SPOTIFY has warned of a potential price hike for customers around the world – as a result of an ongoing spat with Apple.
The music streaming app’s boss claims that Apple takes too large a cut of its subscription fees, and may need to hit Brits with bigger monthly payments to stay profitable.
Any app available on the App Store has to pay Apple 30% commission on the sale – if it’s a digital item.
But Spotify’s chief exec believes this fee is simply too high, and has now floated the idea of charging subscribers more than the current £9.99 monthly fee.
“You can see us having no other choice than to accept the 30% fee put in place, which essentially would mean we would have to raise our prices for consumers all over the world,” Daniel Ek told the Financial Times.
He suggested that this gives Apple an “unfair benefit of being able to compete at much lower prices” with its own rival streaming service, Apple Music.
“I obviously think our service is superior to theirs, but a 30% price difference is a lot,” Ek added.
If Spotify was to introduce a 30% price rise to its monthly membership, Brits would find themselves paying about £12.99 a month.
That would add about £35.96 onto a Spotify subscriber’s bill over the course of a year.
Of course, not everyone agrees with Spotify’s decision to slam Apple for charging a fee.
“For me, it feels like Spotify wants all the benefits of Apple’s platforms without having to give Apple any money,” said Bradley Chambers, a blogger who specialises in Apple coverage for 9to5Mac.
“Right now, they are free to do that. If customers download the Spotify app, they’ll be prompted for a login screen. If someone wants to figure out a way to sign up, they’ll probably Google it and find a sign-up page.
“It’s not Apple’s job to build the platform, build the devices, sell the devices, support the devices, and then help Spotify sign up more customers.”
Getting your app onto the App Store can be a major boon to company coffers.
Apple has paid out about £90billion to developers since the App Store launched, and it’s helped Spotify rack up hundreds of millions of app downloads.
It’s also worth mentioning that Apple only charges 30% commission for the first year, at which point it drops to 15%.
But this hasn’t stopped Spotify: last week, the company filed an antitrust complaint with the European Union.
The Swedish firm complained that Apple had behaved unlawfully and abused its position as App Store operator.
“At that time we said, what are our true options here? We have no other options but to raise our prices, because Apple’s not giving us a choice when we can’t compete fairly,” Ek explained.
He also added that leaving app store not a realistic choice for Spotify or “any competing internet service in this day and age”.
The Spotify chief made a harsh attack on Apple in a speech in Berlin today.
“We worked hard to meet their rules and guidelines, even though over time, they became more and more extreme – to the point of being ridiculous,” Ek said.
“What initially felt like a mutually beneficial partnership increasingly felt very one-sided.”
Apple, he believes, “shouldn’t be permitted to impose restrictions that break the law and cause consumers harm in the process, for the sole purpose of disadvantaging competitors”.
“It’s like inviting you to a match on our ping pong table and then forcing you to play blindfolded while we change the rules throughout the game,” Ek added.
“No one here would think that’s fair.”
It’s no surprise Spotify is worried, of course.
Since launching in June 2015, Apple Music has shot to enormous success, and has more than 56million subscribers around the world.
Spotify, by comparison, has 96million paying subscribers globally – but the gap is closing.
Apple is also expected to make a major media push later this month, with the long-anticipated launch of a TV streaming service.
This may put further pressure on Spotify to up its prices in a bid to stay competitive.
However, it’s entirely possible that the Spotify warning is bluster – according to one industry expert.
“We believe while it’s a scary headline and creates noise in the name, ultimately the bark is worse than the bite on the Spotify situation,” said Dan Ives, a top analyst at Wedbush Securities, speaking to The Sun.
“It was a shot across the bow at Apple as Cupertino is getting attack from all sides with Netflix/App Store pricing another issue.
“In our opinion Apple sees the writing on the wall and it speaks to why the streaming video content service is so important for the company over the coming years with pressure on facets of its linchpin services business abound.”
We’ve asked Apple and Spotify for comment and will update this story with any response.
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