Apple Responds to EU's Decision to Narrow Antitrust Case Prompted by Spotify

[Mrkevinfinnerty]

View attachment 2166199

Yeah but streaming royalties are not paid on a 'per stream' basis so those numbers don't impute what you think they do.

It is not hard to see how the inaccuracies, which were not stated but may have been inferred from the letter and the article, could lead some artists to think that they’ll be getting a penny from Apple every time their music is streamed, or even that the company has increased its rates to pay artists a penny per stream, even though the letter specifically states that “royalties from streaming services are calculated on a stream share basis” (i.e. a song’s percentage of the service’s total number of streams, which means Apple Music does not pay royalties on a per stream basis). Ultimately, the variables make apples-to-apples comparisons (sorry) nearly impossible, but multiple sources say the two companies’ rates are actually much closer than Friday’s headlines would imply.

But more to the point, the inaccurate reports and slippery wording play directly into widespread confusion or lack of knowledge about how artists earn money from streaming services, and how misleading per-stream rates can be (Spotify states the latter point clearly in its report of last month).

First, in actuality, streaming services rarely pay artists directly: They pay rights-holders, usually labels and publishers, which take their cut and then pay artists their share.

Secondly, multiple industry sources tell Variety that although the per-stream model may seem to be the least-baffling streaming royalty metric to grasp, it is an antiquated and even inaccurate way of measuring a streaming service’s power.

Why It’s Misleading to Say ‘Apple Music Pays Twice as Much Per Stream as Spotify’

Headlines stating that "Apple Music Pays Twice as Much Per Stream as Spotify" are deeply misleading: Here are a few reasons why.

variety.com

 

[webkit]

Everything you listed here is good; I would never buy an iPhone from those stores if they started putting this crap on the phone before I bought it.

You are not alone. Some people do feel those restrictions are good but others feel differently. Going back to the MS DOJ case, same was true regarding IE. Many people felt MS offering/including IE for "free" was good but not everyone did. Netscape obviously felt differently.

With all of Apple's talent and resources, I am confident they would be able to keep iOS as safe and secure as it is today (which isn't perfect) for those liking the way it is now, while satisfying antitrust regulations and business/customer demand for sideloading, alternative app stores, etc. New competition could also push Apple to make the App Store and iOS environment better which would be a GOOD thing.

The reality is antitrust laws and regulations aren't likely going to satisfy all users, customers, companies, etc.

 

[webkit]

1. Is Target allowed to switch out pieces in a box of Legos? You mentioned resellers, not the same as forcing an OEM how their hardware works. By the way, OEM, is Original Equipment Manufacturer... Dell, HP, GateWay, Lenovo, etc.

2. Webkit is an open source engine... anyone and everyone is free to develop it.

3. Apple's sells you a device. It works a certain way. You don't like that device you return it and get something else. Back in the 90's when Microsoft did all this, there really wasn't another choice unless you wanted to buy a product that was incompatible with what everyone else was using (aka monopoly). If you don't like your Apple device, your alternatives are more compatible with everything else on the planet.

My point was more that Apple has a lot of restrictions regarding what third party companies can do related to iOS/iPhones. Whether it not it's better or worse than restrictions MS had can be debatable. MS certainly gave Windows end users more flexibility than Apple gives iOS end users.

4. Duopoly... iOS 20%/ Android 80% You really think it's fair to hold them to the same standards? What if that duopoly is, I don't know, 10% / 90%... should those two companies be treated the same? That's the desktop market Mac / Windows.

This is more ridiculous when you think that of all the possibly 100's of other OEMs in the world only Apple can create and maintain a viable alternative platform? This is not Apple's problem. This mess is because Google gave away Android for free and OEMs flocked to it, ditching every other licensable OS and creating this duopoly. So yeah, let's just keep adding restrictions to Apple, maybe they'll go away and we'll be left with a single Android monopoly.

That depends on the region in question. In this case, we are talking about Europe (and specifically EU countries) where iOS has around 36% share and Android has around 64% share. If we were talking about the U.S., iOS share is around 58% to Android’s 42%.

With only two major players in the mobile OS market, antitrust laws and regulations are justified if companies are determined to be engaging in anticompetitive behavior. Just because alternatives may exist or could exist does not give dominant companies the right to violate antitrust laws and regulations.

