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Spotify’s main complaint is pretty stupid because everyone has this problem in retail. It’s not unique to Spotify. If I sell paper cups to Walmart they will ta

Spotify’s main complaint is pretty stupid because everyone has this problem in retail. It’s not unique to Spotify. If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The house brand can also operate on a razor thin margin because that product isn’t critical to their business. This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper.

jedberg 7y ago
But in retail I can choose a different store. For Apple, there is exactly one store.
- themagician 7y ago
  You can choose android. Or use the browser. If you want to sell in the Apple store, to Apple customers, you play by Apple’s rules. Same for Walmart or Amazon. The house always has the upper hand. If you don’t want to sell to Apple customers, you can sell direct. There is really nothing unique about this. Anyone who has a business in retail is familiar with this problem. Want to sell on Amazon to Amazon customers? 8-20%. Want to sell in Walmart to Walmart customers? 12-17%. I wish it weren’t so, I really do. I’d be 15% richer overnight (probably more, as I’d be more cost competitive). If we decide that these sort of platform fees are illegal that would actually be HUGE and redistribute massive amounts of wealth from gatekeepers to smaller businesses.
  - jedberg 7y ago
    > You can choose android. That's a false choice. That's like saying "don't like Walmart? Then leave the US and move to Europe!" The choices aren't equivalent. Each have their pluses and minuses, but the choice of Android or Apple should not dictate which retail outlet you get to use. In the real world, the consumer can chose the easy retail outlet (Walmart, Amazon) or they can choose a harder to use/access outlet, but at least they get the choice. With Apple, you can't choose your retail outlet, and that is by Apple's design.
    - themagician 7y ago
      There is really no consumer issue here. If you want to use Spotify you can. You can download it and use it all you want on your Apple device. You can use it on the web, and you can even download an app. If you want to buy Spotify premium, you can! You can buy it directly from Spotify. If you want to buy it from the App Store you can! But Spotify has decided they don’t want to sell it on the App Store because Apple’s entitlements/platform fee/referral fee/whatever you want to call it is too high.
      - jedberg 7y ago
        > If you want to buy Spotify premium, you can! You can buy it directly from Spotify. Only if you independently know that it exists. They can't link out to their web store. Apple can though.
        themagician 7y ago
        They can let people know it exists through any number of ways. They just can’t bundle that advertisement explicitly into product they sell on the App Store. But they actually do (in the radio spots). They just can’t do it in plain text. Again, this is can be true in other places in retail as well. Walmart may not be happy if I slap a giant sticker on my box that says, “Buy direct from us for less!” Sometimes the stores don’t care. Sometimes they do. If they don’t like it they reserve the right to kick you off the shelf or ask you to remove it.
        jedberg 7y ago
        You keep conflating Apple's store with Apple's hardware. All of Apple's policies would be fine if they allowed any store on their hardware, because then other stores could have other policies. But since Apple doesn't allow other stores, it's not the same as regular retail, because the consumer can't choose another store with better policies.
        snowwrestler 7y ago
  - treis 7y ago
    >You can choose android Pointing out that Apple is a duopoly and not a monopoly isn't a compelling argument. Especially so when the other half of the duopoly engages in the same sort of abusive behaviors.
    - xvector 7y ago
      Pointing out that the App Store is the only available app store in the iPhone is not a compelling argument either. When you're in a Walmart, you can only buy from Walmart. Nothing is stopping you from going to Costco.
      - treis 7y ago
        >When you're in a Walmart, you can only buy from Walmart. Nothing is stopping you from going to Costco. The laws of physics are not anti-competitive. What would be an anti-trust issue is if Walmart took steps to prevent their customers from shopping at Costco. Apple is stopping iPhone owners from going to the equivalent of Costco by banning competing app stores. That's a pretty clear violation of U.S. antitrust laws.
        xvector 7y ago
        > What would be an anti-trust issue is if Walmart took steps to prevent their customers from shopping at Costco. Apple is not preventing you from choosing to buy an Android phone. Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else. Walmart-made products will be cheaper in the store. You can always go somewhere else. You can make the choice on whether you want to go to Walmart or Costco before, during, or after your stint in either.
        treis 7y ago
        >Apple is not preventing you from choosing to buy an Android phone. They're preventing you from buying iOS apps from anyone but Apple. >Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else. It's not and you can't. There's nothing inherent that forces you to only buy software from Apple because you own an Apple device. And you can't go somewhere else to buy your software because Apple blocks that.
