Spotify CEO Daniel Ek says Apple's new App Store changes are a 'new low' | Hacker News Reader

Spotify CEO Daniel Ek says Apple's new App Store changes are a 'new low'

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27 pointsbelter44 comments

Speaking of Apple taking a cut, does anyone know what kind of cut Spotify takes from artists?

> Spotify pays artists between $0.003 - $0.005 per stream on average. That works out as an approx revenue split of 70/30 - so that's 70% to the artist/rights holders and 30% to Spotify.

So Spotify takes ~30% cut?

How do you figure out the revenue split if you only know what Spotify pays Artists per stream but not what they actually earn themselves? Lets say I pay $10 per month and listen to 2000 songs. Then they would earn $0.005 per song on average. If they pay everyone $0.005, their cut would be zero. If they pay $0.003, their cut would be 40%.

I believe the above post is quoting Spotify, not making a guess.

Spotify has not publicly released any numbers of that kind. It seems the post is quoting some other article [1] that not only doesn't answer my question but even admits that the given numbers are mere speculation. So there is zero basis for the statement in the post above.

[1] https://dittomusic.com/en/blog/how-much-does-spotify-pay-per....

The New York Times seems to claim a 70/30 split [1]. However the devil is in the detail as there are plenty of claims from artists of hundreds of thousands of plays resulting in a few dollars being earned. It may be that the split is correct, but that high profile artists are getting a higher rate per stream?

Others claim Spotify is great for being discovered [2] and that this is where its value lies for them (as artists).

[1] https://www.nytimes.com/2021/03/22/technology/streaming-musi...

[2] https://www.reddit.com/r/spotify/comments/13v4i4k/spotify_pa...

I agree with your question, I googled what percent cut Spotify takes, and that was the google provided answer. I think it's right to question my quote. It seemed very much in line with every other market place, so I didn't question it too much.

In an effort to be more accurate, this is the official financial report from Spotify to shareholders:

https://s29.q4cdn.com/175625835/files/doc_financials/2023/q3...

It claims $3,357 million in revenue, and it claims that revenue cost them $2,472 million.

Which implies they are taking at least a 26% cut. I am a financial layman, so perhaps someone with more expertise could correct me if my understanding is wrong.

>Which implies they are taking at least a 26% cut

No, that implies they get at most a 26% cut. But cost of revenue includes everything needed to deliver the service. That includes infrastructure, maintenance, all the people working on that stuff, bandwidth, etc. So the actual cut must be much lower.

Money from subscriptions can go to Spotify or artists. If money is going to Spotify for profit or services, that is their cut. That is the amount of money taken from artists to provide the service of Spotify.

Any money in cost of revenue not going to artists for the purposes of running infra/maintenance, etc. is part of Spotify's cut. Therefore 26% is a lower bound and spotify may be taking more than 26% of the total money earned by subscriptions. We can assume that all gross profit did not go to artists, which means gross profit is the lower bound of Spotify's cut.

I think you are asking what percent of profit do artists get, while I am asking what percent of income do artists get.

I think when comparing this to the Apple App store. Apple is taking a 30% cut of income, not a 30% cut of profits, so asking what cut of income spotify is taking is appropriate.

Cut is based on revenue, not profits. So it's still at most 26%.

Here's a U.S. music streaming calculator created by a company that claims to have data: https://www.manatt.com/music-streaming-royalty-calculator

> So Spotify takes ~30% cut?

According to the calculator, for 10M streams, Spotify pays the label (really, the sound recording owner) $38,917 (0.38¢/stream), while Apple pays $66,840 (0.668¢/stream).

In the "1M Streams" charts on that page, Spotify keeps 50% of the total and pays creators/rights-holders the rest, while Apple keeps 29%.

I think this is a very compelling case against Apple, and this is a perfect example of lies, damn lies, and statistics.

  Spotify's pie is:   $7,631
  Apple's pie is:     $10,711

Spotify's pie is 28% smaller than Apple's which is suspiciously close to the app store fee.

The way this information is displayed feels very dishonest to me. The display implies Apple is better for artists, but the reality this displays when analyzed for more than how it is presented is that apple is using anti-competitive practices to unfairly offer artists a better deal.

Both pies being displayed the same size, despite that one is physically larger, hides relevant information.

I think owning the app store and having an app that competes with other apps on it is a clear and odious conflict of interest. If that were the main argument against apple, I would be a strong supporter of Apple targeted regulation. Apple's cut is fine, being able to take that cut directly from your competition offering you a clear and unfair competitive advantage is not.

There is nothing here about App Store fees. Spotify has a smaller pie due to their millions of unpaid listeners, whereas Apple only has free trials.

> Spotify has a smaller pie due to their millions of unpaid listeners…

FWIW, in that case Spotify is still paid, just by advertisers.

> The way this information is displayed feels very dishonest to me.

There's definitely some weirdness here. For example, the "1M Spotify Streams" pie obfuscates that Spotify's share is 50% by making it look closer to 37%.

> Apple's cut is fine, being able to take that cut directly from your competition offering you a clear and unfair competitive advantage is not.

Spotify has never paid Apple a penny. In 2016, Spotify turned off that feature. Before that, they passed along that cost to customers who subscribed via App Store.

There's zero evidence that Spotify handed Apple a competitive advantage by preventing their customers from subscribing via App Store. As Variety noted in 2019, less than 1% of Spotify subscribers signed up via App Store. https://variety.com/2019/digital/news/apple-spotify-fees-sub...

