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Addressing Spotify’s Claims (apple.com)
733 points by css 42 days ago | hide | past | web | favorite | 652 comments



> 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.

Uh, I seem to recall Apple being forced to reverse some brazenly greedy policies for their music service when a high-profile artist called them out and withheld content in protest. For Apple to characterize itself as a champion of exploited artists is pretty disingenuous.


> Spotify’s aim is to make more money off others’ work

Moreover, that's the pot calling the kettle black. That's the app store in a nutshell -- Apple supplies the marketplace, but is also making a substantial chunk of money off of others’ work.


Yep.

> Spotify’s aim is to make more money off others’ work.

And Apple's aim is to make more money off that more money. It's such an obviously, laughably stupid argument they're doing there.


Well, Apple just want to "grow the pie."

Although growing on the pie seems a more apt metaphor. Defending 15% fees on second-year subscription is pretty difficult. There's no marketing, very little fraud risk. It's really rent-seeking behaviour – which of course is the commercial point of the walled garden approach.

This is Apple exploiting a very lucrative market position, one that they did invest quite a lot of money in – and took quite a gamble – to create.


> This is Apple exploiting a very lucrative market position, one that they did invest quite a lot of money in – and took quite a gamble – to create.

What's wrong with that?


Consumers get perma-shafted.


Counterargument: consumers are free to switch their entire phone to enjoy the rent-seeking behavior of another party on another platform.


Definitely no counter-arguments from me. Because of Apple's pricing insanity, I've made sure I own zero of their devices, and I think every person capable of independent thought should do the same.


Spotify pays artists a fraction of what Apple pays.


Do you have a reference for that?



Thanks for that link. It took a second to dig through the layers of news posts to find the original story/data:

https://informationisbeautiful.net/visualizations/spotify-ap...

It looks like Google Play (Google Music?) still wins for compensating artists the most so it's nice to see my choice still holds up over time.

To save people the click:

* Google Play $0.0068 * iTunes $0.0060 * Spotify $0.0044


I've heard the argument about this is that Spotify has a free tier, and free listens pay out less.


This makes me wonder if $ per play is the right metric, versus $ per artist per platform. If you get paid less per play on Spotify, but get many more plays there would that still be a better deal?


And this makes sense. They are counting the value paid per 1000 plays. If most of users in spotify are free, the average will be lower. Also, spotify has more plays than apple, so the final value paid might be higher.


Exactly what my local store does. They pay the wholesaler 10 and sell to me for 15.


No, not exactly. You're free to buy from other stores, and suppliers can sell to them. A very important distinction.


Same story with phones. You are free to buy from other suppliers. But you can’t walk into a Walmart and buy milk from whole foods on their shelf’s, even if you feel that would be great for you personally because Walmart is closer but you prefer Whole Foods.


And I am free to use Google Music, Apple Music, YouTube Music, Deezer and even Tidal. Nobody is forcing me to use Spotify.

But, if I have an iPhone, the only application store I can use is controlled by Apple.

In other words: if I am an artist and I want to offer my music via streaming I have plenty of options. If one of them does have a deal that I find unfair, I can choose others.

If I am a developer and I want to offer my app to iPhone users, I have only one option. And if I am banned from this store for any policy infringement (which sometimes is ridiculous and totally arbitrary) I have no other option to offer my app to iPhone users.


I think it's somewhat frequent to have app submissions denied, but I haven't heard of Apple banning future submissions in the same way that I hear of Google permabanning developers.

I agree with Android it's slightly different because side loading is at least possible, but I doubt many people are going to find your widget if it's not on the play store.


True, and if I’m a dairy farm that wants to sell my products to Walmart’s customers there’s only one distributor of shelf space to go to. You can’t cut through an arbitrary point in the business and just demand they change their model. The iPhone might not even be a viable platform today if they had been forced to carry malware from the start because they had “a monopoly on their own product”


I as a customer don't want your app from outside the App Store, from where I know I can get apps that protect my privacy and information.


No, that is not the same story. Physical stores can be swapped out on a whim. Phones are something you change at most every couple of years (and hopefully last even longer, if you give a damn about the environment).

Actually, the "Walmart is a choice" claim also only holds up if there actually are multiple stores nearby, because who is going to drive fifty miles to the next store? Food deserts are a thing.

This is a false idea of "choice" and it is just yet another way producers and sellers try to shift responsibility to the end consumer who is largely powerless in most cases.


OK, but there are no iPhone deserts where only iPhones work and Androids get no signal. I don't see any false choice here. There are plenty of other phones on plenty of networks, with plenty of Apps. If there are more or better Apps on the iPhone, arguably that's at least in part because of their careful policies on curation of the platform rather than despite them.


To go to one grocery instead of another in suburban America means driving a few more minutes with a cost of some time, a bit of gas, and a minute amount of wear and tear on a car. To change app stores, it requires spending several hundred dollars on replacement hardware, not including having to repurchase applications, accessories, etc.


That applies as much to Android, or any other phone, as it does to Apple though. It’s just the nature of the market, not some perfidious Apple plot. There’s just nothing substantive here.


> That applies as much to Android, or any other phone, as it does to Apple though.

On Android you can side-load APKs, have alternative app stores like F-Droid and even install custom operating systems. So no, that is again not comparable.

> It’s (…) not some perfidious Apple plot

Sure

> just the nature of the market

Dammit, NO. The market is a human-made artificial construct, not some natural freaking law like gravity that is inevitable and unavoidable. And given that it is human-made we can change it, and make choices on what we demand from it.


Users can’t reasonably be expected to switch smartphone hardware just because of an app. The smartphone hardware market has its own constraints (people generally own only one at a time, they upgrade it every couple of years at a cost of several hundred dollars, etc). Apple may have legitimately earned its position in that hardware market by making products people want, but it’s not legitimate for them to use that dominance to control wholesalers’ access to consumers in a separate marketplace: music streaming. In that marketplace, the relative success of Apple Music vs Spotify should be based on consumer preferences for those services, not on which company also happens to dominate a separate marketplace. See also: Microsoft using its OS market dominance to control the web browser market.


This is more like I'm not allowed to keep whole foods milk in my sears refrigerator- I'm only allowed to shop at Walmart stores.


I use spotify and netflix without going through apple, the former on my linux desktop, the latter additionally on my smart tv.


Problem is that Apple is actively trying to prevent that. They have no right to do that and are abusing the power they have in other areas to do it.


Apple is not "actively trying to prevent" people from managing their Spotify, Netflix et al subscriptions outside of their respective iOS apps, what are you talking about?


The app literally can't send you to the Web page so you can sign up there. It has to say something vague for Apple to approve it for publishing. Here's an example from Kobo [1]. They apparently can't even tell you the domain name.

[1] http://imgs.fyi/img/7hut.png


And how does that actively prevent people from using Spotify on their desktop?


Uh, Apple rejects your app if your app talks about being able to subscribe/upgrade via means other than IAP (includes desktop)


How are Apple trying to prevent people using Spotify or Netflix on smart TVs and Linux desktops?


I suspect spiderfarmer meant that Apple is trying to prevent "[Using] spotify and netflix without going through apple", at least on iOS.


How? I use Netflix on my iPad all the time and not once has Apple tried to stop me.


Netflix is not allowed to point people to their website from their App store description, which is absurd to me.


Reads to me like you have to get in a different car to shop at those other stores because one of your cars only drives to one store.


its about payment not app store lock in. there is nothing wrong with paying by browser and not via the appstore besides convenience. your car does come with a 'buy new tires' button but you can still go to the store and pay with cash.


You can't carry neither your TV nor your desktop on the go with you like you can with your smartphone.


But just like my TV and my desktop computer, I've paid for my phone with cash. Its mine. Just like my PC, I don't owe Apple Computers any extra money in exchange for the privilege to install apps like spotify on my device. The benefit of having access to the app store is already factored into the (quite high) price I paid for my phone.


And if you can find a way to defeat it's security, you are free to do so. However being incredibly locked down and secure is one the the product's features. It's up to you if you still want the product, but that's how it comes.


True, but a counter argument could be that Apple has created the ability of your phone to have apps installed on it. And I’m theory you could jailbreak your phone and install any app you’d want.


Sure; but I paid $1000 for my phone in part because of that capability. My phone would be worth less if I couldn't install apps like spotify. And unlike a game console, app purchases aren't used to subsidise the phones. Its pure profit for apple.

And I wouldn't have a problem with that in general, except it feels dirty to claim Apple are saints for graciously allowing apps like spotify to be sold on their platform. They're already being paid for doing so through phone sales. Leveraging the monopoly they hold over the ios app store against Spotify, one of their competitors, is exactly what antitrust legislation is designed to prevent.


And the developers are paying a fee every year just to exist on the app store.


You are free to buy a smartphone from other manufacturers. No one is forcing you to use an Apple product.


It's either Android or iOS really. I'd love for a decent alternative to exist but if you don't want Google tracking everything you do, Apple is the only option.


The thing is there have been loads of other alternatives over the years. Blackberry, WebOS, Windows Mobile, Tizen. Actual customers said no, these are what they want.


A lot of them faced what I would argue anti-competitive behaviour to prevent their growth.

For example, Google banning their apps on Windows Mobile and Amazon Firestore. Google blocking Windows Phone users from accessing maps/mail via a user-agent check. That and Google actively blocking Microsoft developing a native Youtube app.

Is it any surprise that customers were unsatisfied?


Apple and Google's duopoly is natural, no question about it. That doesn't mean we should ignore how they use it.

Google is rightfully scolded for requiring that users sign away their information and following their every move (often using dark patterns).

Apple should be put on hot coals too for how they are abusing their position. Spotify is an excellent illustration because Apple is both the platform and a competitor. I don't understand why an Apple consumer would support their anticompetitive stance.


As soon as you install some apps, your iPhone is tracking you as well. The recent stories about FourSquare have made me realize that things are much worse than I previously thought.


That's one reason I only keep essential apps ;) also use DNS blocking for trackers.

It's much better than Android even without that though. Especially since Google became more aggressive with tricking users to sign away their privacy.


There are lots of Android versions with all Google tracking code excised.


Are they sold like this directly from the manufacturer?


No, you just download them and install the new OS. Just like you have to jailbreak your iphone if you want to use it however you see fit.


You're also free to use Spotify online, on your Desktop, on Android, etc.

You're not forced to have an iPhone.


Err who forced this guy to buy an iPhone?


I think I can safely say absolutely nobody.


Apple has ~15% market share (fluctuating) so it's not really a monopoly situation. Google will give you access to the exact same Spotify service.

Whether what Apple is doing is legal or not I guess the courts will decide. But it's certainly factually incorrect to imply that you're not free to buy from anywhere else.


The Apple Store has 100% market share on all iPhones, iPads and iWatches.

I really don't see this being that much different from the famous United States v. Microsoft Corp. case[1].

[1]: https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....

EDIT: comments have made clear that Windows had a monopoly on the personal computer space, whereas Apple doesn't have a monopoly on the smartphone or tablet space.


MS had a monopoly in the personal computer industry. Apple does not have one in the mobile industry. By this logic Mercedes has a monopoly on all Mercedes cars but they're clearly not one in the auto industry. If Mercedes ever decides to ban or squeeze a supplier, monopoly will not be the argument to nail them.

I'm not saying Apple is right to do this. I'm saying the monopoly on their own product is not the correct argument. Apple is not a monopoly. If they lose this case it won't be based on this.


