The Spotify Apple Issue

Many people who follow tech know that Spotify has filed a complaint with the European Commission regarding the challenges that Spotify has doing business in the iOS app store.

I am very sympathetic to Spotify’s complaint. In my post last week on The Warren Breakup Plan, I wrote:

The mobile app stores, in particular, have always seemed to me to be a constraint on innovation vs a contributor to it.

Spotify has a huge user base and brings in billions of dollars of revenues every year but it has a challenging business model. Let’s say that 70cents of every dollar they bring in goes to labels and artists. That seems fair given that the artists are the ones producing the content we listen to on Spotify. But if they also have to share 30cents of every dollar with Apple, that really does not leave them much money to build and maintain their software, market to new users, pay for servers and bandwidth, and more.

You might say “well that’s what they signed up for” and you would be right except that their number one competitor is Apple. So their number one competitor does not pay the 30% app store fee, meaning that they have a competitive advantage.

But this is about more than money. If you look at the web page Spotify put up to explain how challenging it has been to do business with Apple, you will see numerous instances of Apple not approving app upgrades.

We see this with our portfolio companies a fair bit too. Apple has complete control over what gets into their app stores and what does not. And the process can be arbitrary and frustrating. But that is how it works and our portfolio companies are reluctant to make any noises publicly for fear of making their situation with Apple even worse.

I am not a fan of Warren’s idea of breaking up companies like Apple.

I like my partner Albert’s ideas better which he expressed in a tweet last week:

If it was the law of the land that any company could side load any application onto the iPhone or any iOS device, including third party app stores, we would have a much more competitive market with a lot more innovation, and Spotify would not have to go to the European Commission to deal with this nonsense.


Comments (Archived):

  1. Mitchell Henderson

    I only recently signed up for Spotify premium after being a longtime Apple Music subscriber. How different could it be? It turns out Spotify is not twice as good, Spotify is about 100 times better than Apple Music. It has opened my eyes to the reality of competing against FAANG. If they cannot beat you, they will simply change the rules until they do.

    1. Adam Sher

      Spotify is my favorite technology outside of the computer itself (maybe also my car and home insulation). I spoofed my location so I could get it in the US when it was in the UK. Paid for it the entire time that was an option. I love it.

  2. Adam Sher

    You can side load any app onto Android. Would you expect to see a longterm shift of users if developers provide better/first/only upgrades on Android and demote Apple? I would think so. As you experienced in switching b/t iOS and Android, it’s easy. I use iMac, Lenovo, and Android and everything I care about is synched. What’s the advantage of Apple’s integrated and closed systems?

    1. fredwilson

      Apple has a large and loyal user base for iOSI am not one of them

      1. Adam Sher

        Agreed, but I don’t see the killer thing, other than brand cache, that keeps people there. What if you couldn’t stream Netlfix and Spotify on iOS? Or some combo of a few major services. How far will cache take them?It’s a bit of a chicken/egg problem for Spotify et. al. Risk permanently losing iOS users or taking a temp hit rev hit and waiting for their customers to come around.Although I remember reading that those services could coax their customers to subscribe outside of Apple Pay. So there’s some avenue there but it sounds like a hassle.

      2. Richard

        Why do companies bitch about the Moats of others while working relentlessly building their own?

      3. Guy Lepage

        They have this user base because they understand the power of UX.90% of people in tech are power users. UX does not matter for power users. But it’s everything to 99% of the population.

    2. JamesHRH

      Apple users want to know as little as possible about how everything works.Whatever you did to sync across those platforms is 10x to 100x more work than 80% of iOS customers want to hear about, let alone do.

      1. Adam Sher

        Apple users want to know as little as possible about how everything works.I don’t think so. Something something developing in a Unix environment. Have you used Android or Windows recently? What is the UX advantage that makes Apple products easier to use? Samsung closed the gap in phones years ago, maybe with its Galaxy 3. Motorola is the most innovative phone manufacturer. Microsoft itself closed the gap in PCs with its Surface Pro 3. There’s a lot of cool stuff going on in the not-Apple world.

