5 ms·

> That Apple Music can charge less because they don't have to pay a 30% commission to Apple I know this sounds stupid, but how do we know that Apple isn't taki

by ihuman 7y ago

> That Apple Music can charge less because they don't have to pay a 30% commission to Apple I know this sounds stupid, but how do we know that Apple isn't taking a 30% cut and attributing it to app store revenue like the other 30% cuts everyone else gets?

themagician 7y ago
It’s possible they are but also irrelevant. Apple can operate Apple Music at a razor thin, zero, or negative margin. It’s not critical to their business. Spotify can’t. This is true for any retail operation with its own house brand products. It’s why they are always cheaper, even if internally they treat the accounting the same as they would with an external vendor.
- toasterlovin 7y ago
  Spotify's problem is that they're a feature trying to be a product.
  - ihuman 7y ago
    Why can't a feature be a product if the implementation is good enough to stand on its own?
    - themagician 7y ago
      Clearly, it can’t.
      - anoncake 7y ago
        That is not a valid answer to a question starting with "why".
    - toasterlovin 7y ago
      Why weren't independent butchers and bakers able to compete with supermarkets? I'm not sure, exactly. I suspect the answer has a lot to do with people having limited bandwidth for vendors in their life and that they derive a lot of value from being able to make one buying decision that covers as many of their needs as possible.
  - anoncake 7y ago
    Music streaming looks pretty producty to me. If anything, the issue is that too few things are considered independent products: In the case of Spotify, the client really should be a separate product from the service. No one would use that crap if it weren't tied to the service. The broader issue here is that if you tie bundle things together as features of a single product, a for-profit company has little incentive to improve them. We don't get the best product/feature possible but the worst one whose lack of quality can still be compensated by other features/products. Saying "they're a feature trying to be a product" instead of properly regulating the market does not result in a functioning market but in WeChat.
    - toasterlovin 7y ago
      I think I pointed out a good corollary in another market: independent butchers and bakeries have largely been replaced in the U.S. by the meat and bakery departments of large super markets (and quality has probably stagnated or gone down as a result). Given that we don't seem to have any issues there, why do we have an issue with it here? And I disagree with the idea that music streaming is really a product. The streaming services don't own any content; they're basically just the packaging around other people's content. And, unlike cable TV providers, who also package other people's content, music streaming services do not own the last mile to the customer. The other natural comparison would be to Netflix, but Netflix has exclusive content (mainly because they were intelligent enough to realize early on that they would end up where Spotify is now if they didn't develop their own content). The only thing music streaming services really bring to the table is playlist curation and discovery. That doesn't seem very substantial to me and, in that light, it's not a surprise to me that an independent music streaming service would struggle to make money.
      - anoncake 7y ago
        > I think I pointed out a good corollary in another market: independent butchers and bakeries have largely been replaced in the U.S. by the meat and bakery departments of large super markets (and quality has probably stagnated or gone down as a result). Given that we don't seem to have any issues there, why do we have an issue with it here? I don't think meat and bakery departments are features under a definition useful for this discussion. For me, a product is something you can pay for separately, a feature is part of a product. That means meat and baked goods[1] are separate products. Supermarkets having meat and bakery departments is not much of an issue because it's perfectly reasonable to buy meat from a butcher and other groceries in a supermarket.