Addressing Spotify’s Claims - Apple

[borghe]

The issue is the fact that Apple has a competing product that because of its nature as a 'first party' product does not have the profitability issue that Spotify does on their platform. All of the other talk Apple tries to push to deflect from this is rather immaterial.

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Spotify has a profitability issue because Spotify has a profitability issue. period. that this gets ignored for "but apple...." is beyond ridiculous. Apple is NOT the cause of Spotify's profitability issue, see: recording industry lawsuit.

That misses the point I was making. I was making the point that you can't complain that Netflix only pays $99 because Apple literally wouldn't sell as many devices (especially Apple TV) if Netflix wasn't available. They're bringing Apple revenue in more than one way.

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I mean Netflix/Apple is tough to nail down.. two massive companies who benefit symbiotically from each other.. but it should be noted that Netflix is playing by Apple's rules (not allowing subs through the app) AND is not suing Apple on this basis (nor are they as of yet joining in on Spotify's lawsuit... which is a bit telling)

The flip side of that is by charging 'industry norm' Apple makes more margin due to not needing to pay anyone a cut. This allows them to pay artists more, which puts pressure on negotiating rounds to increase payouts, which can make '$9.99 but pay 30% to platform holder' unsustainable, but '$9.99 and keep 100% yourself' ok.

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welcome to the retail industry and store brands, for oh about the last 70 years..... if Spotify doesn't like competing against the store brand at the same price they can.... not sell their subscription on the store.

also the "but keep 100% for yourself is doable" is disingenuous, but I think you know that.. if it weren't... they wouldn't currently be suing the recording industry. Let's not for a moment pretend that Spotify is anywhere near profitable, NOR pretend that that is even mostly the App Store cut's fault.

 

[Prototype Viktor]

The rules for the App Store is that you can't give your users instructions, links or Call-to-Action to other payment solutions than Apples IAP.

If you try to publish such a thing for your app, Apple will just block it until you remove it.

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also the more steps to a sign up the less conversions you get for sign ups

 

[You Are Viewtiful]

The EU is going to take Apple to the cleaners. This PR statement is for the schmucks (Apple fans). The courts won't care that Apple pays more to artists, what does that have to do with being anticompetitive? The iPhone prioritizes Apple Music above all else and that's closed-case of anticompetitive behaviour.

 

[Kthulhu]

knock it the fuck off with "forcing". This is all the way back to the generic version argument. You sell your product in someone else's store, it's the stores prerogative to take a cut. We enter a digital services landscape and people suddenly become stupid about this.

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In terms of iOS there is only one store. The cut wouldn't be as much of an issue if there were other ways to get apps or if Apple Music didn't exist maybe I'd agree, but they do so I don't.

generic branding has nothing to do with selling it outside the App Store. Back to "digital services make people throw common sense out the window". Apple has a store. Apple selling iPhones at the Apple Store have higher margins than selling iPhones at Target and Best Buy. That's how free market economics work. IF Spotify doesn't like that, they have the right to sell their subscriptions outside of the App Store. What they want is to be able to make it appear as if they are selling their subscription inside of the App Store (simulating an IAP interface) without paying any of the advantage of getting that user and device that Apple is providing through their product and service (App Store)

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There is no Target or Best Buy in this situation, just Apple and their store. Apple has a monopoly on iOS app distribution as such they should be required to complete at the same level as their competition. To do otherwise enables their ever growing monopoly.

If Spotify didn't run their business where their service with such razor thin margins that they couldn't withstand a 15-30% margin on a 3rd party store.... they would be able to better compete with Apple... but no... heaven forbid they actually do that... (which again, is LITERALLY WHY Apple's letter is 100% spot on.. This isn't about Apple being unfair.. this is about Spotify being unable to support the pricing model THEY CREATED now that all of the big boys entered the market... not the big boys' problem...)

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Shouldn't you want different pricing options? Isn't competition and lower prices what the free market you mentioned is all about?

