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Comment by olau | Hacker News Reader

I know that a consumptionist attitude is popular these days, but as a user of something like Spotify I would surely prefer as much as possible of my monetary contribution ending up with Spotify and the musicians instead of in the hands of a company controlling the market place.

To the people who think the exorbitant fees are okay: Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

The only reason the phone OS companies get away with it is lack of real competition. The regulatory environment is very slow in catching up - it's not more than a few years ago that the EU finally hit the payment card companies.

And yes, the EU also has something to say when it comes to dark subscription cancelling patterns.

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I don't think Spotify is the best example here, since I'm not particularly convinced that more cash going to them would end up in the hands of musicians.

But certainly, if I subscribe to The Economist I want as much of my money as possible to go to the journalists who actually write the content.

Spotify is public and you can see most of their numbers -- the Cost of Revenue for 2021 was 7 billion EUR on 9.6 in revenue. The cost is said to be mostly the royalties though it would include paying the many millions to some podcasters.

The ad-supported users outnumbers premium users (236 million to 180 million) but bring in only 1/6th the revenue. So that's a factor depressing the payout per stream.

https://investors.spotify.com/financials/press-release-detai...

Or phrased slightly differently, Spotify takes 30% of revenue generated by selling access to artists' songs.

Seems pretty fair, since if it was easy for an artist to undercut Spotify, they'd be doing it.

Just like the application developers on Google Play, Apple's app store, and Steam, eh?

The difference is the artificial limitation placed on Play Store listings and Apple App Store, versus the freedom of an artist to sell their music to any other platform (it's just that it would be far less successful).

The only "pull factor" Spotify has is the userbase, which is arguably fair. For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store.

One could argue (on Android) that it's possible that you can install third-party markets, and that's true, but there's also pretty big roadblocks to installing, whereas selling on another music platform is much easier in comparison. (Don't believe me? Send your father an APK file and ask him to install it. Let alone iOS where this is not possible at all..

> For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store.

Couldn't you replace "Google" and "Play Store" with "Spotify"?

You can "sell" your app directly to users through your own site (see Fortnite) or dubious sites like https://en.uptodown.com/android/general-android but you have the same "pull factor" with the Play Store that you do with Spotify (the user base).

The Google + Play Store and Spotify (company) + Spotify (platforms) situations don't seem fundamentally different to me, just different by degrees. Google's monopoly on Android app distribution is unparalleled.

Spotify is a service whereas GP is an application platform. You distribute apps (services like Spotify) through GP, whereas you distribute product (songs) through Spotify. GP is the only (reasonable) way to get apps on Android, whereas there are dozens of legal licensed alternatives for Spotify.

You can try to find alternatives for an app store, but that doesn't change the fact that inherently within Android, there are certain roadblocks that simply don't exist for a Spotify competitor, for example.

Less problematic actually. If you don't like Google's policies you're a bit screwed since they control the platform very thoroughly.

Spotify is just a convenience service in the end. They could sell their music through their own app, site, Magnatune, etc.

There are plenty of different platforms besides Spotify which have comparable catalogs and are available on all/most platforms (even Apple Music has an Android app). Their subscription prices are almost the same so the market seems to be very competitive and nothing like the iOS App Store.

Similar prices could also suggest cartel-like behaviour

The contracts that the record labels offer to streaming platforms are (or were a decade ago when I was in the business) set up to strictly control the prices seen by end users but I'm sure their lawyers believe they can do this without running afoul of competition laws. Even if the effect is price fixing...

Steam doesn't belong there, as it's not the only avenue for developers to distribute games on PC.

Even Google Play is iffy, as developers could distribute through 3rd party app stores or sideloading, though Google makes that harder than it should be.

Apple is really the only one of the 3 you mentioned that forces a 15/30% cut if developers want to distribute an app on their platform.

Bandcamp takes 10% to 15%, which is still a lot, but definitely closer to "fair" than 30% is.

> if it was easy for an artist to undercut Spotify, they'd be doing it

Isn't this the definition of a monopoly?

No, the definition of a monopoly is "the exclusive possession or control of the supply of or trade in a commodity or service."

A company that is not easy to undercut could just be an efficient business that operates roughly at cost without excessive margins.

I disagree. Spotify is practically a monopoly and is a rent-seeking entity. The reason artists can't go somewhere else is not because Spotify efficiently operates at cost (their gross margin was 26.5% in Q4), but because it's the only brand most customers know.

Deezer is in competition, Amazon Music, YT Music.

Monopoly doesn't apply, does it?

Even DAB/FM radio takes their lunch.

I think it’s worth taking fairness as a separate question, especially when posing the question about alternatives.

This classic article by Steve Albini captures what monetizing music was like for artists before the Internet: https://thebaffler.com/salvos/the-problem-with-music

That said, many artists have objected to subscription models like Spotify’s (Taylor Swift notably), or a la carte like Apple’s (Pink Floyd and Beatles’ estates notably). Most paid Internet music services have been a mixed bag of inconsistent payouts and artistic control. Spotify is definitely among them, even if it might be more attractive than a Record Deal^tm.

In my experience and inferred from experiences of other artists, SoundCloud has the best exposure benefits for lesser known artists combined with the most freedom to monetize, and Bandcamp is the most straightforward self publishing platform for built in monetization.

