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Apple Says Spotify Wants 'the Benefits of a Free App Without Being Free' (engadget.com) 215

Apple has responded to Spotify's European Commission (EC) complaint. In a press release, the company said that Spotify "seeks to keep all the benefits of the App Store ecosystem ... without making any contributions to that marketplace." It added that the App Store has generated $120 billion for developers while offering users a secure platform, and that Spotify is seeking to side to sidestep the rules that every other app follows. From a report: "Spotify has every right to determine their own business model, but we feel an obligation to respond when Spotify wraps its financial motivations in misleading rhetoric about who we are," the company wrote. Spotify's main argument was that Apple's own music service, Apple Music, isn't subject to the same restrictions of its own app. "[A]pps should be able to compete fairly on the merits, and not based on who owns the App Store," wrote CEO Daniel Ek. "We should all be subject to the same fair set of rules and restrictions -- including Apple Music." It added that Apple had often stymied it on app updates and locked it out of Apple services, "such as Siri, HomePod and Apple Watch." Finally, it noted that Apple had blocked communication with its own customers on things like special offers. In response, Apple addressed each complaint point by point, while criticizing Spotify's treatment of musicians and artists. It said that it has approved nearly 200 app updates, and "the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every app follows."
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Apple Says Spotify Wants 'the Benefits of a Free App Without Being Free'

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  • by fred6666 ( 4718031 ) on Friday March 15, 2019 @09:35AM (#58277958)

    to Apple. Problem solved.

    • by WankerWeasel ( 875277 ) on Friday March 15, 2019 @09:40AM (#58277992)
      They likely do so, for legal purposes. For example, when Facebook or Google use their own advertising platforms to advertise to their visitors, they must pay just the same as anyone else would. Sure, it basically come out of the budget in one part of the company and goes into another, but it has to be done, and all applicable state and federal taxes must be paid too. It's not completely free to them, even on their own platforms.
      • all applicable state and federal taxes must be paid too.

        Most states exempt business-to-business transactions from sales tax. There is no federal tax on advertising services either, so there are no direct tax liabilities.

        It will shift around their profits, but the accountants and tax lawyers are there to make sure that the profits don't disappear. Or to exploit tax regulations, if the situation allows, for more profits.

        It's not completely free to them, even on their own platforms.

        It may not be technically entirely free, but it's scarcely more a rounding error on their P&L.

    • 1) Apple has lawyers and accountants; likely they are doing the minimum required. That said, talented people in those areas likely have creative accounting techniques for minimizing their self-payment.

      2) Apple's counterpoint is a clear win; Spotify is just being another greedy corp testing the boundaries. That said, Apple didn't address how they pay themselves so I would guess something isn't quite right... the lawyers might be preparing to remedy that if that could be disclosed in detail.

      3) They said "Appl

      • by Vrekais ( 1889284 ) on Friday March 15, 2019 @10:41AM (#58278466)

        What are Spotify getting for the 30% every month though for each user, after the user finds the app and installs it. For most apps that 30% usually of a small figure like £1 or £2 is almost like a listing fee, 30 to 60 pence to have you app on the store and in the search results.

        A Spotify subscription costs £9.99 per month, and if you pay for it through the phone with your Apple Account £3 of that goes to Apple every month (for the first year). Apple aren't running any of Spotify servers, they aren't paying musicians with that money. They are offering the exact same services as the other apps get but for a monthly fee rather than a one of payment.

        I think the most reasonable compromise would be 30% of the first month.

        • And the percentage of Spotify users that maintain the free tier of service, giving nothing to Apple? Apple’s argument is essentially that it averages out, and that makes it fair for everyone.

          • The people on the free tier are paying customers of Apple. They've bought a device that supposedly allows third-party applications to run. Please don't claim that Apple is getting stiffed by people using their very expensive device for exactly what it's designed for.
        • Apple are basically running servers on Spotify's behalf though, handing the downloads, refreshes, and everything else for their application which has vastly more "free" downloads (that Apple still has to support with their infrastructure) than paid ones. Additionally, most Spotify memberships are paying Apple out at the 15% rate for > 12 months, which also includes ~2% card fees right off the top.

        • by shilly ( 142940 )

          Spotify are paying for the potential to make money from more than a billion active users. It's a revenue share each time this potential is realised. Apple put a significant amount of time and money into making the platform work and building up that 1bn+ user-base. Why should Apple let Spotify have access for free?

      • by sh00z ( 206503 )

        5) If you look over Apple's details, you'll see that they have a huge volume of Apps that skip the 30% fee. So clearly they are shifting the majority of overhead costs to the big players who can afford it. They don't mention what their profits or operating costs are for their store ; perhaps somebody could find an SEC report? I would guess that it is on the high end of normal and nothing close to typical monopoly profits.