[2] You cannot really mix Android and iOS apps. Also: "and quality has probably stagnated or gone down as a result" does sound like an issue. However in this case, I guess it's either because supermarkets are cheaper or because buying everything in one place is more convenient. The latter is a natural advantage of supermarkets. Putting all stores in one place would be good for the customer by lowering the cost of shopping at multiple stores but it's physically impossible.[3] Apple's advantage on its own platform, in contrast, is the result of anticompetitive behavior and could be avoided. > The only thing music streaming services really bring to the table is playlist curation and discovery. Size of the catalog? Different clients? Even if music streaming was purely a commodity, why can't a commodity be a product? Even electricity is. [1] I guess you could technically consider meat and bakery departments services. But in that case, does such a thing as a good even exist? [2] Geography aside. If the stores are too far apart, shopping at both is unreasonable. But I would be surprised if you didn't see any issues in such a case. [3] A supermarket that somehow actively stops competitors from opening near it would be acting competitively. Concentrating all stores in one place does have pose the issue of increasing customers' distance to the nearest store. But that's easy to solve when we're violating the laws of physics anyway.
- gamblor956 7y ago
  Apple can operate Apple Music at a razor thin, zero, or negative margin. It’s not critical to their business. Spotify can’t. And you've just succinctly stated in a nutshell why this is an antitrust violation. Apple is leveraging its market position in other markets to force out competition in the music market. With Apple, there's no option to provide Spotify to iPhone users except through Apple's own store. With retail it's different--the retailer still has to pay for the product up-front. They charge more for the branded products because they can. People have seen the branded product on TV, or online, or in a restaurant, etc. Often but not always the branded products will be higher quality (but this depends on the product and the store), and so this is another differentiator between the store brand. More importantly, and the reason that store brands aren't an antitrust issue like Apple Music is--if a retailer tries to leverage its store brand over the branded competition, the brands can simply stop selling to the retailer, because their products can be purchased in the exact same form at another retailer. This has actually happened before, many times.
  - pfranz 7y ago
    I don't have a strong opinion on this topic, but I'm confused by this line of argument. If Apple is running razor thin, zero, or negative margin for Apple Music--what are they getting out of it? Mail, Maps, Stocks, Notes, Reminders fit that same definition. In those cases I imagine they're "value adds." Music (as a store or subscription, not as a player) I don't see being a "value add." > because their products can be purchased in the exact same form at another retailer. The Internet is different. I've always been annoyed that if I buy a movie or most ebooks I'm tethered to that platform for playback. I'm very glad thats generally no longer true for music purchases.
    - themagician 7y ago
      FYI, I think it’s maybe a troll account now that I look at. His “arguments” are just that.
    - snazz 7y ago
      Apple’s locking their customer base into their profitable products (iPhones) through services that work best on those devices. To their credit, Apple Music is available for Android, but is still much better integrated and available out of the box on iOS. By making their “house brand” products the default option, consumers buy into the ecosystem further and further and cannot exit very easily. It’s like buying a house that can contain products from a special store that sells cheaper and better versions of name brand products that conform to your house’s design. If you move into a house built by another company, suddenly you must shop at a store where the options are more expensive and you lose access to some of the things you bought for your old house.
jedberg 7y ago
They might, but it doesn't matter. Since their accounting is at a higher level, they can run Apple music at a loss, knowing that it is contributing to their app store gains.