Comparatively, Spotify is basically, like Apple, filling the void of the record labels they usurped. While their terms are comparably “fair”, it’s easy to understand why they’re not ideal for a lot of artists.

It's probably not really possible to even estimate how much of actual cashflow is attributable to user income vs. artist payout from GAAP-based financial statements. And their cashflow statements are not particularly useful either. I'm sure a lot of nice things are "said to be," but if spotify were particularly proud of how much money they let through to artists I think they'd be touting it in more concrete ways.

Anyways, this is a bit like looking at Walmart's COGS and declaring that they've never screwed over a supplier by forcing them to cut prices to the bone.

It doesn't naturally follow that if I gave Spotify more money, they'd give it to the artists versus taking it as extra profit.

But the corollary is definitely true, if 30% of the revenue goes to Google there is no chance of that money going to the artists.

Sure, Spotify just isn’t the example I would choose to demonstrate OP’s point, which I thought was excellent.

There is no proof that if Spotify gave the labels more money, that it would go to the artists.

I think Spotify is an excellent example of labels using a 3rd party to mislead where they money is really going when Spotify is paying nearly 80% of its income as fees to 3rd parties.

Yes, that too! There are multiple intermediaries involved here.

Maybe, but this is not Spotify that's the issue.

They have a license to play music, and they pay for the songs at a rate that the labels charge for. If artists do not get enough money from streaming then their label should negotiate more from Spotify. If they are already taking 80% of Spotifys income then that means that either they aren't charging Spotify enough, and Spotify should charge users more, or they are taking a larger chunk and deflecting blame.

With them using the RIAA for the longest time as a distraction from it actually being Sony et al that was suing it's customers, I would not be surprised if this is misguided blame again.

But again, if artists do not get enough money from streaming music, then that is not Spotifys fault. It has paid for a product that it is reselling. You don't then get to bitch that you sold someone something for below the cost that you wanted to.

Do you prefer to give the money to Google? Honest question, I don't mistake any of those companies neither with evil nor with NGOs.

Maybe Spotify should offer a discount.

For Spotify in particular, I'd rather have more money going to Google instead of Spotify. Because I don't want to be funding Joe Rogan.

If you really wanted that you'd just not use Spotify at all.

A silly response. It's much easier to not do anything than it is to move my music ecosystem somewhere else.

Then you don't "don't want to be funding Joe Rogan at all".

It's not a silly response.

"It's much easier not to switch" is just a peculiar way to spell "I don't care enough to switch" in this case.

If someone doesn't care enough to do something as easy as switch music streaming services, do they actually care?

There are automated tools that can transfer your playlists between streaming platforms, just for your own future reference.

That is exactly what I have been doing all along.

which is odd because Rogan made most of his money from Youtube which is also Google, youtube was his biggest promotional tool. So I imagine you don't watch youtube either?

He's still on YouTube btw, so still making money off the YouTube platform and gaining listeners/distribution from there.

Also, there's far worse people than Joe Rogan who make a full living off YouTube, so yeah just completely ideologically inconsistent if someone is going to reject Spotify because of Rogan and still use YouTube.

Some of us actually don’t use either of these products. I can’t speak for the person who got the whatabout, but I think it’s presumptuous to jump straight to hypocrisy without any information about other choices and how they might or might not be consistent.

Yeah, that's fair.

So, you don't use YouTube at all?

What video streaming sites do you use as an alternative? Or do you just not consume online video that isn't behind a strict publisher?

My understanding of the YouTube-alternatives is that they tend to be more anti-censorship, so they're likely to host even more "worse" content then Joe Rogan vs. YouTube.

> So, you don't use YouTube at all?

If at all possible! I used to, but mostly either for streaming music (it was a convenient way to play full albums instead of finding CDs I never got around to ripping). I stopped doing that when the recommendation algorithm started trying to show me shit like Alex Jones after I listened to a Pink Floyd album or whatever.

> What video streaming sites do you use as an alternative? Or do you just not consume online video that isn't behind a strict publisher?

I mostly don’t consume a lot of video content at all. Even at times when I have it’s been mostly listening while doing other things. When I do now it’s almost entirely Netflix, and probably half the time I’m just listening while snuggling my pup.

FWIW I don’t think Netflix is any kind of a morally better alternative, either. My distaste for both Spotify for audio and YouTube for video is the same: I don’t like to consume lots of small bursts of information, especially with a lot of context switching and interaction, especially with a lot of sensory input. And I don’t like to pay extra to turn off shuffle.

As far as the moral aspect of content on these platforms, I mostly think they’re all garbage or waiting to be. And yep, consuming the ones I do does make me a hypocrite. But I appreciate the opportunity to put that fact in evidence.

It's funny. There where 101 articles when he had "anti-vax" people on. 0 articles when he had "pro-vax" people on. He can make 15 three hour episodes that none gives a fuck about, but then 1 episode that everybody loses their shit! :D

It seems that there is some kind of disparity between how Joe Rogan is being portrayed.

It's because him having a "pro vax" person on is incidental, whereas the "anti vax" person is invited because they're anti vax. And you shouldn't be platforming people who spew nothing but falsehoods.

But if you need another example, I'd love to see a single person who stops Rogans randomly inserted anti-trans rants he manages to somehow have on every episode, even if it is not topical. Aside from the fact he had a lot of "anti trans" people on (Debora Soh, Abigail Shrier, Jordan Peterson, Blair White... I mean the list is essentially endless) and not one person who is invited because they're pro trans.