        Can you cite one? The biggest player I can think of is Amazon, and their Kindle app complies because you can't buy a book in the app! They direct you to a browser to make the purchase, where the 30% fee isn't applied.

  • The Truth: (Score:5, Insightful)

    by MikeDataLink ( 536925 ) on Friday March 15, 2019 @09:35AM (#58277960) Homepage Journal

    The TRUTH is, Apple is a dick when it comes to the handling of the app store and its walled garden iron fist controls. They could be better and should be.

    The TRUTH is, Spotify is ruining music in many ways by paying fractions of pennies in royalties. Some artists with millions of song plays have received on $80 for a year of royalties. Fix that, then stop trying to side step app store rules. They could be better and should be.

    Two companies who are both pulling bullshit are mad at the other for pulling bullshit. That's the Truth.

    • Re:The Truth: (Score:5, Insightful)

      by Nidi62 ( 1525137 ) on Friday March 15, 2019 @09:37AM (#58277972)

      The TRUTH is, Spotify is ruining music in many ways by paying fractions of pennies in royalties. Some artists with millions of song plays have received on $80 for a year of royalties.

      I wonder how much their publisher received though. I bet it was a lot more than $80.

      • Re:The Truth: (Score:5, Informative)

        by Solandri ( 704621 ) on Friday March 15, 2019 @12:32PM (#58279414)

        The TRUTH is, Spotify is ruining music in many ways by paying fractions of pennies in royalties. Some artists with millions of song plays have received on $80 for a year of royalties.

        I wonder how much their publisher received though. I bet it was a lot more than $80.

        Spotify pays $0.006 to $0.0084 per stream [cnbc.com] to the holder of music rights. That works out to $6000 to $8400 in royalty payments per million song plays. If the artist is only getting $80 for a song that's listened to millions of times in a year, their publisher is the one screwing them over. The publisher is keeping more than 99% of the royalty payments, passing on less than 1% to the artist.

        (Sanity check: Spotify averaged 1.7 billion listening hours per month in 2015. [musically.com] At 3.5 minutes per song, that's 29 billion song plays per month, or 350 billion song plays per year. At the above royalty rates, they'd be paying about $2-$3 billion in royalties per year. And indeed that's about how much they pay in royalties [statista.com] - $3.9 billion in 2018. So yes, it is in fact the record labels who are screwing the artists over, not Spotify.)

    • Re:The Truth: (Score:4, Informative)

      by fred6666 ( 4718031 ) on Friday March 15, 2019 @09:51AM (#58278078)

      The TRUTH is, Spotify is ruining music in many ways by paying fractions of pennies in royalties. Some artists with millions of song plays have received on $80 for a year of royalties. Fix that, then stop trying to side step app store rules. They could be better and should be.

      These artists are free NOT to be on Spotify if they think their music is worth more than that.
      I doubt Google/Deezer/Apple and other competitors are paying much more.

      • And Spotify is free to not be on the iPhone if they think their app is worth more than the the 70% of the price they charge for it on the App Store. They can also, wait for it, INCREASE THEIR PRICE to what they DO think it is worth - and then find out if their customers agree with them.

        • I agree with that, but Apple should at least be forced to allow the convenient installation of Spotify from outside their store. Just like Android does.

    • by dcw3 ( 649211 )

      Please explain...

      How is music being ruined?
      Tell us which artist is getting paid $80 for their "millions of song plays"?

      And finally...Why, if you don't like it, don't you take your business elsewhere?

    • Re:The Truth: (Score:5, Interesting)

      by thegarbz ( 1787294 ) on Friday March 15, 2019 @10:45AM (#58278486)

      You have dramatically simplified Spotify's impact on music while ignoring Apple's. The amount of money artists get have nothing to do with the sums spotify are paying for access to the music. That is the bullshit from the industry which invented bullshit.

      An *rights holder* with over a million streams would be receiving somewhere between $30000 and $84000 according to Spotify's current rate. If the artist is only getting $80 then I would really be looking at who is the middle man between Spotify and the artist.
      A reference I found to an "artist" rather than a "rights holder" puts the figure closer to $10000

      In the meantime Apple is here to help right? I mean for a million songs the "rights holders" would get a whopping $37000 from Apple which would really help those artists sleep at night.

      And while it's nice to criticise Spotify for the money equation, maybe you should look at their balance sheet. After all they will cease to exist if they keep up their trend of endlessly losing money. Is it much of a surprise with little income, and passing more than all of their profits to the record industry they are somewhat pissed at the thought of paying Apple on top of that?
       

      • by Paxtez ( 948813 )

        Do you have a source for that?

        The one I found cited a $0.00397 per stream rate for Spotify
        [ https://thetrichordist.com/201... [thetrichordist.com] ]

        Which works out to be $3,970 per million streams.

        Interestingly Apply does seem to pay almost twice as much at $0.00783 / stream.