        1. JamesHRH

          Cost of change.Drove a new rental Ford Expedition this weekend. Almost legendarily non-competitive w my Suburban for decades….2018 model is terrific. An absolute potential substitution.Cost of change? Roll Suburban onto lot & do the paperwork.Not the same with my Apple stack ( all pictures of kids on there).Integrating a nonApple is a lot of work if the Apple does 90% of what you want.

          1. obarthelemy

            That’s very true. I’ve been dong it for a few users, it’s a few hours of work, and a few days of knowledge.On the other hand, I think Apple has miscalculated; their user base is not so much tech-sophisticates as the risk-averse and the tech ignoramuses, and the new pricing and buttonless design are alienating that base. Plus the competition has gotten “delightful” at a fairly low price (the $150 Redmi Note, as long as you don’t want low-light pics).

    3. Daniel Cool

      a lot!

  3. William Mougayar

    Apple made $12B in revenue in Q3 2018 from their App Store, as a reference point. That’s huge. What’s needed is for the big players such as Spotify and Netflix for example to rebel as a coalition. Apple could drop their takes to 15% or 10% overnight if they really wanted to.

    1. Richard

      Thorough analysis!

    2. SFG

      And they could charge 15% less for iphones too if they really wanted to — but they don’t.

    3. Adam Sher

      What’s needed is for the big players such as Spotify and Netflix for example to rebel as a coalition. Yes, they and maybe a couple of others are big enough to collectively bargain with Apple or do their own thing. Plus as others said, you can subscribe directly to these services. I do.

  4. Aaron Berlin

    If history repeats itself, this ends with the iPhone asking you which app store you want to use when you initially set it up.

    1. obarthelemy

      The case is less clear-cut though:1- Windows had 90+% market share. iOS has 15-ish. It only dominates in a few countries, and in the high end.2- Apple is making the specific case that users actually want Apple to curate their apps, and that this has costs. I’m not sure this is true though, nobody ever asked users if they’d trade a crappier appstore for 15% lower prices.3- the competition is charging as much as Apple. If I were Google, I’d lower my cut to 20% right about now ;-p

  5. obarthelemy

    “the mobile appstores”….I think there’s wrongful overgeneralization going on here.1- Only Apple’s AppStore is exclusive, only iOS bars users from installing apps from any other source. Windows and Android are non-exclusive, users can freely install apps from other sources, and on Android (don’t know about Windows) they can even install whole other appstores. ChromeOS lets you install Linux and Android apps.2- To compound the issue, Apple has by far the most restrictive rules for accepting apps into its appstore. In particular, devs are not even allowed to have clickable links to non-AppStore payment webpages.Granted, this has good sides too- iOS’ AppStore is safer the Google’s or alternative Android appstores, I strongly advise my users to install apps only from Google’s PlayStore – the difference is a bit cosmetic, because in the West at least, most users don’t stray from the official stores at least on Mobile.But in the end, Apple has a lot of power over where their users are allowed to spend money -or even what apps/content they’re allowed to peruse- and isn’t shy of exercising it. Android a) is a lot more laissez-faire and b) has sideloading as a built-in safety valve.Apple’s AppStore is a very unique beast.

  6. creative group

    Eduardo:This view only applies to Portfolio companies held to their competitors.It has to apply to all businesses. Fair competitive advantages don’t only apply to companies your invested but their competitors also.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  7. Guy Lepage

    To be honest, if your model relies on a third party to access ‘their’ customers it is “the bed you made.” If you don’t like the bed, build your own. Why can’t Spotify and others understand this from the start. Tbh software companies just don’t try to beat out Apple and Google. I always hear the same excuse… “Hardware’s hard.” Life’s hard. Get on with it. If all these companies would have “taken a shot” there would be a dozen competitive platforms out there today.

    1. obarthelemy

      What exactly can Spotify do to have access to to iPhone users ? Are you saying they should make their own iPhone ?

      1. Guy Lepage

        The fees were 30% when they started building a business on someone else’s platform.a) They knew there’s only so far they can grow. A decision they made.b) When they found product market fit and scaling seemed very doable, they should have worked out a plan to get off someone else’s platform. They could have tried to get into hardware. Build their own platform if that means a phone then so be it. Just because MS and Amazon, who don’t understand UX to begin with, doesn’t mean startups can’t.. Someone decided to give up and say “hardware’s hard” and everyone followed suit.I feel these companies should not complain as they were not able to take a risk to become a great company. It’s wild to think that all of these companies that kill themselves from the start by leaving their business up to someone else could get try to regulate the platforms that made them who they are. Go out and compete or don’t complain. They have a good business and should be happy. They are not great. It is what it is.