Apple is forcing their app on people's phones by default and charging their competition more to use their in app purchase feature (and allegedly using notifications in a way their competition cannot). That doesn't sound like competition and a free market to me. It sounds like a monopoly that's trying to get even bigger.

 

[Zackat]

I just want to stream Spotify from my Apple Watch.

 

[Klotera]

Spotify has a profitability issue because Spotify has a profitability issue. period. that this gets ignored for "but apple...." is beyond ridiculous. Apple is NOT the cause of Spotify's profitability issue, see: recording industry lawsuit.


I mean Netflix/Apple is tough to nail down.. two massive companies who benefit symbiotically from each other.. but it should be noted that Netflix is playing by Apple's rules (not allowing subs through the app) AND is not suing Apple on this basis (nor are they as of yet joining in on Spotify's lawsuit... which is a bit telling)

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Just because they haven't sued yet doesn't mean they're happy with it. Are you suggesting if someone or some organization doesn't sue, then they can't be being treated unfairly? Netflix might have decided that they're big enough and people know them enough that the cost and publicity of a suit or EC complaint isn't worth it. But, if Apple changed the rules, I guarantee Netflix would take advantage. Sometimes, someone has to be the first to take the step

 

[borghe]

also the more steps to a sign up the less conversions you get for sign ups

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I addressed this previously. It's not about making it harder to sign up for services. It's about not allowing developers to fully simulate/recreate the IAP subscription interface while completely avoiding paying for the benefits of that ecosystem.

The EU is going to take Apple to the cleaners. This PR statement is for the schmucks (Apple fans). The courts won't care that Apple pays more to artists, what does that have to do with being anticompetitive? The iPhone prioritizes Apple Music above all else and that's closed-case of anticompetitive behaviour.

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like I mentioned earlier, this WILL be interesting. Primarily if Apple is allowed to keep Music installed by default (I'd be fine if they were forced to remove it), and if Apple is in fact limiting Siri's capabilities artificially from Spotify compared to other DEVS.

But no way the EU sides with Spotify on margins.. this would send shockwaves through the entire retail industry when it comes to store brand pricing compared to major brands... I mean it's not even a question.

 

[borghe]

Just because they haven't sued yet doesn't mean they're happy with it. Are you suggesting if someone or some organization doesn't sue, then they can't be being treated unfairly? Netflix might have decided that they're big enough and people know them enough that the cost and publicity of a suit or EC complaint isn't worth it. But, if Apple changed the rules, I guarantee Netflix would take advantage. Sometimes, someone has to be the first to take the step

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no... I'm saying that Spotify's entire lawsuit based on margins is meritless. And everyone knows this which is WHY action has never been taken. Because if Amazon sued Apple because Apple takes a margin on Amazon's movie sales..... Then EVERY MANUFACTURER IN THE WORLD could sue Amazon if Amazon made an Amazon Basics product that "unfairly" competed with their product.

it's literally a cornerstone of free market economics.

now the prominence of Music app MAY be a different story..

 

[MrKlaw]

Apple is forcing their competition to either charge more or reduce their profit margin while Apple isn't.

You are also ignoring the power of the default that Apple has. Apple has an unfair advantage by making Apple music the default player. Many will not bother switching, even if an objectively better service were to be created.

This is not comparable to a generic brand, as I cannot install apps outside of the App Store by default. With a generic brand I can easily go to another store if they charge more, I cannot do this on iOS.

If Apple removed the IAP cut for media apps it would force Apple to better compete with Spotify, a service many would argue is superior.

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[Klotera]

People should stop trying to compare Apple Music to store brands in retail. Last I heard, there were a lot of different retailers to buy, say, hand soap from. App stores are a duopoly and once you buy your expensive device, it essentially becomes a monopoly, since you're not going to switch phones for a while. You don't have many choices.

Also, store brands are hardly ever actually produced by the store. They're usually partnered with another company, who they themselves pay, to manufacture for them. Sometimes, it's even the same company that makes a brand name. It's a completely different business relationship.

