Spotify attacks Apple's 'outrageous' 27% commission | Hacker News Reader

Spotify attacks Apple's 'outrageous' 27% commission

bbc.com

89 pointsInsomniacL91 comments

At the very least Apple should not be able to do this in categories it competes in. Charging Spotify 30% is hella anti competitive because they also have Apple Music.

Related discussions:

https://news.ycombinator.com/item?id=39020365

https://news.ycombinator.com/item?id=39034951

And https://news.ycombinator.com/item?id=39014642

The best part about this is that Apple Music historically asked Android users to put in their credit cards, bypassing Android’s own IAP system. (Might have changed a few years ago)

This is how Apple has implemented its “StoreKit external purchase link” system: https://developer.apple.com/support/storekit-external-entitl...

It’s important to note this is US only, not UK. It appears to apply to net new subscriptions being solicited through iOS apps which also have in-app subscription enabled.

Wow, glad I avoid native app development. The eternal dictatorship.

From 2019:

> https://www.cnet.com/tech/mobile/apple-fires-back-spotify-pa...

What if Spotify makes it 27% more expensive to use Spotify on Apple?

People would move to Apple Music which sounds great for Apple.

The playlist moat is deep at Spotify. Between ease of building playlists, sharing playlists, following playlists, and the "fresh finds" playlists that Spotify creates, it's tough to compete. I don't think very many people are going to go through that transition for a couple of bucks.

A playlist moat doesn't sound like a real thing. I don't know how the average user uses Spotify but aside from the playlist that Spotify generates, all the music I like goes in one massive playlist. I've never used Apple Music but if another service generated playlist for me I would just as easily listen to those.

It 100% is a real thing, I dont even really understand the opposite. Users curate lists, and even share those. I am a YT Music user and that severely cuts down on my ability to find playlists that others have created compared to spotify. When I switched to YT Music, my partner was pissseed. I had to locate and run some python scripts to run to transfer over the playlists or we were gonna be switching back. There are people who have Youtube Premium & Spotify because of their playlist/social lockin. Spotify Wrapped alone keeps people from jumping ship.

We are on opposite sides of this because playlist as as social feature is not something I can understand. However, every streaming platform has copied Spotify Wrapped. Hell, Steam sends me a Spotify Wrapped type email about the games I played at the end of the year now.

The YT Music equivalent to Spotify Wrapped is a complete joke.

Probably not allowed to ic you want to be on the appstore.

Then people will use Apple Music which is exactly the leverage Apple has. Apple let Spotify test the market of music streaming. Entered the market at basically the same price. Then charges Spotify 27% to compete with them directly.

but thanks to Epic court case Spotify can now put a big fat banner on their app that says 'go to this link to subscribe to Spotify premium'.

Does that mean that subscribing on the app has a commission but subscribing on a web site on the browser app does not?

Right, if a user subscribes via app it uses Apple’s payment system and Apple is paying merchant processing fees, vs if they subscribe directly with Spotify they handle processing fees, chargebacks, support etc.

The ~30% was relatively reasonable when the App Store launched with most transactions being $0.99 one-time purchases, but isn’t very equitable for things like $15/mo subscriptions.

If they go to the browser themself - without clicking a link in the app - to subscribe, then no commission has to be paid. However, if they clicked a link from within the app itself to subscribe then they must pay the commission, even if the payment eventually happened from within a browser.

In other words, no matter how the subscription/payment happened, if it originated from within the app (whether via a link to an external site or via apples payment system) you must pay a commision.

Can the application developers then send links via email/text instead?

Either way it's mind boggling how the court didn't shut this disgraceful racketeering down

Can I sell a physical item at any store and advertise at the same store that you can buy directly and save money?

It's not a store, though. It's a phone. People generally don't shop at establishments they already paid for. Even if they did, it wouldn't be an apt analogy because other stores can't sell that same item anyways.

