Apple believes Spotify wants a free ride, and the EU may just give it to them

AppleInsider · February 22, 2024 10:58PM

Despite evidence that Apple has worked with Spotify and other competitors, Apple appears to expect that the European Commission will rule against the company based on the music competition probe.

Spotify

The European Commission has been investigating Apple and how it handles competing developers like Spotify. The probe could result in a 500 million euro fine and additional regulation on how Apple handles business with its products and the App Store.

According to information provided to AppleInsider by Apple, the company is concerned that the European Commission (EC) will rule in Spotify's favor and give it even greater control of the streaming market. After a decade of investigations, Apple claims the EC has failed to find anything proving Apple has caused consumer harm or anti-competitive behavior.

Spotify pays Apple zero commission thanks to its reader app status and has access to many Apple technologies for the price of a $100 per year developer fee. Its apps work with thousands of Apple-provided APIs over 60 frameworks.

Despite that, Spotify wants even more control on iOS to increase its profits even more. The latest attempt for Spotify to get a favorable EC ruling relies on targeting Apple's anti-circumvention rules.

Apple provided a statement to AppleInsider on the matter:

"We're happy to support the success of all developers -- including Spotify, which is the largest music streaming app in the world. Spotify pays Apple nothing for the services that have helped them build, update, and share their app with Apple users in 160 countries spanning the globe. Fundamentally, their complaint is about trying to get limitless access to all of Apple's tools without paying anything for the value Apple provides."

The push from Spotify since 2013 is unprecedented, having met with the EC at least 65 times. Its arguments paint itself as an underdog, but the numbers show otherwise.

Apple Music occupies only 11% of the streaming market in the EU, while Spotify dominates at 56%. Apple is the fourth most popular streamer after Spotify, Amazon Music, and YouTube Music.

Apple believes there isn't any evidence of anti-competitive behavior or consumer harm. Consumers have plenty of choices, and the streaming market is thriving.

Another argument that's being made is that customers don't know how to subscribe to music services outside of an app. This argument doesn't seem to hold any weight as Spotify grew over the past decade, even before Apple introduced new App Store rules.

Spotify can directly email customers with offers for premium plans and does so. The company so far hasn't taken advantage of the in-app link to external subscriptions, but it is considered a reader app, so account creation and subscription can take place outside of the iPhone app.

No judgment from the EC has been made yet, but clearly, Apple expects a ruling in Spotify's favor. What this means for Apple's existing business model remains in question.

Read on AppleInsider

chasm · February 22, 2024 11:18PM

It’s worth noting that despite its huge majority share and subscriber base, Spotify has only recently started reporting (sometimes) profitable quarters. After some 18 years in business, and a decade as the streaming service leader.

It should also be mentioned that Spotify’s royalty rate is really, really low. Apple Music, by comparison, pays around 2.5x what Spotify pays, and that was before Apple’s recent carrot-dangling of even higher royalties if artists record or remaster in Spatial Audio/Dolby Atmos.

Then throw in their absolute indignation at giving Apple $100/year in developer fees, which is the only money Apple apple earns from them. I happen to live in the same city as one of the execs of Spotify, and I’ll just say they live a billionaire lifestyle while their investors get little and their artists (inventory) gets even less.

So if you’re wondering where the bulk of the money goes, the answer is “not where it should.”

tmay · February 23, 2024 7:35AM

Good time to post this about Spotify changes in terms on Audiobooks;

https://storyfair.net/spotify-modifies-terms-for-audiobook-rightsholders/

[Tucson AZ, Feb 15, 2024] A recent, significant change in Spotify’s terms for audiobook publishers and rightsholders allows Spotify to “reproduce, make available, perform and display, translate, modify, [and] create derivative works from” audiobooks. (Shout out to StoryFair author Amy Shojai for bringing this to our attention).

Appears as those changes are not in the best interest of publishers, authors, or human narrators, but that continues a tradition of Spotify taking advantage of rights holders.

lam92103 · February 23, 2024 12:08PM

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

kmarei · February 23, 2024 4:49PM

"Spotify wants even more control on iOS to increase its profits even more"

isn't that the aim of every single company on the iOS app store?

avs_htx · February 23, 2024 4:59PM

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

Not entirely true on your first line. You, as a consumer always licenses a software based on the terms the company set. This is same as any computing device ever made. You do not own it....just license to use based on how they designed.

chasm · February 23, 2024 8:45PM

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

“All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, a fresh water system, and public health, what have the Romans ever done for us?”