 

[borghe]

Apple is forcing their app on people's phones by default

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agreed

and charging their competition more to use their in app purchase

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untrue. They are taking a cut of a product (a month of subscription) from being sold on their store. Spotify can price that at whatever they like.

feature (and allegedly using notifications in a way their competition cannot).

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possibly agreed (if found to be true)

That doesn't sound like competition and a free market to me. It sounds like a monopoly that's trying to get even bigger.

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the actions to make Spotify functionally inferior or less desirable than AM.. I agree with you. The pricing issue.. .not in any way shape or form. it's the classic "store brand vs. name brand" argument.[/quote][/quote]

 

[OrdinaryPrime]

Spotify has a profitability issue because Spotify has a profitability issue. period. that this gets ignored for "but apple...." is beyond ridiculous. Apple is NOT the cause of Spotify's profitability issue, see: recording industry lawsuit.

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I'm not really sure what the point of discussing this with you would be. I feel like the case is pretty clear cut. The level of obfuscation you seem to resort to makes it even clearer.

untrue. They are taking a cut of a product (a month of subscription) from being sold on their store. Spotify can price that at whatever they like.

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Except in order to get the same amount of money for a sub that Apple gets, they need to charge more. So Apple can charge less than Spotify and make more money in the process all because they own the platform. It's absolutely a problem.

 

[MrKlaw]

People should stop trying to compare Apple Music to store brands in retail. Last I heard, there were a lot of different retailers to buy, say, hand soap from. App stores are a duopoly and once you buy your expensive device, it essentially becomes a monopoly, since you're not going to switch phones for a while. You don't have many choices.

Also, store brands are hardly ever actually produced by the store. They're usually partnered with another company, who they themselves pay, to manufacture for them. Sometimes, it's even the same company that makes a brand name. It's a completely different business relationship.

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I get your point about duopoly/monopoly and lack of choice. But in the case of cross-platform service apps like spotify, you have choice on where you purchase your subscription. You can buy on device which can be convenient but the poor developer gets less money (not necessarily something you should care about as a consumer but potentially a tiny increased risk they discontinue the service which would be bad for you). Or you could buy on the web and still get exactly the same service as before on your phone, but the developer is getting more revenue from it. Or buy a gift card in a store (probably a halfway house as the store will want a slice off top)

 

[borghe]

Except in order to get the same amount of money for a product that a store gets from their own brand, they need to charge more. So the store can charge less than the name brand manufacturer and make more money in the process all because they own the store. It's absolutely a problem.

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fifty. So basically the retail industry for the last 70+ years has been a problem.

even crazier as to how little I had to change in your quote... and how literally similar what was there was changed to.. in fact just the names of the companies and stores.

heck, let's do it again

Except in order to get the same amount of money for a cable that Amazon gets from their Amazon Basics brand, they need to charge more. So Amazon can charge less than Monster Cable and make more money in the process all because they own Amazon. It's absolutely a problem.

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[Klotera]

fifty. So basically the retail industry for the last 70+ years has been a problem.

even crazier as to how little I had to change in your quote... and how literally similar what was there was changed to.. in fact just the names of the companies and stores.

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You can see my note above, but they're not the same thing. Most stores don't make their own product, they pay someone else to manufacture for them. Sometimes they even hire one of the name brand manufacturers to make it for them. The cost savings is generally on the marketing.

 

[borghe]

You can see my note above, but they're not the same thing. Most stores don't make their own product, they pay someone else to manufacture for them. Sometimes they even hire one of the name brand manufacturers to make it for them. The cost savings is generally on the marketing.

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you just made every point for the App Store cut in this thread. "The costs for both services are the same, but apple pays less in marketing because it's their own product.. whereas Spotify has to market their product on someone else's store"

Not sure that was your intent there...........

 

[Klotera]

you just made every point for the App Store cut in this thread. "The costs for both services are the same, but apple pays less in marketing because it's their own product.. whereas Spotify has to market their product on someone else's store"

Not sure that was your intent there...........

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No, marketing refers to advertisements, salespeople, etc. You're talking about shelf space.