 

[Jensend]

Apple pays 0.01 per stream
Spotty pays 0.001 to 0.008 per stream



source: https://www.lalal.ai/blog/streaming-payots-2022/

Apple doesn’t have a free tier.
I’m betting that if you did an apples to apples comparison of, say, what percentage of the subscription fee of US-based subscribers goes towards licensing fees, the percentage would be very similar.

Unless you think Apple is voluntarily paying license holders more, or they can’t negotiate as good of a deal…. and, um… neither of those sound very plausible.

I want Apple to compete by having better software, better recommendations, better integrations (using public APIs), etc., not because they are a default option or because they can charge less because they don’t have to pay a platform fee.

That’s good for all customers, including those who prefer Apple services.

 

[farmboy]

You know Microsoft made the same argument in the 90s regarding web browsers during United States of America vs Microsoft and the DoJ shot that argument down quickly.

Now that the shoe is on the other foot I see we can't keep that same energy.

No, Microsoft was charged with unlawfully binding Internet Explorer to Win95 and forcing other PC makers to license IE on every PC that shippped with Windows. At least get your facts straight.

This should be an open and shut case. Either Apple must allow advertisement in app of the ability to pay externally for lower prices, or in areas where Apple directly competes (like video and music streaming) they should be required to remove their commission so developers can charge competitive prices. I don’t see how it’s not blatantly anti-competitive if they aren’t required to do at least one or the other. That or allow non-apple controlled app stores (which is the solution I’d be least happy with but seems the most likely outcome)

Apple is not a charity. As far as "remove their commission" you have no inherent right to free stuff at other's expense.

 

[obviouslogic]

My point was more that Apple has a lot of restrictions regarding what third party companies can do related to iOS/iPhones. Whether it not it's better or worse than restrictions MS had can be debatable. MS certainly gave Windows end users more flexibility than Apple gives iOS end users.





That depends on the region in question. In this case, we are talking about Europe (and specifically EU countries) where iOS has around 36% share and Android has around 64% share. If we were talking about the U.S., iOS share is around 58% to Android’s 42%.

With only two major players in the mobile OS market, antitrust laws and regulations are justified if companies are determined to be engaging in anticompetitive behavior. Just because alternatives may exist or could exist does not give dominant companies the right to violate antitrust laws and regulations.

Debatable!?! Microsoft literally killed off its competition in those markets? Has Apple killed off Spotify? No. In fact Spotify's numbers are growing faster than Apple Music!!! Spotify and every one else can survive without iOS. That was not true back then ... to survive you had to support Windows. Even the damned Mac was almost killed off.

 

[Mrkevinfinnerty]

Apple doesn’t have a free tier.
I’m betting that if you did an apples to apples comparison of, say, what percentage of the subscription fee of US-based subscribers go towards licensing fees, the percentage would be very similar.

Unless you think Apple is voluntarily paying license holders more, or they can’t negotiate as good of a deal…. and, um… neither of those sound very plausible.

They don't it was pure spin from Apple.

Always amusing though when somebody tries to wave the pom poms about the prospect of a 2 trillion dollar corporation paying artists a few pennies more for their work than a company a thousand times smaller.

 

[sw1tcher]

If platform makers can't make money, they will not create and maintain said platforms.

🤣 at you thinking Apple can't make money off their App Store when they generated record sales in 2022

Apple's App Store growth is slowing down

This year's disclosure suggests that Apple's App Store growth has plateaued.

www.cnbc.com

Apple said in its release that 2022 was a “record” year for the App Store, and revealed 900 million subscriptions, up from 745 million subscriptions in 2021.



and where their profit margin is at 78%

Apple runs App Store with 78% profit margin, according to court testimony - 9to5Mac

It is an open secret that the App Store is a huge revenue and profit driver for Apple but to...

9to5mac.com

 

[ACHD]

No one, and I mean no one is stopping these companies from creating their own platforms and hardware. Feel free as a company to make moves as you see fit. The entitlement to someone else's work just baffles me.

The reality is the work. is spotifies not apple.

APPLE is acting ENTITLED TO SPOTIFIES WORK.

Dude you realize that right?

Spotify makes the app AND hosts all of the streaming services and the cost.

Apple only handles the hosting of the app which doesn't cost anywhere near 30% of subscriptions at all.

Thats the issue. Apple has it set so that no one can charge the cheaper apple music prices because apple forces all others to charge a 30% markup to compensate or to loose out on 30% of revenue. when apple is doing nothing in reality for those apps.