So with that in mind, it's more like paying for an apartment where you have to order your groceries and furniture over Apple's room service. When other businesses want dial-out functionality, Apple taxes them 27% of the transaction to enter the building. When you offer to walk outside and help accept the delivery, Apple locks the doors on you and tells you to buy a second apartment. Enough people have bought these apartments (and like them) that they want to change the bad door policy but keep the posh interior. Now Apple wants to play the victim despite claiming an ample 40% profit margin every time someone buys a room.

I don't think that's a good analogy because in this scenario only one store can even exist in the first place.

Would you be okay with Apple taking 30% from food ordering app companies when making orders through an Iphone? Because it's basically the exact same thing they're doing here.

That’s fair.

In that case, the answer is not to force Apple to allow others to advertise lower prices in their store. But to force Apple to allow other app stores.

They still have to pay the commission if the user does so within seven days.

Assuming this is true, it would be very tempting to add a simple check before displaying the banner that the install date was more than 7 days ago.

No, the ruling is that they have to pay the commission within 7 days of a subscription/payment occurring via a link in an app distributed on the app store.

There's no way around it. The only way around it is if the user naturally finds/discovers the link to subscribe to a service via another method outside of the app itself. If the act of subscribing happened via clicking a link in the app, the commission must be paid.

Thanks, that's very different from what the parent suggested.

Which by itself it crazy to me.

Why not a banner that just says "Save 30% Subscribe to Premium on Our Website"

With no link.

Not allowed

Apple's storekit offering does not permit that, which I am not sure would survive a court challenge.

Considering that the court already determined that Apple is owed the commission for the initial lead, it absolutely would survive a court challenge.

They certainly haven't leveraged that supposed leverage, since Apple Music doesn't even come close to Spotify from a usability standpoint. I'd wager most people would stick to Spotify in that case, were I a betting man.

They'd have to make it 36% more expensive to break even

It was 30% more expensive if you signed up on the iOS app. I'm not sure if it still is.

https://community.spotify.com/t5/Accounts/higher-costs-per-m...

They just don’t let you upgrade from the free plan at all. Change was rather recent.

https://www.macrumors.com/2023/07/05/spotify-subscribers-no-...

I’d still use Spotify since Apple Music is such a bad app.

Funny that Epic, Spotify etc don't complain about the same cost levied by other platforms like Playstation, Xbox etc?

Usually the strategy (mostly, but hardly exclusively, followed by patent and other trolls) is to start with the smallest, weakest participants and then use them as a precident and then work your way up.

Starting with the richest of them all with decades of litigation experience seems foolish, and indeed it hasn't worked for Epic. Also a lot of people admire Apple, so why face that in the court of popular opinion when you could have build the case that they are the bad guys?

FWIW: I think Sweeny is a dick, that Spotify is financially precarious, and Apple is basically a great white: efficient, relentless, and not your friend.

Can you expand on financially precarious? Would like to understand what this refers too.

They are being squeezed both by the app store gatekeepers who have a monopoly, in all but name, over distribution avenues, and by the music labels who have monopoly power over most artists.

Yup, being wedged between monopsony and a music oligopoly can't be fun.

they're not profitable

I would assume margins are razor thin in the music streaming business, there are only very tame moats

Imagine if google had just developed a proper iMessage competitor in 2012, and made it a cornerstone product like gmail. We probably would actually have a competitive smartphone landscape in the US today.

BlackBerry had BBM on their legacy devices and it didn't stop the original iPhone from being a hit. BlackBerry released their BB10 devices in January 2013 with BBM that were very competitive, and objectively better than the iPhone at the time, and it did not stop the iPhone. Then BlackBerry released BBM on Android and iPhone allowing cross-platform communication with objectively the best messenger available at the time. It failed.

The success of the iPhone was built on the culture of iPhone-first app development and the unwillingness of companies to develop for a third platform.

Android was much more competitive with iPhone back then, as social circles hadn't yet solidified around one platform. Google was also still widely praised back then as an innovative leader. BB had lost enormous market share by 2012, it was too late.

All google had to do was make an iMessage clone, probably even could have made a better service back then, and make it the default on all android phones. Suddenly Google would have had a powerhouse feature for the main thing phones were used for in 2012: communication.

