Roger Fingas
Spotify and other streaming music services are upset with Apple's App Store policies, which they say effectively prevent them from competing with iTunes or Beats Music, a report claimed on Wednesday.
The issue, according to industry sources for The Verge, is the 30 percent cut Apple takes from all App Store purchases, including in-app transactions. In the case of Spotify, the company has to charge $13 a month for a Premium subscription bought through its iOS app to make the same amount of money it does from a $10 fee elsewhere. App Store rules further prevent apps from linking to external storefronts.
More importantly, Apple has been venturing deeper into the streaming world. The company now pulls in revenue from both iTunes Radio and Beats Music, while benefiting from reduced competition on its industry-standard mobile store. Apple is believed to be working on rebranding Beats Music for an on-demand service launching later this year.
"They control iOS to give themselves a price advantage," one of the sources said. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
Similar arguments arose when the App Store first began allowing in-app subscriptions. At the time, however, complaints were mostly from magazines and newspapers. Some publications caved in order to reach the lucrative iPhone and iPad market, but many still prefer that people sign up for a subscription elsewhere and use a login to unlock content. Indeed, music and video services have generally adopted the same model for iOS.
Spotify is believed to be a primary target for Apple. Earlier this week, The Verge claimed that Apple wants record labels to pressure Spotify into dropping its free tier, giving the company an edge with its upcoming service. This and actions involving YouTube have reportedly led to a U.S. Department of Justice probe.
On Tuesday, Bloomberg said the Federal Trade Commission is also looking into Apple's streaming music negotiations. The chance of government intervention could nudge Apple into making changes to its new service before it even launches.
Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
106 Comments
Well how lucky that Apple is not market share dominant in the smartphone market. No antitrust issue here.
Release web app instead and stop whining if you think the App Store offer no value to your business model.
It's not Apple's job to promote their servixe. If they do their own promotion and signup customers from Their own site then they would have to pay the 30 %. The would have to pay all the marketing and placements plus the credit card processing etc.
These rules have been here forever. Everyone knows that's the cost of doing business in the iOS playground. Nobody is stopping them from creating a web app or going to Android. Apple created their ecosystem and market and now these companies think Apple should just let them play for free. Welcome to business 101.
Spotify is a leech, gonna have to agree with the artists on this one. i will and do pay for tons of CD's and converted any "pirated mp3's" i could replace with actual lossless files taken from cd's that I purchased. The piece of crap sound quality of youtube and spotify, etc. is not the experience I want. The spotify's of the world also have limited internation music tracks that are important to my family.