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Comment by k-mcgrady | Hacker News Reader

>> I remember when Gruber was telling us that Apple was not buying Beats for the streaming service and its associated contracts.

He really said that? I thought everyone at the time was pretty much agreed they were buying it for the streaming service, not the headphones.

>> "That also explains why Apple is not approving the last Spotify app update. It's war."

They're not approving it because supposedly Spotify built in their own payment system which is a clear violation of App Store guidelines. Could be wrong but that's what I read.

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>> "He really said that?"

http://daringfireball.net/linked/2014/05/08/beats

"The problem with this theory is that those licenses (to my understanding) aren’t transferable in the event of an acquisition. Music label executives may be dumb, but they’re not that dumb."

>> "They're not approving it because supposedly Spotify built in their own payment system which is a clear violation of App Store guidelines. Could be wrong but that's what I read."

Maybe but I think it was a strategy. Spotify wanted to grab attention. The origin of the issue is really the fact that Apple is not releasing the 30% tax for music streaming services. This is unsustainable in the music business where there is close to 0 margin. The labels take most of the revenue.

>> "Maybe but I think it was a strategy. Spotify wanted to grab attention with this. The origin of the issue is really the fact that Apple is not releasing the 30% tax. This is unsustainable in the music business where there is close to 0 margin."

I definitely agree it was a strategy. No way Spotify thought they would get away with that, it's a PR exercise. The issue isn't Apple's 30% though - it's Spotify's business model. Apple charges all publishers the same flat rate. If you can't sustain your business on it either leave the App Store or force your users to register through your website. I can see how it sucks for Spotify but it is not unfair in my opinion (unless Apple had a monopoly on streaming music, then it would be anticompetitive but for now it's an advantage they have and should be free to use).

Unfortunately in the music business there is only one business model. The one the labels command (with very minor differences between each service). Apple business model for streaming is the same than the spotify one except they don't have to pay the 30% tax.

The only way to command the labels is to control the market. Apple did it with the iPod and iTunes. They were able to set the .99c price for any song. The labels were upset about it.

Apple is trying to reproduce that with streaming. They're initial goal was to release a cheaper suscription ($7.99/month).

First, you said: >> That also explains why Apple is not approving the last Spotify app update. It's war.

Then: > The origin of the issue is really the fact that Apple is not releasing the 30% tax.

I'm honestly not sure if you're contradicting your first statement or if I'm misunderstanding your choice of words.

Is Apple failing to pay out? Seems like I would have read about it if they reneged on their contract with a highly visible third party.

The two statements are related, the source being the second one. The first one is just a PR strategy. I wrote my first post too fast.

Huh. As a Mac/iPhone/Spotify user, this is the first I've heard of any of this.

Only he also says there:

>I can’t see Apple keeping the “Beats” brand around for headphones. If Apple wanted to sell expensive high-end headphones, they don’t need to spend $3 billion.

So it's not like what the parent implied -- whether Gruber saying it wasn't for the licenses also meant Gruber though it was about the headphones.

Plus, Gruber could be totally right about the licenses not being transferable.

Apple didn't buy Beats neither for the licenses nor for the licenses. It bought them for the users, the know-how, and the connections (through Iovine and Dre).

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