At this point I'm really curious who makes most of the booking decisions for the show. They seem to maximize for right-leaning outrage culture / reactionaries, comedians and some people with very milquetoast politics. I can only remember Bernie as a big left voice on the JRE.

I'm not sure those are directly comparable. For YouTube you are not contributing to Joe Rogan unless you watch his videos and add views/popularity/ad revenue. Spotify, however, signed a separate contract that (AFAIK) is unrelated to listening count. In that sense any Spotify subscription has paid into the money Rogan gets, which isn't the same on YouTube.

You do know that YouTube's music selection is much better than Spotify's right. Not even close

Exactly, that's why I'm not paying for Spotify.

And that is because you hate to think for yourself, or do you lack the attention span for long form interviews.

He got popular on YouTube BTW.

I would still rather that The Google not get one cent, considering the transaction otherwise didn't need them at all, and the benefit to their involvement is rather dubious considering that all of my subscriptions may one day be inaccessible because The Google decides my account thinks wrong and closes it with no recourse.

This might have changed, but generally, Spotify pays 70% of premium revenue to rights holders[1], i.e., it's a variable cost. Most won't end up in the hands of artists, but I'm not sure if any streaming or purchase platform is better for that.

1: https://techcrunch.com/2017/03/18/dictate-top-40/

Let me tell you, as a musician and artist, the miniscule portion provided to the artists who supply the content is a travesty and a crime. This new partnership only serves to add more hands in the pie and squeeze out any hope of increases for the content creators. Every time you click on Spotify you are fueling the beast. I make more money selling one vinyl record at one live gig than I will make on Spotify for months. All of this is great news except for the little guys!!!

Spotify seems designed to over-reward the high volume artists at the expense of the little guy assuming I understand their model correctly.

Current:

     totalMoney x (totalListenTimeForArtist/totalListenTime)

imo the sensible system looks like:

     PerUserMoney x (PerUserListenTimeForArtist/TotalUserListenTime)

ie distribute each users subscription (minus fees) across the artists they list to so they don't just get dominated by big/popular music on repeat

I subscribe to Spotify and I agree it is a travesty - hopefully some day we get a platform that is as easy to use and is not so unfriendly to artists.

> To the people who think the exorbitant fees are okay: Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

Just so that we're talking on equal terms here, card processors and networks solve a massive amount of problems that existed with cash. Pre-card, many stores setup credit accounts with individuals, had book keeping practices to deal with, and had to chase down credit lines they themselves offered. Even with debit cards, card networks facilitate the ability to automatically move money between parties and give customers the ability to dispute/chargeback fraudulent transactions easily. If you physically hand a merchant cash, you can't claw that back without a legal process, whereas you're afforded protections by the card network.

But the 30% cut is completely different from card processors. Of the 30% to Google Play or to Apple, a small fraction (2.9%ish) is actually the card overhead. The rest is split between pure profit, infrastructure, and whatever else gets tacked on.

Cards definitely offer important things to facilitate transactions that are objectively better than a pure cash world for most people. But it's important to call out crazy cash grabs like 30%, which is unheard of even in the payment network world.

Choice is the real thing though more than actual value add. I feel like I see it less now, but recall seeing how vendors would only accept certain cards and not others (frequently, not American Express) which was as far as I know stemming mostly from higher fees they didn't want to pay. Similarly, places would not accept credit cards at all if they had razor margins and didn't want to eat the fee. I still know of a few places like that, often with an ATM near by so the customer can pay a fee if they are caught unaware.

That was the thing though, a business could decline to accept particular cards or cards at all and still perform transactions. That "opportunity" has generally not extended to the app store world in a practical way. If you want to play, they had their cut and customers and vendors didn't have a whole lot of say in what was reasonable. There is no simple default transaction (like cash) that they were trying to out compete.

Cash-only businesses are dodging taxes not money handling fees.

Even your 2.9% number is probably too high. Perhaps for AmEx or in super-high-risk situations you need to pay that kind of fees, but for regular MC/VISA in developed countries, even a medium-sized business can get below 1%. Large companies, like Apple, can almost certainly get it lower than that.

Source: Involved in multiple such deals over the years.

It is 2% to 3% in the US due to the copious rewards programs which result in minimum 2% cash back for credit card users.

But those are paid for by your bank (by charging high interest rates on the percentage of people who don't pay right away), not by MC/VISA.

The banks must be getting a piece of that because MC/Visa collect more depending on the rewards tier the card is in (Infinite/Signature/World and whatever other names they have).

Also, MC/Visa charge basically nothing for debit cards, and they do not take on any of the chargeback/default risk of credit cards, so I assume the rest of the fees are for the rewards for the most part. Which is why Discover/Amex fees are similar too.

> in developed countries,

In the EU it’s legally capped at 0.3% for all transactions (0.2 for debit cards).

Can back this up. No one at that level of merchant processing is paying the rack rate of what you might see on Stripe. It's usually high 1's, or low 2's.

> But the 30% cut is completely different from card processors. Of the 30% to Google Play or to Apple, a small fraction (2.9%ish) is actually the card overhead. The rest is split between pure profit, infrastructure, and whatever else gets tacked on.

As an example, Apple's profit margin on the App Store was about 80% in 2019[1].

[1] https://www.bloomberg.com/news/articles/2021-05-01/apple-s-a...