Fair point.


The other posters are right about the Microsofty monopoly, but what made it particularly egregious was Microsoft's anti-competitive practices using their market dominance to actively damage or destroy competitors. This included:

* Contractually barring licensees from offering competing OSes, or selling boxes without Windows installed.

* Leveraging their OS dominance to get dominance in other markets such as linking OS licensing with licenses for other software.

* Pinching competitor's technology using their advantages as platform owner and rolling it into their own products (Stac).

There was more, but those were the main ones.


>* Leveraging their OS dominance to get dominance in other markets such as linking OS licensing with licenses for other software.

Such as leveraging their preferred status to get dominance for Apple Music (by being able to charge less since they aren't subject to a 30% Apple Store 'fee')?


Although I don't disagree, the difference was that Microsoft had a monopoly on computing. Not just on PC but take computing as a whole and microsoft was hugely dominant. From a legal standpoint there is a huge difference.


Desktop computing -- in the 90s in the server area there was more competition, primarily from Netware.

It wasn't until the end of the 90s when macs started making an impression on peoples desktops, with the imac, but oddly enough if https://en.wikipedia.org/wiki/Usage_share_of_desktop_operati... is to be believed, windows still has a 95% share of the desktop/laptop market.


I believe it because Windows comes on all kinds of devices and supports all kinds of hardware mixes and SKUs. It effectively encompasses the entire price range in a way that Apple doesn't care to.


That’s also why high street stores are now struggling while consumers are buying direct from the source or online where margins are tighter.

However I’m not suggesting that local stores are in the wrong either but it does illustrate how consumers have choice there is no such competition inside Apples walled garden. And that is the real crux of why their margins are high: it’s because developers and iPhone owners are locked into the App Store

The obvious counteragument here is that people don’t have to buy iPhones - and that is true. However people do and they still expect their app prices to be low, so developers are the ones who ultimately lose out as they either have to support Apple or be left out entirely and they’re the ones who then have to lower their prices to compete.

It’s also worth noting that the physical store, in your example, would have greater overheads than an App Store of equivalent size so Apples markup shouldn’t include the same operational cost.


> no such competition inside Apples walled garden

There is massive competition to the garden itself.


> There is massive competition to the garden itself.

I did already acknowledge that and pointing out why it doesn't work in practice.

In a normal high street setting manufacturers and distributors set their prices and the shops then add their mark up on time. If the prices are too high then consumers will shop in another local store. Which means those stores either have to negotiate a lower selling price or reduce their own margins (or offer an alternative incentive to shop there in spite of the high prices - like free coffee)

With iOS consumers don't have the option of going to another App Store, which then flips the order of control. It means Apple can dictate their markup and app developers are then forced to lower their own margins if they want to appear attractive to other shoppers.


> With iOS consumers don't have the option of going to another App Store

Correct, it's certainly unfair competition but what I'm saying is that it's still not a monopoly, not that it's "fair". When you paid for the iPhone you also paid for the services bundle that you bought as a package. Now if Apple controlled 90+% of the market this would fall under antitrust laws (MS+IE situation all over again). But they only control 15%. Users have the option of going for the the same/equivalent service provided by other vastly more popular phones and their app store(s). So every link in the chain has a perfectly good equivalent.

And even Spotify has a choice. They can shaft Apple and become Android only, since Android has 85% of the market. The reason they're not doing it right now I assume is because they would also shaft themselves, the AppStore might bring a very big chunk of their revenue (historically iOS users are bigger spenders).

Practical example of single supplier without an actual monopoly: If you buy a GM car you're left with one option for a subscription telematics service: OnStar. You can't get Lexus Link for example. I don't think it ever occurred to anyone to call this a monopoly.


> it's certainly unfair competition but still not a monopoly

I agree - which is why I specifically did NOT call it a monopoly.

> When you paid for the iPhone you also paid for the services bundle that you bought as a package....

You're still missing my point:

> And even Spotify has a choice. They can shaft Apple and become Android only, since Android has 85% of the market. The reason they're not doing it right now I assume is because they would also shaft themselves, the AppStore might bring a very big chunk of their revenue (historically iOS users are bigger spenders).

EXACTLY. Thus Spotify effectively doesn't have a choice. It's pay Apples tax or don't have support at all.

This is compounded when you factor in that the in-app sales that Apple wants to take a cut from for businesses like Spotify are sales that Apple's had no stake in. Since you like car metaphors: it's like a taxi driver buying a car and the the dealer expecting to take a cut from all the taxi fairs even though the dealer's involvement ended the moment the car rolled off their forecourt.

> I don't think it ever occurred to anyone to call this a monopoly.

Again, I never called the App Store a monopoly. Others might have but I deliberately didn't because I'm already aware that it legally is not a monopoly. However that doesn't mean they don't still have total control over app sales on their own platform - legal terms aside.


> Thus Spotify effectively doesn't have a choice.

I'm not sure I follow this. When I say choice for Spotify I mean Apple or Google. The industry still allows them to get the same service from the other 85% of the market. I interpret that as "choice", having options. When I go to Malls'R'Us to rent a storefront I only have them as a choice. But I can go to another mall without anyone claiming foul about competition.

Having no choice is when you want internet but there's only one provider. Rejecting that provider doesn't mean you get different internet, or worse. You get none.

And to pick up on the mall analogy above, some storefronts cost more than others especially if they bring in more revenue for the store. And the owner of the mall also has full control over this. Is this not an equivalent situation?

I know I now sound unsympathetic to Spotify's situation but after reading (and later validating) some of the claims Apple is making in this article I can't help but feel like Spotify kind of cheated when they published their call for action by leaving some important stuff out. I had my pitchfork out only to realize the truth is a little more nuanced.


> I'm not sure I follow this. When I say choice for Spotify I mean Apple or Google. The industry still allows them to get the same service from the other 85% of the market. I interpret that as "choice", having options.

> Having no choice is when you want internet but there's only one provider. because rejecting that provider doesn't mean you get different internet, or worse. You get none.

But ignoring Apple's App Store does mean they then get no service for "iDevices" (not just the iPhone).

So their choice on iOS is pay the tax or don't have a presence. This is complicated by the fact that they would then lose customers who want a music streaming on multiple platforms including iOS. So Spotify's choice is really just an illusion.

> But isn't this what you'd expect when renting a storefront in a mall?

Indeed it is. You usually get a little more choice because you can have different landlords in a given high street (albeit you did specifically say "mall" where that choice wouldn't exist) but even in those cases shop owners are regularly complaining that increases in rent are pushing them out of business. and in fact the UK has seen a lot of independent stores go out of business because of exactly that.


> So their choice on iOS is pay the tax or don't have a presence

If I want my music in the Spotify catalog who decides what's my cut and what's Spotify's cut of the money my music is generating? They have 100% control there so if I want to list my music there what are my choices? Pay up or not have a presence.

Apple's choice is to give them access to millions of customers with big pockets (statistically), maintain the whole infrastructure for this, not get anything because the app is "free" but actually not even be allowed to drop them? What kind of choice is that? Should an app even be called "free" if it offers nothing without paying? Isn't that like asking for tax exemptions for a nonprofit organization that makes a profit?

Would it be OK if Apple changed the rules so apps had to offer full functionality without further paid unlocks or simply charge for the app as a service in the App Store at whatever monthly price the developer chooses?

The fact that Spotify lied or misled about these details that are pretty obscure to most people (including me until I specifically read about them) kind of disqualifies them from playing victim in my perspective. They want all the benefits with none of the strings.


> If I want my music in the Spotify catalog who decides what's my cut and what's Spotify's cut of the money my music is generating? They have 100% control there so if I want to list my music there what are my choices? Pay up or not have a presence.

Indeed. This same argument has been ranging on for years about music streaming services and ebooks via Amazon too. So it's not just Apple who get put under the spotlight.

> Apple's choice is to give them access to millions of customers with big pockets (statistically), maintain the whole infrastructure for this, not get anything because the app is "free" but actually not even be allowed to drop them? What kind of choice is that? Should an app even be called "free" if it offers nothing without paying? Isn't that like asking for tax exemptions for a nonprofit organization that makes a profit?

I think that's a little disingenuous. Apple don't chose to let app developers on board - Apple do it because their platform depends on it. Smart devices live and die depending on the developers that support it.

I also agree there is an infrastructure cost but as I said in an earlier post, it's not equivalent to the infrastructure costs of bricks and mortar despite Apple retaining the same kind of mark up. This is where people get narked off. But as I said elsewhere, I also accept Apple has the right to charge whatever they think they can get away with. I mean that's just basic business.

Your point about free apps is an interesting one however if we're honest, Apple do still make money even from free apps. Developers have to pay a small fortune to get their apps included in the App Store - from MacBook sales (if they weren't already Mac users), developer licences and app submissions. I think (but please correct me if I'm wrong here) Apple also have their own ad network for iOS as well? So they would obviously get a cut of that too. In any case I'm not trying to disagree with you here - more just say that Apple are hardly making a loss on free apps even without taking into account in-app sales.

> Would it be OK if Apple changed the rules so apps had to offer full functionality without further paid unlocks or simply charge for the app as a service in the App Store at whatever monthly price the developer chooses?

In fairness Amazon's app store states something like full functionality. I can't remember the specifics but they push back on apps that are in-app orientated in a scammy way while still allowing developers to be contributed for their work. It's a system which works pretty well - at least from an end user perspective. In fact that was one of the biggest things I missed when I "upgraded" my son's Kindle to a regular Google Play-powered Android tablet.

> The fact that Spotify lied or misled about these details that are pretty obscure to most people (including me until I specifically read about them) kind of disqualifies them from playing victim in my perspective. They want all the benefits with none of the strings.

I don't think Spotify has mislead anyone any more than Apple are misleading people. As you said, they all have an agenda - but that's just the nature of business. The question is really who's controlling the deck and are they doing so unfairly. The answer to the former is quite clearly Apple - but the jury is still out on the latter.


> I think that's a little disingenuous.

It's not really. Crying wolf is a bit hypocritical seeing how both engage in the exact same practices but only one is coming up with the sob story.

> I don't think Spotify has mislead anyone any more than Apple are misleading people

They came in the court of public opinion asking for fair treatment while misleading and giving half the story in their very loud complaint. They lost their moral high ground. Even worse since they're a company doing the exact same thing to artists. My point is, when you're in the same pigsty keep a low profile ;).


Your argument is weird. You acknowledge both are up to the same tricks yet it’s ok for one party and not the other because the first party annoyed you with a press release?

I agree it’s hard to argue who’s right and wrong but your opinion seems to be based purely on a knee jerk emotional reaction - which isn’t a compelling stance to take.


No, I'm saying that what Apple is doing to Spotify is exactly what Spotify is doing to their artists, and it's business as usual for both. It may be immoral but I don't see it as illegal (a court may very well see it differently). After putting Spotify's "call for justice" in context it lost all credibility in my eyes. It's like a robber complaining they've been robbed.

And it's not a kneejerk reaction. I plan on using both Apple and Spotify in the future. But anything Spotify want to get they should also give. Doe it look like they are to you?


I'd take Apples comments about the way Spotify treats artists with a huge pinch of salt. Spotify can only work with the labels and they're the ones who pay the artists. Often for a pittance, yes, but that's outside of Spotify's control. In fact labels are the ones who have been asking for higher mark ups in distribution while paying less to the artists and it's because of this we've seen so many music streaming services go under. Despite what Apple say, it's not that lucrative a market for most streaming services.