But instead Google decided to leave SMS default and instead toy around with their stupid a/b model that nobody ended up using anyway.

1. Spotify hasn’t allowed in app purchases for 7+ years

2. When Spotify was allowing in app purchases they did charge more

3. Doesn’t Sootify also take a 30% cut to allow artists on their platform?

> 3. Doesn’t Sootify also take a 30% cut to allow artists on their platform?

Woah woah woah - this is HN, we only shake our fists and scream at the unfairness of Apple earning a commission on its IP. When others do it, it’s ok.

It's 30% commission all the way down

> Doesn’t Sootify also take a 30% cut to allow artists on their platform?

No, but Spotify is known for happily starving artists (via their label payouts) to increase its bottom line. For example, Apple Music pays nearly double the royalties Spotify does.

The one simple trick to avoid here is to not be "an artist". Unless you make it big the only thing you're getting out of Spotify and Apple is possibly the easy of distributing a link to your music.

I know a minor band with a few 10's of thousands of Spotify plays and they make 10x more money out of Bandcamp and gigs than they do out of streaming services. And they can't live off that so have day jobs anyway.

It's easy for Apple Music to pay double the royalties when it doesn't have to pay a 30% cut to a 3rd party. It doesn't have to pay one on Apple's Store, and I doubt it pays one on Google's.

Spotify doesn’t pay a 30% cut to a 3rd party either. They don’t allow in app purchases in iTunes.

Okay. That isn't really much of a counter argument. They can't afford apple's 30% gatekeeping take so they lose out on a large number of potential customers.

That must be why AppleTV+ is the number one video streaming company.

It took Spotify over a year to implement streaming over the cellular Apple Watch after the API was introduced

Okay but this completely irrelevant to the argument at hand.

If you want to choose apple music over Spotify for the sake of the artists. Good. Though I'd also he cautious, Spotify does have a much stronger market share than apple in this regard but precedent seems to indicate that apple will happily leverage their strong position to squeeze money out of people.

These companies are all wanting to make more money, this money needs to come out of somewhere. Users, artists, developers...

> Spotify does have a much stronger market share than apple in this regard but precedent seems to indicate that apple will happily leverage their strong position to squeeze money out of people.

We have 23 years of history (Apple's digital music services launched in 2001) showing that's not true, so I'll take that bet.

And the only thing that's changed about the App Store 30% cut implemented 15 years ago is that was halved for the vast majority of software sellers.

> 3. Doesn’t Sootify also take a 30% cut to allow artists on their platform?

Is Apple paying for their engineering staff, data centers and streaming bandwidth? No.

Once someone purchases Spotify, Apple just pushes app updated, a microscopic fraction of the cost of running Spotify.

Putting that aside, the real issue is that Apple has their own competing service that effectively doesn't have to pay the same tax. That is where things become anti-competitive.

> Is Apple paying for their engineering staff, data centers and streaming bandwidth? No.

Is Spotify paying for artists’ session musicians, recording studio, or musical instruments? No.

> Once someone purchases Spotify, Apple just pushes app updated, a microscopic fraction of the cost of running Spotify.

How much work does Spotify do to publish an individual song?

I think the point is that the tax is a double-standard. Apple can inherently exploit more competitive tactics by offering a first-party option that is financially infeasible to resist.

Spotify isn't squeaky-clean either, but their argument is sound. Not only can Apple grant themselves private API entitlements (a literal competitive advantage), but competitors cannot offer a cheaper alternative even if they wanted. It's a situation where ad-ridden platforms like YouTube and TikTok are rewarded and legitimate licensed competitors can barely justify a native iOS app.

What private API entitlements does Apple take advantage of that affects Spotify?

It took Spotify over a year to implement streaming over cellular Apple Watches after it was introduced with a four month lead time when it was in public beta

It's no surprise they'd drag their feet on investing in a platform that actively prevents them from competing. You're describing a broken egg and asking why the chicken never hatched.

