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If you’re claiming that Spotify would get all the benefit of a break in the fee, you’re implicitly claiming that it bears all the economic burden of the fee (ie
by shajznnckfke 6y ago
If you’re claiming that Spotify would get all the benefit of a break in the fee, you’re implicitly claiming that it bears all the economic burden of the fee (ie. it doesn’t pass on the fee to users). Spotify currently charges $13 to sign up in iOS and $10 to sign up on the web. This is strong evidence that Spotify is currently passing through the fee to users. It seems much more likely that Spotify would give iOS users a price break if the fee was cut. Music streaming is a competitive market, so they don’t have much choice if everyone gets the same break.
- dehrmann 6y agoEspecially when Apple Music is $10 per month, Spotify needs to more or less match that price. The problem is if Apple takes 30% and Spotify pays out 70% (old info, maybe this has changed) to labels, Spotify is left with $0. It drops to 15% after the first year, but that's still not good compared to the 3% major credit card processors charge.
- Spivak 6y agoRegulators won’t see it like that because you didn’t factor in opportunity cost. If Apple takes one of Spotify’s customers then not only do they lose out on the 30% but they’ve just taken on the burden of providing the actual service to the customer. So Apple not only has to make a profit but make more profit than the 30% would have gotten them. And music streaming is a competitive business. Do you never think how Kroger brand products don’t run into the same issue?
- foepys 6y agoJust for reference: the EU has capped credit and debit card transaction fees at 0.2 and 0.3% and both are still profitable.