You mean apart from creating a development environment for apps, creating the first modern smartphone, creating the whole idea of an app marketplace in the first place, creating said worldwide marketplace and ecosystem to support the apps, literally thousands of APIs that allow for apps to be built easily, enhancing audio codecs to allow Spotify and others to sound their best, building audio headsets that combine Spotify’s product with intelligent management to allow for seamless daily interaction, allowing Spotify to be the default music app on Apple hardware products if users desire, promoting the use of Dolby Atmos which will eventually benefit Spotify (when they get around to moving beyond “stereo”), creating a very easy subscription management system that makes it as easy to cancel as it is to sign up (that part Spotify wants NO part of), a seamless central app delivery system, and supporting the underlying infrastructure of the internet that makes it all work?

Yeah, not much.

rorschachai · February 23, 2024 10:39PM

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

For $100 a year, Spotify gets:

- Access to hundreds of frameworks across seven platforms which are tested and updated with new features regularly
- Unlimited hosting and bandwidth
- A professional IDE plus dozens of other developer tools

Maintaining and developing all that isn’t cheap. The $100/year is subsidized by revenue from in-app purchases. If Apple stopped taking a cut there, they would almost certainly raise the annual fee significantly or charge per-download or per-MB/GB for bandwidth.

9secondkox2 · February 24, 2024 1:40AM

Big fan of Spotify.

Love that they are a bit more pro freedom of speech and they seem to do the music streaming thing more apple-like than apple does.

But in this case, apple is right. Spotify is just getting greedy and feeling uppity since they have a couple more big companies trying to see apple hurt and take advantage. But they know apple is in the right. You’re using their platform. Pay them what you owe and go home.

nubus · February 24, 2024 7:23AM

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Indeed! If Apple is right about this, then why is there no enforced 30% Apple Tax on Mac developers? Is Apple saying that macOS is worth nothing to developers? If Apple want even more from us, then first step is durable alternatives to their vegan covers. But this... is some very non-vegan output from Cupertino.

davidw · February 24, 2024 3:40PM

nubus said:

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Indeed! If Apple is right about this, then why is there no enforced 30% Apple Tax on Mac developers? Is Apple saying that macOS is worth nothing to developers? If Apple want even more from us, then first step is durable alternatives to their vegan covers. But this... is some very non-vegan output from Cupertino.

Apple do indeed collect a commission on purchased apps and from IAP from apps, that are downloaded from the macOS App Store (on a Mac). And for many Mac developers, it's worth paying the 15/30% commission to be in the macOS App Store. Not every developer have the resources to take online credit card payments or to host a website that potential customers trust from which apps can be securely downloaded or even maintain a secure website at all. And then also have to keep financial records of their customers purchases, along with keeping track of all the sales tax (or VAT) that must be collect and remitted to the various governments. By having their apps in the macOS App Store, all they would need to do is develop their apps with Xcode, have it meet Apple App Store policies and Apple will list in it the macOS App Store, where Mac users can find and download it. Apple will keep the record of customer purchases and collect and remit the sale tax or VAT. Most small app developers will only be paying the 15% rate. And if they're paying 30%, then that means they are making over $1M (a year) with their app(s) in the macOS App Store and shouldn't be complaining at all about the commission. Unless you're like the greedy asshole CEO of Spotify or Epic Games.

One must also consider that there are more than one way to develop for macOS (OSX) other than getting an Apple developer account and using Swift/Xcode. And one do not need to use the macOS App Store to get an app installed on to a Mac. OSX dates back to the 80's when it was develop by Next,15 years before the release of Xcode (in 2003). On the other hand, the only way to develop for iOS is to use Swift/Xcode and one need to have a paid Apple developer account in order to get the app installed on iOS.

It's really no different than comparing Microsoft Windows and Microsoft Xbox platform. Microsoft collect their 30% from developers developing games for the Microsoft Store on the Xbox but only collect a 15% commission for Windows apps in the Microsoft Store on PC's. But also don't collect any commission for apps that are not installed through the Microsoft Store on PC's. Microsoft lowered their 30% commission to 15%, in order to compete with the 12% commission with the Epic Game Store only in the Microsoft Store on PC's.

https://www.protocol.com/bulletins/microsoft-store-commission-cut

You know, Apple is not only not forcing you to use Apple devices, they also are not forcing you to buy cases for Apple devices made by Apple (if you choose to use an Apple device). There are over a dozen makers of "non-vegan" cases for Apple devices, that you can choose from.

kmarei · February 24, 2024 3:53PM

avs_htx said:

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

Not entirely true on your first line. You, as a consumer always licenses a software based on the terms the company set. This is same as any computing device ever made. You do not own it....just license to use based on how they designed.

i wonder how that goes for a second hand device?
if i buy a used iphone 15, i did not go into an agreement/contract with apple since i did not buy it from them, nor were those terms relayed to me at time of purchase

libertyandfree · February 24, 2024 4:58PM

kmarei said:

avs_htx said:

