Spotify, which is widely believed to be behind the antitrust allegations that led to both EC and DOJ investigations into Apple, has now added a fresh complaint. The Verge reports Spotify is complaining that the 30% cut Apple takes from in-app Premium subscriptions in the iOS app amounts to an “Apple tax.”
Apple charges a 30 percent fee toward any sales through its App Store, and that includes subscription services. That means if Spotify wants to sell its premium subscription service — which usually costs $9.99 a month — through the App Store, it has to raise the price 30 percent higher to $12.99 to pull in the same revenue, while Apple can still offer Beats at a lower price. Spotify and many others in the music industry believe Apple’s App Store tax gives them an unfair advantage over the competition.
One unnamed music industry source said that Apple taking 30% was “**cking bullsh**” …
Spotify Premium normally costs $9.99/month, and if you sign up via the web at that price, you can use your Premium subscription in the iOS app. But if you download the app, use the free tier and then buy a Premium subscription via an in-app purchase, it costs $12.99 – and App Store guidelines mean the app can’t point you to the web instead.
The allegations leading to the EC and DOJ investigations are that Apple has been engaging in anti-competitive behavior by pressuring music labels into dropping support for free, ad-supported streaming services like Spotify and YouTube. If true, this would suggest Apple is trying to reduce competition in the market from free services in order to make its rebranded Beats Music service more appealing.
Apple had reportedly hoped to offer its own service for $5/month, but was unable to secure the necessary deals from music labels. A revised attempt at hitting $7.99/month also reportedly failed for the same reason, even though Google Play offered initial All Access Signups for a $7.99 locked in.
Apple is expected to formally announce its streaming music at WWDC as part of an iOS 8.4 update that will see it integrated into the existing Music app, with access on Macs via an iTunes update. There is some doubt as to whether the service will actually launch at the point at which it is announced.
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Spotify, make your OWN smartphone with OWN OS and then you can talk. I see Spotify only crying as a little child.
Yep – We want to swim in your pool but we don’t want to have to pay you do so. This is crap. I don’t understand how so many companies want to play in Apples garden and have access to Apples millions of customers, but don’t want to pay for it.
Exactly what I thought. Apple’s response to this should be: You don’t agree with what we charge, easy: remove your app for our ecosystem and go f*** yourself.
Are all Apple fanboys so salty?
They don’t even need to make their own ecosystem.
If they don’t want to pay for apples 30% cut, they just have to don’t use AppStore’s payment system, and redirect users to a payment system using Safari, for example.
This is actually exactly what they cannot do, if an app is offered in the app store then payment must be made through the app store with very specific guidelines, they cannot redirect to safari.
They could, however, not have an app and just make a safari-based player to avoid the app store altogether.
@duepeak07 – Actually, the only thing they can not do is put a link to sign up in Safari. They can, and some do, absolutely have the app available as free, and a note to visit their web site to sign up.
Yes they can, they can even make the payment in-app if they want.
Amazon, PayPal, eBay, etc. they all do exactly that.
What they can’t use, is Apple’s iTunes/AppStore infrastructure for free.
Amazon can’t sell Kindle books through their iOS app and bypass Apple’s payment system. It depends on what is being sold.
rnc, all those apps you mentioned are for making payments for/purchases of things unrelated to the app itself. That’s fine. However, that’s not allowed for any content or service provided in-app. So Amazon can sell you a physical book to be shipped to you in their app, but they can’t sell you music, movies, ebooks, or anything that you consume inside their apps.
And while your at it Spotify why not start making your own music and stop creaming it of the actual artists.
So you guys would rather pay 12.99 for Spotify then 9.99 for Beats? This is a valid complaint. Bravo Spotify. They’re simply saying that its not fair play. Apps like Spotify are what make iOS so great. If y’all wanted just Apple apps your phones would be lame
Then they should charge 6.99 for the music service (so it gets to 9.99 total). Period. Funny how Apple has to offer their platform for free, but they can go lower en their price? C’mon.
You can buy your spotify for 9.99 and use it on iOS.
