
Apple responds to Spotify with words, but no real answers - J253
https://char.gd/recharged/daily/apple-responds-with-nothing
======
feross
Apple:

> Underneath the rhetoric, Spotify’s aim is to make more money off others’
> work. And it’s not just the App Store that they’re trying to squeeze — it’s
> also artists, musicians and songwriters.

OP:

> Apple saying that it's "trying to make money of others' work" while ignoring
> that the App Store is doing exactly that on an unprecedented scale by
> restricting choice is truly ironic.

~~~
macawfish
Not just the app store but Apple's music store as well!

------
h3ckr
Apple is pretty much saying “I own all the rails and it’s ok for me to compete
with the transport companies that use them”. This might not be ok in EU, but
US doesn’t give a sh*t. No matter how much developers, songwriters, consumers,
etc get screwed by some greedy corporations. $1000 is not enough for a phone,
we still need to pay 30% of all the apps we’re using... It’s a crazy world.

~~~
chillacy
Then don’t buy an iPhone?

~~~
h3ckr
That’s how ended up with Comcast...

~~~
chillacy
Comcast has a natural monopoly given by the government to do last-mile
internet, that's why they get to be the sole provider, Apple has no such
monopoly, that's why you get to choose.

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sjwright
The App Store is a voluntary system for all developers. Nobody is forced to
write apps for the iPhone—and Apple did put a lot of work into making the
ecosystem work very well for developers. Whether they deserve exactly 30% of
revenues is a valid debate, but there is no doubt that Apple's efforts adds
value to the market.

What has Spotify done for anyone? What is so genius about saying "hey, you can
have this really cheap product because we've somehow convinced our suppliers
to sell us the product for next to nothing!"

~~~
chillwaves
Negotiating product for next to nothing seems like an attractive offer to
whoever their customers are.

Spotify is much better than any of their competition.

~~~
sjwright
So then what's the problem? They have a cheaper supply chain, they have
(according to you) a better product and their biggest competitor isn't
attempting to undercut them. And the vast majority of their revenue isn't
filtered through Apple's 30%. They've got nothing to complain about.

------
freedomben
Apple's official response (direct link):
[https://www.apple.com/newsroom/2019/03/addressing-
spotifys-c...](https://www.apple.com/newsroom/2019/03/addressing-spotifys-
claims/)

------
Benjammer
This seems like an overly emotional interpretation of things, written in an
intentionally aggressive style.

Are there any lawyers here who can actually make an interpretation of the
situation free of emotion and PR speak? I still don't understand the
fundamental basis for why Apple is legally obligated to "play fair" on the App
Store. Reasons I've heard that don't make sense to me include:

\- XYZ, inc. made a business on the App Store, so XYZ should be free to pay a
cut to Apple that is intuitively "fair" in some vague sense, simply because
their entire business is on the App Store.

\- 30% just sounds intuitively too much, so they aren't playing fair

\- 30% is higher than other, vaguely related platforms charge for vaguely
related services, so that means it's unfair simply because the number is
higher

\- Apple also makes apps that sell the same types of subscriptions, so Apple
should be fixing prices of competing services at a point where...? Spotify can
make a profit? Consumers are just always charged the same amount for any
"music app" from any competing company? This seems to be the one that a lot of
people hang their hat on as the nuanced way to look at it.

"No, but it's about the _competing product_ they offer, they _undercut_
Spotify's price." etc.

But, undercut what? Spotify's price point relative to their current business
model? I don't understand the argument here. Spotify is another business.
We're not talking about some minimum wage thing for a person where you have a
moral imperative to keep the price above a certain point, inherently.

I don't understand why any legal system should be forced to take Spotify's
current business model as the peak optimal one possible, and then say that
they couldn't possibly lower their price to match Apple's competing service
without irreparable harm to their business. Why does any of this matter,
legally? Companies make money, industries grow and fade, niches pop in and out
of existence as paradigms shift, business cycles up and down. What are the
laws that mean Apple must be civil with Spotify here?

~~~
judge2020
The main issue is that Apple doesn't allow you to use any other payment method
- even via linking to a website - to use in-app purchases.

Take this analogy: Apple is a city and has exclusive say over whether or not
you can build a brick-and-mortar store on their land. Apple here exclusively
owns all of the land, and won't let anyone else build on it without their
permission (required distribution via app store).

In the current situation, Apple is saying "you can rent the land here for
free, as long as you give us 30% of your sales". As per their press release, A
bunch of game apps take advantage of the free property and make money via ads,
which don't give Apple any cut of the revenue.

Spotify is complaining that, in order to build on Apple's land, they have to
pay this 30%. They say "fine. we'll pass the cost on to the consumer." and
institute a $13/month charge instead of $10.

Now that Apple sees music streaming is a profitable market, they build a store
right across the street from the established Spotify store. Since Apple is
both the city (who takes a 30% cut) and the store itself, they can decide to
make the consumer price $10/month without actually losing any profit as
Spotify would. This makes a bunch of iOS (iOS-only) Spotify customers cancel
Spotify and switch to the cheaper Apple Music.

Now Spotify is angry, and is taking it up with the state government (EU).

