Rival music services claim Apple’s App Store pricing is anticompetitive

“Universal Music Group has been the main music label leveling pressure against Spotify to abandon its free tier, according to sources,” Micah Singleton reports for The Verge. “Earlier this week, The Verge reported that Apple has been pushing music labels to force Spotify to get rid of its free tier ahead of Apple’s relaunch of its Beats streaming service, a move that has drawn the attention of the Department of Justice and, more formally, the Federal Trade Commission, which is leading the inquiry.”

“But Spotify’s issues with Apple extend far beyond the claim that world’s largest company is trying to convince music labels to kill its free tier. The music streaming service is also not happy about Apple’s App Store tax, according to multiple sources,” Singleton reports. “Apple charges a 30 percent fee toward any sales through its App Store, and that includes subscription services. That means if Spotify wants to sell its premium subscription service — which usually costs $9.99 a month — through the App Store, it has to raise the price 30 percent higher to $12.99 to pull in the same revenue, while Apple can still offer Beats at a lower price. Spotify and many others in the music industry believe Apple’s App Store tax gives them an unfair advantage over the competition.”

“‘I get that there’s some administrative burden so they should get some kind of fee, but 30 percent is fucking bullshit,’ one music industry source said,” Singleton reports. ‘They control iOS to give themselves a price advantage,’ said another industry source. ‘Thirty percent doesn’t go to any artist, it doesn’t go to us, it goes to Apple.'”

Read more in the full article here.

MacDailyNews Take: This is the same old tired whining about Apple’s App Store terms.

If you don’t like the terms, you are free to market your wares to non-iOS users. Apple’s iOS market share is dwarfed by Android. Apple does not have a monopoly in smartphones, therefore there’s nothing to abuse. Go sell Spotify and whatever other amateurish crap services are out there to the billion+ fragmandroid settlers if you don’t like Apple’s App Store terms. Knock yourselves out.

16 Comments

  1. This Gentleman is a little confused.

    Spotify can’t actually sell its $9.99 subscription for $12.99. Last I checked Apple explicitly requires the same price for App Store purchases as the company would charge off the App Store. Sounds like they might be violating their developer agreement they are doing that.

    I’m not a Spotify user, so I’m not sure if they do or not.

  2. If you use Apple’s Mall services to make a profit, then 30% is their cut. They do not contract with musicians through your services, Spotify. Nice try. You seem to suggest, Apple prevents you from paying artists there due. However the fact is, you don’t pay them their due. It has nothing to do with Apple.

    1. I thought in-app purchases went through the App developer’s systems and thus the big uproar initially by magazine publishers for their apps. Which led later to the ebook publishers like B&N, Amazon and Kobo changing their Apps to only be readers.

  3. Last time I checked, nobody forced Spotify to put their app on the App Store. If Spotify doesn’t like it, I feel confident that they have the ability to remove their app from the store.

  4. Let’s see now, the thinking is that Apple has an advantage because they own the App Store and everyone knows that is costs nothing to create and run an App Store, right?

    Apple’s costs for themselves are the same as for everyone who sells on the App Store. Yes, they get a small profit for creating the store but it is not huge.

    Solution: music moguls need to create their own Store and ecosystems from scratch an then they can reap the benefits.

  5. Shell goes to Exxon and says that Exxon has to let them sell their gas at Exxon stations for the same price and profit as Exxon does and Shell gets to use the pumps and cashiers for free. Oh, don’t forget that Shell insists on having their labels on the pumps too.

    1. Nothing wrong with Spotify making their App simply a streaming App and have a separate webpage to purchase subscriptions like the ebook publishers now do for their Apps in the Apple App Store.

  6. ‘Thirty percent doesn’t go to any artist, it doesn’t go to us, it goes to Apple.’”

    what they don’t say is that the remaining 70% goes to the big music house. The artist gets pretty much NOTHING from them these days.

    Greed, greed, and damn greed! Sad but true.

    1. Greed? How about service? If the artist want to spend the money and effort to create an online store and promote it and take all the profits, they will not have time to produce the content that their ‘art’ is about.

      The promoters spend time, effort and money to make the artists famous and allow them to make money. The distributors allow the artist the luxury of being able to focus on their ‘art’ and leave the business of getting it to the public. Can you imagine how an artist just starting out could manage all that by themselves? Take some time to learn about how hard it is to become famous and sell millions of songs.

    1. If Apple is using its market power to influence music supplies to force a change in Spotify’s business model, then yes that is anti-competitive. Why does Apple care what Spotify does on an ad-supported free tier? Apple still gets its 30% take of the subscription fee, yet because it might hurt the uptake of new Beats they use their power to attack Spotify’s business model? That is blatantly anti-competitive, but also completely unproven at this point.

  7. So don’t offer spotify premium in the iTunes store which is what they do. I think Apple should allow a link to their website to upgrade in the app. This has never been restriction on desktop apps and a new precedent in the iOS world. I think that is the only argument that makes sense.

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