So I really wouldn't take Apples rebuttal at face value either. It doesn't line up with what any other the other streaming services (both current nor the ones that closed shop because they simply couldn't afford the exorbitant rights being demanded) have claimed over the years, and it certainly doesn't line up with what I experienced back when I was involved in the music scene myself (which was some years ago now - but sadly it's an industry that showed no sign of adapting even then)


> So their choice on iOS is pay the tax or don't have a presence.

Not true. They can simply not offer in-app purchases. The Kindle App doesn’t pay any “tax” to Apple. Consumers have access to the Kindle App without Apple getting any “cut” of Amazon purchases even as Apple has Books.


I think this is basically what Spotify are doing at the moment but it's not really an ideal solution. Though I guess there's nothing stopping users signing up via Safari and then installing the native iOS app.


> Since you like car metaphors: it's like a taxi driver buying a car and the the dealer expecting to take a cut from all the taxi fairs even though the dealer's involvement ended the moment the car rolled off their forecourt.

I think this is an incorrect analogy. This is why Apple only charges for physical goods, not digital ones. The rationale is they distributed your product to customers you would never have had access to without them:

- they spend marketing dollars to get those customers;

- they develop and maintain a platform so you can run your business on it.

By simply publishing their app on the App Store, Spotify gets access to 15% richest customers of the smartphone market. If you’re charging customers for something they consume on that device, then I think it’s fair to pay a share.

That being said, I have no idea how this will play out in court. Intuitively, 30% the first year sounds like a lot of money for a distribution fee.


> I think this is an incorrect analogy. This is why Apple only charges for physical goods, not digital ones. The rationale is they distributed your product to customers you would never have had access to without them:

Would the app developers "never have access" to those consumers though? Because if the iPhone didn't exist then consumers would just use another handset. Just like we did before the iPhone and just like a significant amount of people do currently.

There's definitely a blurred line somewhere though. I agree to Apple having a fee for app sales though I think 30% is a bit steep but I agree Apple ultimately get to decide how much they want to charge. I agree that some apps might try to circumvent that fee by offering in app sales instead so Apple are trying to close off that particular loophole. However I don't agree that Spotify fall into that same category because their "in app sales" is actually a subscription service to a much larger product. However where do you draw the line?

> I think this is an incorrect analogy.

Obviously I wouldn't agree but I can completely understand why you'd say that given how open to interpretation analogies can be.

To be honest I hate posting them in debates because if you agree with the point then you'll agree with the analogy but if you don't agree with the point then you'll naturally find a reason the analogy doesn't fit. And given analogies aren't meant to be 100% representative, it means there's always plenty of ways to disprove it. Thus analogies are never persuasive in a debate. Worse still, sometimes you end up going down a rabbit hole of arguing analogies rather than discussing the actual point at hand.

For this reason, I usually try to avoid them.


> The rationale is they distributed your product to customers you would never have had access to without them

What about the rationale that nobody would have bought their iPhone in the first place if it wasn't for apps?


Agreed, see my carnival analogy in the thread :)

The 30% is interesting, but so is the Verge article I read about Google lowering their fees from 30% forever to 15% forever: https://www.theverge.com/2017/10/19/16502152/google-play-sto...

I’m sure no one is in the right here, morally speaking. But as far as I can tell, big business is as far as you get from morals.


There does seem to be a conflation of “unfair competition” and “monopoly” going on. Generally speaking of this debate, that is.

The App Store is a service rendered to its customers, the likes of Spotify. In the form of the hosting of the app, and all the backend behind that like in-app storage (iCloud). The code review and ‘security guarantee’ that Apple holds over Google and other rivals is also a cost.

IMHO this boils down to subsidy, on the part of digital services companies, publishing apps, subsidise the free and “real world” goods and services company’s that go unlevied for their participation.

It’s a bit like at carnivals, when food trucks pay to get a place, and are often expected to pay a commission on their profits too. But the charity stands, and free ‘workshops’ for kids etc. don’t pay to be their, because their providing a different service.


What free stuff are you referring to?


Apple's walled garden is _A_ store. One of several.


I think you need to go back and reread what I posted:

> Apple's walled garden is _A_ store.

Well obviously. Please quote me where I said otherwise.

> One of several.

Feel free to list all the other app stores on the iPhone.


Why do we need to mandate stores within stores? That's absurd.


>Moreover, that's the pot calling the kettle black. That's the app store in a nutshell -- Apple supplies the marketplace, but is also making a substantial chunk of money off of others’ work.

Yes, but on mobile Spotify doesn't even provide the Marketplace -- only part of it (their own app), the other (the mobile OS, platform, payment processing, consumer trust, marketing, etc) is built by Apple and Google.


Because that's the only way you can do it.


They can always create their own mobile platform, if they think Apple providing them with one is not worth much to them...

After all Google and Apple did.


Just as Apple could allow them to build their own payment stack into it and circumvent the app store.

But they don't.


Well, you build the environment, you make the rules is kind of the whole point.


That's a very shallow point though. Technically correct but misses the point completely.

twoslide 42 days ago [flagged]

> make more money off others' work

That's basically capitalism in a nutshell


> That's basically capitalism in a nutshell

That's an edgy tankie teenager's definition of capitalism in a nutshell.


That is the definition of work-for-hire, is it not? Is it immoral now?


It's not a case of morals, but 30% at apples scale is fairly egregious.


Pretty cheap actually for distribution channels.

If Spotify were selling their products through retail they would probably lose about 50% of their margins.


I don't know how you arrive at that conclusion unless you seriously compare physical with digital distribution.

Retail margins are famously low (very low single digits).

The problem is that Apple and Google are exploiting their mobile content distribution oligopoly so aggressively that they are practically begging for a regulatory crackdown.

I wonder why companies are getting carried away with this kind of profit destroying greed again and again. They are killing their own golden goose.


"I wonder why companies are getting carried away with this kind of profit destroying greed again and again. They are killing their own golden goose. "

Could simply be that they dont know what the world will look like in 5 years so they might as well cash out while they can. No use playing the long game when the next big game changer could be around the corner?


I think is more due to the fact that they see themselves as 'too Big', with lots of leverage.

Anyhow, they have so much money that even when regulation comes, their business will still be secured.


Could be, but I very much doubt they see it that way.


Maybe not Google. But I would be a little shocked to find that Apple at least doesnt think that way to a degree. I mean... Look what the Ipod did. The Ipod was a game changer.


> Retail margins are famously low (very low single digits).

The margins and costs include more than the wholesale price of the product. The correct question is how much does a farmer get paid for a gallon/liter of milk and how much is that same gallon/liter sold for at the shop. Farmers in the US are getting roughly $1.00 per gallon for whole milk. How much is it selling in the store? Roughly $3.50.

Anytime people talk about “greed,” I tune out because that’s the sign of a person who doesn’t actually know what goes into running the thing they claim a company is greedy with. Take the Apple 30% fee for example. If you ran payment processing yourself through Stripe, you might pay 3%. So let’s take Apple’s remainder to 27%. Apple handles chargebacks/disputes for you. So each dispute using Stripe would cost you $15 unless you win the dispute. We also have fraud prevention and management, which Apple provides. An app developer never has to deal with fraud on the App Store. An fraud is a significant issue, especially selling globally.[1] How much is fraud worth? I would say that it’s worth at least 5% to never have to deal with it. So now the App Store commission is 23%.

Next you have to deal with a CDN for delivery of the purchased app. Where do you store the file? How do you secure it? Who pays for the bandwidth of distributing it? Who maintains that system? With the App Store you don’t have to deal with any of that. I would say that’s worth at least 5%. You can’t have any downtime or you lose money. You can’t have casual security or you’ll lose product. So that system has to be well maintained, robust, and able to handle scale, and be fast and easy for your customer.

Now we are at 18% of Apple’s commission remaining. For every product you sell worldwide, you have tax consequences worldwide, assuming you care about following the law. For every sale you get, you potentially have to remit taxes, taxes that vary by individual jurisdiction. Apple does all of that for you. They also provide a localized and internationalized store front for almost any country in the world. Want to sell your App in Vietnam? Is your infrastructure set up to reach those customers? How about your Vietnamese skills when a potential customer has a purchasing issue? How about your payment processor? Are they set up to handle how Vietnamese people like to pay for things? Can a Vietnamese person go buy a gift card and use it on their device to buy your product? With the App Store, you get all of that capability built-in. And you get that capability for pretty much every connected country. Including market exposure via App Store search and discovery. Let’s combine this point with the next, a product website. If you want to sell on your own you have to build and maintain a website to sell your app. You need to integrate payment processing, the download, security, and maintain it. While most of us have the skills to do that, you also have to ensure it’s updated, you have to pay to host it, translate it into worldwide languages (or not.) However if you actually want to sell your app, you’ll also need to worry about SEO, online marketing and attracting users to your app. Just a simple webpage isn’t going to make a dent in search results from the open web since your “premium music player” keyword will take years to rank.

So the App Store gives you the ordering system, access to many more markets than you’d likely normally be able to handle yourself as well as the aforementioned search and discovery. There is also the trust factor: why would I download some random music player from some random site off the internet? That concern is going to create a high barrier to getting large numbers of people to download the app. Not so on the App Store.

I would say all of that is worth at least 8%.

So that leaves our “greed percentage” at 10%. However, we have another aspect as well. Not only do you sell a paid version, you also have a free version you use as a marketing tool to expose people to how great your app is. That free version has ads that you insert while people are listening to music on your music player. You get 100% of the revenue from the ads, Apple has nothing to do with that. However, all of the stuff we’ve described above — Apple gets 0% for free apps — and your free users download and use the store infrastructure by the millions. Millions of downloads that never touch your system. Who pays for that bandwidth? Not you, at least not directly. So Apple has 10% of that fee unaccounted for. Handling all of your free users is probably worth at least 5%. Also we haven’t talked about an update. If you release an update, how do all of your millions of users get the update? Apple handles that for you as well.

On your second year of a subscription, the commission drops to 15% because many of those above listed expenses aren’t as relevant. However, taxes, update infrastructure, payments, declined cards, collections, etc.. that’s still being handled.

Making an argument that Apple is “greedy” is ill-informed. Besides, you don’t even have to pay Apple 30%. Users could go to your website and pay there. Then Apple is handling all of you download/update infrastructure for practically free. That 30% is only applicable when users pay within the App Store context. So Apple handles the distribution of potentially millions of downloads even though they aren’t necessarily making much money from your subscriptions you sell outside the store. Maybe it’s greedy to expect Apple to manage millions of your downloads for just a $99 per year developer fee? Apple expecting a cut of transactions they manage isn’t unreasonable.

[1] https://stripe.com/guides/2017-global-fraud-report


So your response is to find a bunch of features and assign an arbitrary 5% value to each of them and conclude Apple is doing you a favor?

> Apple handles chargebacks/disputes for you.

In many cases they forward the complaint on to you as the developer for "does not perform as described".

> If you ran payment processing yourself through Stripe, you might pay 3%. ... We also have fraud prevention and management, which Apple provides. An app developer never has to deal with fraud on the App Store.

You're double dipping. You already subtracted some money for Stripe, unless you're implying they _don't_ have fraud protection and management?

> Next you have to deal with a CDN for delivery of the purchased app. Where do you store the file? How do you secure it? Who pays for the bandwidth of distributing it? Who maintains that system? With the App Store you don’t have to deal with any of that. I would say that’s worth at least 5%.