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

Not entirely true on your first line. You, as a consumer always licenses a software based on the terms the company set. This is same as any computing device ever made. You do not own it....just license to use based on how they designed.

i wonder how that goes for a second hand device?
if i buy a used iphone 15, i did not go into an agreement/contract with apple since i did not buy it from them, nor were those terms relayed to me at time of purchase

I don’t know the legal terms on your initial purchase say if they are implicitly transferred to you but any future software updates have the same or similar terms and conditions.

danox · February 24, 2024 5:14PM

kmarei said:

avs_htx said:

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

Not entirely true on your first line. You, as a consumer always licenses a software based on the terms the company set. This is same as any computing device ever made. You do not own it....just license to use based on how they designed.

i wonder how that goes for a second hand device?
if i buy a used iphone 15, i did not go into an agreement/contract with apple since i did not buy it from them, nor were those terms relayed to me at time of purchase

When you download the OS software upgrade the terms and agreement is put right before you before you download? You can't get out of it.

spheric · February 24, 2024 6:06PM

kmarei said:

avs_htx said:

lam92103 said:

Free ride? I have paid for my device. That comes with both the hardware and the software. What exactly is Apple doing here for Spotify?

The only one excuse they have is the AppStore, but then allow people to move off it.

Now this would mean a more fragmented app landscape, and possibly a less secure one, but when the execs at Apple can’t see past their greed, there is not much option left.

The sane option here would be to let people pay for in-app purchases without asking for a cut.

They can still make money off App Purchases, which is the model most small developers use.

Not entirely true on your first line. You, as a consumer always licenses a software based on the terms the company set. This is same as any computing device ever made. You do not own it....just license to use based on how they designed.

i wonder how that goes for a second hand device?
if i buy a used iphone 15, i did not go into an agreement/contract with apple since i did not buy it from them, nor were those terms relayed to me at time of purchase

The license is bound to use on that device.

paisleydisco · February 24, 2024 7:07PM

"customers don't know how to subscribe to music services outside of an app"

outside of these tech forums, most people -- probably 90% and above LOL -- are really really really tech dumb af.

I mean really really dumb.

Did I mention really dumb?

socalrey · February 24, 2024 8:25PM

paisleydisco said:

"customers don't know how to subscribe to music services outside of an app"

outside of these tech forums, most people -- probably 90% and above LOL -- are really really really tech dumb af.

I mean really really dumb.

Did I mention really dumb?

In my experience, as someone who helps everyone I know with their Apple devices (they have all put an “i” in front of my name lol), I also find this to be the case. Most people not only know nothing about any of this, but they just don’t care. Not because they aren’t smart enough or savvy enough to understand, but because all they care about is that their phone works. Where the money goes? Nuances of security? Spats between this company and that company? If I bring it up I’m just a nerd or a fan boy or whatever else. But as these outside companies start making more and more cracks in the walls of Apple’s garden and sh*t starts ‘breaking’ or they get spoofed by some weird side loaded app, you better believe that’s when they will come running and ask me to fix it. And that’s when I will say to just stay in the walled garden. It’s called a garden for a reason!

jimh2 · February 24, 2024 9:02PM

Spotify is going to pay one way or another. They better take the download fee and move on. Next move might be API access rights. It is important to note that Spotlight owns nothing other than their source code which is dependent on Apple's API's.

avon b7 · February 24, 2024 9:08PM

I wonder if their service is the kind that might be able to leverage something like the GSMA's Open Gateway.

I hear that this week's MWC2024 will have a big focus on that.

jellyapple · February 24, 2024 9:46PM

Apple Music apps have made access to users’ owned music collections difficult after Apple introduced Online Music subscription. Every day is an iTunes Remembrance Day.

9secondkox2 · February 25, 2024 8:22AM

tmay said:

Good time to post this about Spotify changes in terms on Audiobooks;

https://storyfair.net/spotify-modifies-terms-for-audiobook-rightsholders/

[Tucson AZ, Feb 15, 2024] A recent, significant change in Spotify’s terms for audiobook publishers and rightsholders allows Spotify to “reproduce, make available, perform and display, translate, modify, [and] create derivative works from” audiobooks. (Shout out to StoryFair author Amy Shojai for bringing this to our attention).
Appears as those changes are not in the best interest of publishers, authors, or human narrators, but that continues a tradition of Spotify taking advantage of rights holders.

Whoa. That's as bad as Amazon is with author/publisher book prices, sales, etc. Shame on Spotify.

Apple believes Spotify wants a free ride, and the EU may just give it to them

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