> Underneath the rhetoric, Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters.
Uh, I seem to recall Apple being forced to reverse some brazenly greedy policies for their music service when a high-profile artist called them out and withheld content in protest. For Apple to characterize itself as a champion of exploited artists is pretty disingenuous.
> Spotify’s aim is to make more money off others’ work
Moreover, that's the pot calling the kettle black. That's the app store in a nutshell -- Apple supplies the marketplace, but is also making a substantial chunk of money off of others’ work.
Although growing on the pie seems a more apt metaphor. Defending 15% fees on second-year subscription is pretty difficult. There's no marketing, very little fraud risk. It's really rent-seeking behaviour – which of course is the commercial point of the walled garden approach.
This is Apple exploiting a very lucrative market position, one that they did invest quite a lot of money in – and took quite a gamble – to create.
Definitely no counter-arguments from me. Because of Apple's pricing insanity, I've made sure I own zero of their devices, and I think every person capable of independent thought should do the same.
And this makes sense. They are counting the value paid per 1000 plays. If most of users in spotify are free, the average will be lower. Also, spotify has more plays than apple, so the final value paid might be higher.
This makes me wonder if $ per play is the right metric, versus $ per artist per platform. If you get paid less per play on Spotify, but get many more plays there would that still be a better deal?
Same story with phones. You are free to buy from other suppliers. But you can’t walk into a Walmart and buy milk from whole foods on their shelf’s, even if you feel that would be great for you personally because Walmart is closer but you prefer Whole Foods.
And I am free to use Google Music, Apple Music, YouTube Music, Deezer and even Tidal. Nobody is forcing me to use Spotify.
But, if I have an iPhone, the only application store I can use is controlled by Apple.
In other words: if I am an artist and I want to offer my music via streaming I have plenty of options. If one of them does have a deal that I find unfair, I can choose others.
If I am a developer and I want to offer my app to iPhone users, I have only one option. And if I am banned from this store for any policy infringement (which sometimes is ridiculous and totally arbitrary) I have no other option to offer my app to iPhone users.
I think it's somewhat frequent to have app submissions denied, but I haven't heard of Apple banning future submissions in the same way that I hear of Google permabanning developers.
I agree with Android it's slightly different because side loading is at least possible, but I doubt many people are going to find your widget if it's not on the play store.
True, and if I’m a dairy farm that wants to sell my products to Walmart’s customers there’s only one distributor of shelf space to go to. You can’t cut through an arbitrary point in the business and just demand they change their model. The iPhone might not even be a viable platform today if they had been forced to carry malware from the start because they had “a monopoly on their own product”
Users can’t reasonably be expected to switch smartphone hardware just because of an app. The smartphone hardware market has its own constraints (people generally own only one at a time, they upgrade it every couple of years at a cost of several hundred dollars, etc). Apple may have legitimately earned its position in that hardware market by making products people want, but it’s not legitimate for them to use that dominance to control wholesalers’ access to consumers in a separate marketplace: music streaming. In that marketplace, the relative success of Apple Music vs Spotify should be based on consumer preferences for those services, not on which company also happens to dominate a separate marketplace. See also: Microsoft using its OS market dominance to control the web browser market.
No, that is not the same story. Physical stores can be swapped out on a whim. Phones are something you change at most every couple of years (and hopefully last even longer, if you give a damn about the environment).
Actually, the "Walmart is a choice" claim also only holds up if there actually are multiple stores nearby, because who is going to drive fifty miles to the next store? Food deserts are a thing.
This is a false idea of "choice" and it is just yet another way producers and sellers try to shift responsibility to the end consumer who is largely powerless in most cases.
OK, but there are no iPhone deserts where only iPhones work and Androids get no signal. I don't see any false choice here. There are plenty of other phones on plenty of networks, with plenty of Apps. If there are more or better Apps on the iPhone, arguably that's at least in part because of their careful policies on curation of the platform rather than despite them.
To go to one grocery instead of another in suburban America means driving a few more minutes with a cost of some time, a bit of gas, and a minute amount of wear and tear on a car. To change app stores, it requires spending several hundred dollars on replacement hardware, not including having to repurchase applications, accessories, etc.
That applies as much to Android, or any other phone, as it does to Apple though. It’s just the nature of the market, not some perfidious Apple plot. There’s just nothing substantive here.
> That applies as much to Android, or any other phone, as it does to Apple though.
On Android you can side-load APKs, have alternative app stores like F-Droid and even install custom operating systems. So no, that is again not comparable.
> It’s (…) not some perfidious Apple plot
Sure
> just the nature of the market
Dammit, NO. The market is a human-made artificial construct, not some natural freaking law like gravity that is inevitable and unavoidable. And given that it is human-made we can change it, and make choices on what we demand from it.
Apple is not "actively trying to prevent" people from managing their Spotify, Netflix et al subscriptions outside of their respective iOS apps, what are you talking about?
The app literally can't send you to the Web page so you can sign up there. It has to say something vague for Apple to approve it for publishing. Here's an example from Kobo [1]. They apparently can't even tell you the domain name.
its about payment not app store lock in. there is nothing wrong with paying by browser and not via the appstore besides convenience. your car does come with a 'buy new tires' button but you can still go to the store and pay with cash.
But just like my TV and my desktop computer, I've paid for my phone with cash. Its mine. Just like my PC, I don't owe Apple Computers any extra money in exchange for the privilege to install apps like spotify on my device. The benefit of having access to the app store is already factored into the (quite high) price I paid for my phone.
And if you can find a way to defeat it's security, you are free to do so. However being incredibly locked down and secure is one the the product's features. It's up to you if you still want the product, but that's how it comes.