        1. obarthelemy

          It seems IT ecosystems are natural duopolies (Windows-MacOS on the desktop, Android-iOS on Mobile). So you’re saying anyone who’s not MS, Apple, Google shouldn’t even try to make a living on any of those platforms, at least not in any market one of those three may want for itself ?Also:1- they’re not building heir business on Apple’s platform. They’re building a multi-platform business, and Apple is one of the key platforms they support.2- I’m not sure anyone knew how streaming could/can grow, and how the economics will work is still in flux3- launching a platform is pretty hard to start with, probably impossible at this stage. I think you’re being disingenuous, at least you’re ignoring market realities. Android and iOS are locked in, nobody will carry a device just for music nowadays.4- Spotify knew of the 30%, they didn’t know Apple would launch a competing streaming service, and disallow linking to off-appstore payments.I’m guessing you’re a very invested Apple customer ?

          1. Guy Lepage

            1. Then this argument is moot.2. Everyone is taught not to build on others platforms or you could get crushed.3. It’s not that hard if you’re not lazy. Look at all the open source platforms.4. That’s ignorance on their part. Even the non-tech media talked about that as a possibility.

          2. obarthelemy

            4- I’m very interested in an article from 2006 (that’s when Spotify launched) saying Apple will launch into streaming in 2015 (that’s when Apple launched into streaming music). You must have it, since you’re so definitive in your answer. Ditto about off-platform payments.3- Indeed, all those Linux desktop in homes…. /s2- No, Apple is changing the rules of that game. Oracle, SAP, Netflix,…. have built very successful businesses 100% on others’ platforms and nobody ever suggested they do any different. What has changed is that Apple is running the only closed platform since the minicomputers era, and is using that power to edge out competitors in recurring-revenue markets it wants. BTW, they’re doing the same for hardware repairs.1- How so ? iOS is an important platform on its own, and being ubiquitous is a key requirement for streaming providers. If Apple isn’t kept in check, they’re in a position to enforce exclusivity on iOS exclusive and then leverage that into being the *only* ubiquitous streaming provider. That’s the exact definition of abusing the monopoly they’re carving for themselves on iOS users.

          3. Richard

            How so? …. Now that’s what you call Fake News !

        2. Quantella Owens

          Thank you.Plain, simple truth.But you forget…..all of these companies are chasing “fastest to market” and “fastest to unicorn” or whatever the hell their term sheets required which usually means someone else’s marketplace.None of them set out to be independent for long….you can tell by how they approach markets, customers and even their marketing.They make money from selling ads, and selling their customers. But not on selling their customers a great, longterm experience. They aren’t Sonos or any other high end audiophile friendly company/experience. People just want others to see it that way….ad platforms in disguise. They never set out to be great companies….they wanted to be bought long before it became an issue.Not competing is a big deal…and its one of the reasons I’ll never be an Apple user: walled gardens. Customers lulled into a false sense of safety while a deal with Government telecom gives them backdoor access to info they shouldn’t have…and on and on and on. Info they sell to all the wrong people… The confusion it causes in the marketplace and valuations etc will probably show up most acutely during the next stock downturn. And won’t that be fun for all the common stock holders who thought they were holding shares in a music streaming company, but instead hold shares in third-rate ad platform that’s steadily losing market share to Amazon?

      2. Richard

        No real difference than – radio airways – broadcast television – Netflix. The last mile wins.

      3. Daniel Cool

        yes! stop complaining. take your app off the appstore. go do it yourself.

    2. Lawrence Brass

      The only problem with this is that Apple has a streaming business running in the same platform, but.. Spotify on the other side is teaming with other streamers like Google and Pandora in their “fight for survival”, appealing a CRB ruling that increases the rates for songwriters and authors.Spotify wants authors’ rates more or less to “remain the same” and to follow their business model.…Lot’s of PR, lawyers and companies fighting for their own interests.

    3. Daniel Cool

      spot on!