> What private API entitlements does Apple take advantage of that affects Spotify?

That's not what I said. Spotify is arguing that Apple has double-standards, and I'm using the existence of API entitlements to back them up. It's an ironclad example that Apple does have conflicting interests whether they want them or not. Apple claims those double-standards help users, but I'm arguing that the promotion of special closed-door agreements and ad-supported platforms is preventing actual competitors from emerging.

> It's no surprise they'd drag their feet on investing in a platform that actively prevents them from competing. You're describing a broken egg and asking why the chicken never hatched.

Did people who were interested in being able to run with just an Apple Watch choose not to buy an Apple Watch or choose to switch to Apple Music?

How did they think this was going to hurt Apple and not themselves?

> That's not what I said. Spotify is arguing that Apple has double-standards, and I'm using the existence of API entitlements to back them up

Of course the OS vendor is never going to allow every app the same level of access to the hardware that they have. Do you want every application to have root access?

How has Apple having “private entitlements” hurt their competitors when it comes to books (where Kindle is more popular), streaming video (AppleTV+ vs Netflix - really? ), streaming music (Spotify still has more market share on iOS I believe), podcasts (I use Overcast). Third parties can manipulate the photo library.

The two exceptions I can think of are adding music to the music library directly on the phone and installing apps.

> Do you want every application to have root access?

No application should have root access. If Apple is giving their competitive apps root-equivalent permissions then I would say that's an even larger scandal.

> How has Apple having “private entitlements” hurt their competitors [...]

By creating yet another gate where they are exempt from the rules.

> The two exceptions I can think of

With all due respect, if there are exceptions you can think of then I think the situation is flawed. There's also the browser engine dispute, iMessage's neverending hermitage, and Apple's gradual depreciation of cross-platform libraries. We can argue that there's some merit to all of those behaviors, but together they represent a coordinated anticompetitive strategy.

If Apple can't isolate their hardware ambitions from their software ones, I feel like this will end with a judge threatening to break Apple into two companies a-la United States v. Microsoft Corp.

> By creating yet another gate where they are exempt from the rules.

You still haven’t given one example of where Apple has a competing service that puts them at an advantage over competitors based on private entitlements?

> iMessage's neverending hermitage

What can iMessage do that a competing messaging app can’t do?

> Apple's gradual depreciation of cross-platform libraries

How is not supporting a cross platform library given Apple a competitive advantage? Game developers use cross platform engines that abstract the difference and there have been cross platform web based cross platform SDKs forever like React Native.

> If Apple can't isolate their hardware ambitions from their software ones, I feel like this will end with a judge threatening to break Apple into two companies a-la United States v. Microsoft Corp.

Back then Microsoft was the most valuable and today…MS is the most valuable company. How did that work out?

Apple has literally been an integrated software/hardware company for almost 50 years

> You still haven’t given one example of where Apple has a competing service that puts them at an advantage over competitors based on private entitlements?

Apple Maps, Apple Health, Apple Music (as you mentioned) the App Store, Siri, Safari and Password Manager all come to mind.

> What can iMessage do that a competing messaging app can’t do?

Functionally replace SMS. Apple knows they should have replaced SMS using a consortium of some sort, but they took advantage of the situation and bundled instead. Now SMS is a derilect mess, the alternatives are just as greedy as iMessage and nobody wants to work together.

> How is not supporting a cross platform library given Apple a competitive advantage?

It's part of a continued, overt and obvious strategy to stop cross-platform developers from porting their code to Mac.

> Game developers use cross platform engines

...which is probably why MacOS doesn't have any games to speak of, innit?

> Back then Microsoft was the most valuable and today…MS is the most valuable company.

> Apple has literally been an integrated software/hardware company for almost 50 years

What is your point?

> Apple Maps, Apple Health, Apple Music (as you mentioned) the App Store, Siri, Safari and Password Manager all come to mind.

What can Apple Maps do that Google Maps can’t do? What can Apple Health do that third party apps can’t do?