Apple does not design nor development spotify app, they do not design nor develop, nor pay for spotify's infrastructure etc.


So like you said. its baffling as to why apple demands such high fees for work they arent entitled to.

And before you say someone has to pay for app downloads.. That's literally what the developer fees the companies have to pay already.


Apple stops people from telling people they can sign up cheaper elsewhere. Trying to coerce people to paying apple.
Its like a gang stops you whenever you try to buy cheaper food forcing you to buy more expesnive stuff.

 

[obviouslogic]

Apple doesn’t have a free tier.
I’m betting that if you did an apples to apples comparison of, say, what percentage of the subscription fee of US-based subscribers go towards licensing fees, the percentage would be very similar.

Unless you think Apple is voluntarily paying license holders more, or they can’t negotiate as good of a deal…. and, um… neither of those sound very plausible.

I want Apple to compete by having better software, better recommendations, better integrations (using public APIs), etc., not because they are a default option or because they can charge less because they don’t have to pay a platform fee.

That’s good for all customers, including those who prefer Apple services.

I don't understand your logic. It seems as if you're saying that once you subscribe to one service you're stuck for life! You do realize that services still have to compete because it is dead simple to stop the subscription - especially on iOS where there's a single place to manage those subscriptions.

If you are a user and you signed up for Spotify through the App Store and then realize you're paying more for doing so and could save money by signing up on their website... guess what? Cancel it and then go to the website and sign back up.

 

[obviouslogic]

The reality is the work. is spotifies not apple.

APPLE is acting ENTITLED TO SPOTIFIES WORK.

Dude you realize that right?

Spotify makes the app AND hosts all of the streaming services and the cost.

Apple only handles the hosting of the app which doesn't cost anywhere near 30% of subscriptions at all.

Thats the issue. Apple has it set so that no one can charge the cheaper apple music prices because apple forces all others to charge a 30% markup to compensate or to loose out on 30% of revenue. when apple is doing nothing in reality for those apps.

Apple does not design nor development spotify app, they do not design nor develop, nor pay for spotify's infrastructure etc.


So like you said. its baffling as to why apple demands such high fees for work they arent entitled to.

And before you say someone has to pay for app downloads.. That's literally what the developer fees the companies have to pay already.


Apple stops people from telling people they can sign up cheaper elsewhere. Trying to coerce people to paying apple.
Its like a gang stops you whenever you try to buy cheaper food forcing you to buy more expesnive stuff.

Guess what? Apple pays a lot of people to develop and maintain iOS, the API's, the developer tools, the distribution servers, data warehouses, etc. I'm willing to bet those costs are more than Spotify makes in a year. Furthermore, App Store fees subsidize the cost of giving away OS updates rather than needing to charge for them (as they used to do). This simple act is a huge boon to small developers who can't afford to maintain support for different OS versions, because as has been shown, if it's free people will update. This ensures the user base stays up to date.

Apple isn't using Spotify for anything. Spotify is free to make a player only app and never give Apple anything (other than Developer Program Fee). Exactly what Netflix and Amazon do.

Finally... Apple doesn't take 30% of what a developer makes. They take 30% of what a developer charges. That's a huge distinction, because the developer is free to set the price so their 70% cut is 100% of what they want.

 

[Jensend]

I don't understand your logic. It seems as if you're saying that once you subscribe to one service you're stuck for life!

Where did I say or even imply that? How is saying that I want the services to compete on software quality mean i think users are stuck for life?

If you are a user and you signed up for Spotify through the App Store and then realize you're paying more for doing so and could save money by signing up on their website... guess what? Cancel it and then go to the website and sign back up.

Why would I, as a user, prefer to be required to jump through hoops like that? And how would I know that if Spotify isn’t allowed to tell me? And why would I sign up for Spotify over Apple Music in the first place if I have to pay more?

I’m aware of how Apple works, so I already know this information. Many don’t.

Some here have said the reason they like Apple’s restrictions is that they can have all their subscriptions in one place. Ok, then why not just be up front with the customers and let them decide if the convenience is worth the benefit of a higher price? Just let the app say “You can subscribe through Apple for $13, or through our website for $10”.
If Apple believes customers value that convenience, what are they scared of? Be up front about it.