Then let's focus on lowering that percent instead of making the situation worse for consumers.

However to be clear, that percent is in the same area that game consoles and I believe Steam (someone correct me?) charge. And we accept that. When the 30% rule for the App Store came down, our smart phones were basically the same as a game console. Most people did not expect these devices to become the central part of all of our lives. At least not in this way.

Now that it has, than sure the percent needs to be lowered and I am not arguing that (I said in another comment the 30% is worth it for me personally but doesn't mean I am ok with it).

> let's focus on lowering that percent

A noble position but it seems to have been going other way unfortunately. Not sure how you would do that … further regulation or introducing artificial competition in the market. I think the most pro-business approach is to quash the monopoly and open up the market.

Going the other way? The fee started at 30% and has only gone down from there (ex. 15% for subs active > 1 yr). I believe the fees will fragment further and give developers the option of paying less but receiving less too. For example: You can pay 5% less but you will only show up in app store search results. Or something to this effect. We will never get blanket 30% take rates again. It was a simplification when the market was early

Steam lets developers sell keys without the tax using their own systems. In addition to this you are allowed to list your games on other storefronts for PC.

Do you know if there is any revenue sharing happening in the background in that model?

AFAIK they do it without revenue sharing because it keeps customers using steam (running their client, seeing their ads, viewing their store, and being tied to the steam ecosystem). They don't need to turn a profit on the tiny, irrelevant volume of off-site sales.

As already already been said there is no revenue sharing.

Though there is fair-use policy that Steam users shouldn't be given worse deal. E.g you're not allowed to only run 30%-off discount exclusively on your store without offering same discount for Steam store users sometime later.

> than sure the percent needs to be lowered and I am not arguing that

Yes to 0% and any percentage of revenue should be made illegal. Google and Apple can charge whatever fixed values they want or even charge based on a wide variety of vectors but a % of revenue should be explicitly illegal that kind of blatant rent seeking is a quintessential example of something the government needs to stamp out.

Apple and Google are providing a service, so why exactly should they not get a cut of revenue?

To be clear, 30% is too much, but aside from payment handling and taking on fraud risk as a result of that (3-4% is generally the industry standard for card not present transactions), they provide a subscription management/payment API for IAPs, as well as app packaging and distribution, reviews, etc.

That certainly is worth more than 0%.

Isn't the fraud risk still generally born by credit card companies at the end of the day?

I think we can legitimately talk about the costs of maintaining the app-store as a marketplace, and we can talk about the future costs of providing updates free of charge in perpetuity and orchestrating the infrastructure to host those various downloads... but that's about where their service offering ends. App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).

I'd question whether Apple and Google are really providing a service or just exploiting a captive market.

> Isn't the fraud risk still generally born by credit card companies at the end of the day?

No – for online/e-commerce payments, the liability is generally with the merchant, not the card issuing bank.

If it was about risk/fraud, debit cards would be an economic non-starter, as their interchange is capped to 0.05% + 0.24$ for almost all issuers.

EU issuers also get by (probably not too comfortably so, but still) with the recently introduced interchange cap of 0.3%/0.2%.

> Isn't the fraud risk still generally born by credit card companies at the end of the day?

Absolutely not, the bank initiates a chargeback, which the payment processing network directs back to the one who handled the payments. They generally are then tasked with "proving" the purchase is authorized. Enough chargebacks, even fraudulent ones, and the payment provider cuts ties with you (although, at Google scale, I don't see this happening) as you're too great a risk.

> App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).

The implementation being a joke doesn't mean it's not a service with COGS that need to be accounted for.

Nope. All fraud and chargebacks go back to the merchant/seller. The processor will immediately hold those funds in question pending a dispute or resolution around the fraud or chargeback.

On top of that there's a hefty fee for any fraud or chargeback that's not refundable even if it's resolved in your favor. Usually in the range of $40 per instance.

Apple and Google (and others) also allow loading credit using physical cards that you purchase at retail stores. I believe the stores get around a 5-10% margin on these, i.e. you buy a $100 gift card, and the store only pays Apple/Google $90-95.

There is a definite cost to all these so 0% is unreasonable. Epic is trying to be the "good" games distribution store and they reportedly take a 12% cut. Something around there, maybe down to 10% would be a reasonable place for Apple/Google to be.

Unfortunately Epic can't honestly comment on what cut they're taking while their storefront loses immense amounts of money[1] - I agree that a lower percentage is probably a lot more reasonable but I don't think EGS can serve as that example.

1. https://www.pcgamer.com/epic-has-sunk-dollar500m-into-the-ep...

> can't honestly comment on

Of course they can, but we can acknowledge it's a moving target. I'm at least confident it will be better than Steam.

> loses immense amounts of money

This is the same for any growth business/product where you front-load marketing and business development costs, and is not an indicator of future trends.

Losing money at first is how almost everything works.

I know that Silicon Valley is a hell of a drug but starting a business by burning two hundred million dollars a year that you haven't yet earned is not how nearly anything works. It only works for tech startups and it's bizarre since tech doesn't actually cost that much money.

I'm pretty sure it loses money because of all the giveaways and coupons they pay for, so you'd have to take those out of the picture before doing the math for a proper comparison.

No, industry standard for online credit card transactions is 1-1.5% in the EU and 2.5-3% in the US. Even back in 2008 before 3d secure was common and before the EU regilations we as a tiny online casino had 2.5% fees.