Or Cloudflare for $20/mo?

> So the App Store gives you the ordering system, access to many more markets than you’d likely normally be able to handle yourself as well as the aforementioned search and discovery. There is also the trust factor: why would I download some random music player from some random site off the internet? That concern is going to create a high barrier to getting large numbers of people to download the app. Not so on the App Store.

> I would say all of that is worth at least 8%.

Sounds like an artificial barrier to me. "Insert roadblock, charge for roadblock, say I'm doing you a favor". I'm also not sure how you think you magically don't have to do any SEO or marketing just because you're in the Apple Store, let alone that it's automatically worth "8%".

No-one is saying that the Apple Store doesn't add value or manageability.

But I am questioning your magic calculations that just happen to reduce Apple's tax to effectively nothing.

Apropos of anything else, developers handling "millions" of downloads are in the single percent range. And can also afford economies of scale to support things themselves, CDNs, merchant accounts and the like. But instead they have to pay Apple's flat rate.


I have made some of the exact same points in another thread hours ago where someone claimed that Apple could easily run the App Store for a 1% commission: https://news.ycombinator.com/item?id=19398315

So I am fully aware of everything you're saying and I agree with most of it in principle. I do disagree on the numbers you're using. But we are both inevitably ill-informed in the sense that neither of us has the hard numbers required to work out the true cost of running the App Store.

We do know a couple of things though:

1) The App Store is profitable. Apple has said so. Most analysts reckon that it has high and growing margins. Everything Apple says about its services business makes me believe that these analysts are correct.

2) There are only two relevant mobile app stores (perhaps 2 1/2 if you count Amazon).

3) Both charge exactly 30%

This is not a well functioning market by any definition. Dysfunctional markets like these rarely charge too little. So the assumption that they charge too much seems not too far fetched.

To me, charging 30% for every app, irrespective of its price, seems completely implausible, not just the percentage but also the structure. Any plausible pricing structure would include a fixed fee plus a percentage.

I'm not using the word "greed" in a moral sense (as is often the case). I'm using it because it is clearly an act of self harm to extract high margins in an obviously oligopolistic and dysfunctional market.

They are begging to be regulated and why would they do such a stupid thing?


It's not fair to compare a digital marketplace with retail channels..

I'm quite sure technically (at the size of the Apple Store) a digital marketplace could charge 1% and still make a profit after the operational costs.


I agree that 30% is egregious oligopoly pricing, but 1% is definitely insufficient to run a payment service and a software distribution platform that includes any sort of fraud prevention and support.


In 2018 (edit: 2017) they made roughly $11.5 billion[1] with their 30% cut.

1% instead would be $383 million a year. You think that wouldn't be sufficient to run a digital store (including the things mentioned)? Pretty sure you can do it with far less than that.

[1]: https://www.forbes.com/sites/chuckjones/2018/01/06/apples-ap...


No, I really don't think it would be sufficient to run a payment service that includes billing, international VAT processing, chargebacks, customer support, fighting fraud, plus providing an entire software development, distribution and vetting platform.

Mobile platforms are dysfunctional markets. That's why they can charge 30% and that's why regulators will step in sooner or later.

But take a look around and you will find that there is no digital shop that acts as a merchant of record internationally for anywhere close to 1%. It's impossible and completely unrealistic even before accounting for the entire software development and distribution side.


Software development is completely unrelated: of course Apple needs to provide software so developers can build apps so consumers have a reason to buy an iPhone in the first place. That has little to do with a marketplace.

They can charge 30% because the marketplace (Apple's App Store & Google's playstore) are monopolies and they have complete control over the complete supply chain. If you want your app to be available on the iPhone you have to go through the App Store. There is simply no other way (for a native app), as such you either give in 30% or you don't create an iPhone app.


>They can charge 30% because the marketplace (Apple's App Store & Google's playstore) are monopolies and they have complete control over the complete supply chain.

I agree with that. 30% is not a plausible rate in a well functioning market. But it's not 1% either, I can guarantee you that. So what is the right revenue share?

Paddle charges 5% to act as a merchant of record for you (i.e as a reseller). That's what Apple does as well and I haven't seen that service offered for much less.

On top of that, Apple provides all the software distribution and discovery functionality. I'm not sure what the cost of that is, but it's not nothing.

So by my estimate, a realistic revenue share for Apple in a well functioning market could be in a range between 8% and 15%. But on the lower end that might mean higher fixed fees for free apps and worse support.

What they should do first of all is change the pricing structure to charge a fixed fee plus a percentage. That would allow them to cover their per transaction cost and take a far more realistic revenue cut on top of that.


Fair enough, especially if you account for the discovery (a form of marketing I guess). Within that scope I agree with you.


2 or 3% goes directly to the credit card processor, no?


On that scale I doubt you pay the same as your average Shopify webshop.


The lack of choice is a problem. I’d support a law that mandated that all Turing-complete machines allow its owner to execute whatever code he wants on it, and therefore that iOS devices allow third-party apps (and third-party app stores) to be installed.


You can signup for a Developer account and then execute whatever code you like on the device.

You just don't have a right to distribute that code to others. And that's one of the reasons why many of us like iOS since I can almost guarantee I won't have malware, viruses etc.


What if the device is a HSM? In that case not being able to execute arbitrary code is a feature for me.


A HSM does not necessarily have to be Turing complete, I think.


Spotify is essentially a middleman. Apple is much more, they’re building the entire platform.


I pay for Spotify due to their app.

It runs on all the platforms I want it to run, including on Linux or on my Playstation, you can easily switch devices, picking up where you left off, you can remotely control devices, etc. The suggestions engine isn't spectacular, but works. I also like to see what my friends listen to. They also have the best integrations with other apps.

The music selection could use some improvement but it's much better than Apple's Music and getting better every month.

In other words your claim is very disingenuous.


You’re saying you get value out of Spotify’s services. That’s good. Middlemen exist because they’re providing some value. Doesn’t make them not middlemen though.

Ultimately, if I use Spotify to discover an artist, I’m going to continue paying Spotify to listen to that artist and the artist themselves will be lucky to even make pennies off of that. I could move off Spotify and keep listening to that artist pretty easily, I just probably won’t. Spotify is a middleman focused on discovery but isn’t providing ongoing value to the artist once the viewer has discovered them.

Apple on the other hand is building and maintaining the platform that app creators use. This is a lot more tha discovery, the app wouldn’t even exist without the platform, and Apple keeps adding more value to the platform over time. Apple is not a middleman.


Spotify would and does exist on all the other platforms, like Android, Windows or the open web.

Apple created a lot of value with its first iPhone, but the world evolved since then.

And yes, in your definition, Apple too is a middleman, because a big reason for why many people buy overpriced smartphones is to use apps. That you can't move those purchases easily to another platform, that's the lock-in effect of Apple's walled garden, but that doesn't make them any less of a middleman.

Speaking of pennies, I emphasize, but how much are artists getting paid by Apple Music? Isn't this hypocrisy on their part? This whole thing is infuriating because Apple can easily undercut its competition because they don't have to pay the 30% store tax.

This is anti-competitive behavior and yes, I realize that Apple does not have a monopoly, but I think anti-trust laws should be rewritten, because this kind of behavior isn't acceptable coming from the world's richest software company, due to the infinite potential they have for harming the market.


> That you can't move those purchases easily to another platform

You do realise that there are technical reasons for that.

You can't just lift an iOS, Linux, Windows, Android, PS4, Xbox etc app and just run it on a different platform. Especially if your target platform is a resource constrained one.


Indeed, however there is no technical reason why devices couldn’t be built so apps could be lift and shifted verbatim. We already have examples of cross platform frameworks that can target desktops as well as mobile devices. We have an understanding of how to reflow our content for different screen sizes, orientations, aspect ratios, and even (albeit less successfully) DPI. We also have platforms were code has to support different horsepower (eg games written for the Nintendo Switch between docked and undocked mode). So we understand the theory and I’m sure most developers would welcome such a change too. But there is absolutely no incentive for hardware manufacturers to do this (and I can’t blame them either).

To be honest though, I’m less concerned about app portability as I am about retaining ownership of apps after their or the app stores support has ended. While this doesn’t really matter for mobile apps nor music streaming services, it’s something that really concern me with regards to collecting retro games. There is a lot to be said for owning physical media. But I’ve digressed.


Linux apps are easily ported to other platforms and this is because the Linux kernel has an easy to port interface and all the GUI toolkits, along with the X Window subsystem are open source and have been ported already.

For example I use Gimp and Inkscape, irregardless of the OS. The experience is a little shitty on MacOS, but they get the job done.

It's also the reason for why Microsoft was able to provide the "Subsystem for Linux" on Windows 10, because the Linux kernel is much easier to mock than Windows is, being a much smaller effort than what the Wine project has to handle. Speaking of Wine, it has been doing a decent job of running Windows apps on Linux, many Windows-only games are playable on Linux due to it. And Steam has been using Wine to make games available on Linux.

iOS on the other hand is another matter entirely. First of all you don't have direct access to the binaries, without hacking the OS and Apple is doing everything they can to make that OS unhackable.

No, we are not talking of technical limitations, as those aren't insurmountable.


Artists get paid over double what they get paid on Spotify.

https://mixmag.net/read/new-data-reveals-which-streaming-pla...


That definition of a middleman is pretty useless. According to you Apple is a middle-man because they just provide access to apps and web pages which you really want to use. Google search is a middle man because you just use them to access websites you really care about. Walmart is a middle man because they only connect the producers of consumer goods to consumers.

Everything ultimately leans on suppliers so if that's your definition everything is a middle man unless you farm crops or dig up ore or something.


I'm confused as to what it is that Apple Music does that Spotify doesnt? You say that Spotify is a middleman but never once comment that Apple Music is also by your own definition a middle man.

Also the title Middle Man has a sort of negative conotation to it. But Spotify/Apple Music is simply a platform that can connect a artist to a listener. But this doesnt make them any more of a middleman then Netflix or the guy at Mcdonalds who cooks your Cheeseburger.


Spotify build distribution, recommendation infrastructure,and more. They are far more than a warehouse middleman which adds no additional value beyond providing a retail outlet.


There’s a word for what you’re describing here: middleman.


I'm struggling to see a distinctive difference between a middleman and a platform...


A car dealership is a middleman. A auto manufacturer is a platform. The car dealership sits between you and the manufacturer, making it easier for you to buy the car, but taking a cut. But you don't need the dealership in order to use your car. Spotify makes it easier for you to find music, but once you've found music, you don't need Spotify anymore (not a perfect analogy since you need to pay to purchase the music from a real store if you're ditching Spotify, but close enough). The auto manufacturer actually builds the car, supplies the replacement parts and manuals for repair, provides software updates for the car's computerized systems, manages any kind of in-car network GPS systems, etc. This is Apple. They develop the whole OS, including all the frameworks that developers actually use to build their apps (and the developer tools too, for that matter), they keep it updated, adding new features and fixing bugs. Apple provides ongoing value to both the user and the developer over the entire lifetime of the app.


There's a word for what more you're contributing to the debate here: nothing.


What an incredibly silly comment. Serving music to millions of people across all major platforms whilst also being kosher/legal are real multifaceted challenges. This is one of the reason why you don't see much competition in this space. Remember Grooveshark? That was closer to a "middle man" than Spotify, and they promptly got sued and got shutdown.