 

[Mrkevinfinnerty]

Guess what? Apple pays a lot of people to develop and maintain iOS, the API's, the developer tools, the distribution servers, data warehouses, etc. I'm willing to bet those costs are more than Spotify makes in a year. Furthermore, App Store fees subsidize the cost of giving away OS updates rather than needing to charge for them (as they used to do). This simple act is a huge boon to small developers who can't afford to maintain support for different OS versions, because as has been shown, if it's free people will update. This ensures the user base stays up to date.

Apple isn't using Spotify for anything. Spotify is free to make a player only app and never give Apple anything (other than Developer Program Fee). Exactly what Netflix and Amazon do.

Finally... Apple doesn't take 30% of what a developer makes. They take 30% of what a developer charges. That's a huge distinction, because the developer is free to set the price so their 70% cut is 100% of what they want.

Guess what? Apple makes enormous margins on the hardware more than enough to subsidise the software.

 

[obviouslogic]

Guess what? Apple makes enormous margins on the hardware more than enough to subsidise the software.

Free OS updates didn't happen until after the App Store started making money for them.

 

[sw1tcher]

Guess what? Apple pays a lot of people to develop and maintain iOS, the API's, the developer tools, the distribution servers, data warehouses, etc. I'm willing to bet those costs are more than Spotify makes in a year.

Easy to win bet when Spotify has never been profitable on an annual basis

Furthermore, App Store fees subsidize the cost of giving away OS updates rather than needing to charge for them (as they used to do).

You realize not all developers pay Apple an App Store fee, right? Starbucks, Bank of America, Amazon, etc don't pay Apple any App Store fees, just the annual developer program fee. Why do these companies get a free ride on the App Store?

 

[obviouslogic]

Easy to win bet when Spotify has never been profitable on an annual basis

Makes -> brings in -> revenue

And yeah, they have a crappy, unsustainable business model. Maybe they should start making their own devices?

 

[Mrkevinfinnerty]

Free OS updates didn't happen until after the App Store started making money for them.

Ok? Struggling to remember them ever charging for OS updates for the iPhone.

In any case how does that dispute the point that Apple makes more than enough to not have to charge excessive fees? The App Store is a fraction of Apples revenue.

 

[sw1tcher]

Free OS updates didn't happen until after the App Store started making money for them.

If I remember correctly iOS updates for iPhone have always been free. Apple only charged iPod Touch users.

 

[Jensend]

Finally... Apple doesn't take 30% of what a developer makes. They take 30% of what a developer charges. That's a huge distinction, because the developer is free to set the price so their 70% cut is 100% of what they want.

That doesn’t help when Apple is a direct competitor with the app in their store. Spotify would have to charge about $15 to have about the same profit margin as Apple has with their $10.99 subscription fee.
And profit margins are already thin when you are licensing content, so there is very limited ability to cut profit margins to match Apple’s price.

 

[Jensend]

If I remember correctly iOS updates for iPhone have always been free. Apple only charged iPod Touch users.

And if I remember correctly, they were basically forced to charge for OS upgrades

yes:

Accounting rules behind iPod touch update charge

An accounting rule that requires companies to charge for upgrades is why Apple charged $19.99 for last month's iPod touch update, analysts say.

www.macworld.com

 

[obviouslogic]

And if I remember correctly, they were basically forced to charge for OS upgrades

yes:

Accounting rules behind iPod touch update charge

An accounting rule that requires companies to charge for upgrades is why Apple charged $19.99 for last month's iPod touch update, analysts say.

www.macworld.com

Just found that article myself.

I could've swore I paid for an update for my original iPhone. Never owned an iPod touch. Maybe I'm conflating the big bruhaha over that with my iPhone?

 

[falainber]

No. Not at all. The swipe fees are 2-4% or so. That is paid by the merchant, not the consumer.

A bank offering a couple of points back to the cardholder as a benefit of using their card is a marketing and product decision on the bank's part. And not all cards offer cash back (which is really the only card benefit that couple possibly be conflated as reducing the effective fees.

Lets use some simple round numbers:

1,000,000 cardhlders total
600,000 cardholders of that with a 1% cash back card

Each cardholder makes a $10 purchase.
Total swipe fees PAID BY MERCHANT = $20,000
Total cash back TO CARDHOLDER = $6,000

The swipe fees are still the full amount. Some banks include a cash back benefit to their cardholders that is paid out of either the $20,000 swipe fees, or most likely, from a corporate marketing budget or other promotional funding source.