Third parties like 1Password can be used in place of Apple passwords. There has been an API for for it years.

Siri - there are third party hooks for Siri. Today if you have ChatGPT installed, you can activate Siri and say “Ask ChatGPT…”

And as far as SMS, “consortiums” always lead to slow progress and least common denominator. RCS doesn’t even have encryption.

Apple Music. What can it do that third parties can’t do?

> It's part of a continued, overt and obvious strategy to stop cross-platform developers from porting their code to Mac.

And yet there are Electron apps galore on Mac today.

> which is probably why MacOS doesn't have any games to speak of, innit?

It couldn’t possibly be because until three years ago that most Macs had poor graphics hardware and even today the Mac market share is tiny.

> What can Apple Maps do that Google Maps can’t do? What can Apple Health do that third party apps can’t do? [...]

Everything. I don't doubt that Apple extends a ladder to these developers, but I also don't expect it to look any different than their "ladder" for third-party browsers. When Apple controls the API, they have a direct conflict of interest with their competitors. We see this most overtly with the App Store's exclusive happy-path installation route.

I don't think every case will be treated equal, either. Apple will be allowed to retain some level of power asymmetry, but the outstanding question right now is how much? Their current control has been identified as anticompetitive by multiple large jurisdictions, so they're going to have to adjust policy at least partially to keep operating in the same markets.

> And as far as SMS, “consortiums” always lead to slow progress and least common denominator. RCS doesn’t even have encryption.

I agree; this is one of those fields where I want Google to pound sand so Apple can establish a better cross-platform replacement to SMS.

Again, I feel like I have to repeat this every so often; I don't hate Apple users or Apple hardware, by-and-large. I hate the pervasive isolationist attitude that Apple amplifies, immunizing them from legitimate criticism and stopping customers from critically thinking about their purchase. I'm not the only one who identified this, and hardly the first. People have been talking about Apple's "reality distortion field" for decades now, it only makes sense that it would come to a head with the iPhone and App Store.

> And yet there are Electron apps galore on Mac today.

And on NetBSD as well. A screaming testament to the success of cross platform web browsers.

> It couldn’t possibly be because until three years ago that most Macs had poor graphics hardware and even today the Mac market share is tiny.

Surely. If you ignore Apple's mistaken hostility towards cross-platform graphics libraries and failure to provide a stable development target, it's definitely a hardware issue. Gotta manage your expectations anyways, it's not like Apple had outstanding commitments to Khronos Group in the first place. Even if they did, fat chance it would have helped gaming on Mac.

What's someone gonna do, write a DirectX translator? If they did it wouldn't be for a puny, unprofitable API like Vulkan, right?

> Everything. I don't doubt that Apple extends a ladder to these developers,

So you don’t have an example…

BTW, Apple put in the necessary functionality for third party navigation apps in 2010 before Apple Maps offered navigation.

> And on NetBSD as well. A screaming testament to the success of cross platform web browsers.

You said that Apple restricted cross platform apps. There is an existence proof that that isn’t true.

> Surely. If you ignore Apple's mistaken hostility towards cross-platform graphics libraries and failure to provide a stable development target

Game developers build on top of third party game engines. Those game engines have been available for the Mac for years. Heck the Unreal engine started on the Mac.

No matter how great the graphics library is when most Mac users until 2021 were using Intel graphics and there was a small market share, game developers weren’t going to port games to the Mac.

> What's someone gonna do, write a DirectX translator

Well first someone did….

You might have heard of the company…

https://forums.macrumors.com/threads/apple-built-a-directx-1...

But DirectX isn’t “cross platform”

On what does Spotify charge this? Do they sell music now? I was under the impression that they paid out by track streams

They take 30% of the revenue customer’s pay them and distribute the rest in a pool they give rights holders.

> 3. Doesn’t Sootify also take a 30% cut to allow artists on their platform?

LOL No. Spotify would not be in so much trouble as a business if it did anything like that.

Spotify in fact does take 30% of the revenue from paying customers and ads and puts the rest in a pool to pay artists. How is this any different?

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