True, but a counter argument could be that Apple has created the ability of your phone to have apps installed on it. And I’m theory you could jailbreak your phone and install any app you’d want.
Sure; but I paid $1000 for my phone in part because of that capability. My phone would be worth less if I couldn't install apps like spotify. And unlike a game console, app purchases aren't used to subsidise the phones. Its pure profit for apple.
And I wouldn't have a problem with that in general, except it feels dirty to claim Apple are saints for graciously allowing apps like spotify to be sold on their platform. They're already being paid for doing so through phone sales. Leveraging the monopoly they hold over the ios app store against Spotify, one of their competitors, is exactly what antitrust legislation is designed to prevent.
It's either Android or iOS really. I'd love for a decent alternative to exist but if you don't want Google tracking everything you do, Apple is the only option.
The thing is there have been loads of other alternatives over the years. Blackberry, WebOS, Windows Mobile, Tizen. Actual customers said no, these are what they want.
A lot of them faced what I would argue anti-competitive behaviour to prevent their growth.
For example, Google banning their apps on Windows Mobile and Amazon Firestore. Google blocking Windows Phone users from accessing maps/mail via a user-agent check. That and Google actively blocking Microsoft developing a native Youtube app.
Is it any surprise that customers were unsatisfied?
Apple and Google's duopoly is natural, no question about it. That doesn't mean we should ignore how they use it.
Google is rightfully scolded for requiring that users sign away their information and following their every move (often using dark patterns).
Apple should be put on hot coals too for how they are abusing their position. Spotify is an excellent illustration because Apple is both the platform and a competitor. I don't understand why an Apple consumer would support their anticompetitive stance.
As soon as you install some apps, your iPhone is tracking you as well. The recent stories about FourSquare have made me realize that things are much worse than I previously thought.
Apple has ~15% market share (fluctuating) so it's not really a monopoly situation. Google will give you access to the exact same Spotify service.
Whether what Apple is doing is legal or not I guess the courts will decide. But it's certainly factually incorrect to imply that you're not free to buy from anywhere else.
EDIT: comments have made clear that Windows had a monopoly on the personal computer space, whereas Apple doesn't have a monopoly on the smartphone or tablet space.
MS had a monopoly in the personal computer industry. Apple does not have one in the mobile industry. By this logic Mercedes has a monopoly on all Mercedes cars but they're clearly not one in the auto industry. If Mercedes ever decides to ban or squeeze a supplier, monopoly will not be the argument to nail them.
I'm not saying Apple is right to do this. I'm saying the monopoly on their own product is not the correct argument. Apple is not a monopoly. If they lose this case it won't be based on this.
The other posters are right about the Microsofty monopoly, but what made it particularly egregious was Microsoft's anti-competitive practices using their market dominance to actively damage or destroy competitors. This included:
* Contractually barring licensees from offering competing OSes, or selling boxes without Windows installed.
* Leveraging their OS dominance to get dominance in other markets such as linking OS licensing with licenses for other software.
* Pinching competitor's technology using their advantages as platform owner and rolling it into their own products (Stac).
>* Leveraging their OS dominance to get dominance in other markets such as linking OS licensing with licenses for other software.
Such as leveraging their preferred status to get dominance for Apple Music (by being able to charge less since they aren't subject to a 30% Apple Store 'fee')?
Although I don't disagree, the difference was that Microsoft had a monopoly on computing. Not just on PC but take computing as a whole and microsoft was hugely dominant. From a legal standpoint there is a huge difference.
Desktop computing -- in the 90s in the server area there was more competition, primarily from Netware.
It wasn't until the end of the 90s when macs started making an impression on peoples desktops, with the imac, but oddly enough if https://en.wikipedia.org/wiki/Usage_share_of_desktop_operati... is to be believed, windows still has a 95% share of the desktop/laptop market.
I believe it because Windows comes on all kinds of devices and supports all kinds of hardware mixes and SKUs. It effectively encompasses the entire price range in a way that Apple doesn't care to.
That’s also why high street stores are now struggling while consumers are buying direct from the source or online where margins are tighter.
However I’m not suggesting that local stores are in the wrong either but it does illustrate how consumers have choice there is no such competition inside Apples walled garden. And that is the real crux of why their margins are high: it’s because developers and iPhone owners are locked into the App Store
The obvious counteragument here is that people don’t have to buy iPhones - and that is true. However people do and they still expect their app prices to be low, so developers are the ones who ultimately lose out as they either have to support Apple or be left out entirely and they’re the ones who then have to lower their prices to compete.
It’s also worth noting that the physical store, in your example, would have greater overheads than an App Store
of equivalent size so Apples markup shouldn’t include the same operational cost.
> There is massive competition to the garden itself.
I did already acknowledge that and pointing out why it doesn't work in practice.
In a normal high street setting manufacturers and distributors set their prices and the shops then add their mark up on time. If the prices are too high then consumers will shop in another local store. Which means those stores either have to negotiate a lower selling price or reduce their own margins (or offer an alternative incentive to shop there in spite of the high prices - like free coffee)
With iOS consumers don't have the option of going to another App Store, which then flips the order of control. It means Apple can dictate their markup and app developers are then forced to lower their own margins if they want to appear attractive to other shoppers.
> With iOS consumers don't have the option of going to another App Store
Correct, it's certainly unfair competition but what I'm saying is that it's still not a monopoly, not that it's "fair". When you paid for the iPhone you also paid for the services bundle that you bought as a package. Now if Apple controlled 90+% of the market this would fall under antitrust laws (MS+IE situation all over again). But they only control 15%. Users have the option of going for the the same/equivalent service provided by other vastly more popular phones and their app store(s). So every link in the chain has a perfectly good equivalent.