AnthonyMouse 7y ago
> If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The store is obviously going to make a margin to pay for the costs of operating the store. The store brand can't avoid those costs by being in-house because it still needs shelf space and stock clerks etc. This is different than with Apple because it's actually plausible that it costs "12-17%" to have a physical store with physical goods in it, but a 30% margin for online distribution is just blatant monopoly rent. Which comes from the fact that other stores compete with Walmart in retailing paper cups but Apple prohibits anybody from competing with them in retailing iOS apps. > This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper. The house brand is cheaper because it has less brand recognition, which in turn is because it has less expense in building a brand through advertising and long-term quality control. This is why, despite the products often being completely identical, many people will pay more for the one they're familiar with and not have to take the chance that the store brand isn't as good (even if it usually is).
- themagician 7y ago
  Wrong. The retail store makes its margin based on the spread between wholesale and retail price. They mark it up. Typically, 50%. Entitlements sit on top of that. They are usually broken out between logistics, damage, marketing support, liability, referral, platform, etc..They average around 15%, but it depends on category. Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. This is strictly a fee you pay to access their customers. Same as Apple. It’s the fee you pay to access their customer base, with credit card and billing info, and have them handle the transaction and associated liability. It’s pretty clear you have zero understanding of retail business logistics.
  - AnthonyMouse 7y ago
    > Entitlements sit on top of that. They are usually broken out between logistics, damage, marketing support, liability, referral, platform, etc. "Entitlements" are just a component of overall margins. Breaking them out separately doesn't win you anything because the store brand still needs to pay its pro rata share of the cost to cover those things. > Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. These is strictly a fee you pay to access their customers. Yet notice that their fees are typically something like 13% rather than 30%, and they're still dealing in physical goods and then have to contend with the sellers who send an empty box rather than a product etc.
gamblor956 7y ago
If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The house brand can also operate on a razor thin margin because that product isn’t critical to their business. This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper. This argument is so much FUD. A paper cup company sells their cups to Walmart at wholesale prices. Walmart buys all the cups they sell in their stores, including the "Walmart brand" generic cups, and so "resells" them to the end customer. Because Walmart is "reselling" the cups, it can charge whatever it wants on whatever products it wants. Not even remotely the same thing to what Apple does: Apple just claims to be a transaction processor facilitating a direct sale between an app-maker and a customer. Except that Apple charges its competition 30% and itself nothing. They use to use this sort of scenario as the textbook example of antitrust violations. Antitrust enforcement fell out of favor in the West following the actions against Microsoft, but it looks like the EU is girding up to start enforcing it again.
- themagician 7y ago
  Somewhat fair if we are talking about Walmart stores. But Walmart.com still charges fees just to sell on there, and they don’t (necessarily) buy anything. Same for Amazon.com. If Apple’s policies are an antitrust violation then it will likely extend to Amazon, Walmart, and any other retailer that also sells their own product. It would also impact Microsoft, Sony and Nintendo. I’m not actually again inst that. I just find the Spotify case to be particularly weak.
  - deleted 7y ago
    [deleted]
  - gamblor956 7y ago
    If Apple’s policies are an antitrust violation then it will likely extend to Amazon, Walmart, and any other retailer that also sells their own product. It would also impact Microsoft, Sony and Nintendo. Amazon, Walmart.Com Marketplace...no. Because if you want to sell Physical Product X, you can sell on Amazon and Walmart.com. Or Ebay. Or your own website. You can't sell an iPhone app through the Google Store. Amazon has raised antitrust concerns, but they are very different from the ones facing Apple. Walmart.com hasn't raised any...because they aren't attempting to use their existing market position in physical retail to reduce competition in online retail. Microsoft, Sony, and Nintendo. No, because you can buy games for each console in physical stores, you don't have the same issue--none of these company's stores is the sole way to sell your game to a owner of that console. The Spotify case is may not be the strongest case, but it's just one of hundreds or thousands. And worse for Apple, Spotify is an EU company, and the EU is still very much in favor of enforcing antitrust laws. (I assume your reference to Shopify was a typo. Not sure what their beef with Apple is, if any.)