Nice try
Here’s the problem Spotify and Tidal have. Apple doesn’t have iTunes to make a large amount of profits, nor does Apple solely rely on iTunes for revenues and profits. They want 30% because they have the cost of content delivery because they have (or at least did have Akamai) performing the content delivery and Akamai charges per song/app/movie or file based on size downloaded and those costs aren’t cheap, so out of the 30%, Apple pays out a large percentage of that 30% to Akamai, another percentage towards overhead of hiring people for the iTunes legal department, s/w development, support costs, etc. and after it’s all said and done, Apple retains only about 5% Net Profits. So it wasn’t designed to be a huge money maker, they originally had iTunes more of a courtesy service to their iPod (and other devices) products as a means to help drive people to pay for content rather than stealing it from the now defunct Napster, Kazaa, and other sharing sites that were illegally sharing content.
With Spotify, Tidal, etc., they don’t sell hardware/support contracts and they don’t rely on the profits from hardware sales. All they have are these subscription services as a means for revenues and profits and so far none of them make any Net Profits. Spotify loses money, Tidal loses money, etc. The only company actually turning a profit is Apple, but the majority of the profits is based on hardware, services sales rather than content sales. 30% Gross Profits is a REASONABLE amount for that type of sale as it’s very similar to what a retail brick and mortar store would need to get to stay open.
Yeah now I hope Apple destroys Spotify.
Exactly my thoughts! Spotify is shaking in their boots on the Apple’s streaming service roll-out. I saw there was an analysis done, where Spotify was the biggest looser of subscribers once Apple’s service is launched. I am hoping Apple will price this service specially for iTunes Match subscribers.
Agreed. If Apple were varying the rate for different app providers or raising the rate as it increased in popularity Spotify could have a point but since night prof those have happened I doubt they can make a compelling argument.
Apple is using that tax to get their music service more clients and take them away from spotify. This breaks the rules of free market and it basicly Apple trying to create a monopoly
So whoever makes / owns the smartphone and OS should be allowed to pressure and influence industry players just because they made the device? That’s going way too far. Yeah, they can have the guidelines and reject apps, but why do they have to pressure their partners to drop support for spotify and YouTube? That’s not right.
Let’s not mix one rumor with another.
Well the thing is they own the store where you get the app so they have to pay for servers, etc. to allow people to download the app millions of times. It’s like if Apple was a clothing store and a brand wanted to sell in their store but keep all the profits of their clothing store but people wouldn’t be able to buy the clothes if the infrastructure didn’t exist
If Spotify wants to make the same revenue as Apple, then they need to create more than just a music provider
how does this fees work at android,windows and blackberry 10?
Microsoft and Google take the same 30% cut.
But they also offer other ways of paying in-app which Apple doesn’t. Honestly I think this just shows Spotify is scared sh*tless of whatever Apple is working on. Nobody is forced to offer in-app purchases. Spotify could just disable it and have people sign up for subscription via their website. That’s how it works for Amazon and B&N e-books.
yup. You are absolutely correct. 30% markup is kind of a standard thing and it’s enough for them to break even or make a little profit after they factor in their overhead/taxes for that division. Spotify and Tidal just have their own problems because they don’t have other revenue sources.
Rogifan, Apple has other in-app revenue streams. People can actually buy the song/album if they want to.
Then shut the **uck up spotify,! They’re just scared of new Apple’s streaming service. They’re acting like if they were a victim.
Not sure if it’s Spotify och The Verge who can’t do math, but Apple charges 30 % from the total, so Spotify would only end up with $9.09 (which is 70 % of $12.99). They would need to charge $14.27 to land on $9.99 after the 30 % fee.
Thats because Spotify knows good and dang well nobody is going to pay 14.27 so Spotify chose 12.99 at a loss as it is still a psychologically acceptable price point.
Or Spotify can’t do math.
I don’t understand. If you sign up on the web site its the same price. If you don’t then who loses out? If you are happy paying extra, more fool you. Spotify still make their money.
I agree Steve. Anyone too lazy to get their subscription on the web and then use the app on their iPhone is not paying the Apple Tax, they are paying the stupid tax.