And even Spotify has a choice. They can shaft Apple and become Android only, since Android has 85% of the market. The reason they're not doing it right now I assume is because they would also shaft themselves, the AppStore might bring a very big chunk of their revenue (historically iOS users are bigger spenders).
Practical example of single supplier without an actual monopoly: If you buy a GM car you're left with one option for a subscription telematics service: OnStar. You can't get Lexus Link for example. I don't think it ever occurred to anyone to call this a monopoly.
> it's certainly unfair competition but still not a monopoly
I agree - which is why I specifically did NOT call it a monopoly.
> When you paid for the iPhone you also paid for the services bundle that you bought as a package....
You're still missing my point:
> And even Spotify has a choice. They can shaft Apple and become Android only, since Android has 85% of the market. The reason they're not doing it right now I assume is because they would also shaft themselves, the AppStore might bring a very big chunk of their revenue (historically iOS users are bigger spenders).
EXACTLY. Thus Spotify effectively doesn't have a choice. It's pay Apples tax or don't have support at all.
This is compounded when you factor in that the in-app sales that Apple wants to take a cut from for businesses like Spotify are sales that Apple's had no stake in. Since you like car metaphors: it's like a taxi driver buying a car and the the dealer expecting to take a cut from all the taxi fairs even though the dealer's involvement ended the moment the car rolled off their forecourt.
> I don't think it ever occurred to anyone to call this a monopoly.
Again, I never called the App Store a monopoly. Others might have but I deliberately didn't because I'm already aware that it legally is not a monopoly. However that doesn't mean they don't still have total control over app sales on their own platform - legal terms aside.
I'm not sure I follow this. When I say choice for Spotify I mean Apple or Google. The industry still allows them to get the same service from the other 85% of the market. I interpret that as "choice", having options. When I go to Malls'R'Us to rent a storefront I only have them as a choice. But I can go to another mall without anyone claiming foul about competition.
Having no choice is when you want internet but there's only one provider. Rejecting that provider doesn't mean you get different internet, or worse. You get none.
And to pick up on the mall analogy above, some storefronts cost more than others especially if they bring in more revenue for the store. And the owner of the mall also has full control over this. Is this not an equivalent situation?
I know I now sound unsympathetic to Spotify's situation but after reading (and later validating) some of the claims Apple is making in this article I can't help but feel like Spotify kind of cheated when they published their call for action by leaving some important stuff out. I had my pitchfork out only to realize the truth is a little more nuanced.
> I'm not sure I follow this. When I say choice for Spotify I mean Apple or Google. The industry still allows them to get the same service from the other 85% of the market. I interpret that as "choice", having options.
> Having no choice is when you want internet but there's only one provider. because rejecting that provider doesn't mean you get different internet, or worse. You get none.
But ignoring Apple's App Store does mean they then get no service for "iDevices" (not just the iPhone).
So their choice on iOS is pay the tax or don't have a presence. This is complicated by the fact that they would then lose customers who want a music streaming on multiple platforms including iOS. So Spotify's choice is really just an illusion.
> But isn't this what you'd expect when renting a storefront in a mall?
Indeed it is. You usually get a little more choice because you can have different landlords in a given high street (albeit you did specifically say "mall" where that choice wouldn't exist) but even in those cases shop owners are regularly complaining that increases in rent are pushing them out of business. and in fact the UK has seen a lot of independent stores go out of business because of exactly that.
> So their choice on iOS is pay the tax or don't have a presence
If I want my music in the Spotify catalog who decides what's my cut and what's Spotify's cut of the money my music is generating? They have 100% control there so if I want to list my music there what are my choices? Pay up or not have a presence.
Apple's choice is to give them access to millions of customers with big pockets (statistically), maintain the whole infrastructure for this, not get anything because the app is "free" but actually not even be allowed to drop them? What kind of choice is that? Should an app even be called "free" if it offers nothing without paying? Isn't that like asking for tax exemptions for a nonprofit organization that makes a profit?
Would it be OK if Apple changed the rules so apps had to offer full functionality without further paid unlocks or simply charge for the app as a service in the App Store at whatever monthly price the developer chooses?
The fact that Spotify lied or misled about these details that are pretty obscure to most people (including me until I specifically read about them) kind of disqualifies them from playing victim in my perspective. They want all the benefits with none of the strings.
> If I want my music in the Spotify catalog who decides what's my cut and what's Spotify's cut of the money my music is generating? They have 100% control there so if I want to list my music there what are my choices? Pay up or not have a presence.
Indeed. This same argument has been ranging on for years about music streaming services and ebooks via Amazon too. So it's not just Apple who get put under the spotlight.
> Apple's choice is to give them access to millions of customers with big pockets (statistically), maintain the whole infrastructure for this, not get anything because the app is "free" but actually not even be allowed to drop them? What kind of choice is that? Should an app even be called "free" if it offers nothing without paying? Isn't that like asking for tax exemptions for a nonprofit organization that makes a profit?
I think that's a little disingenuous. Apple don't chose to let app developers on board - Apple do it because their platform depends on it. Smart devices live and die depending on the developers that support it.
I also agree there is an infrastructure cost but as I said in an earlier post, it's not equivalent to the infrastructure costs of bricks and mortar despite Apple retaining the same kind of mark up. This is where people get narked off. But as I said elsewhere, I also accept Apple has the right to charge whatever they think they can get away with. I mean that's just basic business.
