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Apple Slams Spotify For Asking For 'Preferential Treatment' (buzzfeed.com)
On Thursday, Spotify made major accusations against Apple of playing unfair to its music service. The Swedish-based music company said that Apple didn't approve a new version of Spotify's iOS app because "it didn't want competition for Apple Music." The Cupertino-based company has responded to the accusations. In a letter sent to Spotify general counsel Horacio Gutierrez on Friday, Apple general counsel Bruce Sewell rebutted the streaming music service's allegations, adding "we find it troubling that you are asking for exemptions to the rules we apply to all developers and are publicly resorting to rumors and half-truths about our service," Sewell wrote. BuzzFeed News reports:"Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor," Sewell explains. "Ironically, it is now Spotify that wants things to be different by asking for preferential treatment from Apple."
And as for Spotify's suggestion that Apple is treading on dangerous, anticompetitive ground, well, Sewell doesn't seem too concerned. "There is nothing in Apple's conduct that 'amounts to a violation of applicable antitrust laws.' Far from it," Sewell, writes after wryly observing that not only has Apple's platform generated "hundreds of millions of dollars in incremental revenue to Spotify"; but that the Spotify App currently in the App Store is still in violation of Apple's guidelines. "I would be happy to facilitate an expeditious review and approval of your app as soon as you provide us with something that is compliant with the App Store's rules," he quips.Apple commentator John Gruber, writing for DaringFireball:Cry me a river. Spotify has long charged $12.99 via in-app subscriptions to get around the 30 percent "App Store tax". And Apple has now cut the long-term subscription split from 70-30 to 85-15. And Spotify is the streaming service most at war with artists over their abysmal royalty rates. Read between the lines and the real message here is that Apple Music is kicking Spotify's ass.
If you want to sell SUBSCRIPTIONS via your App on Apple, you have to give them a cut. There are means to circumvent (having people go to your website to signup and pay) but taking payment and not giving apple their pound of flesh has always been operating procedure. I am unsure the problem here? I mean, you might not like the terms (30% is a lot) but it hasn't changed in years.
Spotify added 20 million users in the past 18 months, so nah, bro.
Also, remember that Apple already had all the login info and credit card numbers of all the iTunes users, and Apple Radio users. And, the largest base of handheld devices. Spotify did 20 million new users without that structural advantage.
You are welcome on my lawn.
If Apple were to launch a service similar to Facebook you can be certain they would cripple the Facebook app.
Correct. Because Apple states in the rules for their walled garden that no apps can compete with their offerings. That shouldn't be a surprise to any app developer who read the rules.
Uh, no. Apple distributes free apps for free whether they offer in-app purchases or not. Apple gets rewarded for that by people buying hardware for which there are lots of apps available. Therefore, it is entirely nonsensical to suggest that because an app is tied to a subscription service, that Apple somehow deserves a cut of those services solely because they provided the ability to download an app that consumes those services.
And that argument fundamentally falls apart for another reason: The only reason Spotify is distributed by Apple is because Apple will not allow companies to distribute their own apps. Therefore those costs of distributing the app via the App Store are entirely Apple's decision, forced upon Spotify by Apple, not the other way around. Apple doesn't get to dictate that everyone must use their distribution mechanism, and then turn around and claim that because other folks used their distribution mechanism, suddenly they owe Apple a percentage of their income in perpetuity. I understand that Apple wants that, but it certainly isn't owed to them.
Frankly, this is a bit like Ford changing the gasoline filler connector and requiring every gas station to use their special filler, then demanding a percentage of the cost of every gallon of gas pumped through that nozzle. The fact that anybody puts up with it from Apple is, frankly, amazing, and there's a reason most of the major players have chosen to present an unfriendly login screen with no hints of how to get an account, rather than giving up a huge chunk of their revenue to a company that has done basically nothing to earn a huge chunk of their monthly revenue.
And most of the big companies that haven't been non-user-friendly about it (e.g. Facebook) have gotten permission from Apple to ignore that part of the App Store rules. Yeah, Facebook takes credit cards for Ad purchasing right in the app. No in-app purchases. This makes Apple's position even more legally tenuous, IMO, because they'll make exceptions for Facebook, but won't make exceptions for a company whose services are in direct competition with an Apple-branded service. Danger, Will Robinson!
It is not free, but it is nearly free. The proportional costs for Apple Music's use of the store (payment system) are negligible. Realistically, because Apple aggregates billing for multiple services and gets preferential treatment for being such a huge vendor with such a low charge reversal rate, I'd imagine their cost for operating the billing system is less than 2% of the cost of the subscription. The difference between that number and 30% (or even 15%) represents a major competitive advantage.
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