4 ms·

I don't think you considered the loss of the 30% from each apple music customer's previous subscription to a competitor. There's no unfair advantage, the maximu

I don't think you considered the loss of the 30% from each apple music customer's previous subscription to a competitor. There's no unfair advantage, the maximum profit apple can make by switching a customer away from spotify is spotify's profit.

codys 5y ago
This assertion ignores that apple makes a profit off the 30% cut. In other words: it doesn't correspond to a real cost to Apple.
- moffatman 5y ago
  It's known that music licensing costs are about 50% of gross subscription prices. So a subscription to spotify is about 50% to rightsholders, 30% to apple, and 20% to spotify as their profit. A subscription to Apple music is 50% to rightsholders, and 50% to apple. The additional profit Apple makes from converting a Spotify customer is only 20% (50%-30%), the same profit that any other competitor to Spotify (such as Tidal) would make on a conversion. Now, Apple could afford to lower their subscription costs to below Spotify's, selling below "cost" at say 75% rate. So they are still "making money" per subscription, but at a price which is unsustainable to Spotify, which seems at first glance unfair and is what I think the comment chain is picturing. But what's happening here is that Apple as a whole is actually making less money on an Apple Music customer (25% margin) than a Spotify customer (30% margin), so it's not profitable or a good business decision versus the alternative. And we don't see apple doing that, at least where I live both subscriptions are the same price. It only works if you are able to drive Spotify out of business, then jack up the prices, but that anticompetitive opportunity to "dump" is possible for Apple in essentially any market due to their vast vast cash reserves. In my view the potentially anti-trust advantages Apple has over Spotify mainly come from the fact Apple Music is preinstalled and is promoted to iOS users through push notifications.
- sixstringtheory 5y ago
  Disagree. If Apple only had their Music app, they wouldn’t have to maintain the whole ecosystem that comes along with the app store that allows Spotify to exist as an iOS app. Maintaining that system is where the 30% goes. Would anyone then say Apple had an unfair advantage as to who could have a streaming platform on iOS? Spotify would be free then and are now to make a web based player like youtube or soundcloud.
  - fastball 5y ago
    Strange how Spotify managed to create and distribute their app entirely without Apple's "help" on macOS, but would somehow be incapable of doing the same on iOS.
  - pyrale 5y ago
    > Maintaining that system is where the 30% goes. Let's be honest here, the 30% spent by Europeans is mostly going to anonymous bank accounts in Jersey.
spywaregorilla 5y ago
What if spotify can get 1 customer at $1, but apple can get 2 customers at $0.7, to get $1.4. Alternatively, if for some reason there's just a single lump of music streaming revenue to be earned, maybe it's still shitty if Apple steals spotify's business but breaks even on the opportunity cost.

codys 5y ago

This assertion ignores that apple makes a profit off the 30% cut. In other words: it doesn't correspond to a real cost to Apple.

moffatman 5y ago
It's known that music licensing costs are about 50% of gross subscription prices. So a subscription to spotify is about 50% to rightsholders, 30% to apple, and 20% to spotify as their profit. A subscription to Apple music is 50% to rightsholders, and 50% to apple. The additional profit Apple makes from converting a Spotify customer is only 20% (50%-30%), the same profit that any other competitor to Spotify (such as Tidal) would make on a conversion. Now, Apple could afford to lower their subscription costs to below Spotify's, selling below "cost" at say 75% rate. So they are still "making money" per subscription, but at a price which is unsustainable to Spotify, which seems at first glance unfair and is what I think the comment chain is picturing. But what's happening here is that Apple as a whole is actually making less money on an Apple Music customer (25% margin) than a Spotify customer (30% margin), so it's not profitable or a good business decision versus the alternative. And we don't see apple doing that, at least where I live both subscriptions are the same price. It only works if you are able to drive Spotify out of business, then jack up the prices, but that anticompetitive opportunity to "dump" is possible for Apple in essentially any market due to their vast vast cash reserves. In my view the potentially anti-trust advantages Apple has over Spotify mainly come from the fact Apple Music is preinstalled and is promoted to iOS users through push notifications.
sixstringtheory 5y ago
Disagree. If Apple only had their Music app, they wouldn’t have to maintain the whole ecosystem that comes along with the app store that allows Spotify to exist as an iOS app. Maintaining that system is where the 30% goes. Would anyone then say Apple had an unfair advantage as to who could have a streaming platform on iOS? Spotify would be free then and are now to make a web based player like youtube or soundcloud.
- fastball 5y ago
  Strange how Spotify managed to create and distribute their app entirely without Apple's "help" on macOS, but would somehow be incapable of doing the same on iOS.
- pyrale 5y ago
  > Maintaining that system is where the 30% goes. Let's be honest here, the 30% spent by Europeans is mostly going to anonymous bank accounts in Jersey.

spywaregorilla 5y ago

What if spotify can get 1 customer at $1, but apple can get 2 customers at $0.7, to get $1.4. Alternatively, if for some reason there's just a single lump of music streaming revenue to be earned, maybe it's still shitty if Apple steals spotify's business but breaks even on the opportunity cost.