Your point about free apps is an interesting one however if we're honest, Apple do still make money even from free apps. Developers have to pay a small fortune to get their apps included in the App Store - from MacBook sales (if they weren't already Mac users), developer licences and app submissions. I think (but please correct me if I'm wrong here) Apple also have their own ad network for iOS as well? So they would obviously get a cut of that too. In any case I'm not trying to disagree with you here - more just say that Apple are hardly making a loss on free apps even without taking into account in-app sales.
> Would it be OK if Apple changed the rules so apps had to offer full functionality without further paid unlocks or simply charge for the app as a service in the App Store at whatever monthly price the developer chooses?
In fairness Amazon's app store states something like full functionality. I can't remember the specifics but they push back on apps that are in-app orientated in a scammy way while still allowing developers to be contributed for their work. It's a system which works pretty well - at least from an end user perspective. In fact that was one of the biggest things I missed when I "upgraded" my son's Kindle to a regular Google Play-powered Android tablet.
> The fact that Spotify lied or misled about these details that are pretty obscure to most people (including me until I specifically read about them) kind of disqualifies them from playing victim in my perspective. They want all the benefits with none of the strings.
I don't think Spotify has mislead anyone any more than Apple are misleading people. As you said, they all have an agenda - but that's just the nature of business. The question is really who's controlling the deck and are they doing so unfairly. The answer to the former is quite clearly Apple - but the jury is still out on the latter.
It's not really. Crying wolf is a bit hypocritical seeing how both engage in the exact same practices but only one is coming up with the sob story.
> I don't think Spotify has mislead anyone any more than Apple are misleading people
They came in the court of public opinion asking for fair treatment while misleading and giving half the story in their very loud complaint. They lost their moral high ground. Even worse since they're a company doing the exact same thing to artists. My point is, when you're in the same pigsty keep a low profile ;).
Your argument is weird. You acknowledge both are up to the same tricks yet it’s ok for one party and not the other because the first party annoyed you with a press release?
I agree it’s hard to argue who’s right and wrong but your opinion seems to be based purely on a knee jerk emotional reaction - which isn’t a compelling stance to take.
No, I'm saying that what Apple is doing to Spotify is exactly what Spotify is doing to their artists, and it's business as usual for both. It may be immoral but I don't see it as illegal (a court may very well see it differently). After putting Spotify's "call for justice" in context it lost all credibility in my eyes. It's like a robber complaining they've been robbed.
And it's not a kneejerk reaction. I plan on using both Apple and Spotify in the future. But anything Spotify want to get they should also give. Doe it look like they are to you?
I'd take Apples comments about the way Spotify treats artists with a huge pinch of salt. Spotify can only work with the labels and they're the ones who pay the artists. Often for a pittance, yes, but that's outside of Spotify's control. In fact labels are the ones who have been asking for higher mark ups in distribution while paying less to the artists and it's because of this we've seen so many music streaming services go under. Despite what Apple say, it's not that lucrative a market for most streaming services.
So I really wouldn't take Apples rebuttal at face value either. It doesn't line up with what any other the other streaming services (both current nor the ones that closed shop because they simply couldn't afford the exorbitant rights being demanded) have claimed over the years, and it certainly doesn't line up with what I experienced back when I was involved in the music scene myself (which was some years ago now - but sadly it's an industry that showed no sign of adapting even then)
> So their choice on iOS is pay the tax or don't have a presence.
Not true. They can simply not offer in-app purchases. The Kindle App doesn’t pay any “tax” to Apple. Consumers have access to the Kindle App without Apple getting any “cut” of Amazon purchases even as Apple has Books.
I think this is basically what Spotify are doing at the moment but it's not really an ideal solution. Though I guess there's nothing stopping users signing up via Safari and then installing the native iOS app.
> Since you like car metaphors: it's like a taxi driver buying a car and the the dealer expecting to take a cut from all the taxi fairs even though the dealer's involvement ended the moment the car rolled off their forecourt.
I think this is an incorrect analogy. This is why Apple only charges for physical goods, not digital ones. The rationale is they distributed your product to customers you would never have had access to without them:
- they spend marketing dollars to get those customers;
- they develop and maintain a platform so you can run your business on it.
By simply publishing their app on the App Store, Spotify gets access to 15% richest customers of the smartphone market. If you’re charging customers for something they consume on that device, then I think it’s fair to pay a share.
That being said, I have no idea how this will play out in court. Intuitively, 30% the first year sounds like a lot of money for a distribution fee.
> I think this is an incorrect analogy. This is why Apple only charges for physical goods, not digital ones. The rationale is they distributed your product to customers you would never have had access to without them:
Would the app developers "never have access" to those consumers though? Because if the iPhone didn't exist then consumers would just use another handset. Just like we did before the iPhone and just like a significant amount of people do currently.
There's definitely a blurred line somewhere though. I agree to Apple having a fee for app sales though I think 30% is a bit steep but I agree Apple ultimately get to decide how much they want to charge. I agree that some apps might try to circumvent that fee by offering in app sales instead so Apple are trying to close off that particular loophole. However I don't agree that Spotify fall into that same category because their "in app sales" is actually a subscription service to a much larger product. However where do you draw the line?
> I think this is an incorrect analogy.
Obviously I wouldn't agree but I can completely understand why you'd say that given how open to interpretation analogies can be.
To be honest I hate posting them in debates because if you agree with the point then you'll agree with the analogy but if you don't agree with the point then you'll naturally find a reason the analogy doesn't fit. And given analogies aren't meant to be 100% representative, it means there's always plenty of ways to disprove it. Thus analogies are never persuasive in a debate. Worse still, sometimes you end up going down a rabbit hole of arguing analogies rather than discussing the actual point at hand.
There does seem to be a conflation of “unfair competition” and “monopoly” going on. Generally speaking of this debate, that is.