 

[Klotera]

you just made every point for the App Store cut in this thread. "The costs for both services are the same, but apple pays less in marketing because it's their own product.. whereas Spotify has to market their product on someone else's store"

Not sure that was your intent there...........

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One further difference in your analogy. Retail store don't simply sell on behalf of a manufacturer and take a cut before sending the money back to the manufacturer. The manufacturer sells the product to the store. The store then decides how much to mark up when re-selling. Spotify isn't selling Apple a bundle of licenses to re-sell.

 

[OrdinaryPrime]

fifty. So basically the retail industry for the last 70+ years has been a problem.

even crazier as to how little I had to change in your quote... and how literally similar what was there was changed to.. in fact just the names of the companies and stores.

heck, let's do it again

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Your rebuttal is divorce of context.

 

[itchi]

heck, let's do it again

Except in order to get the same amount of money for a cable that Amazon gets from their Amazon Basics brand, they need to charge more. So Amazon can charge less than Monster Cable and make more money in the process all because they own Amazon. It's absolutely a problem.

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It's actually worse than that. As the platform owner Amazon can monitor the prices of all other HDMI cables and in real-time always ensure that their basic cable is priced the cheapest. As they are a 800bn company they have no problems of losing money doing this and eventually cause the other company to go out of business. Once the other companies go out of business they can then raise their own prices or purchase the company. This is exactly what they did with Diapers.com

 

[borghe]

It's actually worse than that. As the platform owner Amazon can monitor the prices of all other HDMI cables and in real-time always ensure that their basic cable is priced the cheapest. As they are a 800bn company they have no problems of losing money doing this and eventually cause the other company to go out of business. Once the other companies go out of business they can then raise their own prices. This is exactly what they did with Diapers.com

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yeah I concede that Amazon was probably not the best example.. While their Basics line does perfectly illustrate what is happening here.. obviously Amazon's analytics and leverage with that analytics (and promotion on their own site) creates an entirely different beast. But again, all of Amazon's analytics are far outside of what we're talking about. i.e. Apple isn't using analytics to artificially sell their product over Spotify, as that's not even what Spotify is claiming.

One further difference in your analogy. Retail store don't simply sell on behalf of a manufacturer and take a cut before sending the money back to the manufacturer. The manufacturer sells the product to the store. The store then decides how much to mark up when re-selling. Spotify isn't selling Apple a bundle of licenses to re-sell.

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you are describing the difference between sell in and consignment.. that doesn't negate the comparison.. it simply changes the method of monetization. Apps are not sold into Apple.. correct. However they are ABSOLUTELY consigned through apple for the sale. Everything else stands.

Your rebuttal is divorce of context.

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"digital" vs. "physical" is not context. it's semantics.

 

[Deleted member 36054]

What's stopping Apple from just removing Spotify from the App Store? They can't complain about competition because there are other streaming services available on there.

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That would make Spotify's case that much stronger. Like another poster said, it will take other streaming giants to check Apple. Netflix already removed in app subscribing in December, and Apple didn't do shit.

 

[FeliciaFelix]

You cant buy Google home devices on Amazon and they push Alexa when you do a Google search. Disney movies and Nintendo devices were also not available for awhile.

This happens in retail all the time. And nobody even cared when Disney movies were out, everyone just bought it somewhere else and called it a day.

And I dont buy that Apple is monopolistic when Google Store and Microsoft and Amazon have their own shops. It's only a problem for Apple diehards. Vote with your wallet and bail to other services that are right there eager to have you as a member.

 

[Digital0Reality]

Apple hiding behind "supporting the artists" to prop up their rent seeking. Does nobody remember Microsoft's legal troubles with IE? Kinda shocked people are getting behind apple for this.

 

[Klotera]

you are describing the difference between sell in and consignment.. that doesn't negate the comparison.. it simply changes the method of monetization. Apps are not sold into Apple.. correct. However they are ABSOLUTELY consigned through apple for the sale. Everything else stands.

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I think it completely negates it. We're talking apples to oranges at this point. Once a store buys product from a wholesaler, they still want to sell that product, even if they have a store brand sitting on the shelf next to it. They don't want it to go unsold, then they end up losing money.