Spotify literally sued artists and musicians because they didnt agree with a court ordered fee increase...but Apples hypocritical on this issue somehow.

Spotify also uses Apples infrastructure and marketing tools for its app. I dont think Ive seen any app creator up on stage at Apple events more than Spotify. Its not like Spotify will use Apples tools and ecosystem one time then stop. Its ongoing and 15% is reasonable. Apple literally changed the app store rules to accomodate Spotify and everyone knows it.

I will say that I think Spotify should be able to advertise payment outside the app.


Don't forget that it is a symbiotic environment. Spotify needs to be on the Apple ecosystem as it is massive and Apple needs to have Spotify in its ecosystem because that's what the users want.

As for payments, they all follow the same scheme more or less and redistribute about 70% of the revenue to the rightholders. If the services are priced the same, it's exactly the same for artists.

The big difference is that Spotify has a permanent free tier, which admittedly makes less money short term, but it is driving acquisition of premium users faster than any other methods. The alternative being no revenue, it's just fine. Apple on the same topic doesn't care about razor thin margins on this product, or even losses. They are a hardware vendor, so as long as they still sell their devices, they will be fine.


Well, why don't Apple Music pay its "fair share" of 15%~30% to Google since it's hosted on Google Play? They are also using Google's tools and ecosystem.


Google also takes a 30% commission.


Apple doesn't have to pay because Google is so generous as to allow them to link to their own payment method.


>ongoing and 15% is reasonable.

What markup do you think that is. For larger apps I'd imagine it's about 1500% (ie 1% covers the costs).


Since when have Apple's PR releases seemed so snarky? I haven't seen so many phrased like this, which underneath the layers of pseudo support for developers and artists, is basically a big "NO U".


I feel the tone used here was an appropriate matching of what Spotify used against them.


I was thinking this too. I’m not a big fan of this “we’re champions of privacy and the little guy” bullshit Apple has been spewing lately. They have some good points and so does Spotify. But the way they address these issues comes across very condescendingly.

Want to talk about exploiting others work to make money, how about we start with their factories which they use to exploit other countries’ cheap labor?



Taylor Swift is an hypocrite.

She called out Apple when she was at her high, now she bends to Spotify and launches exclusive content on the platform. The platform that doesn't want to pay the artists even when they have all the right.


What did she actually say about Apple?

She mightn't be a hypocrite, just she may not care as long as she's paid??


> Uh, I seem to recall Apple being forced to reverse some brazenly greedy policies for their music service when a high-profile artist called them out and withheld content in protest.

I think you may want to refresh your memory on that. The subject was Apple paying artists during the trial period—when Apple itself isn't being paid. Which isn't brazenly greedy, since (a) they're not making any money during that time, and (b) that was and is still the standard. What was different about Apple was that their trial period—the period where users could subscribe to Apple Music without paying Apple anything—was 3 months, instead of the industry standard 1 month.

Swift had a legitimate complaint about not getting paid for 3 months of listening, but to describe "2 more months where listeners don't have to pay Apple a dime" as "some brazenly greedy policies" misses the mark by quite a bit.


I think they may be specifically referring to the most recent royalties hike that was opposed by Amazon, Spotify, but supported by Apple. Was most likely a PR move to make Apple look like a supporter of artists.


According to this infographic (linked below), it seems like Apple Music does give more average revenue per play than Spotify, $0.0060 for vs $0.0044. But in general, Apple Music isn’t _that_ much better than the rest where paying artists goes. It lags far below tidal, for example, which doles out $0.0125 per play on average.

https://informationisbeautiful.net/visualizations/spotify-ap...


However, it's worth noting that Tidal has been accused of inflating its streaming numbers: https://www.musicbusinessworldwide.com/did-tidal-falsify-str...

Tidal's model is supposedly more literally like the proverbial "pie", where the most popular artists get the biggest cut. So if it's true that they inflate numbers for Jay Z and Beyonce, then other artists are being deprived of revenue.


Holy cow. So you have to play a song 227 times for the artist to make a dollar off the song? Any idea what it's like for just buying the song on Amazon?


Long time reader, first post.

It’s actually more plays than that because Spotify also takes 30% of each stream payout, so it’s odd they would also complain about a 30% mechanical.

The premium accounts payout more per stream than freemium accounts.

This is also assuming the artist owns the master recording outright, wrote the entire song, and administers their own publishing and mechanical royalties. The latter being almost impossible.

More than likely if signed to a label, they will get 10% of sales, the label will get the rest. This is based on traditional album deals where you get 1 point per song. If they are also published, the publisher takes half of their performance royalties, a mere 6-7 percent of stream payout. Also the PRO(ASCAP, BMI, etc) recieves half of the mechanicals, another measly 6-7 percent. To be clear if you don’t speak music payment terms. The people that own the publishing AKA the people that actually write the song, and administer that published writing only get 12-16% per stream payout(not fair). When labels receive around 48%-58% per stream payout, this is for a specialized business loan that pays for the recording + marketing and distribution(way too much). Not to mention this loan has to be totally recouped before the artist sees any of that 10 percent, if they ever do.

To sell anything on Amazon, you are charged $40/month for a professional account, or they have an under 40 item plan with a listing fee of $.99 per item. An additional 15% is taken by them on music sales. So if you have less than 40 songs you pay $.99 a month to list them each.


Damn, this sounds so brutal. Thank you for explaining.


Artists or record labels get about 30 cents of a $0.99 song purchase I believe.


Wow interesting... thank you!


So Apple does actually pay artists more but that's irrelevant because something, something "it's a PR move".

I would imagine that the artists probably care even if you don't.


It's a big problem that artists don't care. Artists are the ones who know the actual deals they have with publishers/labels.

So instead of demanding their fair share from the labels, they go after streaming services who don't even pay them directly: all money goes through labels.


> Spotify’s aim is to make more money off others’ work

And taking 30% of each transactions is exactly what you're accusing Spotify from doing, Apple.


For context: Apple's original plan was that artists would get no royalties from users using Apple Music's (3-month) trial. Taylor Swift threatened to (maybe actually did for a bit?) pull her music, and Apple backed down.


Spotify also only recently became profitable [1]. I'm not endorsing their extremely low artist payout rates, but it's not because they're greedily hoarding money the way Apple is implying.

[1] https://www.theverge.com/2019/2/6/18214331/spotify-earnings-...


That greedy policy was not paying artist for the free period, like Spotify is doing!


As with so many matters that involve money, arguments fly around left and right that claim to be on principle, but really aren't.

When you see ESPN and Comcast argue over showing the World Series, don't buy the argument that one of them is "trying to prevent loyal customers from being able to see their favorite game", or when your local hospital group withdraws from your employer health plan that "the other side is trying to deprive you of consumer choice".

Each side is wanting to make a share of the money, and they're disagreeing over the price (or often the royalties share). No one is entitled to any particular provision of service in any of these cases. Except in regulated industries there's no law governing the "fair" share that someone has to offer, or someone has to accept. And in most cases, each side could choose to compromise what it's asking for with no damage to its model of business (not talking about $, just the principles they claim).

Spotify wants a lower $ charge. Apple owns the platform and controls that access and $ charge. That's it.

This is a private contract dispute and only of interest because you care about listening to music. There's no public right to have a music app be charged a certain amount that's called "fair". Spotify could charge nothing to consumers, and be charged nothing by Apple. It's their choice. It's Apple's choice.

Don't be fooled into "principles" when there's money involved.


" There's no public right to have a music app be charged a certain amount that's called "fair". Spotify could charge nothing to consumers, and be charged nothing by Apple. It's their choice. It's Apple's choice."

Competition laws place limitations on what a business can do. They're not free to sell or price entirely as they please.

In this case Spotify are arguing that Apple is using its dominance of the smartphone market to give an unfair advantage to its own music store. Whether or not this is true is up to the courts to decide, but it's not a frivilous case; there's a real risk to Apple that they lose.


Well, that is a separate and good point, and very much a political one. And you can never tell with the EU.

As I said in a comment far below here, it's a funny thing, how to define anticompetitive and monopoly practices, depending on how you frame the scope of the market. See Peter Thiel's book for a chapter on this.

You could say that Apple has a monopoly over developers building apps and providing their services to people using iPhones. Someone else looking at it could say that Spotify has a multitude of ways to provide its content to customers -- web, it's own Windows + Mac desktop apps, Android, etc.

Which way is a regulator supposed to look at it?

The point about Apple Music is also interesting. Actually Apple Music (the streaming version) I believe came after Spotify. Anticompetitive regulations are about penalizing behavior that discourages new entrants to the market. Apple Music was actually the newer entrant in that case.


I am very hard-pressed to believe iOS has a monopoly by most arguments.

Market share argument:

Android has 71% market share in the EU, as of February 2019 - compared to iOS's 21%. [1]

Ease of customer switching argument:

If Apple pressed too much in a way that harmed consumers, there are many other cheaper alternative Android phones vs. iOS to which they can easily port their number over (say what you want about ISPs and Telecoms, I find this to be pretty easy in the US - unless you signed an unreasonably stifling contract. Admittedly I'm unsure how difficult this would be in most of the EU.)

Supply-Side Price elasticity argument:

In theory, if the 30% cut was too high, developers wouldn't want to develop on the iOS platform, and would instead focus resources on developing on Android; the specific cut would be at an equilibrium point that enough developers would find profitable, and would still provide choice in the app marketplace for customers.

[1] http://gs.statcounter.com/os-market-share/mobile/europe


Your argument relies on combining the markets for iOS and Android apps into a single market. These are separate markets because you can't put an Android app on iPhone or an iOS app on Android.

If iOS had 100% share, you probably wouldn't say it doesn't have a monopoly on apps because you can just use desktop apps instead.

I also wouldn't say Comcast doesn't have a monopoly because they only have xx% share and you can move to a different state or country and get another provider. Or use your phone for internet instead.

> Ease of customer switching argument

This is confusing the consumer market for smartphones and the markets for distribution of smartphone app.

> Supply-Side Price elasticity argument

Yeah, if any monopoly's cut is too high, you can exit the market. This is not an argument that the monopoly is not a monopoly. This only means there is a limit to the monopoly's power.


Defining markets is what competition law is all about. There will be enormous resources thrown at both sides of this argument. I think odds are in favor of Apple. They’ll will win on the basis that the market is mobile devices generally.


Thats like saying that the market for car parts for fords and chevrolets are separate market and monopolized by ford and chevrolet respectively.

It's bunkum and doesn't fit with 100 years of antitrust law.


If the products aren't interchangeable, then they are separate markets. Someone in the market for a part that fits a Ford can't solve their problem by buying the similar part that only fits a Chevy. Likewise, he can't but a new tire to replace a carburator. The tire and carburator are also in separate markets.

However, he can buy an aftermarket part. It's a different product but the same market. So they don't have a monopoly.

I don't know much about antitrust law so I can't comment on that But I do understand basic economics. And from an economic perspective, Apple most definitely created a monopoly which they most definitely use for rent seeking.


None of your comparisons are apt because desktops are not smartphones.

An android phone is just as portable and has all of the same features as an Apple phone. The only day to day difference is having access to the apple ecosystem.

It’s nothing but a minor inconvenience to switch between android and iOS. The same can’t be said for any of your other comparisons.


> It’s nothing but a minor inconvenience to switch between android and iOS.

Switching includes spending hundreds of dollars plus hours to setup and figure things out plus several days of frustrating adjustments.