by ihuman 7y ago

themagician 7y ago

It’s possible they are but also irrelevant. Apple can operate Apple Music at a razor thin, zero, or negative margin. It’s not critical to their business. Spotify can’t. This is true for any retail operation with its own house brand products. It’s why they are always cheaper, even if internally they treat the accounting the same as they would with an external vendor.

toasterlovin 7y ago
Spotify's problem is that they're a feature trying to be a product.
- ihuman 7y ago
  Why can't a feature be a product if the implementation is good enough to stand on its own?
  - themagician 7y ago
    Clearly, it can’t.
    - anoncake 7y ago
      That is not a valid answer to a question starting with "why".
  - toasterlovin 7y ago
    Why weren't independent butchers and bakers able to compete with supermarkets? I'm not sure, exactly. I suspect the answer has a lot to do with people having limited bandwidth for vendors in their life and that they derive a lot of value from being able to make one buying decision that covers as many of their needs as possible.
- anoncake 7y ago
  Music streaming looks pretty producty to me. If anything, the issue is that too few things are considered independent products: In the case of Spotify, the client really should be a separate product from the service. No one would use that crap if it weren't tied to the service. The broader issue here is that if you tie bundle things together as features of a single product, a for-profit company has little incentive to improve them. We don't get the best product/feature possible but the worst one whose lack of quality can still be compensated by other features/products. Saying "they're a feature trying to be a product" instead of properly regulating the market does not result in a functioning market but in WeChat.
  - toasterlovin 7y ago
    I think I pointed out a good corollary in another market: independent butchers and bakeries have largely been replaced in the U.S. by the meat and bakery departments of large super markets (and quality has probably stagnated or gone down as a result). Given that we don't seem to have any issues there, why do we have an issue with it here? And I disagree with the idea that music streaming is really a product. The streaming services don't own any content; they're basically just the packaging around other people's content. And, unlike cable TV providers, who also package other people's content, music streaming services do not own the last mile to the customer. The other natural comparison would be to Netflix, but Netflix has exclusive content (mainly because they were intelligent enough to realize early on that they would end up where Spotify is now if they didn't develop their own content). The only thing music streaming services really bring to the table is playlist curation and discovery. That doesn't seem very substantial to me and, in that light, it's not a surprise to me that an independent music streaming service would struggle to make money.
    - anoncake 7y ago
      > I think I pointed out a good corollary in another market: independent butchers and bakeries have largely been replaced in the U.S. by the meat and bakery departments of large super markets (and quality has probably stagnated or gone down as a result). Given that we don't seem to have any issues there, why do we have an issue with it here? I don't think meat and bakery departments are features under a definition useful for this discussion. For me, a product is something you can pay for separately, a feature is part of a product. That means meat and baked goods[1] are separate products. Supermarkets having meat and bakery departments is not much of an issue because it's perfectly reasonable to buy meat from a butcher and other groceries in a supermarket.[2] You cannot really mix Android and iOS apps. Also: "and quality has probably stagnated or gone down as a result" does sound like an issue. However in this case, I guess it's either because supermarkets are cheaper or because buying everything in one place is more convenient. The latter is a natural advantage of supermarkets. Putting all stores in one place would be good for the customer by lowering the cost of shopping at multiple stores but it's physically impossible.[3] Apple's advantage on its own platform, in contrast, is the result of anticompetitive behavior and could be avoided. > The only thing music streaming services really bring to the table is playlist curation and discovery. Size of the catalog? Different clients? Even if music streaming was purely a commodity, why can't a commodity be a product? Even electricity is. [1] I guess you could technically consider meat and bakery departments services. But in that case, does such a thing as a good even exist? [2] Geography aside. If the stores are too far apart, shopping at both is unreasonable. But I would be surprised if you didn't see any issues in such a case. [3] A supermarket that somehow actively stops competitors from opening near it would be acting competitively. Concentrating all stores in one place does have pose the issue of increasing customers' distance to the nearest store. But that's easy to solve when we're violating the laws of physics anyway.
gamblor956 7y ago
Apple can operate Apple Music at a razor thin, zero, or negative margin. It’s not critical to their business. Spotify can’t. And you've just succinctly stated in a nutshell why this is an antitrust violation. Apple is leveraging its market position in other markets to force out competition in the music market. With Apple, there's no option to provide Spotify to iPhone users except through Apple's own store. With retail it's different--the retailer still has to pay for the product up-front. They charge more for the branded products because they can. People have seen the branded product on TV, or online, or in a restaurant, etc. Often but not always the branded products will be higher quality (but this depends on the product and the store), and so this is another differentiator between the store brand. More importantly, and the reason that store brands aren't an antitrust issue like Apple Music is--if a retailer tries to leverage its store brand over the branded competition, the brands can simply stop selling to the retailer, because their products can be purchased in the exact same form at another retailer. This has actually happened before, many times.
- pfranz 7y ago
  I don't have a strong opinion on this topic, but I'm confused by this line of argument. If Apple is running razor thin, zero, or negative margin for Apple Music--what are they getting out of it? Mail, Maps, Stocks, Notes, Reminders fit that same definition. In those cases I imagine they're "value adds." Music (as a store or subscription, not as a player) I don't see being a "value add." > because their products can be purchased in the exact same form at another retailer. The Internet is different. I've always been annoyed that if I buy a movie or most ebooks I'm tethered to that platform for playback. I'm very glad thats generally no longer true for music purchases.
  - themagician 7y ago
    FYI, I think it’s maybe a troll account now that I look at. His “arguments” are just that.
  - snazz 7y ago
    Apple’s locking their customer base into their profitable products (iPhones) through services that work best on those devices. To their credit, Apple Music is available for Android, but is still much better integrated and available out of the box on iOS. By making their “house brand” products the default option, consumers buy into the ecosystem further and further and cannot exit very easily. It’s like buying a house that can contain products from a special store that sells cheaper and better versions of name brand products that conform to your house’s design. If you move into a house built by another company, suddenly you must shop at a store where the options are more expensive and you lose access to some of the things you bought for your old house.

jedberg 7y ago

They might, but it doesn't matter. Since their accounting is at a higher level, they can run Apple music at a loss, knowing that it is contributing to their app store gains.