I think most people are missing the point of the argument that they are making. You can’t attempt to force a company (assuming the rumor is true) to get rid of the free tier, then charge that same company a 30% cut if they have people subscribe via the app. It forces Spotify (or any company) to either raise prices to continue making money or lower prices to be competitive with Apple and lose a great deal of money. And since Apple does not allow for redirects to bypass, it starts to become an unfair advantage for Apple.
You are completely wrong.
1. Apple isn’t forcing spotify to get rid of the free tier. Apple is making better $$$ deals to labels who don’t offer their music for free.
2. Apple isn’t fording spotify to pay 30% more, Spotify doesn’t have to use apple’s IAP system, in fact, they don’t use, you can buy spotify premium for 9.99 and use their service in iOS app.
3. Apple surely does allow redirect and in app purchase in systems other than apple’s, for example: Amazon, eBay, PayPal app, AliExpress, etc. etc. etc. what Spotify wants, is access to the convenience of Apple’s payment system, where the users already have their credit cards installed, their billing information, it’s already proven secure, everything worked out, taxed out, and insurances are paid too… and they want all that FOR FREE! Apple is not a non-profit organization, and America isn’t a communist state.
On point #1: Dwayne McDougle’s wording is a little flawed. According to the allegations, yes, Apple isn’t forcing Spotify to get rid of the ad-supported service, rather they are trying to strong-arm labels into pulling their music from the service. If true, that’s both anti-competitive and anti-consumer and IMO it’s no better than going ahead and trying to force Spotify to kill is ad-supported service to make Apple own paid service more attractive.
I know more than a few people who would be pissed if that happened, too.
On point 3…I dont know for certain but I dont think any of those Apps are offering subscription recurring payments that can be bought through the app. This policy by Apple relates to recurring subscription services not general item purchases linked back to CCs on file like eBay or StubHub offer.
You are correct on points 1 & 2. However you cannot redirect a subscription to Safari on an iOS app. You also must use Apple’s system if you are offering in app purchases. Amazon allows you to purchase items using their own system. But you cannot sign up for Prime or sign up for HBO Now without giving Apple their 30%.
Today I paid my phone bill through a carrier app.
I did not use safari or a web view, I entered my credit card details on the app, and I paid.
Did Apple get 30%? No!
Any developer can do what they want.
They just can’t use apple’s IAP system without paying Apple.
“That said, don’t forget the real winner here, as in most things happening on its platform: Apple. Its 30% revenue share of any subscription payments made to other streaming services through its platform is not only a quietly-growing income for the company, but also important data to help it decide when the time is right to make its next move into streaming.
And, of course, it has first-hand data from Beats Music now too. Pandora and Spotify may be making good money from in-app purchases on iOS, but they’re also helping Apple to refine its future iTunes strategy.”
http://musically.com/2014/09/25/app-purchases-proving-lucrative-spotify-pandora/
@camerons – if this goes anywhere, Apple should demand to know what percentage of Spotify subscribers are via IAP vs direct. Of that, how many are Apple/iOS device users. Spotify must have this, and I bet it is lower than we think.
It’s all very funny when they have nerve to say such things about the platform that IS THEIR EXISTENCE. No iOS, no spotifly.
Exactly. All that app ecosystem infrastructure needs to be paid for somehow, hence everyone pays 30%.
WTH are you talking about? Spotify existed long before the Spotify App (or App Store) ever came to be…..must worship Apple!
Didn’t they both come about in 2008?
Spotify was founded in 2006
Ignorance shown once again by PMZanetti. You are the worst.
“One unnamed music industry source said that Apple taking 30% was “**cking bullsh**” …”
Is this source trying to say Apple does not take 30% or that 30% being taken is dirty by Apple. Because I am not sure which they are implying.
He’s saying it’s too high.
Don’t the other two major platforms charge the same 30%?
I find this incredibly annoying. Apple is on the hook for refunds for in-app purchases, as well as acting as the payment gateway, AND putting the entire mobile platform into people’s hands.
And Spotify are bitching that their users need to sign up on their website, and that apple won’t just hand them everything on a silver platter.
I really don’t understand why they think it’s so hard for users to just sign up on their site. If their service is more attractive than Beats, people will gladly sign up off-device, and just login with their username and password.