The App Store is a service rendered to its customers, the likes of Spotify. In the form of the hosting of the app, and all the backend behind that like in-app storage (iCloud). The code review and ‘security guarantee’ that Apple holds over Google and other rivals is also a cost.
IMHO this boils down to subsidy, on the part of digital services companies, publishing apps, subsidise the free and “real world” goods and services company’s that go unlevied for their participation.
It’s a bit like at carnivals, when food trucks pay to get a place, and are often expected to pay a commission on their profits too. But the charity stands, and free ‘workshops’ for kids etc. don’t pay to be their, because their providing a different service.
>Moreover, that's the pot calling the kettle black. That's the app store in a nutshell -- Apple supplies the marketplace, but is also making a substantial chunk of money off of others’ work.
Yes, but on mobile Spotify doesn't even provide the Marketplace -- only part of it (their own app), the other (the mobile OS, platform, payment processing, consumer trust, marketing, etc) is built by Apple and Google.
I don't know how you arrive at that conclusion unless you seriously compare physical with digital distribution.
Retail margins are famously low (very low single digits).
The problem is that Apple and Google are exploiting their mobile content distribution oligopoly so aggressively that they are practically begging for a regulatory crackdown.
I wonder why companies are getting carried away with this kind of profit destroying greed again and again. They are killing their own golden goose.
"I wonder why companies are getting carried away with this kind of profit destroying greed again and again. They are killing their own golden goose. "
Could simply be that they dont know what the world will look like in 5 years so they might as well cash out while they can. No use playing the long game when the next big game changer could be around the corner?
Maybe not Google. But I would be a little shocked to find that Apple at least doesnt think that way to a degree. I mean... Look what the Ipod did. The Ipod was a game changer.
> Retail margins are famously low (very low single digits).
The margins and costs include more than the wholesale price of the product. The correct question is how much does a farmer get paid for a gallon/liter of milk and how much is that same gallon/liter sold for at the shop. Farmers in the US are getting roughly $1.00 per gallon for whole milk. How much is it selling in the store? Roughly $3.50.
Anytime people talk about “greed,” I tune out because that’s the sign of a person who doesn’t actually know what goes into running the thing they claim a company is greedy with. Take the Apple 30% fee for example. If you ran payment processing yourself through Stripe, you might pay 3%. So let’s take Apple’s remainder to 27%. Apple handles chargebacks/disputes for you. So each dispute using Stripe would cost you $15 unless you win the dispute. We also have fraud prevention and management, which Apple provides. An app developer never has to deal with fraud on the App Store. An fraud is a significant issue, especially selling globally.[1] How much is fraud worth? I would say that it’s worth at least 5% to never have to deal with it. So now the App Store commission is 23%.
Next you have to deal with a CDN for delivery of the purchased app. Where do you store the file? How do you secure it? Who pays for the bandwidth of distributing it? Who maintains that system? With the App Store you don’t have to deal with any of that. I would say that’s worth at least 5%. You can’t have any downtime or you lose money. You can’t have casual security or you’ll lose product. So that system has to be well maintained, robust, and able to handle scale, and be fast and easy for your customer.
Now we are at 18% of Apple’s commission remaining. For every product you sell worldwide, you have tax consequences worldwide, assuming you care about following the law. For every sale you get, you potentially have to remit taxes, taxes that vary by individual jurisdiction. Apple does all of that for you. They also provide a localized and internationalized store front for almost any country in the world. Want to sell your App in Vietnam? Is your infrastructure set up to reach those customers? How about your Vietnamese skills when a potential customer has a purchasing issue? How about your payment processor? Are they set up to handle how Vietnamese people like to pay for things? Can a Vietnamese person go buy a gift card and use it on their device to buy your product? With the App Store, you get all of that capability built-in. And you get that capability for pretty much every connected country. Including market exposure via App Store search and discovery. Let’s combine this point with the next, a product website. If you want to sell on your own you have to build and maintain a website to sell your app. You need to integrate payment processing, the download, security, and maintain it. While most of us have the skills to do that, you also have to ensure it’s updated, you have to pay to host it, translate it into worldwide languages (or not.) However if you actually want to sell your app, you’ll also need to worry about SEO, online marketing and attracting users to your app. Just a simple webpage isn’t going to make a dent in search results from the open web since your “premium music player” keyword will take years to rank.
So the App Store gives you the ordering system, access to many more markets than you’d likely normally be able to handle yourself as well as the aforementioned search and discovery. There is also the trust factor: why would I download some random music player from some random site off the internet? That concern is going to create a high barrier to getting large numbers of people to download the app. Not so on the App Store.
I would say all of that is worth at least 8%.
So that leaves our “greed percentage” at 10%. However, we have another aspect as well. Not only do you sell a paid version, you also have a free version you use as a marketing tool to expose people to how great your app is. That free version has ads that you insert while people are listening to music on your music player. You get 100% of the revenue from the ads, Apple has nothing to do with that. However, all of the stuff we’ve described above — Apple gets 0% for free apps — and your free users download and use the store infrastructure by the millions. Millions of downloads that never touch your system. Who pays for that bandwidth? Not you, at least not directly. So Apple has 10% of that fee unaccounted for. Handling all of your free users is probably worth at least 5%. Also we haven’t talked about an update. If you release an update, how do all of your millions of users get the update? Apple handles that for you as well.
On your second year of a subscription, the commission drops to 15% because many of those above listed expenses aren’t as relevant. However, taxes, update infrastructure, payments, declined cards, collections, etc.. that’s still being handled.