30% is between 10 and 20 times a reasonable fee.

Doesn't this ignore the reality that a service with many of subscribers puts dramatically more strain on marketplace systems than a service with only a few subscribers?

For example, a smalltime dev isn't going to see hardly any refunds, but a dev on the scale of Epic Games is going to be seeing something on the order of tens or hundreds per minute. Should that not be accounted for?

That said, this could be accomplished with tiered fixed fees. An indie dev would probably land in a low rung where costs are tiny, where a triple-A game studio would get charged substantially more.

Apple provides software updates for devices for years after they been paid for. Apple and google both providedthe CDN bandwidth for incredibly popular “free” software for which they do not receive a penny.

The revenue from paid services covers that support.

Would I prefer the cut was lower, but at the same time the 15% (for most)-30% cut seems to match every other platform

So, Spotify also reportedly takes 30% of the revenue before paying the creators.

This isn't an Apple/Google/Spotify thing, it's a service thing.

I don't understand this argument. Spotify is a service connecting listeners to the artists and infrastructure and development of said service has its cost whereas Google/Apple charge fees for the app store which Spotify subscription does not require.

So, Spotify is allowed to charge 30% for access to the market it has created, but Google and Apple are not?

An app store costs money too - the creation and maintenance of the billing platform/API, bandwidth, human curation, cross-device storage of saved configurations, user acquisition, etc.

What makes musicians so different from software developers that it's perfectly acceptable for Spotify to take such a large share of the revenue their music has earned?

(To make my own position clear, I don't think any of them deserve 30%)

The problem with this line of argumentation is - why single out phone OS providers as the only link in the very long supply chain that deserves a cut?

Why not internet provider? Verizon's infrastructure costs money, too - should they also be eligible for a 30% tax?

The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those

What about the phone manufacturer - Xiaomi or Samsung would definitely not reject their fair share

None of this would happen without electricity - power transmission companies deserve a portion

There really isn't a coherent moral argument in favor of the current status quo - it's simply about market power, nothing else

My point is: Spotify's 30% is not a fair cut. It's no more fair a cut as the Apple/Google/et.al. cut from developers.

Since HN is a lot more familiar with the cuts the stores take out of developers earnings, it makes for a nice point of comparison.

Spotify has very low margins so it's hard to say 30% isn't fair. Any lower they'd have trouble paying their costs. Streaming in general helped the music industry revenue grow. You can say Spotify might be bad at business for not making much money on a 30% cut, but overall they seem to be serving decent value for money to the copyright holders and customers. Before streaming, the overhead was a lot higher, with the retail distribution chain taking a comparable cut.

> Verizon's infrastructure costs money, too - should they also be eligible for a 30% tax?

> The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those

This is a novel idea. Verizon and Cisco could charge a price above their cost. They could call this a "profit margin". You might be on to something here.

Because those other companies are paid for their service directly. You don’t directly pay for the app stores.

Developers already pay Apple $100 a year to publish apps on the App Store. Google charges a fee for access to the Play Store, as well.

Because Apple and a Google created a market where there was none. It basically impossible to make money from selling mobile apps to consumers before them.

Had Verizon singlehandedly created the internet and had no real competitors they might have been able to tax it’s usage. Thank God that did not happen, though…

I am fine with them charging whatever they want, as long as they don't prevent competitors from opening alternative markets. The problem is the monopoly, not the price.

If they are a monopoly (or roughly equivalent) then they can be regulated.

Access to User, and Specifically Mobile Apps users, are split between Apple "App Store" and Google "Play Store".

Access to listener, or even if you limit to Mobile listener, are not bound to Spotify.

Apple/Google app stores are a service connecting users to app creators, and all the points about Spotify also apply to Apple and Google. In the case of Apple, they literally created the entire market, from the CPUs all the way up.

If 30% is too much, publish your content as a web app. If you want to play in the walled garden, pay the cover charge.

I think the biggest difference is that Spotify isn't a monopoly at the end of the day - it's a popular service. A lot of people still use different methods to listen to music like YouTube, iTunes, bandcamp and a plethora of others. If you, as a band, want to make money on your music you aren't required to do business through spotify, it's a choice that most people make because it's free money.

On the other hand if you want to write an app for a mobile device you're, realistically, either going to write it for Android or iOS. On the Android side you can distribute it as an apk assuming you can handle the cost of writing self-updating code - but on the iOS side you're hooped. Mobile devices are a part of modern life, the fact that one company dominates the market (and another company takes the remainder) leaves the market extremely unhealthy.

Google Play, which charges 30%, is not a monopoly either. Nor is Steam. The Microsoft/Sony/Nintendo scene is a bit less clear, but they charge 30% too.

Musicians have about the same freedom in this respect as any application developer, practically speaking. AKA, they're just as exploited (if not moreso, see other comments about how musicians are also being screwed over by studios).

Yep. One major difference is that with Google/Apple (and also Steam I believe), app makers can at least choose the price of their apps and services themselves, and they know how many units they sell. If Google/Apple are charging you 30%, just increase your price.

With Spotify, however, musicians can't choose how much their music is worth, and the payment of royalties is also not exactly transparent.

But the very concept of being an mobile app developer was brought to life by Apple, and later Google. 15 years ago, you could not really be a pro app dev. Now, you can, but with a 30% cut. You are strictly better off. And if you think the 30% is too much, do something else.

