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Spotify does not want to charge a “30% margin”. Spotify wants to not give up 30% of their revenue to Apple, who coincidentally had a competing service effective

Spotify does not want to charge a “30% margin”. Spotify wants to not give up 30% of their revenue to Apple, who coincidentally had a competing service effectively free from the 30% tax. The epic game store charges 12%; against which developers are partially handcuffed due to steams price matching requirement.

redwall_hp 3y ago
Relevant: Spotify already hands over 70% of their revenue to music rights holders to cover the various performance and mechanical royalties. All of their other operating expenses have to fit into the remaining 30%, meaning they often have quarters that report a loss. Apple trying to take 30% of subscriptions while operating a competing service as a value-add that can afford to be a loss leader is highly anticompetitive.
- kristjansson 3y ago
  Even the most extreme Apple position isn’t trying to take 30% of all of Spotifys revenue, they’re trying to take 30% of each subscription originated on-device, for the first year of that customer. Which is still a huge cut, and still a problem that doesn’t encumber Apple Music, but the business question for Spotify is “do the incremental subscribers make sense (in quality and quantity), not “sell one subscription and Apple eats our entire operating budget”. A better Apple (with less adversarial partners) might have tried to structure the commission as a profit share, not a rev share, to keep high and low margin businesses on the platform, but alas.
  - jncfhnb 3y ago
    I’m not sure that needed clarification but sure
    - jjtheblunt 3y ago
      I found it useful. (Your comments too.)
  - toasterlovin 3y ago
    The crazy thing is that Spotify has already proven that in-app subscription on iOS isn’t necessary to their business, since they’ve already succeeded in becoming the most popular music service without it! But of course that’s not going to keep them from asking their government to give them more.
    - stubish 3y ago
      Business is about staying in business, not being popular. A streaming pricing model, so you lose money on your best customers streaming 24x7 who get a great deal whilst keeping mediocre customers on a free tier because it is expensive. An advertising service where the audience is so tight they won't pay the price of a coffee for music streaming. Popular but sustainable? They already can't pay artists enough, only getting away with that because artists don't have a choice but to bend over.
criddell 3y ago
Small correction: Apple was getting 15% from Spotify, not 30%.
- jncfhnb 3y ago
  Yes, but a sweetheart deal to avoid a legal battle for the greater good with the few entities that have sufficient mass to potentially win at court is a scummy thing in its own right
  - shuckles 3y ago
    There was no sweetheart deal. Spotify pays Apple 0% because they offer no in-app subscriptions, and any developer with long term subscribers gets 15% pricing.

redwall_hp 3y ago

Relevant: Spotify already hands over 70% of their revenue to music rights holders to cover the various performance and mechanical royalties. All of their other operating expenses have to fit into the remaining 30%, meaning they often have quarters that report a loss. Apple trying to take 30% of subscriptions while operating a competing service as a value-add that can afford to be a loss leader is highly anticompetitive.

kristjansson 3y ago
Even the most extreme Apple position isn’t trying to take 30% of all of Spotifys revenue, they’re trying to take 30% of each subscription originated on-device, for the first year of that customer. Which is still a huge cut, and still a problem that doesn’t encumber Apple Music, but the business question for Spotify is “do the incremental subscribers make sense (in quality and quantity), not “sell one subscription and Apple eats our entire operating budget”. A better Apple (with less adversarial partners) might have tried to structure the commission as a profit share, not a rev share, to keep high and low margin businesses on the platform, but alas.
- jncfhnb 3y ago
  I’m not sure that needed clarification but sure
  - jjtheblunt 3y ago
    I found it useful. (Your comments too.)
- toasterlovin 3y ago
  The crazy thing is that Spotify has already proven that in-app subscription on iOS isn’t necessary to their business, since they’ve already succeeded in becoming the most popular music service without it! But of course that’s not going to keep them from asking their government to give them more.
  - stubish 3y ago
    Business is about staying in business, not being popular. A streaming pricing model, so you lose money on your best customers streaming 24x7 who get a great deal whilst keeping mediocre customers on a free tier because it is expensive. An advertising service where the audience is so tight they won't pay the price of a coffee for music streaming. Popular but sustainable? They already can't pay artists enough, only getting away with that because artists don't have a choice but to bend over.

criddell 3y ago

Small correction: Apple was getting 15% from Spotify, not 30%.

jncfhnb 3y ago
Yes, but a sweetheart deal to avoid a legal battle for the greater good with the few entities that have sufficient mass to potentially win at court is a scummy thing in its own right
- shuckles 3y ago
  There was no sweetheart deal. Spotify pays Apple 0% because they offer no in-app subscriptions, and any developer with long term subscribers gets 15% pricing.