  8. Adam Sher

    How is that loyalty? Plus I believe he said he stopped doing that and buys Android only.

    1. creative group

      Adam Sher:How many years during each new Apple and Google Pixel has Fred tested? Thank you.Loyalty is based upon one’s patronage to the product or service? Fred has meet that threshold. You don’t need to throw yourself in front of the vehicle for Fred. The facts that all can view will outlast any narrative to the contrary. Be loyal to the facts and never to the fallible person. We support Fred only when he is right. A great feeling when it is applied.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  9. J. Lightfield

    Maybe as a developer I remember the days of software sold at retail as never ever being quite sold. I’m not so sure that the issue is as clearcut as allowing any app to be installed on an iPhone. The Apple app platform also includes my development tools, and ensures that my apps will get a decent opportunity on sizable operating system markets.There’s a value to less uncertainty in the performance of end user devices that ensure viability for innovation. Distribution costs and logistics didn’t disappear, they just shifted to a new model that will one day also get replaced with some blockchain based thing.

    1. Lawrence Brass

      I am so thankful Apple and Google stores do exist. Both opened a world of opportunity for developers. I really don’t care about their cuts as long as those are even.If your app competes with my app at the stores we are both subject to the same “tax”, so we would be even. The store cuts, in fact, are paid by consumers not developers.The problem in the case of Spotify and Apple is that Spotify’s app competes with an Apple service which is technically a bundled app. Do you agree? In this specific case we could say that the 30% fee is an unfair advantage for Apple. This is the type of rationale that inflates breakup proposals in politicians’ minds. All in the name of “fairness”.Yes, we have a problem.

  10. Pointsandfigures

    Competition is the way to break up big tech not regulation.

    1. obarthelemy

      What about natural monopolies and predatory practices ?

      1. sigmaalgebra

        Old voice telephone was a “natural monopoly” and so was residential electric power, both because for each of these two services really want to incur the costs of just one tree of connections. Somewhat similarly for railroads. And IIRC that’s where the idea of natural monopoly and its regulation, based on “welfare economics”, grew up.I’m failing to see how Apple has a natural monopoly.I know; I know; Apple has a network effect: So many people use an iPhone because so many app developers write for iPhone. And so many app developers write for iPhone because so many people use an iPhone.Could say the same for a popular suburban shopping mall, Wal-Mart, Sam’s Club, Sears, Amazon, FedEx, UPS, etc. Uh, about Sears, well, maybe not! Gee, such a network effect should be really really powerful, e.g., keep out Amazon — I guess Bezos didn’t take the right course in welfare economics in college and/or didn’t get the memo that no way could he compete with the network effect of the Waltons, not the TV show! Gee, Amazon started selling music CDs: Easy enough to buy at the Waltons, just drive to the store and paw through a bin, a cube, 4′ on a side, and pick your favorites. Uh, the Waltons never thought of an index, not even just a keyword index. Hmm …. Heck, the Waltons STILL haven’t thought of a keyword index for their store contents. Gee, why didn’t Barnes and Nobel try that, just dump all the books in a pile in the middle of the store and let customers pick their favorites!!!! Same for A&P, just dump all the canned goods in a central pile!!!Good grief: What the heck would be the all-time, grand natural monopoly??? How ’bout, maybe you’ve heard of it, the Internet???? Well, at one time, the US DoD’s ARPA funded it. Then the NSF funded it. IBM ran the whole thing. Think of that — IBM, back there supposedly the bad boy of natural monopolies, was running ALL of the Internet!!! If they owned it all now and got a penny a packet, they’d own the solar system and everything in it!!!When I hear that the much better ideas are from Beth, that is, Elizabeth, …, well: When she’s calm and happy, she looks sweet, grandmotherly. Bet when she was 13 she was really cute!!! When she’s happy, calmed down, and talking, she sounds nice, even drinking a beer! But, THEN, she starts on politics!! She stands up, starts waving her hands, gets all serous and wound up, as Fauxcahontas no longer wears her American Indian Chief eagle feathered headdress, but starts saying nutty things, wack-o things, far out, wildly destructive things. So, she gets attention: It’s common interests, the newsies want a shocking story to tell, and she wants her shocking story told. BUT, I copy and keep a few of her wack-o statements and, thus, permanently put her on my never but never list, should be on the way to the state institution for some TLC list, sympathy for her suffering husband and grandchildren list, and generally really sad case as in Darwin still makes too many mistakes list. Beth, you made several of my special lists!Sorry, Beth: Just dote on your grandchildren and quit trying to ruin the US economy.I am a HUGE music fan, so I just did a Google search on Spotify, got a URL of a Web site of theirs, and looked at what music they were pitching. To me all that music would have been worse than enhanced interrogation and not used even by the CIA against the worst case of Ali ISIS Caliphate Abdul Head Chop Jihad Car Bomb bin Boom Boom.But as bad as their audio torture looked, apparently I could download a Windows “app” and torture myself. No thanks.Yes, eventually my startup will have to pay attention to Spotify content … not before the alpha test!Apple doesn’t like audio enhanced interrogation torture? I can understand that!After that Spotify torture, I need t recover: How ’bout…or…or Was ist besser als ein Mädchen?…The Enlightenment trashed; The Age of Reason banished; all reason and civilization destroyed; psychosis reins; Fauxcahontas, AOC, Beto, lost; “Out vile spot!”; thank you pretty singers, it worked; hopelessness lost; I can get back to work now!This time, but it was close, right at the edge, looking into a 30 billion solar mass black hole, can’t hope to get by coming that close very often.Progress!!!…The music is terrific; so is the orchestra; she’s GORGEOUS; and she can SING!!! Must have moved to a new universe!