These companies created something that grew into a foundational element of modern life in about a decade. That’s amazing and should be awarded with trillions of dollars. The market should reward this corporate behaviour extremely well, and punish the IBMs and GEs and Boeings harshly.

As an aside, Apple et al are also not resting on their laurels, and keep pushing the envelope. My 2 y.o. + iPhone is literally better than on the day I bought it. I’m more than happy to pay more for apps / subs to get this.

The developer who made a useful website with a link to their paypal has been mostly obsoleted by app developers. Small tool development isn't a novel creation of modern mobile devices - it's just the packaging of these into bespoke binaries that have highly regulated distribution channels. A cynical person might assume that part of the reason Apple hated flash so much is that it threatened to stunt the upcoming app market. To lend some credence to this position, things like Kofi have taken off in recent (on my scale) years as HTML5 gained enough traction to essentially duplicate the functionality of flash without any of the security issues - I personally think this is what led to the feature to save websites as apps on iOS and that is something that doesn't threaten Apple much with their network advantage, but has the potential to cut into their revenue if it gets popular enough.

The problem is when that innovative company becomes the new IBM/GE/Oracle and starts treating every client as nothing else but a revenue stream instead of focusing on creating new and innovative products. I don’t think Apple/Google are there yet but they are clearly moving into that direction.

When that happens they die - does anyone care what IBM, GE, or Oracle do? All their customers are working to get off their platforms.

Apple does not have a monopoly on software distribution, nor on making computers.

Apple makes very popular computers in their iPhones, but other phones, tablets, laptops, gaming consoles, etc all do the same stuff.

Eg. When your phone is broken, you can still call people over your laptop, and you can access an internet browser from basically anything

Apple and Google are responsible for 99% of all mobile software distribution[1]. They both monopolize the mobile app distribution market, as well as the mobile app payment markets.

Both firms leveraged their dominance in the mobile OS market to dominate the mobile app distribution market, and then they leveraged their dominance in the mobile app distribution market to dominate the mobile app payments market.

When talking about monopolies, the working definition is firms that have significant and durable market power such that they can set prices and exclude competitors[2]. Both Apple and Google fit that bill for the mobile OS, app distribution and payments markets. Whether you use the words monopoly, duopoly or cartel to describe them doesn't really matter, because all of those terms are accurate descriptors.

[1] https://www.businessofapps.com/data/app-revenues/

[2] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

And the Play Store/App Store is a service connecting mobile users to apps and they provide an infrastructure to download apps, developer tools, etc.

What’s the difference?

If we want to make the situation better for customers then companies like Apple and Google should provide subscription management/payment API for IAPs for free to developers so developers are incentivized to use the centralized platform. Customers can manage and cancel payments through that centralized platform. The only reason developers come up with these roundabout methods for payment is because of the massive fees that Google and Apple have.

Steam isn't a monopoly like Apple and Google are with their respective marketplaces so it doesn't make sense to compare the two. If I want to publish or play a game there are a lot of different ways to do so that don't involve Steam.

Well even with all the available competition most developers seem to consider the 30% fee on Steam fair enough to host their games there. So maybe that 15/30% is not as ‘massive’ as one might think, especially considering that the app store model was massive improvement over what existed before them. Not that I’m a huge fan of closed ecosystems in general, but I’m not sure the government should dictate what sort of software features manufacturers should implement on their devices. Especially considering that most consumers don’t really value the ability to freely install any software they want on their devices and seem to be fine with the closed garden approach.

Governments regulate all sorts of features on all sorts of products: building codes, electrical codes, car mpg requirements, how planes work, tax requirements, how corporations are allowed to function, the rights of citizens, ...

Why should software get a free pass?

Because all of those things are about externalities?

Software has externalities.

You can only lower the percent with at least the credible threat of competition. Would you pay $13 for a $10 service for the privilege of doing it through the play store?

Likewise would you be equally OK if the dollar figures involved were much larger for example your cable subscription?

> Then let's focus on lowering that percent instead of making the situation worse for consumers.

The only viable path towards finding a fair price for this service (apparently deemed essential and basically a steal by Apple and Google, but worth less than nothing by many app developers) would seem to be competition.

Why not offer both, explicitly allowing for different prices, special deals only for non-store subscriptions etc.?

Or regulation.

In Australia, the Reserve Bank regulates interchange fees and requires the end user to be made aware of card processing fees which can't exceed a percentage/value of the transaction.

Similar regulation applies in the EU.

There's no reason why Google/Apple/etc stores can't be similarly regulated.

That's possible too, but I believe there's much more uncertainty about the fair market value of app store compared to out-of-band subscriptions.

Of course it would also be possible to do both, i.e. to mandate either a fixed rate or alternatively allowing out-of-band payments.

>Then let's focus on lowering that percent

I dont think that is the correct way of looking at it. As you stated at the end, you think it is worth it.

The question is value delivery. Not percentage. I could argue in cases where even 90% is acceptable. The question is how much value is delivered and how much of those 90% are used, or was it pure profits, i.e rent seeking. For some categories of Apps, 30% doesn't make sense.

> And we accept that.

You do. I certainly don’t. And you’re just doing that because it’s the status quo, not out of any analysis.

Absolutely. I want 100% of the money to go to Spotify and I want a centralized one-click cancel, that looks the same for all subscriptions.