    • This.

      I wish I could give more points - the score on this should not be limited to 5.
    • The TRUTH is the vast majority of Apple users of Spotify pay no money to Apple. If they do pay for Spotify subscriptions they are doing through other means like Spotify directly. The 30% fee only applies if the user pays Apple through the app which amounts to a handling fee.
  • I haven't had an iPhone since the 3gs but back then you couldn't get apps that would stream music over the cell data network. The Palm Treo I had previously did it just fine, but the Iphone locked it to Itunes only. I couldn't stream music off my server unless on my local wireless network.
  • Editing needed (Score:5, Insightful)

    by LynnwoodRooster ( 966895 ) on Friday March 15, 2019 @09:47AM (#58278046) Journal

    "the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every app other than an Apple app follows."

    That extra, bolded part, is what Spotify is complaining about, Apple. You have terms you are hell-bent on forcing on others, but you don't have to play by those rules yourself, do you...

    • by dcw3 ( 649211 )

      If you owned a shopping mall, and had your own restaurant inside that mall as well, would you charge yourself the same as you charged other restaurants? Why should Apple have to play that game?

      • If you owned a shopping mall you would not be able to charge rent for your shop based on how many customers visit it. You would additionally not be allowed to punish a company in your mall who decided to offer an online store by preventing customers who signed up online from walking into their store but still permitted them to walk in your own.

        If a shopping mall did that (which is the complaint filed against Apple) then they will find themselves in court.

        Except maybe not in the USA since your antitrust laws

        • Except maybe not in the USA since your antitrust laws are so stacked to required a tangible financial impact on consumers and completely ignores B2B competition that they are essentially not worthy of the title antitrust laws.

          In the U.S., Anti-Trust law exists to protect CONSUMERS, not corporations.

          One thing I've noticed is that there seems to be a dearth of consumers demanding that Apple cut App Store developer fees or that app developers be able to spam-on-demand app users. They're also not asking for price increases on apps or services obtained through the App Store. In fact, ACTUAL BUYERS of Apple's products and services seem to be generally quite happy with them. Those that are not go buy an Android or some other device.

      • If you owned a shopping mall, and had your own restaurant inside that mall as well, would you charge yourself the same as you charged other restaurants?

        The accountants would make up some nominal amount to put down in the "rent" category in order to itemize tax-deductible expenses. And in order to keep privileges that the city's zoning board grants to the mall, a city aware of the possibility of monopoly abuse would require this rent to be within a reasonable range of what Chick-fil-A and other tenants in the food court pay.

        • by dcw3 ( 649211 )

          I'll agree that the accountants would do whatever was necessary to maximize any tax benefits, but that's no different than any other company.

          When have cities given a shit about monopolies with maybe the exception of ISPs?

    • I imagine that Apple has a lot of API calls and OS functions that it keeps to itself too. Maybe it should be forced to publish all of that....who cares if security goes to shit.

  • 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 mo
    • by dcw3 ( 649211 )

      I'd mod you up if I hadn't already commented.

    • Except in regulated industries there's no law governing the "fair" share that someone has to offer, or someone has to accept.

      Music is a regulated industry pursuant to Title 17, United States Code. In addition, the Sherman Act as amended regulates certain aspects of all industries that engage in "commerce [...] among the several states".

      Spotify wants a lower $ charge. Apple owns the platform and controls that access and $ charge.

      Specifically, Spotify alleges that Apple is "dumping" the service of negotiating with labels and operating streaming servers by providing it to users for free. (In competition law, dumping [wikipedia.org] refers to pricing a good or service below cost in order to harm competitors.) If the music publishers and reco

  • by SmaryJerry ( 2759091 ) on Friday March 15, 2019 @10:05AM (#58278184)
    Any other payment service charge will be around 2% but they try to justify 30% (but hey you get to 15% eventually right?). Apple also acts like they are the ones causing the downloads... no dude you are just a large market share of phones. Not every app gets 300 million downloads, it is the quality of the app that causes that. Stop trying to take credit for other people's work.
    • by tepples ( 727027 )

      I imagine Apple set its payment service charge at 30 percent for a few reasons. One of them is that the underlying credit card and ACH payment processors charge roughly 30 cents per transaction no matter the total. This lets Apple not bleed money with a lot of 99 cent transactions.

    • No other payment service will host, validate, and serve up the Spotify app (with free updates) for the millions of users who want to download it and pay no money though. That's far from an inconsequential cost.

