Digital Gabe
Cutting Edge Commentary On All Things Media

Apple Fires Back At Spotify

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Last Wednesday Spotify filed a complaint against Apple with the EU’s regulatory commission over allegations that Apple is running a monopoly with the fees it charges subscription apps downloaded from their App Store.  In a nut shell, Spotify doesn’t want to keep paying Apple a 30% fee for listeners who’ve come through the App Store.

On Friday Apple responded with a 1,100 word statement defending their App Store rev share practice.  To save you from having to read the whole thing here are the highlights of Apple’s counterargument.

  • While Apple does charge Spotify 30% of the subscription cost from App Store listeners in year one, the fee drops to 15% after 12 months. That’s a material point which Spotify casually left out of its EU filing.
  • Over the life of Spotify’s existence Apple has made 173 updates to their app (at Spotify’s behest), and generated 300M lifetime downloads. Apple’s point – they’re actually doing work and providing a benefit for the fee they charge.
  • Apple does not charge Spotify for listeners using the free (ad supported) tier of the app. The issue of Spotify paying Apple more is only coming up now because Spotify is pressing even harder to convert free listeners to subscribers.

Apple makes some fair points in its response.  In my experience there’s probably a fair middle ground between both of their arguments.

I also think there’s zero chance Spotify leaves the App Store and goes it alone like Netflix did.  I’m guessing their hope in filing the EU complaint is to get some sort of relief on the percentage they’re paying Apple.  Even if they get 5% off (which would drop the fees to 25%/10%), that would save Spotify millions a year.  Given the massive operating losses they’re still racking up, any savings would be a win right now.

 

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