> Spotify's pie is 28% smaller than Apple's which is suspiciously close to the app store fee.

As the same Variety article notes, Apple's cut of Spotify subscription fees attributable to App Store was only 15%. And again, Spotify just passed this cost directly to their customers who subscribed via App Store, just as X does today.

> apple is using anti-competitive practices to unfairly offer artists a better deal.

Exactly - Apple is paying both sides of the fence here

Competing with Spotify and at the same time having the boot on their neck

Unfortunately this is the capitalist curse/destiny. A computer company is now making Movies, a Music streaming app and building cars

They can buy Disney and knock over Netflix - there are no bounds

It’s all about the TAM

Apple’s onerous terms really seem like they’d run afoul of part 70 of the preamble of the DMA:

> Given the substantial economic power of gatekeepers, it is important that the obligations are applied effectively and are not circumvented. To that end, the rules in question should apply to any practice by a gatekeeper, irrespective of its form and irrespective of whether it is of a contractual, commercial, technical or any other nature, insofar as the practice corresponds to the type of practice that is the subject of one of the obligations laid down by this Regulation.

Full text: https://www.eu-digital-markets-act.com/Digital_Markets_Act_P...

We can expect any lawsuits around the enforcement of the DMA to take years though. At least that's how it has happened in practice in the EU when a tech company meets new, unfavorable regulation. If you can't just slap them with a fine, e.g., privacy related stuff, you will have to take the long way through courts.

> can expect any lawsuits around the enforcement of the DMA to take years

Wouldn't damages be expected if the courts rule adversely? At least in America, if Apple's actions were shown to be illegal, developers would have a claim as a class to damages.

Are those damages less than the money that Apple would make by imposing these terms? There are lots of potential use cases like an F-Droid equivalent which cannot be shipped on iOS with these current terms, but the actual commercial damages are fairly minimal if this were to go to court since stores like F-Droid are not run for profit.

This whole drama seems like a textbook case of "Be careful what you wish for - you just might get it." Ek seems not to understand that people who have a lot of money and reputation at stake are highly motivated to work around legal and regulatory obstacles (while still avoiding running afoul of the law) and will hire the best people to counsel them. He is a fool if he expected Apple not to try as hard as it can to preserve its fees, the iOS user experience, security for its customers, etc., as much as possible.

Whilst I agree, there is always an angle of having an expectation of what your competitor is going to do, then seeing what they actually propose being wildy outside of that.

Business is sometimes like sports in that regard. :-)

I thought they'd zig, then they zagged xD

[dupe] misleading again, we're days into this story.

More discussion: https://news.ycombinator.com/item?id=39156492

Official post:

https://news.ycombinator.com/item?id=39148422

A per download fee... that is pretty scummy. It would force free apps to need to monetize to ensure they can cover the cost of downloads. Not good for all users.

It doesn’t go far enough! Apple needs to start charging per-minute use for websites accessed via Safari! For too long have FREELOADING web developers taken advantage of all the engineering effort that Apple put into creating Safari, the greatest browser ever created. It’s time that they pay for the privilege!

lol

> It’s time that they pay for the privilege!

We don't trust your TLS certificate if you don't sign it with an Apple Developer account. And for security reasons you may not access HTTPS sites with an untrusted certificate.

I’d be interested in a list of apps that have over 1 million downloads that aren’t already monetized. There’s also the option of sticking with the current terms and free apps won’t have to pay anything.

> It would force free apps to need to monetize…

Only if they create an App Store competitor and distribute their app there. Nothing changes if they continue to use App Store.

Nit: it’s per install per account per year. Not saying that is objectively good but it’s much better than per download.

E.g a user installs it on 3 devices, it’s counted once vs 3 times by your metric. If they install/update it the following year, it counts again.

It's interesting because the iPhone has the ability to "remove" no longer used apps after a period of time.

No doubt Apple with make sure that's switched on to make sure people are redownloading as much as possible

Removed

Yep. Any developer that happens to make a good app will then be forced to cram it with ads to cover the fees. It will make success into a curse.

No. Developers are free to remain in the old pricing model. No one is forcing them to switch.

The disinformation around this issue is incredible.

Indeed, it's the opposite in that Apple is pretty much forcing developers to not switch. And that's exactly the problem, because the regulations call for Apple to permit App Store competition on iOS in practice, not just to create a set of sham terms they know nobody can accept and pretend it solved the problem.

Well - that's for the regulators to decide.

Regardless, until the disinformation dissipates, it will be impossible to discuss the issue rationally.

I don't think in this case is disinformation as much as it is just ignorance

You're making a false dichotomy. I think most disinformation is spread by ignorance.

Well disinformation is usually by doing it deliberately, as opposed to just being ignorant.

Having said that, most is not all and the comment in question was purely from being ignorant as opposed to purposefully trying to change people's perceptions whilst knowing the facts.

Not at all. Most people who spread disinformation are completely unaware that it is disinformation. They actually believe it.

Think of all the senior citizens on Facebook spreading pro Trump memes.

Exactly, it's not disinformation when the person is spreading the information through ignorance.

It's misinformation then they intentionally spread it, whilst knowing better.

I disagree. For example, that's not the criteria social media sites use when they block disinformation. In these cases, nearly all of the people propagating the message are ignorant.

Amazing to see greedy companies call other greedy companies greedy as they all continue to argue over money.

Reply on news.ycombinator.com