jedberg 7y ago

But in retail I can choose a different store. For Apple, there is exactly one store.

themagician 7y ago
You can choose android. Or use the browser. If you want to sell in the Apple store, to Apple customers, you play by Apple’s rules. Same for Walmart or Amazon. The house always has the upper hand. If you don’t want to sell to Apple customers, you can sell direct. There is really nothing unique about this. Anyone who has a business in retail is familiar with this problem. Want to sell on Amazon to Amazon customers? 8-20%. Want to sell in Walmart to Walmart customers? 12-17%. I wish it weren’t so, I really do. I’d be 15% richer overnight (probably more, as I’d be more cost competitive). If we decide that these sort of platform fees are illegal that would actually be HUGE and redistribute massive amounts of wealth from gatekeepers to smaller businesses.
- jedberg 7y ago
  > You can choose android. That's a false choice. That's like saying "don't like Walmart? Then leave the US and move to Europe!" The choices aren't equivalent. Each have their pluses and minuses, but the choice of Android or Apple should not dictate which retail outlet you get to use. In the real world, the consumer can chose the easy retail outlet (Walmart, Amazon) or they can choose a harder to use/access outlet, but at least they get the choice. With Apple, you can't choose your retail outlet, and that is by Apple's design.
  - themagician 7y ago
    There is really no consumer issue here. If you want to use Spotify you can. You can download it and use it all you want on your Apple device. You can use it on the web, and you can even download an app. If you want to buy Spotify premium, you can! You can buy it directly from Spotify. If you want to buy it from the App Store you can! But Spotify has decided they don’t want to sell it on the App Store because Apple’s entitlements/platform fee/referral fee/whatever you want to call it is too high.
    - jedberg 7y ago
      > If you want to buy Spotify premium, you can! You can buy it directly from Spotify. Only if you independently know that it exists. They can't link out to their web store. Apple can though.
      - themagician 7y ago
        They can let people know it exists through any number of ways. They just can’t bundle that advertisement explicitly into product they sell on the App Store. But they actually do (in the radio spots). They just can’t do it in plain text. Again, this is can be true in other places in retail as well. Walmart may not be happy if I slap a giant sticker on my box that says, “Buy direct from us for less!” Sometimes the stores don’t care. Sometimes they do. If they don’t like it they reserve the right to kick you off the shelf or ask you to remove it.
        jedberg 7y ago
        You keep conflating Apple's store with Apple's hardware. All of Apple's policies would be fine if they allowed any store on their hardware, because then other stores could have other policies. But since Apple doesn't allow other stores, it's not the same as regular retail, because the consumer can't choose another store with better policies.
        snowwrestler 7y ago
- treis 7y ago
  >You can choose android Pointing out that Apple is a duopoly and not a monopoly isn't a compelling argument. Especially so when the other half of the duopoly engages in the same sort of abusive behaviors.
  - xvector 7y ago
    Pointing out that the App Store is the only available app store in the iPhone is not a compelling argument either. When you're in a Walmart, you can only buy from Walmart. Nothing is stopping you from going to Costco.
    - treis 7y ago
      >When you're in a Walmart, you can only buy from Walmart. Nothing is stopping you from going to Costco. The laws of physics are not anti-competitive. What would be an anti-trust issue is if Walmart took steps to prevent their customers from shopping at Costco. Apple is stopping iPhone owners from going to the equivalent of Costco by banning competing app stores. That's a pretty clear violation of U.S. antitrust laws.
      - xvector 7y ago
        > What would be an anti-trust issue is if Walmart took steps to prevent their customers from shopping at Costco. Apple is not preventing you from choosing to buy an Android phone. Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else. Walmart-made products will be cheaper in the store. You can always go somewhere else. You can make the choice on whether you want to go to Walmart or Costco before, during, or after your stint in either.
        treis 7y ago
        >Apple is not preventing you from choosing to buy an Android phone. They're preventing you from buying iOS apps from anyone but Apple. >Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else. It's not and you can't. There's nothing inherent that forces you to only buy software from Apple because you own an Apple device. And you can't go somewhere else to buy your software because Apple blocks that.