Want to make it even easier? Create a token system and a QR auth code. Waaa, waaa, waaaa…..Spotify didn’t mind getting into bed with Facebook, to save money on an analytics platform. Now they want to offload credit card processing too.
Apple always said that every vendor can invoice on their own website and every website can have a shortcut icon on the iPhone. In other words, no vendor is required to go through the app store. What makes Apple different from Amazon or Best Buy? They are retailers and they will take a percentage of every sale if you want to sell within their stores. I can listen to Pandora on my PC by going to the website.
“My two Pennies worth”
What a crock of $)$(*.. No one that has a subscription service knows what their mark up is. Why? Because when someone signs up for the service, they could listen to 100000 songs/plays a month, and someone else could listen to only 5000 songs/plays a month. So they don’t know what their mark up is. That’s why no one makes any Net Profits. According to the way they currently do it, they get charged a fee per song played. Instead of paying a flat rate per subscriber. With downloads or rental, they pay a certain amount and they charge 30% above that amount.
I was reading about the difference in Netflix and they pay a flat rate, not a per play rate, which is probably why Netflix actually makes a profit, even though it’s a small profit.
I honestly don’t know how any of these streaming services are going to make any net profits unless they do a cost average and get enough subscribers to pass that breakeven point.
For anyone supporting Apple on this, you’re cutting your nose off to spite your face. Why don’t you want competition? It’s bad for corporations, but great for consumers. You make zero sense.
Because 9to5mac is filled with people that will eat up any thing Apple spews and will kill their own children if they dare besmirch their god (Apple).
So 30% of $10 is too much to ask when Apple has spent BILLIONS over the last 11 years to create and maintain their incredibly successful platform? Why is Spotify just complaining NOW? Why have other developers profited big time from this platform, but Spotify is complaining?
You can try and make Apple the bad guy here, but they are charging the same 30% that they’ve been charging since the AppStore debuted. They have paid out billions of dollars to developers.
But yeah, Spotify should be exempt…come on.
Spotify is complaining because now Apple is getting in the market that they are in, and Apple is forcing them to sell at a higher cost while Apple is allowed to sell at a lower cost.
Apple isn’t “forcing” them to do anything. They’ve charging the same 30% since the AppStore came out. Apple can sell at whatever cost they want because THEY CREATED THE PLATFORM. They spent billions of dollars to create it that Spotify DIDN’T have to pay.
If you replaced this with any other company, especially Microsoft or Google, and everyone on this site would be up in arms.
Those companies DO take 30% of the apps in their store. They are more liberal when it comes to in-app purchases for subscriptions, definitely. But they DO take 30% of all app purchases. Also their platforms don’t make nearly as much money.
there’s no argument here. there’s an google play star that has a bigger market share than apple. impossible to argue monopoly here.
You may be the first person is these comments to make sense.
The long and the short of it, Spotify wants to enjoy the Apple marketplace without paying rent. It the local mall opened its own store within the mall, would other tenants have a foundation to complain that the mall had an unfair advantage? I don’t think so. Sure, Spotify makes less money (or raises their prices). Too bad, so sad for them. What if Apple wanted to give away streaming music for free and eat the cost? Would Spotify claim that wasn’t fair? Spotify is just wanting protection from good ol’ American capitalism.
Remember how it used to be that subscription fees outside the App Store needed to be the same as those within the app? That was to keep companies from charging a 30% premium. Hulu and MLB do not charge a premium. Those fees are likely offset by less overhead on their end, along with be able to sign up new customers within the app.
I didn’t think of it that way…how come the rules changed? I still think 30% is way too high and they should allow them to buy their own subscription and not be forced to use the AppStore.
People — this is all very simple. Let’s say Amazon’s cut of products sold was 30% (it’s lower, but that’s beside the point). Duracell and Energizer decide they want to start selling batteries on Amazon. So they do. But then Amazon decides they want to make their own batteries (or have a deal with someone to brand their own batteries….same thing) and sell those on their own website.