Plus, you get into a whole other line of marketing strategy around people who will always go for name brand vs. people who don't care and just want cheapest. The store knows it needs to accomodate both types of shoppers. So do manufacturers, which is why they will sometimes partner with stores to product a store brand. Apple is a name brand in and of itself. People aren't buying a plain "music" app with the fact that Apple is servicing it obfuscated. It's not the same as the recognizable Rice Crispies with their trademark artwork vs. generic Crispy Rice.

 

[borghe]

Apple hiding behind "supporting the artists" to prop up their rent seeking. Does nobody remember Microsoft's legal troubles with IE? Kinda shocked people are getting behind apple for this.

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I mean completely different. That had to do with promotion and tight integration, BOTH OF WHICH may be in fact liable.

BUT.... it should be noted that that is NOT the crux of Spotify's complaint. Spotify doesn't care that Apple gets users. Doesn't care that Apple Music is a thing. They care that their service is not profitable, and that things like third party store margins, and recording industry payments, (and untenable subscription prices.. oh wait..) are making it this way.

I agree that Apple Music is very similar to the IE thing.. but at the end of the day if the EU comes back and says Apple has to detach Apple Music more from iOS... (which could be possible), that doesn't help Spotify in the slightest.

 

[Digital0Reality]

I mean completely different. That had to do with promotion and tight integration, BOTH OF WHICH may be in fact liable.

BUT.... it should be noted that that is NOT the crux of Spotify's complaint. Spotify doesn't care that Apple gets users. Doesn't care that Apple Music is a thing. They care that their service is not profitable, and that things like third party store margins, and recording industry payments, (and untenable subscription prices.. oh wait..) are making it this way.

I agree that Apple Music is very similar to the IE thing.. but at the end of the day if the EU comes back and says Apple has to detach Apple Music more from iOS... (which could be possible), that doesn't help Spotify in the slightest.

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I'm not on Spotify's "side" here. I'm just consistently amazed that people will take everything apple says at face value while applying blanket scepticism to every other company.

 

[borghe]

I think it completely negates it. We're talking apples to oranges at this point. Once a store buys product from a wholesaler, they still want to sell that product, even if they have a store brand sitting on the shelf next to it. They don't want it to go unsold, then they end up losing money.

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while I concede this entire line of thinking here, I don't see this as changing the "first party vs. third party sale and margins" on a store UNLESS IT'S PROVEN that Apple has been artificially hindering Spotify's sales, WHICH I feel taking a cut of a company's revenue for sales on your store do not do (and am nearly certain the EU will agree with).

Now there are other areas yes. iOS integration, prominence (being available at purchase and even displayed in the dock by default), etc. Apple may be overstepping bounds here (but then again, certainly so are Google and Amazon who do the same thing on their own platforms, right?)

but the thing is... even if the EU comes down on that stuff... ultimately it doesn't help Spotify in the fact that they have no profits amid rising (or fixed for subscription) costs.

Think about that.. All of Spotify's current lawsuits amount to "at our current pricing (an industry standard they set), we can't afford to operate against everyone else"

not a good look.

I'm not on Spotify's "side" here. I'm just consistently amazed that people will take everything apple says at face value while applying blanket scepticism to every other company.

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I'm not at all skeptical of Spotify... I get where they're coming from. They priced their service at a price they felt the market could bear... were looking for that buyout from a major tech firm.. then every major just went ahead and developed their own services and negotiated their own deals... leaving Spotify with a service they have no way to make profitable under the current models. In a perfect world.. one of the majors would have just bought them (maybe still Sony?) and they would have gotten that payday.

As it is... Spotify is saying to the companies "lower our costs!!!" the companies are saying "yeah no". So Spotify is saying "Governments, make those companies lower our costs!!!"

gl with that.

 

[badcrumble]

What's weird here is that both of their arguments are full of a lot of weird, specious stuff outside of the core disagreement that actually matters.

Feels like maybe that's what both of them have to do to argue in front of judges who don't understand a thing about technology.