        1. O. Barthelemy

          Opera lovers are the vegans of the music world. They just *have* to tell us.You misunderstand network effects. They’re not about how demand begets more supply begets more demand, but about how users beget more users. I’m not sure what Amazon vs retail has to do with the whole thing.What’s relevant is whether Applea) has a monopoly: maybe, if high-spending Mobile users are a different market from sensible Mobile usersb) is using that monopoly to move into adjacent markets: certainlyc) is using that monopoly to hamper competitors: certainly.

          1. sigmaalgebra

            > Opera lovers are the vegans of the music world.I’m no vegan at anything, but what is posted is just darned good music, crown jewels of civilization. I was eager to post to have the astounding contrast with that vile spot — and I HATE Shakespeare.Your distinction on network effects is interesting: Your definition, okay, is a network effect, but for my examples there are some big effects and a network that enables them.So, Apple has a “walled garden” where apps are vetted, reviewed, certified, checked, tested, approved, GH approved, etc., save for work, families, children, free from bugs, viruses, malware, phishing, etc. Okay.But IIRC there is also Android without a walled garden. Maybe the worry is that there might be phishing, malware, etc.Well, guys, the standard should be that a computer operating system should be able to run any code at all, any bits and bytes at all presented as code, and do that with 100% safety. No chance of malware or viruses; no chance the code could read/write data it was not supposed to.Nearly all of this is really old stuff: On the IBM 350/67 could run any code at all, with any instructions at all, including privileged instructions, I/O instructions, attempt to run missing instructions, operating system instructions, whole operating systems and, of course, with any applications programs, safely.Sure, that was the start of virtual machine, but no agreements, promises of good behavior, etc. needed. Quite literally, could run anything — indeed, the main first use was using it for developing operating systems. Well, for that, ran on a meager operating system, CP/67. Soooo, right, had to be able to run CP/67 on CP/67 — once as a test they did that, 7 levels deep.If so far there is no smartphone operating system that can run just anything safely, then maybe someone should develop one.

          2. obarthelemy

            I don’t thing it’s realistic to aim for an utterly safe ecosystem. With the breadth of features, the race to new features, bugs, exploits, social engineering… and that’s before “works as intended” is factored in, ie carriers and FB selling our data. Anything with installable apps should be assumed to be not 100% safe, even something with no installable apps sometimes is unsafe.I think we can aim for “reasonably safe” (ie, anyone that is not personally targeted is safe): Google says 0.02% of installed apps had some sort of malware function, mostly ad-clickers. That’s probably Good Enough. Also, we should require speedy removal of newly-detected problem apps, Play Secure is relatively good at that too. Frequent automatic updates help, and iOS leads there by far, but they’re not a panacea as the regular 0-days on Windows and MacOS show.In the end, security is a process not a state. Don’t let old holes linger, keep a watchful eye out, and quickly fix new issues.