Duracell then decides to complain to the government that they should no longer have to pay Amazon a fee for the ability to sell batteries on Amazon’s website since Amazon doesn’t have to charge the same 30% premium to make the same margins on THEIR OWN batteries. Whether Amazon is online or whether you replace Amazon with a brick and mortar store (like RadioShack…which had its own battery brand), the point is the SAME. What part of “Duracell’s complaint” isn’t SO wrong? Now stores that want to create their own brand must let others compete for no fee in their space, providing them with a location to sell or with store shelf space, etc., without being paid for it…just because they started selling a similar product? THAT is BS.
I bet, technicality, Apple DOES collect 30% of the IAP for Beats. In its accounting, it moves from one ledger line to another.
Also, replace batteries in your example and replace it with HDMI cables, and that happens now.
There are plenty of apps not in the App Store, like Pathfinder, Android Studio, Intellij Idea… if they don’t like it, stop whining.
Hell you know what, why do I have to pay spotify to use their app without ads on iPhone? I’m sick of paying a Spotify tax to not be nagged to death. Optionally: Spotify can make their own phone, AppStore eco system, massive support NOC with fault tolerance, scrubbed power, and security all in a disaster free patch of land…
TAX: a compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services, and transactions.
You people are crazy. You will blindly attack anything not praising Apple no matter how wrong Apple is.
Interesting that out of 48 posts not a single person has mentioned the artist in this thread
Considering Apple has sold 1 billion iOS devices to date…I don’t think 30% is too much. Spotify is showing signs of someone that is scared. All they need to do is continue to make cool stuff and find out what is the next step in music streaming.
Ok. This is truly me being pedantic but they say:
>>it has to raise the price 30 percent higher to $12.99 to pull in the same revenue
That is NOT how math works. If apply takes 30%, they have to raise their price 42.8%. If they raise the price to $12.99, they only take home $9.09
Thats because Spotify knows good and dang well nobody is going to pay 14.27 so Spotify chose 12.99 at a loss as it is still a psychologically acceptable price point.
When I first saw this I was like well what’s the issue here — it’s apples store if you don’t like their guidelines, just offer your subscription through the web…turns out they can’t — if it’s an in app purchase it has to be made through the AppStore according to apples guidelines. Sorry, that is going a bit too far IMHO. This is the reason why I don’t think devices should be locked down and sandboxed because someone somewhere gets a bit too protective..
Agreed. It’s a huge, open market with loads of competing services. Is Spotify scared? Absolutely. More high profile competition may eat into their profits. And if Microsoft and Google were to get serious, then they’d really go nuts.
If Apple can charge a large “tax”, many more can come in and charge less for the same or better service and make a killing. But they’d have to compete, undercut, and otherwise try harder at the negotiation table and with technology. A 1% savings is not seriously competing. You need to undercut by 10 – 20%.
Apple is a huge brand that is hard to beat, but not impossible. Heck, we have all heard of Spotify. That’s pretty good right there.
It’s hard to say that Apple controls the platform and therefore makes the rules. There are many sucessful services on iOS and other platforms, and lots of ways to buy and listen to music.
This isn’t interesting.
Spotify if full of bull, and just can’t stand competition apparently. Whaaaaa…..whaaaaa… cry like a baby Spotify. The end is near for you.
Holy shit, you’re dumb.
Honestly streaming music is just about convenience. There is no emotional connection with the crappy tracks that an algorithm selects, vs. the human touch. The average Joe will be fine with it, but true music connoisseurs will still download music of their liking, regardless of the platform or application.
If I’m listening to a drum n bass track, I don’t want some ridiculous dubstep or house track coming on next… It will singlehandedly drive me away from the service. (FYI, I don’t work out. I’m not a “douchy gym guy,” just an old school raver)
I’ve used Spotify in the past, it has a great UI, and loads of music, but it’s redundant in my opinion. It’s setup like iTunes, so I just don’t see the point in it. Now that Apple has announced Apple Music, it’s just easier to consolidate my bills and pay Apple in one bill, vs multiple charges for ancillary services every month?
Spotify can complain all they want, but when you’re taking on the most powerful company in the world, you have to know when you’re beat. Yes I am part of the Apple ecosystem, but that’s not a homer talking, that’s simple human logic.
Remember, streaming music is just about convenience.