4 ms·

Who is the bad-guy here? (Both probably, but who is the worse bad-guy?) Obviously Apple's letter makes it seem as though they are being perfectly reasonable, bu

by fhood 10y ago

Who is the bad-guy here? (Both probably, but who is the worse bad-guy?) Obviously Apple's letter makes it seem as though they are being perfectly reasonable, but neither of the articles that I read have provided much analysis.

pboutros 10y ago
Neither are being bad, but Spotify is clearly trying to force the issue around the App Store generally. Spotify is clearly at fault here (and the way it's been handled in the media suggests some machination, perhaps), but Apple's revenue model with App Store is just as good or bad as it has always been (or maybe better, now that there's the 85/15 split option).
- mackey 10y ago
  But remember that the 85/15 split only occurs after a year, so Spotify would still need to charge more. I also don't know if the app store is flexible enough to lower the customer's price after that year cut goes into affect.
  - oddevan 10y ago
    The cut happens automatically, and it's in place now for all subscriptions. So any Spotify subscriptions that started through the app at least a year ago are now getting the 85/15 split, without Spotify having to do anything.
    - k-mcgrady 10y ago
      I think his point is that if Spotify charges users 30% extra on iOS to cover the split there is no way for them to reduce that to 15% extra for users registered more than a year. So Spotify will get more money but the user will still pay 30% extra for signing up via iOS.
      - MBCook 10y ago
        True. Or Spotify could choose to charge something else, say 10% more, so that on average it worked out to be roughly even for users based on how often they unsubscribe. Where they could charge 15% and eat the other 15% until the subscriber has been around for a year.
mhomde 10y ago
Apple is being a bit greedy when it comes to subscriptions for high-grossing services IMO. Spotify already has razor thin margins and paying out minuscule licensing fees to content producers, it's not viable to pay out 15-30% off the top to Apple. However, Apple clearly should be able to require a fee for providing the marketplace and payment framework, and you can see their point in not wanting apps to circumvent that to make it simpler for users to be able to manage their subscriptions easily. Some kind of cap and/or transaction fee seems more reasonable and would be win-win in the long run. You get a bad taste in your mouth when it feels like Apple is using their walled garden to strong arm competition. You can't compete when your largest rival eliminates your profits. In the end I think it's to Apple's detriment to play aggressively with content providers in their ecosystem when they're in such fierce competition with Android.
- shostack 10y ago
  I think we can expect more of this increased rent seeking behavior from Apple as they continue their shift to a "services" business.
- fhood 10y ago
  my understanding is that this only applies to subscriptions paid through the app though right? What percentage of the total subscriptions does that represent.
  - mhomde 10y ago
    Yeah, but that combined with that it's forbidden to circumvent paying inside the app puts app providers in a weird position. For somewhat technical savvy I guess it's not much of problem but I can imagine my mom would be confused why they couldn't pay for the service. Also, every user that is acquired through the app would potentially be a drain on Spotify due to the draconian fee's and there's no feasible way to wean them off the the app store. I'm not sure of the actual percentage, don't think they're public. Spotify have been desperately trying to sign-up people outside of the App store which I guess is what started this debacle. If the fee's are so high that you can't go through the app store it feels like it should be lose-lose for everyone.
ageitgey 10y ago
Who is the bad guy? It depends on your point of view. Both sides have valid arguments and are "right" from their own point of view. But in my personal opinion, Apple is the anti-competitive / anti-consumer party here. Apple's point of view is that they created the iPhone and spent a lot of money to build the app store, so they get to set the rules of the store. And further more, they treat every dev in the store exactly the same - whether you are Google or Spotify or an indie dev. Everyone pays the same fees to use the store. Since Spotify has decided to break the well-established store rules that apply to everyone, of course their app should be rejected. Apple is just applying their rules. From that very micro point of view, Spotify is 100% wrong and the app should be rejected. Except that totally ignores the larger competition issue and conveniently forgets to mention that Apple itself isn't subject to it's own rules. Spotify's point of view is that Apple's App Store is the ONLY way to sell apps to iOS users (to users who own their own devices!) so Apple has a de facto monopoly over iOS software sales. As such, they should by subject to antitrust law which provides limits on what a monopoly is allowed to do. Specifically, they say the rule that Spotify has to pay 30% of all subscription fees to Apple just to allow user sign-ups in their app is unfair. It's unfair because Apple has a directly competing product called Apple Music. Apple Music has an unbeatable advantage over Spotify on iOS because they don't have to pay 30% of subscription fees to a third party. In a low margin business, no one can possibly compete with Apple if they have a 30% price advantage. I tend to agree with Spotify. Apple is trying to cripple their competition by giving themselves a huge, unfair price advantage by using their monopoly over iOS software sales. It would be fine for Apple to take a 30% subscription fee cut if Spotify chose to use Apple's subscription billing service. But it's not a choice - iOS apps aren't allow to use any other subscription billing service and aren't allowed to even mention other ways to sign up outside of the app. They can't even say the words "go to our website to sign up" without getting kicked out of the store. That seems evil to me. That's the crux of the issue. IMO, Apple created those censorship rules specifically to kill competition with their own products. It's very similar to Yelp's complaints against Google. Yelp complains that even if they have the #1 search result for a restaurant, Google shows their own giant restaurant widget above all organic search results. You don't even see any organic search results "above the fold" anymore. Thus, it's impossible for Yelp to fairly compete with Google in the area of restaurant recommendations because Google controls the user's point of access. The key factor in both the Apple and Google cases is if you believe the companies have a monopoly. Monopolies have more rules to follow than normal companies because they have the superpower to keep the market noncompetitive if they want to. Normal companies don't have that power in a fair market, so they are allowed to be more vicious in how they compete.

