4 ms·

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.

by codys 5y ago

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.

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.

by 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.