You might call that a "minor inconvenience". It certainly is more minor than my examples above. But that absolutely is enough to separate the two app markets. Virtually nobody will switch systems for an app.


"Android has 71% market share in the EU, as of February 2019 - compared to iOS's 21%."

I think it's worth pointing out that Spotify is a Swedish company, where iOS has a 58% market share, according to the site you linked. It could be that Spotify's main markets are ones where iOS has a more significant share.

"In theory, if the 30% cut was too high, developers wouldn't want to develop on the iOS platform"

The problem is not just that Apple is taking a 30% cut; it's that it's also running a competing service. Spotify are arguing that Apple are unfairly using their supposed dominance in one market (phones) to achieve dominance in another market (streaming music).


They're complaint has been made to the EU. Besides, they are a global company in many markets. Spotify are not "the little guys" they are claiming to be.


Part of the point Apple is trying to make is that the AppStore helped Spotify grow their business and prove the business model. Spotify really took of when they started the beta of the iOS App. In Sweden, and then rolling out to the countries in EU, where iPhones (at least at the time) had a dominant market share.

I still find it true that a lot of the early iOS users still have their premium subscription. And I wouldn't be surprised if iOS is dominant in the premium users of Spotify today.

I found the response by Apple good and I think they've helped Spotify grow a lot. Suing Apple feels a bit like they are shooting themselves in the foot.


> I think they've helped Spotify grow a lot

Well no, Apple's even admit that Spotify didn't get their subscriptions through them: "only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model"


That means that only a fraction of iOS user bought Spotify subscription through App Store. It doesn’t mean that many iOS users are not paid subscribers.


Even the Apple statement acknowledges that the majority of users are on the free plan and bring revenue through ads.


> Anticompetitive regulations are about penalizing behavior that discourages new entrants to the market. Apple Music was actually the newer entrant in that case.

A bit of apples to oranges comparison, but Internet Explorer was also the newer entrant in a previous case.


"Actually Apple Music (the streaming version) I believe came after Spotify. Anticompetitive regulations are about penalizing behavior that discourages new entrants to the market.

What? No, they're not just about protecting new entrants, and if you think about it for five seconds it should be obvious why. Microsoft lost it's 1998 antitrust case, despite Internet Explorer being released after Netscape.


Does Apple Music has to go thru app review process, is forbiden from private api use and overall started with 30% handicap?


> "In this case Spotify are arguing that Apple is using its dominance of the smartphone market to give an unfair advantage to its own music store." You forgot to add context; by charging 30% on IAPs. The fact is Spotify don't need to use IAPs for subscriptions. Apple even mentioned this in TFA.


But Spotify can’t even tell users how to upgrade to premium according to Apple’s rules. The best they can say is “You can’t upgrade to Premium in the app. We know, it’s not ideal.”


Right, because Apple does not want them using the App Store platform to promote, sell, and execute payment on a premium service without paying a cut of the premium price to Apple, as per their explicit platform rules.


That’s what I said in my comment, and what Spotify is arguing. They have to follow rules set by Apple that Apple doesn’t apply to Apple Music.


Honest question. Internally, do you know if the Apple Music division of the business still tracks a 30% payment to the App Store division of the business? If this was the case, does that change your opinion here?

I honestly cannot see the legal footing in this whole thing to claim that Apple has any sort of obligation to be "fair" here.


I don’t know if Apple Music has to pay 30% to Apple, but either way It wouldn’t change my opinion and I don’t think it would make a difference to the EU. It’s illegal in most places to use your dominance in one market to your advantage in another. Google got fined by the EU for doing that with Android and Chrome/other GApps. I personally think Apple should allow developers to link to an external payment system for subscriptions/iAPs if they would rather set all that up themselves, but we’ll have to wait and see what the EU decides.


It seems like you've set up an opinion where Apple Music is not allowed to exist in any form because Apple obeying the App Store rules like any other app is not considered enough.


I have no problem with Google Play Music/YouTube Music because those are treated like equal citizens with Spotify on Android. I think it’s better for everyone if Apple Music’s competitors weren’t at a disadvantage just because Apple makes the platform, and I say this as someone who owns many Apple products.


There are many instances where competitors are more or less disadvantaged because the owner of the platform is also competing. Does your favorite supermarket have a store brand? Are you against that?


If that is their argument, then it's pretty weak IMO.


They’ve listed all their arguments on their site www.timetoplayfair.com, although I wish some where more technically in-depth.


>I wish some where more technically in-depth

Or even just any legal depth. It's all just PR fluff speak.


www.timetoplayfair.com?! I have no sympathy for Spotify WRT "playing fair". Match Apple, or even better Google when it comes to paying artists, then we'll talk. They even discuss, as market leader, offering predatory pricing! The rest, as evidenced by Apple's response is seemingly misrepresenting the facts. To be fair, Spotify's marketing team have taken this straight out of the Steven P. Jobs play book; pick a fight.

Personally, I use Amazon Music because I get it as part of Amazon Prime. It has most of the music I want to listen to, but not all. I was considering Spotify, but with nonsense like this, this is one potential customer that they have lost.


How do Netflix and Hulu get around this?


When you download the Netflix app, you only get a sign in button. The only extra info you get about how to get a Netflix account is a help button that calls support. I don’t know what Hulu does, but I presume something similar.


That's a good point. Most of this boils down to not having an upgrade nag prompt. Since netflix doesn't have a free tier, they are less affected. Spotify is in a tough spot because they want free users to upgrade.


They choose not to promote premium services whose payments are executed outside the Apple ecosystem, using (free) advertising channels within the Apple ecosystem.


You can subscribe to Hulu within the app.


I keep hearing this but it doesn't make it true: Apple does not have dominance in the smartphone market. It barely reaches 20% of the smartphone market in the EU.


Spotify is obviously going to try and define the relevant market as something that frames Apple as dominant, but I'm struggling to figure out how they're going to do that. You have to define the market as some set of products that are "interchangeable" to consumers. Apple is under 20% of "smartphones," globally, and somewhere around 25% of the EU.

I don't think you can say that the App Store is itself a relevant market. Especially when you consider that Spotify's exact same services are offered across many other platforms. When you can interchange Android Spotify and iOS Spotify and receive the exact same product and services from Spotify, then how can you frame Apple as a dominant undertaking?


If multiple companies are selling the same product, and one company is making more profit from this product than all the other companies combined, wouldn't you say that this company is dominant?


It's not about what I would say, it's about how a dominant undertaking is defined under EU law. Which isn't just "ah that makes sense" as it's basis. There are legal statutes and court precedent that must be argued to prove the definition of the relevant market, and then to prove that Apple is a dominant undertaking within said market. None of this has to do with my feelings about Apple or how "fair" they are being. I have zero knowledge of EU case law, so it's hard for me to make a definitive, sourced argument here to answer your question. I just don't think it's such an open and shut case of market definition NOR Apple's dominance.


No. I would say that that company is more profitable.

Is Porsche more dominant than Toyota?


It's not about how much dominance it has. It treats its own music platform differently (not subject to Apple Store fees) than any other music platform.

Like Microsoft bundling/treating IE differently to any other browser on its platform.


Lots of regulations in that area are tied to market influence. The Microsoft case was about Microsoft pushing IE through their dominance in PC sales.


It feels like 99% of people are skipping over this necessary condition of Apple being a "dominant undertaking," as defined by EU law, which seems very tenuous at best, no matter how you try to frame the relevant market.


It dominates the profits (87%)[1] which probably correlates with the premium subscriber market.

[1] https://www.forbes.com/sites/chuckjones/2018/03/02/apple-con...


That's not how you measure market dominance.


Not sure why you’d use the EU as the market indicator. They dominate North America, which is where the biggest market is. In the EU, they are the second largest behind Samsung but it’s close and they change spots from time to time.


Because Spotify has filed a complaint with the EU about Apple's behavior, which is why we're talking about all this right now.


Apple isn't doing anything to Spotify that they don't do to all apps - both the app store rejections and the fees. It seems wrong to call that anti-competitive in favor of Apple Music.


But they are doing something to Spotify (and all other music streaming apps) that they don't do to their own app.


Ethically I think you might have a point but having a different set of rules for 1st and 3rd party applications isn't a super new idea.


But it isn't necessarily wrong to call that anti-competitive in favour of Apple in general.


I agree with everything you said they are both businesses trying to squeeze profits. My only issue which supports Spotify is that Apple has a competing music service. Strikes me this is improper. Though if no one is going to stop them it's in their financial interest to do it, 'principles' be damned. The rest of the argument is theater to drum up sympathy from consumers as you allude.


> Spotify wants a lower $ charge. Apple owns the platform and controls that access and $ charge. That's it.

I think that's an oversimplification.

When you control the platform and then use that control to favor your own products on that platform, that's anti-competitive.


Antitrust law in the US bans monopoly "tying": using a monopoly you have in one market to try to control a separate market.

I believe Spotify is claiming Apple is doing this with Apple Music vs Spotify and I didn't see this issue addressed by Apple's message.

I am not sure I agree with Spotify's claim, and US antitrust is in a parlous state, but this approach may get traction in the EU. However Apple's market share is far far from monopolistic.


>Apple's market share is far far from monopolistic.

"We're a duopoly not a monopoly" is not a particularly compelling argument.


It's all about antitrust law: what it says, how the courts have interpreted it. It's not about what I or you think.

In particular, "monopoly power" is typically not interpreted (in the US or EU) to mean literally a single supplier but rather whether you exert dominance in the market. You're correct that "it's a duopoly" is not a compelling argument but Apple would not bother to try to make that case either. They'll just point to the fact that they have about a quarter of the market world wide and slightly more than that in the EU alone; evening the US it's a little less than half the market.

I suspect they have a strong case legally, whatever the merits of Spotify's claim, and doubt they would prevail in court (though IANAL -- it doesn't matter what I think). However if the lawsuit is part of a strategy to get the EU competition commission to act, then it can be effective, even perhaps more effective if they lose!


It's anticompetitive, but is it illegal? Is it unethical? Does Apple's favoritism of its own products on its platform mean competing products cannot exist on the platform, or that they're less capable/visible?

There are many platforms which rigidly control what's allowed on it. For example, is Netflix comparable? Netflix can control which providers are represented on its platform.


To my understanding this is not illegal, and the ethics are debatable.

I don't think Netflix is comparable. The App Store is a market place, where things are bought and sold. Netflix is not a consumer marketplace.


Netflix is most definitely a marketplace, more akin to the App Store than I think you're giving it credit for.

Netflix shows a wide variety of content to the buyer, the buyer pays and consumes certain (but not all) of the content. The content owners are ultimately paid in a way that reflects the demand for their product relative to the others available in that marketplace. (It's not per-unit pricing with a rev share, but you still get paid more to license big blockbuster content than little-watched niche stuff.)

Also similar to App Store, Netflix has certain "blessed" in-house products that it pays to create itself, and lists along side the externally-created products.


That's a fair point. On the other hand, Microsoft Windows wasn't a marketplace with respect to web browsers.


> Does Apple's favoritism of its own products on its platform mean competing products cannot exist on the platform, or that they're less capable/visible?

That is what Spotify is alleging, yes.


Some markets it might be illegal, like in the EU.

Netflix isn't comparable as you can choose any other content streaming services. And also you can use any ISP to access to Netflix.