Making an argument that Apple is “greedy” is ill-informed. Besides, you don’t even have to pay Apple 30%. Users could go to your website and pay there. Then Apple is handling all of you download/update infrastructure for practically free. That 30% is only applicable when users pay within the App Store context. So Apple handles the distribution of potentially millions of downloads even though they aren’t necessarily making much money from your subscriptions you sell outside the store. Maybe it’s greedy to expect Apple to manage millions of your downloads for just a $99 per year developer fee? Apple expecting a cut of transactions they manage isn’t unreasonable.
So your response is to find a bunch of features and assign an arbitrary 5% value to each of them and conclude Apple is doing you a favor?
> Apple handles chargebacks/disputes for you.
In many cases they forward the complaint on to you as the developer for "does not perform as described".
> If you ran payment processing yourself through Stripe, you might pay 3%. ... We also have fraud prevention and management, which Apple provides. An app developer never has to deal with fraud on the App Store.
You're double dipping. You already subtracted some money for Stripe, unless you're implying they _don't_ have fraud protection and management?
> Next you have to deal with a CDN for delivery of the purchased app. Where do you store the file? How do you secure it? Who pays for the bandwidth of distributing it? Who maintains that system? With the App Store you don’t have to deal with any of that. I would say that’s worth at least 5%.
Or Cloudflare for $20/mo?
> So the App Store gives you the ordering system, access to many more markets than you’d likely normally be able to handle yourself as well as the aforementioned search and discovery. There is also the trust factor: why would I download some random music player from some random site off the internet? That concern is going to create a high barrier to getting large numbers of people to download the app. Not so on the App Store.
> I would say all of that is worth at least 8%.
Sounds like an artificial barrier to me. "Insert roadblock, charge for roadblock, say I'm doing you a favor". I'm also not sure how you think you magically don't have to do any SEO or marketing just because you're in the Apple Store, let alone that it's automatically worth "8%".
No-one is saying that the Apple Store doesn't add value or manageability.
But I am questioning your magic calculations that just happen to reduce Apple's tax to effectively nothing.
Apropos of anything else, developers handling "millions" of downloads are in the single percent range. And can also afford economies of scale to support things themselves, CDNs, merchant accounts and the like. But instead they have to pay Apple's flat rate.
I have made some of the exact same points in another thread hours ago where someone claimed that Apple could easily run the App Store for a 1% commission: https://news.ycombinator.com/item?id=19398315
So I am fully aware of everything you're saying and I agree with most of it in principle. I do disagree on the numbers you're using. But we are both inevitably ill-informed in the sense that neither of us has the hard numbers required to work out the true cost of running the App Store.
We do know a couple of things though:
1) The App Store is profitable. Apple has said so. Most analysts reckon that it has high and growing margins. Everything Apple says about its services business makes me believe that these analysts are correct.
2) There are only two relevant mobile app stores (perhaps 2 1/2 if you count Amazon).
3) Both charge exactly 30%
This is not a well functioning market by any definition. Dysfunctional markets like these rarely charge too little. So the assumption that they charge too much seems not too far fetched.
To me, charging 30% for every app, irrespective of its price, seems completely implausible, not just the percentage but also the structure. Any plausible pricing structure would include a fixed fee plus a percentage.
I'm not using the word "greed" in a moral sense (as is often the case). I'm using it because it is clearly an act of self harm to extract high margins in an obviously oligopolistic and dysfunctional market.
They are begging to be regulated and why would they do such a stupid thing?
I agree that 30% is egregious oligopoly pricing, but 1% is definitely insufficient to run a payment service and a software distribution platform that includes any sort of fraud prevention and support.
In 2018 (edit: 2017) they made roughly $11.5 billion[1] with their 30% cut.
1% instead would be $383 million a year. You think that wouldn't be sufficient to run a digital store (including the things mentioned)? Pretty sure you can do it with far less than that.
No, I really don't think it would be sufficient to run a payment service that includes billing, international VAT processing, chargebacks, customer support, fighting fraud, plus providing an entire software development, distribution and vetting platform.
Mobile platforms are dysfunctional markets. That's why they can charge 30% and that's why regulators will step in sooner or later.
But take a look around and you will find that there is no digital shop that acts as a merchant of record internationally for anywhere close to 1%. It's impossible and completely unrealistic even before accounting for the entire software development and distribution side.
Software development is completely unrelated: of course Apple needs to provide software so developers can build apps so consumers have a reason to buy an iPhone in the first place. That has little to do with a marketplace.
They can charge 30% because the marketplace (Apple's App Store & Google's playstore) are monopolies and they have complete control over the complete supply chain. If you want your app to be available on the iPhone you have to go through the App Store. There is simply no other way (for a native app), as such you either give in 30% or you don't create an iPhone app.
>They can charge 30% because the marketplace (Apple's App Store & Google's playstore) are monopolies and they have complete control over the complete supply chain.
I agree with that. 30% is not a plausible rate in a well functioning market. But it's not 1% either, I can guarantee you that. So what is the right revenue share?
Paddle charges 5% to act as a merchant of record for you (i.e as a reseller). That's what Apple does as well and I haven't seen that service offered for much less.
On top of that, Apple provides all the software distribution and discovery functionality. I'm not sure what the cost of that is, but it's not nothing.
So by my estimate, a realistic revenue share for Apple in a well functioning market could be in a range between 8% and 15%. But on the lower end that might mean higher fixed fees for free apps and worse support.
What they should do first of all is change the pricing structure to charge a fixed fee plus a percentage. That would allow them to cover their per transaction cost and take a far more realistic revenue cut on top of that.
The lack of choice is a problem. I’d support a law that mandated that all Turing-complete machines allow its owner to execute whatever code he wants on it, and therefore that iOS devices allow third-party apps (and third-party app stores) to be installed.