          3. Pointsandfigures

  … thought this link was good one:Benedict Evans also tweeted this which is good:…In general, I think we have far too little competition in the US caused by the public policy we passed and the regulatory state that overseas business. Hospital creation is a good example.

          4. sigmaalgebra

            > I don’t thing it’s realistic to aim for an utterly safe ecosystem.Well, for some definitions of ecosystem, right.A good solution would take some architecture. For an extreme case, there is a version of something quite safe now: Run the computer on batteries in a Faraday cage with nothing communicated outside.So, for a little more, need a virtual something or other. Part of that has to be some really good tracking and controls on whatever goes in or out.E.g., some app or Web site sends keystrokes or clicks? NOT A CHANCE because no way are they going to send anything without some really clear, explicit permission, monitoring, recording, encryption, authentication from a trusted authority, etc., basically standard old RSA encryption with Kerberos and capabilities and attribute control lists plus a lot more.Malware? Let them: The virtual whatever should be able to run malicious code safely.But there are still issues: In general the computer, to be useful to the real world has to be in and communicate with the real world. E.g., for something as routine as sending a file to a printer, some guy outside with a truck full of electronics may be able to get a copy of what was printed.I have to believe that a lot of people for a lot of serious needs have looked into parts of this a lot, maybe for iPhone, likely for server farms, especially at banks and US national security.Broadly I believe that your hint about ecosystem is too amorphous for one clean, solid, lasting solution.Then we now have a key to iPhone: They claim, suggest, imply, whatever that they so carefully review apps that an iPhone is relatively safe.So, you have a choice, a walled garden or something closer to the wild west. The walled garden is safer but restrictive and expensive. The wild west is more dangerous but more open and cheaper. So, you can have safe, restrictive, and expensive or dangerous, open, and cheap. Not the first case of a trade-off.Yup, would be nice to have safe, open, and cheap.In investing, there’s expected rate of return alpha and standard deviation of return (or its square) beta. So, give lots of investment possibilities, for each one, can plot the pair alpha and beta — say plot alpha on the horizontal axis.Then in this plot, say all in the first quadrant, get a scatter of points. Want to be big on alpha but small on beta. So, want to be on the south east part of the scatter.For such a scatter, can have an inferior point, that is, one where there is another point better on both alpha (larger) and beta (smaller). Then there are the other points, non-inferior. An algorithm to find the non-inferior points turns out to be easy — I coded up one in the supporting software for my Ph.D. dissertation.Well, so, there are trade-offs, and first cut we look for the non-inferior options.That’s for just alpha and beta and, if we knew alpha and beta, which likely we don’t or at least not very well, it’s all dirt simple.But for iPhone versus Android or something else, it’d be a mess if we had the data, and we don’t and realistically won’t, have the data.I can’t really have an opinion about an iPhone because I’m working on my startup and don’t need or have any smartphone. So, I can’t praise or condemn iPhone or Android. But, still, it looks like, or like it is accepted, that (i) pay up for iPhone and feel safer if constrained or (ii) save money, feel more free, but accept some risks.Then there’s my solution: Don’t have a smartphone. I WILL say that about the time smartphones were getting popular, I’d actually had a malware attack on Windows XP SP3 so had to suspect that smartphone operating systems would likely also have malware problems.Or if don’t like my solution, there is a compromise: Don’t use a smartphone for anything at all important. E.g., if want to listen to music via Spotify, for anyone who can stand that torture, just get the cheapest smartphone and use it for Spotify and anything else not important.For something important, probably shouldn’t be using a smartphone, or any portable device, anyway. E.g., apparently taking any portable computer through customs is a big risk of having the device confiscated.But a LOT of people REALLY like smartphones: E.g., when Trump talks to a group, lots of smartphones to up so that from behind the crowd can see all the bluish screens. A LOT of people.

  11. jason wright

    Naughty Apple. Tut-tut.Will Coinbase be opening up its platform to any stablecoin that wants to get a listing?

  12. Richard

    Well it looks like it’s Fred and Albert and Elizabeth Warren vs 800 million happy IOS users. Mmm. I’ll go with 800 million.

