Apple responds to Spotify with words, but no real answers | Hacker News Reader

Apple responds to Spotify with words, but no real answers

char.gd

70 pointsJ25336 comments

Apple:

> Underneath the rhetoric, Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters.

OP:

> Apple saying that it's "trying to make money of others' work" while ignoring that the App Store is doing exactly that on an unprecedented scale by restricting choice is truly ironic.

Not just the app store but Apple's music store as well!

Apple is pretty much saying “I own all the rails and it’s ok for me to compete with the transport companies that use them”. This might not be ok in EU, but US doesn’t give a sh*t. No matter how much developers, songwriters, consumers, etc get screwed by some greedy corporations. $1000 is not enough for a phone, we still need to pay 30% of all the apps we’re using... It’s a crazy world.

Then don’t buy an iPhone?

That’s how ended up with Comcast...

Comcast has a natural monopoly given by the government to do last-mile internet, that's why they get to be the sole provider, Apple has no such monopoly, that's why you get to choose.

I didn't see anyone putting a gun to your head to buy an iPhone or write an iOS app.

Meanwhile the major competitive platform to iOS is much, much larger and charges 30% for apps as well.

Plus, Apple allows Spotify to distribute the free verison of the app (that Apple doesn't have) free of charge.

The App Store is a voluntary system for all developers. Nobody is forced to write apps for the iPhone—and Apple did put a lot of work into making the ecosystem work very well for developers. Whether they deserve exactly 30% of revenues is a valid debate, but there is no doubt that Apple's efforts adds value to the market.

What has Spotify done for anyone? What is so genius about saying "hey, you can have this really cheap product because we've somehow convinced our suppliers to sell us the product for next to nothing!"

Negotiating product for next to nothing seems like an attractive offer to whoever their customers are.

Spotify is much better than any of their competition.

>whoever their customers are

This is the key though. They are Apple's customers.

So then what's the problem? They have a cheaper supply chain, they have (according to you) a better product and their biggest competitor isn't attempting to undercut them. And the vast majority of their revenue isn't filtered through Apple's 30%. They've got nothing to complain about.

I’d also argue Apple wouldn’t be where they are without developers. Microsoft Office and early Macs come to mind.

It's definitely a symbiotic relationship as it is with all platform/developer environments.

But Apple didn't force Microsoft to make their apps for the original Macintosh. Microsoft chose to. It's a critical distinction.

Apple's official response (direct link): https://www.apple.com/newsroom/2019/03/addressing-spotifys-c...

This seems like an overly emotional interpretation of things, written in an intentionally aggressive style.

Are there any lawyers here who can actually make an interpretation of the situation free of emotion and PR speak? I still don't understand the fundamental basis for why Apple is legally obligated to "play fair" on the App Store. Reasons I've heard that don't make sense to me include:

- XYZ, inc. made a business on the App Store, so XYZ should be free to pay a cut to Apple that is intuitively "fair" in some vague sense, simply because their entire business is on the App Store.

- 30% just sounds intuitively too much, so they aren't playing fair

- 30% is higher than other, vaguely related platforms charge for vaguely related services, so that means it's unfair simply because the number is higher

- Apple also makes apps that sell the same types of subscriptions, so Apple should be fixing prices of competing services at a point where...? Spotify can make a profit? Consumers are just always charged the same amount for any "music app" from any competing company? This seems to be the one that a lot of people hang their hat on as the nuanced way to look at it.

"No, but it's about the competing product they offer, they undercut Spotify's price." etc.

But, undercut what? Spotify's price point relative to their current business model? I don't understand the argument here. Spotify is another business. We're not talking about some minimum wage thing for a person where you have a moral imperative to keep the price above a certain point, inherently.

I don't understand why any legal system should be forced to take Spotify's current business model as the peak optimal one possible, and then say that they couldn't possibly lower their price to match Apple's competing service without irreparable harm to their business. Why does any of this matter, legally? Companies make money, industries grow and fade, niches pop in and out of existence as paradigms shift, business cycles up and down. What are the laws that mean Apple must be civil with Spotify here?

The main issue is that Apple doesn't allow you to use any other payment method - even via linking to a website - to use in-app purchases.

Take this analogy: Apple is a city and has exclusive say over whether or not you can build a brick-and-mortar store on their land. Apple here exclusively owns all of the land, and won't let anyone else build on it without their permission (required distribution via app store).

In the current situation, Apple is saying "you can rent the land here for free, as long as you give us 30% of your sales". As per their press release, A bunch of game apps take advantage of the free property and make money via ads, which don't give Apple any cut of the revenue.

Spotify is complaining that, in order to build on Apple's land, they have to pay this 30%. They say "fine. we'll pass the cost on to the consumer." and institute a $13/month charge instead of $10.

Now that Apple sees music streaming is a profitable market, they build a store right across the street from the established Spotify store. Since Apple is both the city (who takes a 30% cut) and the store itself, they can decide to make the consumer price $10/month without actually losing any profit as Spotify would. This makes a bunch of iOS (iOS-only) Spotify customers cancel Spotify and switch to the cheaper Apple Music.

Now Spotify is angry, and is taking it up with the state government (EU).

A great analogy. Apple have done all the work building the city—maintaining the water and power, keeping the roads repaired, building ample car parking and sidewalks, keeping out the criminals, watering the plants, ensuring that none of the vendors are scammers, and generally making the city a really nice place. They even provide all the construction equipment for anyone who wants to build their store. Then they spent a lot of money marketing this city and over time have built a strong reputation for the city as a great place to be, the result being the city is full of customers.