 

[Klotera]

while I concede this entire line of thinking here, I don't see this as changing the "first party vs. third party sale and margins" on a store UNLESS IT'S PROVEN that Apple has been artificially hindering Spotify's sales, WHICH I feel taking a cut of a company's revenue for sales on your store do not do (and am nearly certain the EU will agree with).

Now there are other areas yes. iOS integration, prominence (being available at purchase and even displayed in the dock by default), etc. Apple may be overstepping bounds here (but then again, certainly so are Google and Amazon who do the same thing on their own platforms, right?)

but the thing is... even if the EU comes down on that stuff... ultimately it doesn't help Spotify in the fact that they have no profits amid rising (or fixed for subscription) costs.

Think about that.. All of Spotify's current lawsuits amount to "at our current pricing (an industry standard they set), we can't afford to operate against everyone else"

not a good look.

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Agreed that Google and Amazon are also engaged in various anti-competitive practices (maybe not the subscription payment one, as Google does have an exclusion for cases like this, but in other ways, including pre-bundling their own apps). In fact Amazon is worse, because it operates retail and a third party marketplace and produces it's own brands and services, which just makes it all the more complex. That's basically my whole thing, is that Apple should be included in the same conversations about reigning in the tech companies as Google and Amazon. While I'm not sure I am with Elizabeth Warren's exact platform utility proposal, I think the problems it's trying to address are real and need to be looked at.

 

[Deleted member 36054]

while I concede this entire line of thinking here, I don't see this as changing the "first party vs. third party sale and margins" on a store UNLESS IT'S PROVEN that Apple has been artificially hindering Spotify's sales, WHICH I feel taking a cut of a company's revenue for sales on your store do not do (and am nearly certain the EU will agree with).

Now there are other areas yes. iOS integration, prominence (being available at purchase and even displayed in the dock by default), etc. Apple may be overstepping bounds here (but then again, certainly so are Google and Amazon who do the same thing on their own platforms, right?)

but the thing is... even if the EU comes down on that stuff... ultimately it doesn't help Spotify in the fact that they have no profits amid rising (or fixed for subscription) costs.

Think about that.. All of Spotify's current lawsuits amount to "at our current pricing (an industry standard they set), we can't afford to operate against everyone else"

not a good look.


I'm not at all skeptical of Spotify... I get where they're coming from. They priced their service at a price they felt the market could bear... were looking for that buyout from a major tech firm.. then every major just went ahead and developed their own services and negotiated their own deals... leaving Spotify with a service they have no way to make profitable under the current models. In a perfect world.. one of the majors would have just bought them (maybe still Sony?) and they would have gotten that payday.

As it is... Spotify is saying to the companies "lower our costs!!!" the companies are saying "yeah no". So Spotify is saying "Governments, make those companies lower our costs!!!"

gl with that.

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Spotify is now profitable
https://www.theverge.com/2019/2/6/1...-announcement-profits-music-streaming-podcast

 

[Border]

They are one of 2 platforms in the market. There's literally only 1 other platform. Apple has unfair advantage over Spotify because early API avress and apple tax. This is bad for consumers and j hope the EU brings down the full weight of their power on Apple. None of this would be an issue if Apple wasn't competing directly with Spotify.

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iOS has a global market share of like 20-30%, and in a best case scenario 50-60% in their strongest territories. I think it's hard to make the case that they are a monopoly.

Spotify has chosen to give a away untold millions of dollars worth of streams to Free Tier customers. I don't see why it is Apple's responsibility to help prop up their flagging business model.

 

[spam musubi]

Spotify is now profitable
https://www.theverge.com/2019/2/6/1...-announcement-profits-music-streaming-podcast

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All that said, the profit may not last. The company is forecasting a loss of €50 to €100 million (about $57 to $113 million) next quarter and €200 to €360 million (about $227 to $409 million) over the full year.

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[Deleted member 36054]

Right, to say that they have no way to be profitable under their current model is downright false.

 

[Deleted member 36054]

DP