  13. Elia Freedman

    I would argue that the solution is even easier: Apple could eliminate the restriction of being able to link to your own website from your own app, advertising payment on your own site in your own app. That’s all that is needed to solve this problem.

    1. Nicholas Tang

      This. If they either limited the cut for subscriptions, or allowed apps in the app store to link to off-site payments, this would go away.However, I don’t think they’d ever want to allow for off-site payments and I understand why; there is a cost to running the app store and there’s a benefit companies get from being on it, which Apple deserves some return for.An alternative that might be win-win in the long run would be to limit the full % cut for the initial payment (since that’s the one that’s benefitted from the app store placement) and say that follow-up renewals get a much lower % (credit card processing costs plus an extra percent or two for their trouble).That would ensure Apple gets to reap some rewards for running the app store, without draining all of the profit out of it for the apps on the app store, which would encourage them to stick around and stop looking for workarounds or legal battles.Sideloading is an interesting solution (and should be allowed, IMHO) but one that I suspect 99% of IOS users won’t be interested in.

  14. Salt Shaker

    Spotify is exploring bundling opportunities w/ Hulu, which is a good play to enhance their value prop w/ subscription. Fighting Apple is not the solution. Creating value by building a stronger model with other players in the entertainment field who similarly are disadvantaged as a stand-alone seems to be a smarter strat. The whole then becomes greater than the sum of its parts. It also minimizes fragmentation, streamlines billing, customer service, etc.

  15. Prithvi Datla

    1. Spotify wouldn’t be where it is today if not for iOS – they know it now, and knew it then2. Users can directly subscribe with Spotify – most of them do not know this3. It’s Spotify’s fault that its own users do not know this4. I subscribed through the App-Store but renewed with Spotify directly5. I LOVE Spotify6. I use an iPhone, because it does what it says it will do, without fail, and so has every iPhone I’ve owned for the past 11 years 7. Spotify needs to stop whining

    1. Guy Lepage

      Very good point.. Spotify needs to convert users off the App Store. We don’t hear Netflix complaining..Apps that complain about the App Store are those who can’t figure out the UX or are too lazy to build their own community/platform.I too moved from purchasing Spotify through the App Store to a direct subscription through Spotify. I do this with all apps I like as it’s easier to manage and see where I’m spending my money than an Apple receipt for everything.

      1. Laurent Boncenne

        Netflix and Spotify have a very different business model, for one Spotify does not produce its own music.

        1. Guy Lepage

          Agreed. What I was saying in another thread was that would be one way for Spotify to compete. Spotify could also become a new form of “Record Label” if they wanted. Spotify could also become an “Events Company” as that’s where the money is today in music. There are so many things Spotify could do with such an amazing brand that they built. Spotify and Apple are both “Lovemarks” of mine. I just think Spotify is being really lazy..

          1. obarthelemy

            Spotify is being choked financially by Apple. They can’t afford to diversify, which I’m sure is one of Apple’s goals.

          2. Guy Lepage

            Spotify made their bed and got lazy… They forgot to adapt and get off a third party’s platform. It would complete suck if Spotify went under but sometimes poor management kills great brands. It is what it is.

  16. JamesHRH

    Surprised no one has mentioned that a law that forced Apple to side load apps would be de facto unconstitutional.Private sector company with multiple competitors.Apple users know they are missing some things and don’t care.It’s not like the world is under media supplied.Geeks being geeks here.

    1. obarthelemy

      I”m curious about your data on iOS users knowing they’re missing some things. I coudln’t find any source, where’s yours ?

      1. JamesHRH

        Don’t have any.

  17. Adam Parish

    The app store is very much like the Pepsi and Coke regional bottlers. Let’s see what happens.

  18. Danny

    Frankly, Spotify can do the payment off iOS in which a lot of the others do even though the UX will be affected. But by giving more benefits to iOS to encourage them to pay off iOS is still a good try. Loyal Spotify users will be willing to do that.