Apple is most likely using predatory pricing against Spotify which is illegal [0]. I highly doubt Apple music is profitable at a price point of $10 once the 30% cut is taken into account. But since they also get the 30% cut back, they can subsidize their product while Spotify has to charge $10 at a loss or price it at $14 which is more than Apples price and makes the un-competitive.

[0]: https://en.wikipedia.org/wiki/Predatory_pricing


I don't think you've substantiated your first claim just by linking to the Wikipedia article about predatory pricing. Even the Wikipedia article admits that the devil is in the details, as it were; it's hard to distinguish between anticompetitive pricing and competitive pricing.

You're correct that Apple Music may be a loss leader, but even if it is a loss leader, there's significantly more nuance involved before we can declare it to be predatory pricing.


> But since they also get the 30% cut back.

That's not how that works. If you charge $50/hr as a freelance software developer and you work on your own stuff for a day you didn't "get $400 back", you paid $400 in opportunity cost.


That analogy isn’t good because apple doesn’t lose opportunity by charging itself the cut to use the store. There is no indication that apple is limited in how many developers it could take on.

If apple had a limited number of apps and they were declining other apps in lieu of its own, that would be true.


So if every company that sells that product at a loss to gain market share is guilty of predatory pricing, that would include almost every VC funded company b


Oh the irony! Spotify claim in "Apple Won’t Let Us Share Spotify Deals We Know You’d Love" that Apple won’t let us share awesome deals and promotions — like 99c for three months of Spotify Premium...

Since Spotify have ~36% of the global market (Apple have ~19%) that could reasonably be viewed as predatory pricing.

It's also worth noting that Spotify charge as much as Apple and you can subscribe to the service without using IAP.


I agree with your point, but don't underestimate the power of public opinion, or the public wallet. I tend to think Apple is shitty in this instance, and I advocate all people use hardware-neutral services when possible. I stand with Spotify - that is, until they do something wildly anti-consumer or break their app.


I agree that public opinion is important, because it's usually what guides public policy.

But I would just caution people to consider whether your stance is truly based on what you think should apply generally, or just because you like the person/party in the specific case. (applies to a lot of things in life)

The power of platform providers versus app providers ebbs and flows back and forth with new technology, depending on who has the most market / customer pull. And you should try to deconfuse your principles about who should be able to charge what, from your liking of the provider -- because that can change in an instant.

Craigslist charges employers a significant fee to post their job listings. Employers have far less sway than Spotify does in that platform dispute. I'm guessing you (audience) like Craigslist, and support them in what they charge? Why?

Amazon charges companies to sell on their platform. You probably don't complain a lot about that, and that's probably just as restrictive as Apple+Spotify for some sellers. Why? Is it because you like Amazon's services?

Or you maybe like Grubhub, and don't care that it takes a huge cut from restaurant owners. (a cut that is more painful than what Spotify charges per month, to the restaurant on every single order you make)

I don't choose sides either way. What is "reasonable" is what the parties had the clout and market pull to agree to, and what the law says is acceptable in form.

Separate your principles from your preferences.


I mostly agree with you, but I think your examples might miss the mark a little.

Craigslist charging employers to post job listings doesn't seem like it would have much of an impact on the consumer market. I'd guess that the business-to-business expense in this instance probably isn't significant enough for it to be passed on to the (employer's) customers or impact their experience.

Restaurants probably don't take as large of a chunk of their revenue or have as many restrictions placed upon them by Grubhub as Spotify does by Apple.

Amazon, on the other hand, is probably the closest comparison. However, I suspect Amazon's services to their sellers involve greater capital and operating expenses than the services Apple provides to their sellers. Both companies need to spend money on tech infrastructure, development, and support. In addition to this, Apple needs to employ reviewers to act as the gatekeepers of the App Store and possibly buy hardware for those reviewers to use. In contrast, Amazon needs to build/purchase/rent warehouses, employ warehouse workers, and purchase warehouse equipment (forklifts, etc.).

Amazon also doesn't take a cut of, for example, Microsoft's subscription fees if someone orders an Xbox and subscribes to Xbox Live. This might be different for Amazon's app store for their Fire OS devices, but I'm guessing you were referring to their general marketplace.

To be fair, I probably don't know enough about any of these markets for my opinions to hold much weight, but I'm not sure if the examples you gave really line up with the situation between Apple and Spotify. But I definitely agree that it's important for people to try to remember to stay unbiased with these things.


They only make money by keeping customers happy. Isn't that why ESPN and Comcast want the World Series in the first place? Customers aren't giving them money in return for nothing like automatons.

People always try to make businesses out as the unitary function organizations where their profit is completely disconnected from serving a market and keeping that market happy.

The only time when companies can operate without keeping customers happy are a) when they have an absolute monopoly and (often the same) b) when they are given some sort of political protection from the marketplace whether indirectly or directly.


> They only make money by keeping customers happy.

You can also make money by giving customers no choice.


I addressed that in my comment.


> When you see ESPN and Comcast argue...

Important detail you left out: Comcast is a regulated utility.

Things are different at scale. There is absolutely ample precedent for regulating pricing for large scale utilities.


> Spotify wouldn’t be the business they are today without the App Store ecosystem, but now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong.

I think that's a very hypothetical claim.

> Let’s be clear about what that means. 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.

I think we should be clear that Apple built the app-store ecosystem to improve its iPhone adoption and lock-in. And Spotify isn't asking to keep 100% of the revenue. Spotify is asking for a choice of letting users pay how they wish.

The problem really is Apple wants to milk its App store ecosystem now that its popular and 30% / 15% is a very steep price / revenue loss for any significant player in that eco-system. And FWIW, Google provides a similar App store service, while also allowing users to what they choose with their phones (i.e., install side-loaded Apps).


> Spotify wouldn’t be the business they are today without the App Store ecosystem,

Apple makes Microsoft look like an angel. Using this argument, Microsoft could claim they could have made hundreds of billions if they got a cut out of every Windows app sale. Oh, and that those companies wouldn't exist if it weren't for Windows.


Look at what Apple is doing to native integration [1]:

Because it uses these deep integration APIs, we're only allowed to distribute the application using the macOS App Store (whose rejections, appeals, and eventual acceptance made for quite the stressful saga over the last week and a half)

Imagine having to get certified by the Linux Foundation, under distribution clause, to access native Linux kernel APIs. But that's what the developer of Wiregaurd has to do to gain access to native macOS integration.

[1] https://lists.zx2c4.com/pipermail/wireguard/2019-February/00...


In addition, Windows 10 requires that Microsoft approve and sign each kernel driver that's loaded, actually.

https://github.com/MicrosoftDocs/windows-driver-docs/blob/HE...


Apple popularized trusted computing. And yes, it's as bad as we feared it would be back in the '90s.


Apple popularized me not spending hours of time troubleshooting and restarting and letting me do what I want to do.


Sad/angry/sick macs the world over would like a word with you.


Ehhh I feel like Unix/Linux popularized trusted computing, Apple merely added a price tag on it. But I may be blinded by my techie point of view about "popularized".


> I may be blinded by my techie point of view about "popularized"

Yeah, unfortunately it seems like we're still in the state where UNIX/Linux can't popularize anything, especially themselves, unless they're repackaged by someone else :(


It doesn't seem like Apple said that Spotify wouldn't exist. Just that they wouldn't be the business they are today.

Which is absolutely true of Microsoft as well. The sheer productivity boon that Office has added to businesses around the world is unmatched by practically any other piece of software ever written. Most of the businesses would still exist, but they wouldn't be the same business. Excel, Powerpoint, and Word are ridiculously important software.


> And Spotify isn't asking to keep 100% of the revenue. Spotify is asking for a choice of letting users pay how they wish.

But users can pay how they wish, if Spotify didn't mind the 30%/15% cut. Spotify simply can't direct users to use their website to use an alternative payment system. I think that is a very reasonable policy for an app store, as it protects its users from poorly implemented financial info handling and scams.

I agree that Apple's article is more hostile than it needed to be, but it is only in response to an unreasonable attack by Spotify on Apple's IAP policies.

Regarding the walled-garden App Store policies of Apple, it's not friendly to enthusiasts and some developers, but it is good for most Apple consumers, and helps less tech-savvy users trust Apple's App Store.

Android has freer permissions on installing apps, because that is necessary for vendor adoption. However, it is unclear if this is still ultimately a better decision for consumers on aggregate.


> But users can pay how they wish, if Spotify didn't mind the 30%/15% cut. Spotify simply can't direct users to use their website to use an alternative payment system. I think that is a very reasonable policy for an app store, as it protects its users from poorly implemented financial info handling and scams.

Give me a break. It doesn’t take 15-30% to implement a secure payment system. This is proven by Apple itself: Apple Pay charges very little for secure payments for physical goods.


Sure Apple makes money off their share of the payment system. Why shouldn't they? They built the whole thing from scratch, including the phones it runs on.

Also Apple doesn't just support the secure payment system, they also handle distributing the money and providing customer support to the end user and the developer. That isn't free either.

If you don't like the Apple model, there are alternatives.

Apple's argument (which seems compelling if we judge it on the result) is that their model is the best solution for customers and developers.


>If you don't like the Apple model, there are alternatives.

What alternatives? Without allowing developers to create 3rd-party payment systems, all payments must be routed through Apple.

>Apple's argument (which seems compelling if we judge it on the result) is that their model is the best solution for customers and developers.

Apple's model does not seem to be compelling for developers/content creators. Developers need to pay a large (for some) amount of money and give Apple a large cut of their profits.

It's also unclear why Apple's model is best for consumers. While it seems good because it protects consumers from scams on third party sites, for reputable companies like Spotify or Netflix, there doesn't seem to be a risk, except for increased prices to the end user because companies need to compensate for losing a third of their earnings.


But it's quite interesting that Apple seems okay with not taking a cut of e.g. Uber, but does want to take a cut of Spotify. Why should they be treated differently?


>>if Spotify didn't mind the 30%/15% cut. Spotify simply can't direct users to use their website to use an alternative payment system.

No they cant, that is a violation of Apples Policies and would result in the App being removed, Amazon tried that with ebooks years ago. You can not redirect a user for payment inside the app, to a payment system outside the app.

>Regarding the walled-garden App Store policies of Apple, it's not friendly to enthusiasts and some developers, but it is good for most Apple consumers, and helps less tech-savvy users trust Apple's App Store.

It is not an either or option. I think Google has struck a good balence, Their App store is pretty locked down today, but if you know the "hidden" menu and what steps to take you can easily unlock the device and install alternate stores and apps.

There is zero security reason why Apple could not supply this type of hidden unlock for people, it is pure monetary control that they desire


> as it protects its users from poorly implemented financial info handling and scams

And, just coincidentally, that 'protection' is very lucrative for Apple.


IMO apple’s subscription management is greatly undervalued. When I go there and cancel a subscription, it just cancels and that’s it. No intentionally buried links to hunt down, no “But why are you leaving? :(“ guilt trip modal, no convoluted payment method removal process.

I would be much more supportive of efforts to push Apple to allow third party payment systems of the practices I mentioned above weren’t so common.


It's not an even playing field though. Apple has a competing music service and they can undercut their competition by avoiding the 30% transaction fee, squeezing competitors into submission.


I think this is the cleanest seam to cut on. If Apple had to compete fairly in the ecosystem the 30% cut would much more likely be something Spotify could stomach -- not an existential threat to their business, just the cost of doing business on iPhone.