That's an unlikely combination. So the viable alternative is a middle ground. A central app store and subscription management takes a cut/adds a tax. I'm ready to pay say 1% or 2% for that service.

I think https://privacy.com is close to that. You get a virtual credit card number for every single service that you sign up for, and you can simply disable them in a centralized place.

It works on the web but it is still a hassle to use on mobile. I imagine Apple can potentially do this using Apple Card, but I don't think this is going to happen any time soon.

I'd rather 100% of the money go to the artists, personally. It is possible in many cases, but not with Spotify (or Google, Apple, etc). Middlemen want their cut, and Spotify cuts as deeply as Apple (google, steam, microsoft, sony, etc) does.

> I'd rather 100% of the money go to the artists, personally. It is possible in many cases, but not with Spotify (or Google, Apple, etc). Middlemen want their cut, and Spotify cuts as deeply

Never ever in all these accusations do people mention The Big Four [1]. It's always Apple to blame. And Spotify. And Deezer. And Pandora. And...

Even though music distributors control all f the market, collect all the royalties, and pay artists peanuts. Does Spotify pay artists directly? No, it can't do that. It pays the license holders which are, in 99% of the cases [1]

[1] https://en.wikipedia.org/wiki/Music_industry#Consolidation

Edit: it's worse now, it's Big Three. They control 88.5% of the market, but by popularity of music that is listened to on streaming platforms, it's likely closer to 100%.

This is where I shrug my shoulders and say "Why not [blame] both?"

It can be that Apple, Spotify, and Google can all be screwing over creators in conjunction with their publishers.

That said, not all musicians on Spotify go through publishers.

> This is where I shrug my shoulders and say "Why not [blame] both?"

I've yet to see any of these discussions to blame both. And your own comment literally never mentions the Big Three.

> can all be screwing over creators in conjunction with their publishers.

I prefer not to wade in to conspiracy territory. Apple may have power over the industry, but they are an outlier. The rest do whatever the industry tels them to.

Quote, [1]. Emphasis mine

--- start quote ---

Spotify primarily makes money for music from two sources — from Spotify Premium subscribers as well as from advertisers on Spotify’s free tier. Roughly ⅔ of this money is paid out to music rights holders.

--- end quote ---

Guess who are the rights holders. They get 60-65% percent of Spotify's revenue (not profit). Care to ask them where this money goes? No one ever dares to.

> That said, not all musicians on Spotify go through publishers.

It's either publishers or indie aggregators (two or three of them). Spotify doesn't pay artists directly. If it tried to do that, the big publishers would immediately pull their catalogs. And the vast majority of popular music on the platform is likely to come from big publishers, not from indie aggregators.

[1] https://loudandclear.byspotify.com/?question=how-do-artists-...

> I've yet to see any of these discussions to blame both.

Perhaps because they are outside the context of this discussion? For the purposes of this discussion, they are a constant, no matter what Spotify or Google does.

> And your own comment literally never mentions the Big Three.

I added a caveat to my "buying from the musicians directly" exactly because of publishers.

> Apple may have power over the industry, but they are an outlier.

Not exactly - they charge the same percentage as the other players in this space that I mentioned. No conspiracy theories required to point this out.

> Care to ask them where this money goes? No one ever dares to.

Sure, in articles about music producers (I recall more than a few hitting HN over the years, especially when Taylor Swift was raising a ruckus about them and Spotify).

> And the vast majority of popular music on the platform is likely to come from big publishers, not from indie aggregators.

I don't believe anybody is disputing that.

> For the purposes of this discussion, they are a constant, no matter what Spotify or Google does.

That "constant" is the main reason artists don't get paid. And yet, only streaming services are blamed.

> added a caveat to my "buying from the musicians directly" exactly because of publishers

That's not a caveat. That is wishful thinking. How do you propose streaming services do that?

> they charge the same percentage as the other players in this space that I mentioned. No conspiracy theories required to point this out

Yes, they do charge the same. So it means that 60-65% of their revenue goes to rights holders.

But sure. "They are in on it with rights holders to rip artists off".

> Sure, in articles about music producers

There are very few such articles and most, like your comment, blame streaming services for paying artists too little even though streaming services have nothing to do with paying artists. It's the publishers/rights holders who do that.

I think the norm that everyone seems to slowly be settling on, of 15% for: 1) hosting the program itself, 2) displaying in the store, 3) payments and subscriptions including figuring out local taxes and CC fees and such, 4) various other services (push messages, for example), is pretty damn reasonable. 30% is clearly too high, but somewhere around 20% it actually starts to look like not-a-rip-off.

> Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

I don't really care for this attempt at analogy. The cut that Apple or Google takes is more similar to the price manufacturers pay for shelf space in a retail store. I'm guessing that in many instances these kinds of charges amount to far more than the 2-3% a card processor takes. And frankly, 2-3% is already ridiculous.

> Now the payment card companies decide they want 30% of all transactions

What you did there is subtle, but you're comparing apples to oranges. "payment card companies" charge 2-3%. It's platforms like Steam, Play store or App store that charge 30%. Those are not comparable.

I'm not arguing that 30% is the right number, but the analogy is very flawed. Ask anyone what % of their game sales comes from Steam vs their own website/itch/humble/epic. Let alone the dozens of other things that you get with a few lines of code (cloud saves, free in-game text/voice chat, workshop, marketplace, free download and easy patching, achievements, etc) and without having to host a single server or maintain anything. How much would it cost both in development but also hosting cost to code all of that yourself?