You can signup for a Developer account and then execute whatever code you like on the device.
You just don't have a right to distribute that code to others. And that's one of the reasons why many of us like iOS since I can almost guarantee I won't have malware, viruses etc.
It runs on all the platforms I want it to run, including on Linux or on my Playstation, you can easily switch devices, picking up where you left off, you can remotely control devices, etc. The suggestions engine isn't spectacular, but works. I also like to see what my friends listen to. They also have the best integrations with other apps.
The music selection could use some improvement but it's much better than Apple's Music and getting better every month.
You’re saying you get value out of Spotify’s services. That’s good. Middlemen exist because they’re providing some value. Doesn’t make them not middlemen though.
Ultimately, if I use Spotify to discover an artist, I’m going to continue paying Spotify to listen to that artist and the artist themselves will be lucky to even make pennies off of that. I could move off Spotify and keep listening to that artist pretty easily, I just probably won’t. Spotify is a middleman focused on discovery but isn’t providing ongoing value to the artist once the viewer has discovered them.
Apple on the other hand is building and maintaining the platform that app creators use. This is a lot more tha discovery, the app wouldn’t even exist without the platform, and Apple keeps adding more value to the platform over time. Apple is not a middleman.
Spotify would and does exist on all the other platforms, like Android, Windows or the open web.
Apple created a lot of value with its first iPhone, but the world evolved since then.
And yes, in your definition, Apple too is a middleman, because a big reason for why many people buy overpriced smartphones is to use apps. That you can't move those purchases easily to another platform, that's the lock-in effect of Apple's walled garden, but that doesn't make them any less of a middleman.
Speaking of pennies, I emphasize, but how much are artists getting paid by Apple Music? Isn't this hypocrisy on their part? This whole thing is infuriating because Apple can easily undercut its competition because they don't have to pay the 30% store tax.
This is anti-competitive behavior and yes, I realize that Apple does not have a monopoly, but I think anti-trust laws should be rewritten, because this kind of behavior isn't acceptable coming from the world's richest software company, due to the infinite potential they have for harming the market.
> That you can't move those purchases easily to another platform
You do realise that there are technical reasons for that.
You can't just lift an iOS, Linux, Windows, Android, PS4, Xbox etc app and just run it on a different platform. Especially if your target platform is a resource constrained one.
Indeed, however there is no technical reason why devices couldn’t be built so apps could be lift and shifted verbatim. We already have examples of cross platform frameworks that can target desktops as well as mobile devices. We have an understanding of how to reflow our content for different screen sizes, orientations, aspect ratios, and even (albeit less successfully) DPI. We also have platforms were code has to support different horsepower (eg games written for the Nintendo Switch between docked and undocked mode). So we understand the theory and I’m sure most developers would welcome such a change too. But there is absolutely no incentive for hardware manufacturers to do this (and I can’t blame them either).
To be honest though, I’m less concerned about app portability as I am about retaining ownership of apps after their or the app stores support has ended. While this doesn’t really matter for mobile apps nor music streaming services, it’s something that really concern me with regards to collecting retro games. There is a lot to be said for owning physical media. But I’ve digressed.
Linux apps are easily ported to other platforms and this is because the Linux kernel has an easy to port interface and all the GUI toolkits, along with the X Window subsystem are open source and have been ported already.
For example I use Gimp and Inkscape, irregardless of the OS. The experience is a little shitty on MacOS, but they get the job done.
It's also the reason for why Microsoft was able to provide the "Subsystem for Linux" on Windows 10, because the Linux kernel is much easier to mock than Windows is, being a much smaller effort than what the Wine project has to handle. Speaking of Wine, it has been doing a decent job of running Windows apps on Linux, many Windows-only games are playable on Linux due to it. And Steam has been using Wine to make games available on Linux.
iOS on the other hand is another matter entirely. First of all you don't have direct access to the binaries, without hacking the OS and Apple is doing everything they can to make that OS unhackable.
No, we are not talking of technical limitations, as those aren't insurmountable.
That definition of a middleman is pretty useless. According to you Apple is a middle-man because they just provide access to apps and web pages which you really want to use. Google search is a middle man because you just use them to access websites you really care about. Walmart is a middle man because they only connect the producers of consumer goods to consumers.
Everything ultimately leans on suppliers so if that's your definition everything is a middle man unless you farm crops or dig up ore or something.
I'm confused as to what it is that Apple Music does that Spotify doesnt? You say that Spotify is a middleman but never once comment that Apple Music is also by your own definition a middle man.
Also the title Middle Man has a sort of negative conotation to it. But Spotify/Apple Music is simply a platform that can connect a artist to a listener. But this doesnt make them any more of a middleman then Netflix or the guy at Mcdonalds who cooks your Cheeseburger.
Spotify build distribution, recommendation infrastructure,and more. They are far more than a warehouse middleman which adds no additional value beyond providing a retail outlet.
A car dealership is a middleman. A auto manufacturer is a platform. The car dealership sits between you and the manufacturer, making it easier for you to buy the car, but taking a cut. But you don't need the dealership in order to use your car. Spotify makes it easier for you to find music, but once you've found music, you don't need Spotify anymore (not a perfect analogy since you need to pay to purchase the music from a real store if you're ditching Spotify, but close enough). The auto manufacturer actually builds the car, supplies the replacement parts and manuals for repair, provides software updates for the car's computerized systems, manages any kind of in-car network GPS systems, etc. This is Apple. They develop the whole OS, including all the frameworks that developers actually use to build their apps (and the developer tools too, for that matter), they keep it updated, adding new features and fixing bugs. Apple provides ongoing value to both the user and the developer over the entire lifetime of the app.