As far as Apple is concerned (for purposes of analogy), the important part is the fee collected by the service provider (credit card company). They get 1..2% for their service. Apple gets 30%. To account for the cash back, all the merchant needs to do is to raise the price by 2%. The customer pays more but gets the cash back. The merchant gets its money. Everybody is pretending that they fooled each other but the reality is that the service fee effectively is just 1...2%. If Apple was paying 28% cash back then the situation would be similar

 

[obviouslogic]

Easy to win bet when Spotify has never been profitable on an annual basis


You realize not all developers pay Apple an App Store fee, right? Starbucks, Bank of America, Amazon, etc don't pay Apple any App Store fees, just the annual developer program fee. Why do these companies get a free ride on the App Store?

They don't... you just mentioned they pay the annual developer fee.

Apple takes a cut of direct sales of digital goods purchased and distributed via their App Store or AIP.

 

[Detnator]

You are joking yes?

Let's see...

1. Microsoft forced OEMs into Windows only contracts, meaning if you wanted deep cuts to Windows licensing fees so you could compete with other Windows-based systems, you weren't allowed to sell computers with other OSes pre-installed. This effectively pushed non-Windows operating systems out.

2. Required any company that wanted site-wide licensing for Windows/Office/Server they had to count and pay for every "seat", which included, Macs, Unix workstations, mainframe terminals. Those agreements were far, far more costly than the actual hardware, so eventually it became cheaper for companies to start replacing hardware. This effectively pushed all non-Windows compatible hardware out.

3. Whenever a cross-platform technology starting making headway in the market, Microsoft was famous for, "embrace, enhance, extinguish" tactics. Netscape was a victim of that when Microsoft - who had a monopoly in the desktop computer market, decided that IE should be tied into Windows 98. This effectively pushed all non-Windows based technologies out.

And remember this was a company that had an actual monopoly. When monopoly still meant; a single entity that controlled a vast majority share of its respective market. (And building and owning something does not make you a monopoly, it makes you the owner.)

They are still a monopoly today, and I whole-heartedly agree that they should be allowed to do whatever they want on their Surface computers. Just as I believe Google should do what they want with Pixel devices. In the same way I think Apple should be allowed to what they want on their iPhones.

ANY company should be allowed to design and create whatever product they want. Have it run however they want. What features goes in that devices. Etc. Then let the market decide. The only time that should ever really become an issue is if that "device" obtains a monopoly position in its respective market and has done so through anti-competitive tactics. (i.e. If the only (or easiest/best) way to sign up to Spotify was via the iOS App Store, then Apple should not be able to dictate the terms.)*

*Although I do think if a company/developer/service creates a "player" only app, then they should be allowed to direct users to an outside method of subscribing, even if in an indirect way.

Fantastic summary of Microsoft’s tactics that really were anti-competitive: they forced anyone who wanted to do ANY business with them to do business ONLY with them, at a time when Microsoft was the only relevant player.

What Apple does is completely different.

Apple requires payment and delivery to go through their systems but does not actively block anyone that competes with them.

If, when Apple released Apple Music, they then blocked Spotify from working on iPhones, that would be akin to what Microsoft did. However Apple welcomes Spotify.

 

[obviouslogic]

That doesn’t help when Apple is a direct competitor with the app in their store. Spotify would have to charge about $15 to have about the same profit margin as Apple has with their $10.99 subscription fee.
And *profit margins are already thin when you are licensing content, so there is very limited ability to cut profit margins to match Apple’s price.

Ideologically I agree, Apple should allow developers an alternative method for users to purchase apps and or subscribe to services. There should be a second button "Purchase on developers site". Hell, I even think they should enable side loading of apps. Apple makes enough money where they could even forgo some fees, especially if it's for a competing service.

However, these are Apple devices, running their platform. They're not hiding anything. This is the way it works. Buy it or don't. Develop for it or don't. And until there's real proof that this hurts consumers or developers en masse, they should be able to do whatever the hell they want. If you don't like it, GTFO. This isn't my thinking because it's Apple. Same should apply for any other company that makes and sells devices. As I said before, if Microsoft wanted to create an App Store for their Surface devices, why not? Amazon only allowed their eBook store on Kindle, why not?

*This is a fact of life when this is your entire business model. This is not new. Streaming services have come and gone. Even if Apple collected $0 from Spotify and Apple Music didn't exist, their business would still be crap. I'd hazard to guess that no streaming service [division] makes a profit.