Spotify complains that Apple’s 30% App Store fee is anti-competitive as revamped Beats service looms

BY Evan Selleck

Published 7 May 2015

Spotify iOS

When Apple acquired Beats Electronics, they also picked up Beats Music, a music streaming service that competes with the likes of Spotify and others.

And, ever since that acquisition, there’s been a constant flow of rumors from the Rumor Mill that Apple is set to make some big changes to the service in a major overhaul of the app. Specifically, Apple wants to directly enter the music streaming market, and with the Beats brand to assist, Apple found its way in. Over the last few months, there have been little details revealed here and there, painting a unique picture regarding the formative years for the upcoming service.

At this point, it’s believed that Apple will showcase the new streaming effort at this year’s Worldwide Developers Conference (WWDC), and that it could launch by the end of June. It was initially rumored that Apple was aiming to price its streaming service at only $7.99 per month, which would undercut the majority of competitors within the same market by a notable amount. Spotify, for instance, is priced at $9.99 per month, much like the other major players.

A price difference like that, especially from Apple, would certainly send waves through the industry as a whole. However, a recent report surfaced that, while unconfirmed, rose even bigger waves. It’s been suggested that Apple is speaking with record labels and anyone else within a position to make change, to stop other streaming music services, like Pandora, Spotify and others, from having a free tier. By trying to convince the record labels to stop offering their music in these platforms, the services wouldn’t be able to offer their free tier.

As a result, investigations have been launched into the still rumored music streaming service from Apple, all in an attempt to find out what Apple is trying to alter behind the scenes before the service launches. As it stands, reports suggest Apple has not finalized all of the deals it believes it needs to launch the new streaming service.

Now, according to a report published by The Verge, Spotify is raising even more arms against the upcoming service, pointing out the “Apple tax” that the Cupertino-based company employs within its App Store. For every purchase made within Apple’s digital store, the company nets 30% of it. So, according to Spotify, the company has to spike its subscription pricing through the App Store to $12.99 just to make the same revenue they pull in from the regular subscription pricing they offer on their website, which is $9.99. For iOS users that pick up the subscription service from Spotify’s website at $9.99, they can still use that service on their device without an issue.

However, for those that use the free tier within Spotify, then simply subscribe to the service through the in-app purchase, they’ll be charged a recurring payment of $12.99:

Apple charges a 30 percent fee toward any sales through its App Store, and that includes subscription services. That means if Spotify wants to sell its premium subscription service — which usually costs $9.99 a month — through the App Store, it has to raise the price 30 percent higher to $12.99 to pull in the same revenue, while Apple can still offer Beats at a lower price. Spotify and many others in the music industry believe Apple’s App Store tax gives them an unfair advantage over the competition.

That automatically makes Apple’s $9.99 service price more appealing to those that are subscribing through the app, which many do, and Spotify says that this is anti-competitive behavior, because Apple is trying to strong-arm entities to make its own service more appealing. Plus, the “Apple tax” is hard to ignore for subscription services when Apple is launching its own option at a cheaper value, when considered at face value.

Apple’s rumored, still unofficial music streaming service is seeing a lot of attention even before it launches, so it will be interesting to see how it continues after it gets announced.

What do you think of Spotify’s complaints?

[via The Verge]