As things stand, Apple has mixed priorities. They want to enable developers where those developers add uniquely to the platform, but they want to outcompete developers where they cannibalise sales from Apple's own products.

This dual remit doesn't help consumers. If Apple's music offering had to pay the 30% tax "for real", they might have to charge $13 too, and that might make the iPhone an expensive platform for music-listeners, and they might be incentivised to cut their margins to compete with other platforms. We could all agree, "Sure it's expensive, but it's their turf and they can run it badly (to their own detriment) if they want."

Not sure where you draw the line between first-party app and OS functionality though. I imagine in some cases it'd be less clear than here.


> Apple connects Spotify to our users.

This is a bit of a ridiculous claim. From another perspective, an iPhone is just another way to access your favorite apps and content. Taken to more of an extreme, imagine Comcast or T-Mobile claiming that they provide users to Spotify... Apple is easily just a middle man here but they make themselves sound like the entity that owns the users and plugs them into apps. It's not like people buy iPhones just because they're shiny pieces of aluminum and glass, and using apps is secondary to that.


This reminds me of the ISPs getting upset about the bandwidth they have to deliver on behalf of Netflix.

"Our platform enables your app" is true in both cases. But so is "our app brings people to your platform." The power imbalance is that it's easier to build a competing app than a competing app store or ISP.


The 'our users' bit is actually one of the most annoying bits. As if anyone that uses iOS is under Apple's control as to what they are or aren't allowed to do or be exposed to. It reveals a lot about how they view their position in the relationship. Between them and users. As if when I download an app or game, Apple is bestowing me to the app developer.


That's right back to the net neutrality debate and the claim that ISP should charge prices that scale with customer profitability rather than network load.


> I think that's a very hypothetical claim.

How is this is a hypothetical claim? It is blatantly obvious. Spotify's early days were entirely dependent on the mobile marketplace. Even now, desktop use constitutes a tiny fraction of their total users.

It's not a hypothetical claim at all, really.

> 30% / 15% is a very steep price / revenue loss

Source? Because 30% / 15% is a common middleman commision for most platforms.

> Google provides a similar App store service

This is ridiculously far from the truth. Google's Play Store isn't curated in the least. Malware regularly pops up, the review process is effectively nonexistent, and the quality of apps on the Play Store is thus far below what one can get from the App Store.

There are costs to reviewing every app. I don't think it's fair for you to say 30% is unfair unless you (a) compare the costs to other middlemen, and (b) figure out how expensive the review process and other infrastructure is.

In general, all you really seem to be doing is promoting freeloading off the App Store. Utilize the benefits it provides, but have users pay for your service via a side-channel so you don't have to contribute back to the ecosystem.


> Spotify's early days were entirely dependent on the mobile marketplace

Spotify's earliest days were before smartphones. I had Spotify on my computers before they'd even released an iPhone app.


This is response to Spotify's site which has the timeline - https://timetoplayfair.com/timeline/

Spotify launched on Desktop after the App Store launched.


> Spotify launched on Desktop after the App Store launched.

Your link seems to say the opposite.


Um, no? Are you confusing between launch of the App Store itself and launch of Spotify's app on App Store?


You're acting like Apple gets nothing out of a healthy app ecosystem (if there weren't apps, no one would bother to buy an iPhone), or from their App Store review process (many people prefer the iPhone because they feel safer with iPhone apps than they would with Android apps). It's not like Apple provides a developer SDK and reviews apps out of the goodness of its heart.


Underrated comment.


Have you ever tried getting a subscription with Spotify on an account linked to facebook, where the facebook account was disconnected?

It is impossible to stop the subscription. No thank you, I will trust my payments with Apple.. Esp. subscriptions.


This is something I think people miss. Almost every other company I have subscriptions with make them a pain to cancel. Subs through the App Store are easy to find and cancel. It's very consumer friendly. Plus as you said, I'm not a fan of giving every service I want to use my CC.

Is that worth 30%/15%? I don't know. The fact that 15% exists shows that Apple is thinking about the pricing and adjusting. Apple just doesn't do anything quickly.


> Let’s be clear about what that means

Is anyone else bugged by the "Let's be clear/To be clear" prefix that gets thrown around a lot these days? It seems unnecessary. If you're being clear then that will be self-evident. It seems like a way to preemptively trick the reader in to taking whatever follows as correct and authoritative.


I wonder if this is why it has become so popular

https://www.politico.com/story/2009/08/obamas-catch-phrase-l...


They can fuck right off with that rhetoric - businesses built and popular before the App Store get strongarmed in the same way.


We can also say Apple Music wouldn't be the business today had Spotify not explored the business of music streaming years ahead. Now they just took the idea themselves and pretend that Spotify contributes nothing.


Realising you can make a great inexpensive product by paying a minuscule fraction for the content isn't exactly business innovation. The innovation was paving the way for artists to be stiffed; Apple had no choice but to compete in order to stay viable.


I think Spotify was quite happy with _not_ keeping the in-app transactions, in exchange of paying a smaller cut to Apple.


They’re not milking anything. Apple has, as far as I know, always charged 30%. What has changed is the way we buy and pay for apps and services.

Everyone wants to move to the subscription service model and Apple has developed rules accordingly.


The issue I see is this, Apple Music does not play fair, it is similar priced with the competition but it is in fact subsidized by Apple, any application or service it is in danger because if Apple wants and it is competent it can create an Apple version of it and give itself smaller prices(or free), native integrations that the competition does not have. This is not fair for the users (it may be fair f5rom other POV but not for the users, fair competition is better look like IE as an example)


Apple Music is priced about the same AND they pay the artists more. Sorry but what's the scam?

Consumers pay the same price. Artists earn more. Who cares how Apple shuffles fictional numbers in their internal accounting?


The thing is obvious and I will explain it again, using a made up example so less emotions are attached

1 I have an app or service say X and I sell it for 5$ and this is the lowest price I can afford

2 Apple wants a 30% cut, so I will have to make my app 7$ .

all is fine so far, the problem is at step 3

3 Apple clones my app names it iX(my original app was named X), makes it 5$ (or bundles it with some gift cars or other deals if you give them more money).

4 Apple's iX gets access to private APIs, is cheaper(or free) since is subsidized, Apple also forces me not to remove from my X app any links to my webpages if I sell things there

Now, please, consider THE USER, what does the user get:

- the user gets less options if my app X is killed or I remove it from the store

- the user pays more if I raise the prices

- the user does not see m,y sale pages because I can't show it in the app

- the X app that some(a big number of ) users consider it better can't access native features like iX can

So, get 30% or whatever you want but compete fair.


I get your point. I got your point the first time. But there are a lot of "ifs" in your hypothesis.

Meanwhile Apple is not attempting to undercut Spotify in the retail space. And they are paying artists substantially more than Spotify for the music so they're clearly not attempting to run a more profitable business.


There is no IF, all Apple apps have unfair advantages, not only financial but I also mentioned access to private APIs.

The user looses when there is not enough competition, like you get stuck with a worse browser (but in this case this may be a deliberate thing to protect the app store)


With that idea, we should forbid grocers from charging less in-store for their brand name items that compete directly with mainstream brands (Safeway Select, WholeFoods 360, etc)


Can you comment on my point and not add an "What about x" ? My point is about the user, do I benefit is a supermarket makes it own products cheaper, Yes , but if it makes my preferred product more expensive to force me to buy the product they want, this does not benefit me,

again, tell me about what the benefit is for the user/consumer not what about x, the market shares, the laws in US, free market ....


The consumer gets an equivalent service for cheaper, that is like literally the definition of consumer benefit in economics. If you truly believe that X is better than iX than you can pay the extra money for X, but if iX is just as good and is cheaper than X the consumer benefits because they can spend less to get the same service.


This is wrong, because you get it cheaper because the better product price was inflated.


I thought the problem was, that their own apps do not have to pay 30%, so they can easily replace any app with their own, if they choose to.


But that's a too simple way to look at it. I am not trying to defend the 30%, but just saying 'their own apps do not have to pay 30%, so they can easily replace any app with their own' doesn't go far enough. They got two options: a) make a 30% on $10/month from Spotify -> $3 in Apple's bag for no work or effort at all. Almost pure profit. b) sell their own music solution for $10/month (INSTEAD of that customer going to Spotify) and have to pay out X to musicians, companies, younameit. Higher hosting and streaming costs too. If X>$7/month Apple loses. If it's $7 Apple earns as much but no more than with option a), if it's less than $7/month only then Apple wins.


  $3 in Apple's bag for no work or effort at all
I agree with most of what you said, but come on. Running (one of?) the biggest software distribution and payment processing systems on the planet is hardly "no work or effort at all".

This is the same sort of rhetoric that calls dropbox a weekend project.


True that. I agree with you. I overstated.

There's credit card costs etc associated with that as well. Doubt it's $3/user per month though and the distribution costs are minimal (only downloads of app updates) compared to the streaming costs (which could be multiple GBs every month).


Apple: $ to build the app, $ to maintain the music label relationships, $ to manage paying royalties, $ to manage server infra, $ for bandwidth.

Spotify: $ to build the app, $ to maintain the music label relationships, $ to manage paying royalties, $ to manage server infra, $ for bandwidth, $ to Apple for the "privilege" of being listed on the App Store and using Apple's payments system (which they have no choice over).

Both companies have the exact same base costs to operate their service. But Apple gets to charge for subscriptions through the app for free, whereas Spotify does not. That's literally the only difference cost-wise, and IMO Spotify is correct to consider that anti-competitive. Whether or not Apple would make more or less money shuttering Apple Music and transferring all their customers to Spotify is completely irrelevant.

And no, I don't consider "creating and maintaining an iOS payments system" to be a part of Apple's costs here. That would exist even if Apple Music did not, and the marginal cost of having Apple Music use that system is virtually nil, certainly not 30% of Spotify's subscription fee.


From what you're saying it sounds like Spotify should have built a smartphone platform. It's not free for Apple to build and maintain the App Store and everything that entails—from API documentation to the rock solid software platform that is being kept up to date and is astonishingly robust compared to any internet-connected consumer platform that came before it.

Some apps pay for that effort with a cut of the app's retail price. Spotify pays for it with the tiny fraction of their users which (a) pay for it at all and (b) pay for it through their iOS device.


It's not free to build a platform, but I believe the cost has already been paid by the users when they buy their device.

No reason to have users pay twice, when they buy their device and when they try to use services on the device they already have.


The cost for the hardware platform is paid by the customer when they buy the phone.

The cost for the store platform is paid by the developers when they sell the app.


There is zero evidence that Apple does not pay the 30%.

We don't see the internal accounting but it's quite likely they do. Internal revenue distribution is standard practice in almost all enterprises.


There’s clearly a difference between moving money from one internal balance sheet to another, and moving it to an entirely different company’s balance sheet.


>> Internal revenue distribution is standard practice in almost all enterprises.

This is both true and generally irrelevant for business, except for the particular matter of taxation.


You couldn't be more wrong.


What has changed is Apple has a direct competitor product.

Firstly, that competitor product has technical advantages as it can access APIs that Spotify cannot (SiriKit, background audio on earlier versions of WatchOS).

Secondly, that competitor product is at a financial advantage because of the 30% fee.

It's not the fee itself that's the issue. It's that Apple is (arguably) using it's control of the platform to compete unfairly against Spotify.


> And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions.

Which you mandate Spotify uses. This isn't an enumerable benefit to Spotify, it is the lock-in mechanism that makes the Apple Tax work.


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