by fhood 10y ago

pboutros 10y ago

Neither are being bad, but Spotify is clearly trying to force the issue around the App Store generally. Spotify is clearly at fault here (and the way it's been handled in the media suggests some machination, perhaps), but Apple's revenue model with App Store is just as good or bad as it has always been (or maybe better, now that there's the 85/15 split option).

mackey 10y ago
But remember that the 85/15 split only occurs after a year, so Spotify would still need to charge more. I also don't know if the app store is flexible enough to lower the customer's price after that year cut goes into affect.
- oddevan 10y ago
  The cut happens automatically, and it's in place now for all subscriptions. So any Spotify subscriptions that started through the app at least a year ago are now getting the 85/15 split, without Spotify having to do anything.
  - k-mcgrady 10y ago
    I think his point is that if Spotify charges users 30% extra on iOS to cover the split there is no way for them to reduce that to 15% extra for users registered more than a year. So Spotify will get more money but the user will still pay 30% extra for signing up via iOS.
    - MBCook 10y ago
      True. Or Spotify could choose to charge something else, say 10% more, so that on average it worked out to be roughly even for users based on how often they unsubscribe. Where they could charge 15% and eat the other 15% until the subscriber has been around for a year.

mhomde 10y ago

Apple is being a bit greedy when it comes to subscriptions for high-grossing services IMO. Spotify already has razor thin margins and paying out minuscule licensing fees to content producers, it's not viable to pay out 15-30% off the top to Apple. However, Apple clearly should be able to require a fee for providing the marketplace and payment framework, and you can see their point in not wanting apps to circumvent that to make it simpler for users to be able to manage their subscriptions easily. Some kind of cap and/or transaction fee seems more reasonable and would be win-win in the long run. You get a bad taste in your mouth when it feels like Apple is using their walled garden to strong arm competition. You can't compete when your largest rival eliminates your profits. In the end I think it's to Apple's detriment to play aggressively with content providers in their ecosystem when they're in such fierce competition with Android.

shostack 10y ago
I think we can expect more of this increased rent seeking behavior from Apple as they continue their shift to a "services" business.
fhood 10y ago
my understanding is that this only applies to subscriptions paid through the app though right? What percentage of the total subscriptions does that represent.
- mhomde 10y ago
  Yeah, but that combined with that it's forbidden to circumvent paying inside the app puts app providers in a weird position. For somewhat technical savvy I guess it's not much of problem but I can imagine my mom would be confused why they couldn't pay for the service. Also, every user that is acquired through the app would potentially be a drain on Spotify due to the draconian fee's and there's no feasible way to wean them off the the app store. I'm not sure of the actual percentage, don't think they're public. Spotify have been desperately trying to sign-up people outside of the App store which I guess is what started this debacle. If the fee's are so high that you can't go through the app store it feels like it should be lose-lose for everyone.

ageitgey 10y ago

Who is the bad guy? It depends on your point of view. Both sides have valid arguments and are "right" from their own point of view. But in my personal opinion, Apple is the anti-competitive / anti-consumer party here. Apple's point of view is that they created the iPhone and spent a lot of money to build the app store, so they get to set the rules of the store. And further more, they treat every dev in the store exactly the same - whether you are Google or Spotify or an indie dev. Everyone pays the same fees to use the store. Since Spotify has decided to break the well-established store rules that apply to everyone, of course their app should be rejected. Apple is just applying their rules. From that very micro point of view, Spotify is 100% wrong and the app should be rejected. Except that totally ignores the larger competition issue and conveniently forgets to mention that Apple itself isn't subject to it's own rules. Spotify's point of view is that Apple's App Store is the ONLY way to sell apps to iOS users (to users who own their own devices!) so Apple has a de facto monopoly over iOS software sales. As such, they should by subject to antitrust law which provides limits on what a monopoly is allowed to do. Specifically, they say the rule that Spotify has to pay 30% of all subscription fees to Apple just to allow user sign-ups in their app is unfair. It's unfair because Apple has a directly competing product called Apple Music. Apple Music has an unbeatable advantage over Spotify on iOS because they don't have to pay 30% of subscription fees to a third party. In a low margin business, no one can possibly compete with Apple if they have a 30% price advantage. I tend to agree with Spotify. Apple is trying to cripple their competition by giving themselves a huge, unfair price advantage by using their monopoly over iOS software sales. It would be fine for Apple to take a 30% subscription fee cut if Spotify chose to use Apple's subscription billing service. But it's not a choice - iOS apps aren't allow to use any other subscription billing service and aren't allowed to even mention other ways to sign up outside of the app. They can't even say the words "go to our website to sign up" without getting kicked out of the store. That seems evil to me. That's the crux of the issue. IMO, Apple created those censorship rules specifically to kill competition with their own products. It's very similar to Yelp's complaints against Google. Yelp complains that even if they have the #1 search result for a restaurant, Google shows their own giant restaurant widget above all organic search results. You don't even see any organic search results "above the fold" anymore. Thus, it's impossible for Yelp to fairly compete with Google in the area of restaurant recommendations because Google controls the user's point of access. The key factor in both the Apple and Google cases is if you believe the companies have a monopoly. Monopolies have more rules to follow than normal companies because they have the superpower to keep the market noncompetitive if they want to. Normal companies don't have that power in a fair market, so they are allowed to be more vicious in how they compete.