What an incredibly silly comment. Serving music to millions of people across all major platforms whilst also being kosher/legal are real multifaceted challenges. This is one of the reason why you don't see much competition in this space. Remember Grooveshark? That was closer to a "middle man" than Spotify, and they promptly got sued and got shutdown.
Spotify literally sued artists and musicians because they didnt agree with a court ordered fee increase...but Apples hypocritical on this issue somehow.
Spotify also uses Apples infrastructure and marketing tools for its app. I dont think Ive seen any app creator up on stage at Apple events more than Spotify. Its not like Spotify will use Apples tools and ecosystem one time then stop. Its ongoing and 15% is reasonable. Apple literally changed the app store rules to accomodate Spotify and everyone knows it.
I will say that I think Spotify should be able to advertise payment outside the app.
Don't forget that it is a symbiotic environment. Spotify needs to be on the Apple ecosystem as it is massive and Apple needs to have Spotify in its ecosystem because that's what the users want.
As for payments, they all follow the same scheme more or less and redistribute about 70% of the revenue to the rightholders. If the services are priced the same, it's exactly the same for artists.
The big difference is that Spotify has a permanent free tier, which admittedly makes less money short term, but it is driving acquisition of premium users faster than any other methods. The alternative being no revenue, it's just fine.
Apple on the same topic doesn't care about razor thin margins on this product, or even losses. They are a hardware vendor, so as long as they still sell their devices, they will be fine.
Well, why don't Apple Music pay its "fair share" of 15%~30% to Google since it's hosted on Google Play? They are also using Google's tools and ecosystem.
Since when have Apple's PR releases seemed so snarky? I haven't seen so many phrased like this, which underneath the layers of pseudo support for developers and artists, is basically a big "NO U".
I was thinking this too. I’m not a big fan of this “we’re champions of privacy and the little guy” bullshit Apple has been spewing lately. They have some good points and so does Spotify. But the way they address these issues comes across very condescendingly.
Want to talk about exploiting others work to make money, how about we start with their factories which they use to exploit other countries’ cheap labor?
She called out Apple when she was at her high, now she bends to Spotify and launches exclusive content on the platform. The platform that doesn't want to pay the artists even when they have all the right.
> Uh, I seem to recall Apple being forced to reverse some brazenly greedy policies for their music service when a high-profile artist called them out and withheld content in protest.
I think you may want to refresh your memory on that. The subject was Apple paying artists during the trial period—when Apple itself isn't being paid. Which isn't brazenly greedy, since (a) they're not making any money during that time, and (b) that was and is still the standard. What was different about Apple was that their trial period—the period where users could subscribe to Apple Music without paying Apple anything—was 3 months, instead of the industry standard 1 month.
Swift had a legitimate complaint about not getting paid for 3 months of listening, but to describe "2 more months where listeners don't have to pay Apple a dime" as "some brazenly greedy policies" misses the mark by quite a bit.
I think they may be specifically referring to the most recent royalties hike that was opposed by Amazon, Spotify, but supported by Apple. Was most likely a PR move to make Apple look like a supporter of artists.
According to this infographic (linked below), it seems like Apple Music does give more average revenue per play than Spotify, $0.0060 for vs $0.0044. But in general, Apple Music isn’t _that_ much better than the rest where paying artists goes. It lags far below tidal, for example, which doles out $0.0125 per play on average.
Tidal's model is supposedly more literally like the proverbial "pie", where the most popular artists get the biggest cut. So if it's true that they inflate numbers for Jay Z and Beyonce, then other artists are being deprived of revenue.
Holy cow. So you have to play a song 227 times for the artist to make a dollar off the song? Any idea what it's like for just buying the song on Amazon?
It’s actually more plays than that because Spotify also takes 30% of each stream payout, so it’s odd they would also complain about a 30% mechanical.
The premium accounts payout more per stream than freemium accounts.
This is also assuming the artist owns the master recording outright, wrote the entire song, and administers their own publishing and mechanical royalties. The latter being almost impossible.
More than likely if signed to a label, they will get 10% of sales, the label will get the rest. This is based on traditional album deals where you get 1 point per song. If they are also published, the publisher takes half of their performance royalties, a mere 6-7 percent of stream payout. Also the PRO(ASCAP, BMI, etc) recieves half of the mechanicals, another measly 6-7 percent. To be clear if you don’t speak music payment terms. The people that own the publishing AKA the people that actually write the song, and administer that published writing only get 12-16% per stream payout(not fair). When labels receive around 48%-58% per stream payout, this is for a specialized business loan that pays for the recording + marketing and distribution(way too much). Not to mention this loan has to be totally recouped before the artist sees any of that 10 percent, if they ever do.
To sell anything on Amazon, you are charged $40/month for a professional account, or they have an under 40 item plan with a listing fee of $.99 per item. An additional 15% is taken by them on music sales. So if you have less than 40 songs you pay $.99 a month to list them each.
It's a big problem that artists don't care. Artists are the ones who know the actual deals they have with publishers/labels.
So instead of demanding their fair share from the labels, they go after streaming services who don't even pay them directly: all money goes through labels.
For context: Apple's original plan was that artists would get no royalties from users using Apple Music's (3-month) trial. Taylor Swift threatened to (maybe actually did for a bit?) pull her music, and Apple backed down.
Spotify also only recently became profitable [1]. I'm not endorsing their extremely low artist payout rates, but it's not because they're greedily hoarding money the way Apple is implying.
Uh, I seem to recall Apple being forced to reverse some brazenly greedy policies for their music service when a high-profile artist called them out and withheld content in protest. For Apple to characterize itself as a champion of exploited artists is pretty disingenuous.