  19. Paulo Trezentos

    Why IAP have to be processed by app stores ? Because it is a compensation for managing the app distribution channel. There is also a benefit of the network effect of processing IAP inside a store, related with credit card insertion and trust. That doesn’t seem so relevant, looking into Netflix and Spotify (in Android) experience.The problem with the compensation is if there is a monopoly, Apple and Google will try to extract the largest margin of IAP and even leverage that power in their services interest (music, maps,…).In iOS and Android we have two similar but different problems: in Apple you cannot install apps outside the app store, in Android you can install but Google uses the control of the operating system layer (Play Protect and security warnings) to make ir harder.While OS owners Apple and Google are playing the “safety” card to maintain as it is (…, we start to see more apps complaining and pursuing alternative distribution channels. Like Fortnite.

    1. obarthelemy

      Is there a single instance of Google using Play Protect to hamper a competitor ? AFAIK, It’s a *technical* completely passive app scanning antimalware, that uses both blacklists and heuristics to remove malware. It has nothing to do with *commercial* competition the way Apple rules do, and doesn’t even interfere with sideloaded apps (unless they’re malware). Also, Google doesn’t enforce a monopoly, sideloading is a baseline feature of Android. I feel the slight obfuscation of sidelodaing (you’ve got to enable dev mode, then enable sideloading within dev mode, then dismiss a security alert for each app install) is about right to make sure users don’t unwittingly take the risk. Apple “you can’t, and can’t, and cant” doesn’t compare.My issue is elsewhere: if we view Mobile ecosystems as infrastructure, the situation on Mobile is equivalent to our power company having a final say as to which appliances we’re allowed to connect to it. The same arguments would work: they validate those appliances for safety, design, ergonomics, functionality… and they take a cut because this has cost and value… Nobody would stand for that. I’m wondering why we are even arguing the point in Mobile.Also, I really think sclerotic duopolies should be treated as monopolies for both players.

      1. Paulo Trezentos

        There are cases of Play Protect (AKA SafetyNet) removing app stores, even from top OEMs. It seems that the machine learning behind considers the installation pattern as suspicious. ML doesn’t have nothing of anti-competitive. What is anti-competitive is after detecting the problem, not to add it to a whitelist.Your analogy makes sense to me.

  20. OurielOhayon

    I think Spotify (and other paid for digital services) problem would be solved if Apple only allowed them to have users pay the way they want right from the app. Namely using a credit card/paypal and even maybe crypto. The core of the problem is not the approval process. It is painful but one can argue it serves users more than it hurts them by protecting them from crapware. The problem is that where users do not have a real choice is how they pay for digital services.That rule is the core of the problem and the one in my opinion that could be challenged.Btw this is the same problem mobile crypto apps are/will have …

  21. Matt A. Myers

    I understand that people are frustrated that Apple has an advantage with access to the their customers who bought into the Apple platform, however that’s how economies of scale works. Apple isn’t a monopoly, and the solution is to create a better platform than Apple – where either you can compete on price with Apple or you provide a better ecosystem for the same price. Alternatively, if we want to go nuclear – we should just ban economies of scale and the benefits that come from it – along with banning patents that also stifle innovation for long periods of time, and increase costs for everyone – at least until there’s enough pressure and mass for a competitor to come along at a high enough scale.

    1. obarthelemy

      I’m unclear what economies of scale you’re speaking of. Smartphone making ? Music selling ?And I’m unclear how this is about economies of scale at all. Again, are you talking about the music steaming business or the smartphone-making business ?And ” Apple has an advantage with access to the their customers who bought into the Apple platform, however that’s how economies of scale works”… has nothing to do with economies of scale, this is vertical integration ? Economies of scale is when making more of a thing makes that thing cheaper. The present issue is about Apple making a different thing (a music service, not a phone).Color me confused.

      1. Matt A. Myers

        All of the above. Economies of scale does improve with vertical integration, because you’re keeping more of the profit layers for yourself from each sector. The Apple platform with software and hardware integration, and supplying core features the masses like, along with taking advantage of their economies of scale to launch the new verticals, is why Apple has been able to be so successful – which includes their App Store, its fee, its structure for and design towards safety and security rules with reviewing apps, its developer program.

  22. Daniel Olshansky

    I’m really surprised Fred didn’t bring decentralization into this conversation. This seems to be a prime use-case for a decentralized app-store where a single centralized entity cannot control which apps get posted and which do not.There are definitely a lot of problems to be answered before such a solution can be implemented (i.e. limiting spam, low quality or illegal apps), but this seems feasible in the long-term.