cunning plan is to make up for it in volume.
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.
So what if Spotify is making a loss on each subscriber. EK’s cunning plan is to make up for it in volume.
The problem with that plan is...well Apple is slowly eating away at its customer base. It only works until it doesn't anymore.
Comments
No. They are not paying only for that.
They pay Apple for:
1. Users it brought to them.
2. Users who are brought to them now (and who can potentially subscribe to Spotify premium over their web-site)
3. Distribution of the updates
4. Development of Swift, Xcode and SDK
5. Indirectly the cost of lowers for such law suits like this one Apple vs Spotify
6. For processing the payments,
7. For providing the report on downloads, payments etc.
Moreover, they pay apple, because they agreed so, when they brought their app to App Store.
And I probably miss something.
30% cut to Apple was fairly low for selling low volume software on a phone when it was launched. 30% recurring (15% after one year) for large, established services who have have their own signup and payment options - not so much. Competing against them in a market where the margin just isn't 30% makes this an even larger point.
Spotify's problem is that there's something of value that they want, but they're trying to claim that the thing that they want has no value.
Spotify isn't worked up because the App Store is a mere payment system that costs too much to use.
No, Spotify's problem is that the App Store is a platform that gives their service visibility and provides convenience to their customers, and they don't want to have to pay for that.
The solution is simple and has already been implemented. New Spotify customers have to log in to Spotify's website and set up their accounts and payments there. Then Apple hosts their app and certifies that it meets security, compatibility and UI standards for free. When you think about it, that is an incredible bargain already.
They are allowed to have their own payment processing. This is how they got around not paying Apple or their millions of subscribers.
"30% cut to Apple was fairly low for selling low volume software on a phone when it was launched. "
Oh Boo Hoo. 30% is 30 whether it's one customer or 100 million. Maybe Spotify should cancel 90% of their subscriber accounts to fix this issue?
He's from the "Apple is greedy" camp and expects Apple to give everything away.
This an earlier response from an Apple spokesperson:
"Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue"
There is quite a bit in that response which the EU might take issue with if the investigation widens a little.
The fact that no one is allowed to offer competing (store, payment, distribution, etc) on the platform might itself be a platform on which the EU can construct an argument.
The term 'our' customers might not have been the best choice as it has two interpretations. I would have left it out completely.
LOL.
I’ll just go with the more likely path, and assume FUD.
Ireland fought for Apple here, but Apple is paying these retro-back-taxes because they are a good global citizen, despite the constant "tax dodger" claims by "others".
Just like in the US, "Apple is the world's largest tax payer."
As others have said in here, Spotify's business model was built on balsa wood, and in their panic they are suing like some many others.
Uber - at least so far - is not competing with Apple for business. So in this case, Uber has a symbiotic relationship with Apple. Apple's device and platform probably helps Uber more than Uber's existence helps bring customers to Apple, but it's symbiotic, nonetheless. Plus, the easiest way to pay for Uber on an iPhone is with Apple Pay. So even though Uber isn't competing with Apple, they're still providing them with a small piece of the action.
Spotify, on the other hand, created a business that competed first with iTunes and later with Apple Music. So how would it be fair for Apple to spend billions in hardware and software development, only to have a competitor spend a tiny fraction to come in after that, create an app that competes with an Apple service, and demand that Apple host what amounts to a parasite for free?
That bank's branch office in the front of your grocery store probably has pretty good lease terms for them to be there. It's mutually beneficial for both businesses. An independent butcher or produce market, however, is probably not going to get the same sweet deal to open up in a similar space. Should the grocer be forced to give floor space or shelf space to a competing vendor and then also be required to process their transactions through the grocery store's cash registers, for free or next to nothing? That hardly makes any sense, does it?
Boohoo.
Spotify clearly did not have a problem with Apple's guidelines when they offered that subscription choice via the App Store. They made that choice and they knew the costs and fees to do so and that was even before Apple changed their policy of lowering fees to 15% after a year.
You can argue all you want about how much Apple takes or whether they deserve that cut or not, but it comes down to the FACT that Spotify MADE THAT DECISION. Just as they made the decision to no longer offer direct sign-up via Apple's platform.
One huge MISLEADING fact you forgot... There are many, many, many more iOS users of Spotify's service who download their app for free. Spotify doesn't pay Apple a thing even though Apple has to support those users just as much as they have to support those 680,000 paying users. The costs balance out.
With the digital media meant to be consumed on an iOS device, Apple guarantees the user experience on that iOS device. Apple keeps iOS devices updated with new iOS's, security updates and add new features (both with hardware and software), whenever possible, on new and older iOS devices. Apple also supply the developers with all the software needed to develop apps for those new iOS's, updates and to take advantage of any new features. Plus offer support. When developers develop for the newest version of iOS, they can be sure that their app will be working on 80% of iOS devices, in a short order of time. (Unlike like developing for any new version of Android.) Apple also offer security and guarantee to the iOS users, that the digital media they get for their devices from the Apple App Store, will work and be virus and malware free. That doesn't always happen, but at least Apple is trying their best and have a decent track record. Apple can only supply this service with digital media purchased from their Apple App Store. Not with any other purchases paid for using an app, on an iOS device.
Plus I would think that the commission Apple collects from paid apps, subsidizes most of the cost of maintaining the app store. Specially for the cost of the 85% of apps that are free. That's the way it should be. And Spotify has two free apps in the Apple App Store. Their app for their ads supported streaming service and their app for their paid subscription service, where the subscribers pays for their subscription outside the App Store. Spotify has paid Apple nothing to have these apps in the Apple App Store and yet, I bet many iOS Spotify paid subscribers, first started listening to Spotify on their iOS devices by using Spotify's free ad supported music streaming service. Spotify essentially got free advertising in the Apple App Store with their free app. Which is the case with many of the free apps in the Apple App Store. They are essentially free advertising for a paid version of an app, being free because they're a "lite" version, trial version, only the first level of a game or a version with ads.
And Spotify still wants to bitch about paying a 15% "Apple tax" on less than 700,000 of their 100M paid subscribers. While tens of millions of iOS users, that are paying for their Spotify subscriptions outside the Apple App Store, enjoy using a free Spotify app on their iOS devices. Not to mention the iOS users that are using the free app for Spotify ad supported music streaming service.
The rule is, if you charged customer x amount of dollars, 15% goes to Apple as fee. Fair and square. Spotify knew it, agreed with it and signed it. Now they acted like a bunch of kiddies.