AnthonyMouse 7y ago

> If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The store is obviously going to make a margin to pay for the costs of operating the store. The store brand can't avoid those costs by being in-house because it still needs shelf space and stock clerks etc. This is different than with Apple because it's actually plausible that it costs "12-17%" to have a physical store with physical goods in it, but a 30% margin for online distribution is just blatant monopoly rent. Which comes from the fact that other stores compete with Walmart in retailing paper cups but Apple prohibits anybody from competing with them in retailing iOS apps. > This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper. The house brand is cheaper because it has less brand recognition, which in turn is because it has less expense in building a brand through advertising and long-term quality control. This is why, despite the products often being completely identical, many people will pay more for the one they're familiar with and not have to take the chance that the store brand isn't as good (even if it usually is).

themagician 7y ago
Wrong. The retail store makes its margin based on the spread between wholesale and retail price. They mark it up. Typically, 50%. Entitlements sit on top of that. They are usually broken out between logistics, damage, marketing support, liability, referral, platform, etc..They average around 15%, but it depends on category. Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. This is strictly a fee you pay to access their customers. Same as Apple. It’s the fee you pay to access their customer base, with credit card and billing info, and have them handle the transaction and associated liability. It’s pretty clear you have zero understanding of retail business logistics.
- AnthonyMouse 7y ago
  > Entitlements sit on top of that. They are usually broken out between logistics, damage, marketing support, liability, referral, platform, etc. "Entitlements" are just a component of overall margins. Breaking them out separately doesn't win you anything because the store brand still needs to pay its pro rata share of the cost to cover those things. > Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. These is strictly a fee you pay to access their customers. Yet notice that their fees are typically something like 13% rather than 30%, and they're still dealing in physical goods and then have to contend with the sellers who send an empty box rather than a product etc.

gamblor956 7y ago

If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The house brand can also operate on a razor thin margin because that product isn’t critical to their business. This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper. This argument is so much FUD. A paper cup company sells their cups to Walmart at wholesale prices. Walmart buys all the cups they sell in their stores, including the "Walmart brand" generic cups, and so "resells" them to the end customer. Because Walmart is "reselling" the cups, it can charge whatever it wants on whatever products it wants. Not even remotely the same thing to what Apple does: Apple just claims to be a transaction processor facilitating a direct sale between an app-maker and a customer. Except that Apple charges its competition 30% and itself nothing. They use to use this sort of scenario as the textbook example of antitrust violations. Antitrust enforcement fell out of favor in the West following the actions against Microsoft, but it looks like the EU is girding up to start enforcing it again.

themagician 7y ago
Somewhat fair if we are talking about Walmart stores. But Walmart.com still charges fees just to sell on there, and they don’t (necessarily) buy anything. Same for Amazon.com. If Apple’s policies are an antitrust violation then it will likely extend to Amazon, Walmart, and any other retailer that also sells their own product. It would also impact Microsoft, Sony and Nintendo. I’m not actually again inst that. I just find the Spotify case to be particularly weak.
- deleted 7y ago
  [deleted]
- gamblor956 7y ago
  If Apple’s policies are an antitrust violation then it will likely extend to Amazon, Walmart, and any other retailer that also sells their own product. It would also impact Microsoft, Sony and Nintendo. Amazon, Walmart.Com Marketplace...no. Because if you want to sell Physical Product X, you can sell on Amazon and Walmart.com. Or Ebay. Or your own website. You can't sell an iPhone app through the Google Store. Amazon has raised antitrust concerns, but they are very different from the ones facing Apple. Walmart.com hasn't raised any...because they aren't attempting to use their existing market position in physical retail to reduce competition in online retail. Microsoft, Sony, and Nintendo. No, because you can buy games for each console in physical stores, you don't have the same issue--none of these company's stores is the sole way to sell your game to a owner of that console. The Spotify case is may not be the strongest case, but it's just one of hundreds or thousands. And worse for Apple, Spotify is an EU company, and the EU is still very much in favor of enforcing antitrust laws. (I assume your reference to Shopify was a typo. Not sure what their beef with Apple is, if any.)