> Ask anyone what % of their game sales comes from Steam vs their own website/itch/humble/epic.

What % of payments come through payment card companies vs. cash/crypto/checks/etc. ?

What does that have to do with what I said? I'm not talking about payment companies at all. 30% is for platforms, not payment companies.

It sounded like you were saying those platforms were justified in taking a 10× higher cut than payment companies because they provide services that developers would make fewer sales without and would have much more difficulty implementing and hosting themselves. But what makes payment companies not platforms? They seem similarly difficult to sell without, similarly difficult to reimplemement and host yourself, and just as valuable as store platforms for the same reasons you gave.

I think you’re mistaken - why would Google have agreed to this if they gave up their cut of the subscription revenue? They’re surely making some money on the backed still, possibly just 3% less than they were (to account for Spotify’s processor fees).

> To the people who think the exorbitant fees are okay: Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

More like a world with only endcaps.

The difference between the app stores and retail is that every SKU has a fixed margin.

At most stores that sell a variety of product, anything you see right away is a paid placement. The first beer you see, Pepsi in the front of one store, Coke in the other. That’s why you don’t see canned corn on the end cap.

The notion that I should have the feels because poor Epic pays a 30% commission to Apple so they can sell my kid a virtual character dance move at 98% margin is absurd. The argument is specious.

It may surprise you to learn that not every app is Fortnite.

It may surprise you that just under 70% of app revenue is games.

The myth of the indie developer held down by Apple and Google is a trope thrown out there just like every supermarket brand evokes images of family farms.

> I would surely prefer as much as possible of my monetary contribution ending up with Spotify and the musicians

If you care about the musicians you should probably be using Tidal and not Spotify.

Tidal et al. only seem to pay more to artists because they have lower engagement than Spotify. So the same monthly pot is just divided between fewer artists. It's a misleading metric.

> my monetary contribution ending up with Spotify and the musicians

Spotify don't give much to musicians compared to other platforms. They are keen on putting hundreds of millions into podcasts though, which is why I left them. Joe Rogan's objectionable behaviour aside - I just don't give a shit about podcasts, so I feel like my sub money would be going to the wrong people.

If payment processing costs 30%, you are expected to pay that as an end-user in the end. There is no "company will eat the costs". They will find ways to recoup that and reach similar profitability levels.

So by choosing the expensive way of paying, you will eventually endup paying more.

There is no shortage of ways companies can do that: "oh you want this new content, too bad it's for our premium gold users only", "ohh you want improved audio quality, here is upsell", "ohh, traveling a lot lately? Maybe we will limit the amount of offline content you can keep, but not in the premium diamond plan", etc

Lol. You can't play the "I want my money to go to the people that deserve it" card, in the very same sentence as "I want the convenience of using Spotify". Spotify pays artists less than Tidal, Apple and Amazon. And if you're using any of those services, you've already decided that convenience is more important than paying the artists. I use Tidal because it pays artists the most. I also buy music that I listen to a lot on CD or, previously Bandcamp - but Bandcamp just got bought by Epic, so no more purchases from them.

> Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

Careful there. Someone might pipe up and say this is what cryptocurrency was designed to resolve.

I would trust Spotify but not NYTimes, in this model, so perhaps consider a more hostile example than Spotify as well.

What did the eu hit payment card companies with? Only thing I know about is banning vendors from passing on fees to the customer, which harmed us: it prevented the customer from seeing they were being ripped off by credit card companies at the point of sale. (Genuine question here)

Well what made Spotify possible was the giant investments done by apple and google in the modern smartphone. I don't want to pay more for a new phone.

Pretty confident in the US since at least 2002 - after aol, sprint and others got in big trouble it’s been super illegal to not allow people to cancel

> To the people who think the exorbitant fees are okay: Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?

Since we are heading to a world with no cash, what's stopping the card companies from doing that after there's no way back? This is why I use cash as much as possible - to delay that day.

> This is why I use cash as much as possible - to delay that day.

A big thing discouraging me from using cash is how suspicious people are of you when you pay in cash. I've definitely gotten weird looks from cashiers when doing so, especially when you pay in larger bills (like $100).

Why would I care what a cashier _thinks_ of me when I pay for products with common legal tender? It's a completely normal means of transaction in exchange for products and services.

Humans tend to want to have other humans like them and think highly of them.

I've never gotten weird looks when paying with cash except during the beginning of the pandemic. But I think that's a special case where we can have exceptions.

The pharmacist turned me down from picking up my doctor-prescribed scheduled substance from CVS because I wanted to pay in cash and she thought it seemed suspicious.

Never went to CVS again, I assure you, but cash definitely has a stigma in some situations.

EU capped the rate to 0.3% for credit cards. That's also why there are no US cashback style deals or those weird point programs.

Honestly I think it is more concerning the data that they get.

But with increased transaction prices, the only way I can think of is by legislation, but we know that legislation is typically reactive and not proactive. So if the CC companies go slow enough, it's like boiling a frog. And no, cryptocurrency isn't a solution to this as (the vast majority of) transactions aren't private nor anonymous.

Is there a way to pay for musicians but not the podcasts.

> Imagine a world with no cash.

I'm in :)

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