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Subscription services like Spotify only pay 30% for the first year of each subscription. After that they pay 15% and this has been the case since 2016. Apple h

by simonh 6y ago

Subscription services like Spotify only pay 30% for the first year of each subscription. After that they pay 15% and this has been the case since 2016. Apple has done a lot to revise the App Store charging policy over the last few years, and I think they deserve credit for that. Also their hosting of free apps for only a nominal developer registration fee is a huge boon to users and a lot of iOS developers. So I don’t think those criticisms are entirely accurate or fair. I am ok with regulators looking into this though. Apples revisions to their charging structure probably wouldn’t have happened without the threat of regulatory review. It’s important they be held accountable. However Apple invested many, many billions of dollars to develop the technologies in iOS over many decades and took huge commercial risks. iOS and these devices are their product and they have the right to decide how they work and what features they have. Those who don’t like that do have alternatives. The fact is an awful lot of people do like the way Apple does things.

fossuser 6y ago
> "Subscription services like Spotify only pay 30% for the first year of each subscription. After that they pay 15%." That's still pretty extreme imo when you control the only store and you directly compete with them/undercut them. > "Also their hosting of free apps for only a nominal developer registration fee is a huge boon to users and a lot of iOS developers." They charge a fee for it, I wouldn't consider it nominal - the ecosystem of apps also obviously benefits apple. --- I'm a huge Apple fan which is why I find this racket irritating, it worries me that it'll blow up in their face and we'll end up worse off. I'd probably charge a (low) flat annual fee for app store distribution and that's it. Apple should be focused on making money with great products, not taxing devs they force through their channel. Keep the rules, lose the tax.
- Spivak 6y ago
  > That's still pretty extreme imo when you control the only store and you directly compete with them/undercut them. Regulators don’t (yet I suppose) care about this because of opportunity cost. If I’m making $3/user/mo off your $10 subscription and I decide to enter the market and compete with you at then every user I steal and every user if not for me would have gone with you costs me $3/mo plus cost of providing them service. So if I’m able to still undercut you then either I’m ridiculously more efficient than you or you have fat margins. Neither of these are true so something else is going on here. Either I’m bleeding money and this is some strategic play in which case it might be unfair for different reasons, or the market is segmented and we actually have two different customer bases with insignificant cross pollination.
  - fossuser 6y ago
    If Spotify is $10/month and paying $3 to Apple they get $7/month. If Apple enters with Apple Music and charges $10/month - they're undercutting Spotify while charging the same.
    - simonh 6y ago
      How many billions of dollars, over how many decades did Spotify spend developing that platform, OS and app distribution system? How many times did they almost go to the wall over the commercial risks that took? Anyway as I already pointed out it’s effectively 15%, not 30%. Also the vast majority, over 99% (literally, I looked it up) of Spotify app users earn Apple nothing because they use it add supported and all the add revenue goes to Spotify.
      - Hasnep 6y ago
        My impression is that the ad revenue from that 99% is users is still less than the subscription revenue from the 1%.
      - protomyth 6y ago
        Also the vast majority, over 99% (literally, I looked it up) of Spotify app users earn Apple nothing because they use it add supported and all the add revenue goes to Spotify. They bought the phone from Apple, so Apple made their money.
        Humdeee 6y ago
        This is the comment that lost me. I'm sorry, how should more of the pie go to Spotify here using that argument? Apple 'made their money' on the hardware, therefore Spotify is entitled to a larger ratio on the software? Is that the correct interpretation? Edit: I'll take your downvote as being it was the correct interpretation. It's okay, I didn't expect a reply.
        fossuser 6y ago
pentae 6y ago
When the average subscription to just about any online service is 3.3 months, the 15% after 12 months is simply PR. Nothing more. Apple crunched their numbers and knows exactly what they are doing. What's more amazing is that everyone, including you, has fallen for it.
- OpieCunningham 6y ago
  Considering most cancelled subscriptions are cancelled within a trial period, the average subscription duration is heavily weighted down. Your point would be something worth considering if you had an average that excluded all cancellations within, say, the first month.
- simonh 6y ago
  The idea that subscriptions are the main issue is just fluff. Under 1% of Spotify app users subscribe, for the rest all the add revenue goes to Spotify. Apple distributes the app and gets nothing.
  - fredophile 6y ago
    As someone else pointed out in a different comment, Apple benefits from the app ecosystem even when they aren't getting cash for an app so they aren't getting nothing. Apple also has their own ad network so they can profit directly on iOS apps that are ad supported [0]. [0] https://www.forbes.com/sites/johnkoetsier/2020/08/07/apple-ad-network-gets-special-privileges-that-facebook-google-wont-on-ios14/?sh=488016787515 https://www.forbes.com/sites/johnkoetsier/2020/08/07/apple-a...

