Spotify is digging in its heels over Apple’s 30 percent cut of all subscription revenue.
According to a new report from Re/Code, the streaming music service is claiming that Apple has rejected a new version of its app because of “business model rules” and stated that Spotify must use Apple’s billing system.
Spotify general counsel Horacio Gutierrez explained the company’s stance in a recent letter to Apple:
“This latest episode raises serious concerns under both U.S. and EU competition law,” Gutierrez wrote. “It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.”
The report didn’t specify what feature caused Apple to reject the app, but more than likely it concerns subscriptions.
Currently, Spotify passes on the extra 30 percent to customers. Anyone who subscribes to the service through Apple pays $13 per month, compared to the usually $10 charged to users who go directly through Spotify. Apple Music starts at $10 per month for subscribers.
Spotify has long complained about the extra 30 percent charged to use Apple’s billing system. Almost a year ago, the service sent a detailed email to users explaining how they could switch to a Web-based account and save the extra $3 per month.
Making changes to subscriptions
Interestingly, Apple is making some changes on how it takes subscription revenue. Starting with iOS 10, after the first year of the usual 70/30 split, developer’s will only be required to give 15 percent to Apple.
Currently, Spotify has more than 30 million paying subscribers worldwide. That’s more than double the 15 million of Apple Music.
While I think Spotify’s concerns are genuine, Apple Music has only increased competition in the space. Since debuting one year ago today, Spotify has upped its game adding a number of new features to help nab subscribers.
Spotify will continue to make its case, but consumers will make the final judgement.