Not only that, they're renting store space to the vendors for free, in exchange for a flat and non-discriminatory sales tax. Seems fair.

Despite all that convenience, Spotify still doesn't have to sell you their service from within stores in Apple City. They could have put a store just outside the city limits in the wild, wild west (aka the WWW). In return for making it slightly more inconvenient for their customers, they wouldn't have to pay the city's sales taxes, even when their customers enjoy the product inside Apple City.

But if Spotify want to sell within Apple City, they benefit from the immense conveniences that Apple have put in place, from the marketing and reputation that Apple has cultivated. And it's not like Apple deceived anyone—the 30% sales tax was never concealed.

>they can decide to make the consumer price $10/month without actually losing any profit as Spotify would

What in the world does this really mean though? What do you mean "without losing any profit"? How do you know what Spotify vs. Apple Music operating costs are? Why should they have equal operating costs? I just don't get this exact part of the whole argument. So what if they undercut Spotify, maybe Spotify should take 30% less profit when they sell using Apple channels?

it is not only operating cost but also costs for licensing.

Let's assume neither Spotify or Apple have a crazy price advantage in the licensing of music.

Spotify and Apple Music get to keep $6.99 of the $9.99 they charge users. They are both forced to pay $3.00 to Apple App Store.

See how this helps Apple out a huge amount? One side has a 30% cut taken, the other has to deal with having their accounting made more complicated.

I am in no way trying to deny that an advantage exists for Apple & Apple Music. Can you explain why that's a legal problem for them though?

The only legal problem I can see is because of the monopoly they have on their own hardware, but at that point, it's an antitrust case.

I can't seem to find whatever Spotify is sending to the EU (from the bottom of the timeline [1]), but to me, it just seems like Spotify is whining throughout the whole website. The only thing I think Spotify could go with, if true, is this:

> the rules are not applied evenly across the board. Does Uber pay it? No. Deliveroo? No. Does Apple Music pay it? No. So Apple gives the advantage to its own services.

Disregarding "apple gives the advantage to its own services" while Uber and Deliveroo are not Apple-owned services, Apple not charging the commission for PassKit (Apple Pay) transactions may be the only thing Spotify has on Apple.

1: https://timetoplayfair.com/the-case/

I didn't know we were talking legality. The point raised above was "So what if they undercut Spotify, maybe Spotify should take 30% less profit when they sell using Apple channels?" I was trying to point out that it is economically unlikely Spotify has a 30%+ profit margin.

Legal problem may exist in different areas. Ianal, but I wonder about Spotify's claims, refuted by Apple, about locking them out of watch and app store rejections. I am also interested in the practice not only requiring payemt though Apple, but banning any mention of other ways to purchase the same product.

>banning any mention of other ways to purchase the same product.

What's the problem with this?

I saw it is possible for netflix to direct user to a website to update his/her payment method. On the other hand spotify is not being allowed to develop such button in their app.

Netflix and spotify both delivering digital goods.

Why does such policy difference exist?

I asked apple officials and waiting for a reply.

We also have a digital goods transaction based app.(digital photo) We are also not allowed to use such button. Why does netflix have that option to use such thing?

If I was advising Apple on how to react to this manufactured crisis, I'd use it as an opportunity to voluntarily raise whatever royalty payment(s) go directly to the artists.

They already pay more to artists than Spotify, but the best way to win the argument is to make the comparison comprehensively unambiguous. Turn it into a competition on which service supports the artists more.

Neither of them pay artists. They pay labels. And then labels pay artists.

Wait a minute. Apple actually directly addresses most if not all of the Spotify claims. I did not read the entire article but this is absolutely not true. I don’t think Spotify has a leg to stand on here. I’m all for equal opportunity, but aside from being a music sharing service, what have they really done? Apple built the platform, store and payment system. Spotify is welcome to complete with something better.

Apple built the platform, store and payment system. They invite developers to make services available on said platform.

If Apple decides, they get into the same market and compete with a 30% price advantage. That's hard math to beat in business.

And that's ignoring Spotify's other claims.

It's an argument of rent-seeking vs rent-seeking. Apple technically has a right to a cut on all purchases made through their platform; however there may be a conflict of interest in this case as they own one of the direct competitors to Spotify (Apple Music). Regardless, at the end of the day the artists are the ones that lose out on $$$ and are getting screwed.

The difference is that everyone who interacts with the App Store platform does so knowingly and voluntarily. (And Apple adds value for developers and for consumers, which means it's not technically rent-seeking.)

Whereas the artists who make music didn't do so with the intent of publishing on Spotify.

Unless I misunderstand you, artists who own their music and don’t intend to be on Spotify aren’t on Spotify. When artists make the choice to sign the ownership or their music away to someone else, they face the potential consequences of that choice.

Correct.

I am, however, specifically talking about the music that is available on Spotify.

I feel like Spotify has 3 arguments:

1. Apple music too cheap

2. Apple tanks Spotify app

3. Apple's 30% is too much

For them Apple responded:

1. Spotify has much more freeloaders than paying users, so it has to be more expensive than Apple Music

2. Responded in length, that Spotify is not special, and got same treatment as anyone else

3. Responded that same as Spotify, far from all apps are payed, and infrastructure is shared by everyone. So 30% cut is not to support only paying apps, but all the App Store.

I am pretty satisfied with Apple's answers.

I don’t agree with 2.

I saw it is possible for netflix to direct user to a website to update his/her payment method. On the other hand spotify is not allowed to develop such button in their app.

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