by simonh 6y ago

fossuser 6y ago

> "Subscription services like Spotify only pay 30% for the first year of each subscription. After that they pay 15%." That's still pretty extreme imo when you control the only store and you directly compete with them/undercut them. > "Also their hosting of free apps for only a nominal developer registration fee is a huge boon to users and a lot of iOS developers." They charge a fee for it, I wouldn't consider it nominal - the ecosystem of apps also obviously benefits apple. --- I'm a huge Apple fan which is why I find this racket irritating, it worries me that it'll blow up in their face and we'll end up worse off. I'd probably charge a (low) flat annual fee for app store distribution and that's it. Apple should be focused on making money with great products, not taxing devs they force through their channel. Keep the rules, lose the tax.

Spivak 6y ago
> That's still pretty extreme imo when you control the only store and you directly compete with them/undercut them. Regulators don’t (yet I suppose) care about this because of opportunity cost. If I’m making $3/user/mo off your $10 subscription and I decide to enter the market and compete with you at then every user I steal and every user if not for me would have gone with you costs me $3/mo plus cost of providing them service. So if I’m able to still undercut you then either I’m ridiculously more efficient than you or you have fat margins. Neither of these are true so something else is going on here. Either I’m bleeding money and this is some strategic play in which case it might be unfair for different reasons, or the market is segmented and we actually have two different customer bases with insignificant cross pollination.
- fossuser 6y ago
  If Spotify is $10/month and paying $3 to Apple they get $7/month. If Apple enters with Apple Music and charges $10/month - they're undercutting Spotify while charging the same.
  - simonh 6y ago
    How many billions of dollars, over how many decades did Spotify spend developing that platform, OS and app distribution system? How many times did they almost go to the wall over the commercial risks that took? Anyway as I already pointed out it’s effectively 15%, not 30%. Also the vast majority, over 99% (literally, I looked it up) of Spotify app users earn Apple nothing because they use it add supported and all the add revenue goes to Spotify.
    - Hasnep 6y ago
      My impression is that the ad revenue from that 99% is users is still less than the subscription revenue from the 1%.
    - protomyth 6y ago
      Also the vast majority, over 99% (literally, I looked it up) of Spotify app users earn Apple nothing because they use it add supported and all the add revenue goes to Spotify. They bought the phone from Apple, so Apple made their money.
      - Humdeee 6y ago
        This is the comment that lost me. I'm sorry, how should more of the pie go to Spotify here using that argument? Apple 'made their money' on the hardware, therefore Spotify is entitled to a larger ratio on the software? Is that the correct interpretation? Edit: I'll take your downvote as being it was the correct interpretation. It's okay, I didn't expect a reply.
        fossuser 6y ago

pentae 6y ago

When the average subscription to just about any online service is 3.3 months, the 15% after 12 months is simply PR. Nothing more. Apple crunched their numbers and knows exactly what they are doing. What's more amazing is that everyone, including you, has fallen for it.

OpieCunningham 6y ago
Considering most cancelled subscriptions are cancelled within a trial period, the average subscription duration is heavily weighted down. Your point would be something worth considering if you had an average that excluded all cancellations within, say, the first month.
simonh 6y ago
The idea that subscriptions are the main issue is just fluff. Under 1% of Spotify app users subscribe, for the rest all the add revenue goes to Spotify. Apple distributes the app and gets nothing.
- fredophile 6y ago
  As someone else pointed out in a different comment, Apple benefits from the app ecosystem even when they aren't getting cash for an app so they aren't getting nothing. Apple also has their own ad network so they can profit directly on iOS apps that are ad supported [0]. [0] https://www.forbes.com/sites/johnkoetsier/2020/08/07/apple-ad-network-gets-special-privileges-that-facebook-google-wont-on-ios14/?sh=488016787515 https://www.forbes.com/sites/johnkoetsier/2020/08/07/apple-a...