~~~
Benjammer
>they can decide to make the consumer price $10/month without actually losing
any profit as Spotify would

What in the world does this really mean though? What do you mean "without
losing any profit"? How do you know what Spotify vs. Apple Music operating
costs are? Why should they have equal operating costs? I just don't get this
exact part of the whole argument. So what if they undercut Spotify, maybe
Spotify should take 30% less profit when they sell using Apple channels?

~~~
berbec
Let's assume neither Spotify or Apple have a crazy price advantage in the
licensing of music.

Spotify and Apple Music get to keep $6.99 of the $9.99 they charge users. They
are both forced to pay $3.00 to Apple App Store.

See how this helps Apple out a huge amount? One side has a 30% cut taken, the
other has to deal with having their accounting made more complicated.

~~~
Benjammer
I am in no way trying to deny that an advantage exists for Apple & Apple
Music. Can you explain why that's a legal problem for them though?

~~~
berbec
I didn't know we were talking legality. The point raised above was "So what if
they undercut Spotify, maybe Spotify should take 30% less profit when they
sell using Apple channels?" I was trying to point out that it is economically
unlikely Spotify has a 30%+ profit margin.

Legal problem _may_ exist in different areas. Ianal, but I wonder about
Spotify's claims, refuted by Apple, about locking them out of watch and app
store rejections. I am also interested in the practice not only requiring
payemt though Apple, but banning any mention of other ways to purchase the
same product.

~~~
Benjammer
>banning any mention of other ways to purchase the same product.

What's the problem with this?

------
ozgurozkan
I saw it is possible for netflix to direct user to a website to update his/her
payment method. On the other hand spotify is not being allowed to develop such
button in their app.

Netflix and spotify both delivering digital goods.

Why does such policy difference exist?

I asked apple officials and waiting for a reply.

We also have a digital goods transaction based app.(digital photo) We are also
not allowed to use such button. Why does netflix have that option to use such
thing?

------
sjwright
If I was advising Apple on how to react to this manufactured crisis, I'd use
it as an opportunity to voluntarily raise whatever royalty payment(s) go
directly to the artists.

They already pay more to artists than Spotify, but the best way to win the
argument is to make the comparison comprehensively unambiguous. Turn it into a
competition on which service supports the artists more.

~~~
dmitriid
Neither of them pay artists. They pay labels. And then labels pay artists.

------
S_A_P
Wait a minute. Apple actually directly addresses most if not all of the
Spotify claims. I did not read the entire article but this is absolutely not
true. I don’t think Spotify has a leg to stand on here. I’m all for equal
opportunity, but aside from being a music sharing service, what have they
really done? Apple built the platform, store and payment system. Spotify is
welcome to complete with something better.

~~~
berbec
Apple built the platform, store and payment system. They invite developers to
make services available on said platform.

If Apple decides, they get into the same market and compete with a 30% price
advantage. That's hard math to beat in business.

And that's ignoring Spotify's other claims.

------
synaesthesisx
It's an argument of rent-seeking vs rent-seeking. Apple technically has a
right to a cut on all purchases made through their platform; however there may
be a conflict of interest in this case as they own one of the direct
competitors to Spotify (Apple Music). Regardless, at the end of the day the
artists are the ones that lose out on $$$ and are getting screwed.

~~~
sjwright
The difference is that everyone who interacts with the App Store platform does
so knowingly and voluntarily. (And Apple adds value for developers and for
consumers, which means it's not technically rent-seeking.)

Whereas the artists who make music didn't do so with the intent of publishing
on Spotify.

~~~
ovao
Unless I misunderstand you, artists who own their music and don’t intend to be
on Spotify aren’t on Spotify. When artists make the choice to sign the
ownership or their music away to someone else, they face the potential
consequences of that choice.

~~~
sjwright
Correct.

I am, however, specifically talking about the music that is available on
Spotify.

------
Svoka
I feel like Spotify has 3 arguments:

1\. Apple music too cheap

2\. Apple tanks Spotify app

3\. Apple's 30% is too much

For them Apple responded:

1\. Spotify has much more freeloaders than paying users, so it has to be more
expensive than Apple Music

2\. Responded in length, that Spotify is not special, and got same treatment
as anyone else

3\. Responded that same as Spotify, far from all apps are payed, and
infrastructure is shared by everyone. So 30% cut is not to support only paying
apps, but all the App Store.

I am pretty satisfied with Apple's answers.

~~~
ozgurozkan
I don’t agree with 2.

I saw it is possible for netflix to direct user to a website to update his/her
payment method. On the other hand spotify is not allowed to develop such
button in their app.

