You’ll remember that The Verge ran the leak of Spotify’s agreement with Sony Music. Now The Verge is running a story about subscriptions to the Spotify app from Apple’s App Store:
Spotify is trying to raise awareness around the fact that it’s cheaper to subscribe on the web instead of through Apple’s App Store. The leading subscription music service plans to email iPhone customers the below note encouraging them, if they haven’t already, to start paying at Spotify.com and save a few dollars. “In case you didn’t know, the normal Premium price is only $9.99, but Apple charges 30 percent on all payments made through iTunes,” the email blast reads. “You can get the exact same Spotify for only $9.99/month, and it’s super simple.”
Here’s the actual emails:
Quick–based on what you just read, who sets the price for the Spotify subscription through the App Store? Apple or Spotify?
I bet you thought that Apple forced an upcharge onto you because you bought the subscription through Apple and not from Spotify directly. It is true that Apple takes a 30% commission from all app developers for “digital consumables” bought through the app like subscriptions. (Apple also operates the App Store, actually created the entire market for apps in the first place, collects the money and pays it through–known as “transaction costs” in the trade. But let’s leave that to one side and pretend that Apple doesn’t deserve the 30% commission which clearly what Spotify wants you to believe.)
Apple doesn’t force an upcharge on anyone. Apple doesn’t set the price for the app or any digital consumable sold from within the app. The app developer sets that price–that’s right, Spotify sets the price.
So if the Spotify premium subscription costs $12.99 when purchased inside the Spotify IOS App and $9.99 direct from Spotify, that’s because Spotify is marking up the $9.99 price to take into account Apple’s 30% commission so that they end up netting $9.09–or since we’re talking about Spotify, $9.093. That price is set by Spotify, just like every other developer. It is not set by Apple.
And it also means that because Spotify charges more when the subscription is purchased through the App Store, Spotify decided to pass on the lions share of the cost of Apple’s commissions to their users. And if Spotify is telling you that you’ll be better off to subscribe directly from Spotify, you will be getting it cheaper, but it appears that Spotify will net about $0.90 more per subscription converted from an in-app purchase than they currently do.
Does Apple care? Just to put this in perspective, Apple made about $4 billion from the App Store last year and developers made about $14 billion. Given Spotify’s horrendously low conversion rate of “free” music users to subscribers, something tells me that Apple won’t be missing Spotify–but wait. Isn’t that called windowing? So Spotify is now windowing their syndication?
Something also tells me that this is more about Spotify’s smear campaign against their competitor Apple Music than it is about anything else. And here’s a hot tip.
You know the Federal Trade Commission and state Attorneys General that Spotify complained to about Apple Music? (A complaint that has gone nowhere.) There’s another division there besides the antitrust division.
The consumer protection division. You know–the one that handles false and misleading advertising claims.
One more thing–Spotify has been in this commercial deal with Apple as long as the Spotify app has been in the App Store. Now that Apple is competing with Spotify, suddenly we see Spotify turning on Apple. What makes you think that they won’t do the same to us? Like the way Daniel Ek handled Taylor Swift.
Yet another unnecessary misstep from Spotify’s PR team. Next they’ll be blaming Apple’s commission rate on Taylor Swift.
Where do they find these people?