    • Apple is hosting the app and the updates in addition to the payment system. While you could say that payment fees shouldn’t be more than 2%, how much would you pay for a App Store to do the same?
  • by oic0 ( 1864384 ) on Friday March 15, 2019 @10:11AM (#58278212)
    If Apple isn't going to allow any other apps or apps stores to be loaded except through their app store, then they shouldn't be allowed to charge any percent. If they allowed other stores and side loading, then it would be fair to charge whatever they wanted. This is basically like saying you can only buy parts and accessories for your car through the dealership.
  • by reanjr ( 588767 ) on Friday March 15, 2019 @10:17AM (#58278258) Homepage

    Apple needs apps from third parties in order to have a useful platform. Spotify benefits Apple ecosystem by gracing the App Store with their presence. No need to send remuneration to Apple at all.

    • Only if servers, payment systems, and infrastructure costs nothing would you have a reasonable argument. The point you missed is that free apps cost nothing to the developer and Spotify does this currently. What Spotify wants is when their iOS users pay for their subscriptions through Apple that Apple should get no cut.
  • by fluffernutter ( 1411889 ) on Friday March 15, 2019 @10:30AM (#58278340)
    Spotify cannot reasonably compete head to head with Apple on their app because as Microsoft has proven, there is no room for any more ecosystems. I could blame Microsoft because they should have seen the whole 'app store' thing coming, but Spotify is a new company that didn't have the fortune to get their foot in the door in time. Apple has an unfair leverage against Spotify.
    • Apple has an unfair advantage over Spotify’s current advertising and spamming approach to get users to upgrade to a paid account. That is all.

      They can require users to set up an account on their website, and gather the data there, and manage payments there. It is just another step for users though, which will draw people away.

      • They can require users to set up an account on their website, and gather the data there, and manage payments there.

        Except Apple is not likely to approve an app that works like that.

  • Apple just wants to profit 30% from all the hard working developer revenue. And I do not particularly eye here Spotify, but all the small indie ones. We work so hard, day & night, weekends, rare holidays you name it, and Apple just grabs 30%. As if they do not have enough money, and we would thankful directly sell it! https://www.youtube.com/watch?... [youtube.com]
    • Okay, how much would you pay as a developer to create a worldwide App Store that handles payments from hundreds of countries as well as distributes the app and updates. Also bear in mind Apple’s App Store is used by hundreds of million of people. You could develop your own infrastructure but I don’t think it would be less than your 30% fee.
      • by ReneR ( 1057034 )
        Not more than the usual credit card transaction fees. We use PayPal for that and pay 1.x% to 6% per transaction. and happily handle the rest of the deployment for Mac, Linux, Windows ourselves. We anyway need a web server and such. Btw. Apple is zero helpful, they randomly reject, delete, and don't offer real updates tiers, unless you create new apps or switch your users to a subscription model, ..! :-/
        • You can build a web server that handles hundreds of millions of users and billions of downloads for 1% fees? What magically technology is this? Or are you false equating what you can do with what Apple actually offers. You may not think Apple is worth it but you can’t say you can build something comparable for less.
        • by shilly ( 142940 )

          But you want Apple to provide you with a cheaper or free way to make your app available for its hundreds of millions of users to buy, right? And those hundreds of millions of users might well buy your app, because they trust that apps on the App Store aren't going to harm their phones, steal their data, etc, right? And that's because of Apple's role. That's what your 30% pays for.

      • by ReneR ( 1057034 )
        PS: let's talk numbers, if an Indy developer team makes 100.000$ they pay 30.000$ to apple. That likely is the difference of breaking even or not. And the difference of allowing new innovative creators to grow, or just the big imperial monopoly to grow even more. I rather have 1000 good and growing individual companies and just Apple, Goole and Microsoft. And it is not that Apple is doing such an amazing job on designing amazing software and hardware the last years :-/
        • PS let’s talk real numbers: if a development team make $1 on an app how much more work do they have to do for $100,000? If they make zero changes to the app, they do zero more work. Apple does all the heavy lifting. If the developers want to manange their own servers, their own network, their own websites, their own payment systems how many thousands of $ would they have to spend before they make $1. And then they have to scale everything as they get more customers.
  • Oh god Apple is bitching about them not getting money for doing nothing.. The Apple store is just one big ripoff for developers, Apple is getting richt over the backs of other for doing hardly anything. They could easily run their store with profit when they would lower their take to 10% (no no % for subscriptions).
  • It added that the App Store has generated $120 billion for developers while offering users a secure platform, and that Spotify is seeking to side to sidestep the rules that every other app follows.

    I always laugh when they quote revenue figures instead of profit. It doesn't matter how much revenue they generated if it isn't making any profit. As a professor of mine once said, you can make a LOT of revenue selling $2 bills for $1 - you just won't be in business very long doing it. You see this all the time in entrepreneurial magazines. They'll quote how much revenue some new business is doing and leave out the fact they are losing money hand over fist.

    I don't have a dog in this fight. I don't use

  • Google Play Apps With 150 Million Installs Contain Aggressive Adware
    https://tech.slashdot.org/stor... [slashdot.org]

    Tell me again the problem with Apple's walled garden?

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