Why hasn't Apple bought Spotify yet
Comment on Spotify's allegations
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APPLE STATEMENT15. March 2019
We believe that technology reaches its true potential when we equip it with human creativity and ingenuity. Right from the start, we've developed our products, software, and services to help artists, musicians, creatives, and visionaries do what they do best.
Sixteen years ago we started the iTunes Store with the idea that there should be a trustworthy place where people can discover and buy great music, and everyone who is creative should be treated fairly. The result revolutionized the music industry and our love of music and the people who make it are deeply rooted at Apple.
Eleven years ago, the App Store brought the same passion for creativity to the mobile app space. In the decade since its inception, the App Store has helped create many millions of jobs, generate more than $ 120 billion for developers, and create new industries by creating companies that thrive solely in the App Store ecosystem to have.
At its core, the App Store is a secure platform on which users can trust the apps they have discovered and the transactions they have carried out. And developers, from just starting out to established, larger companies, can rest assured that the same rules apply to everyone.
It should be that way. We want even more companies to be able to develop in the app environment - including those that compete in parts with our business because they make us improve.
What Spotify is asking is something completely different. After years of using the App Store to grow its business tremendously, Spotify strives to withhold all of the benefits of the App Store ecosystem - including the sizable revenue it generates from App Store customers - without contributing to that marketplace Afford. At the same time, they are spreading the music that is valued as they make smaller and smaller contributions to the artists, musicians, and songwriters who create it - and even go so far as to bring these creatives to justice.
Spotify has every right to define its own business model, but we feel obliged to react when Spotify hides its financial motivation behind misleading rhetoric about who we are, what we have built and what we do to independent developers, musicians, songwriters and to support creative people of all stripes.
Therefore we want to comment on a few main points:
Spotify claims we are blocking their access to their app's products and updates.
To be clear: we approved and distributed almost 200 app updates on behalf of Spotify, which has resulted in over 300 million downloads of the Spotify app. Exceptional cases occurred when Spotify tried to use updates to circumvent the rules that apply to every other app.
We have worked with Spotify many times to help them bring their service to more devices and platforms:
- When we reached out to Spotify several times about possible support for Siri and AirPlay 2, they told us they were working on it. We are ready to help you wherever we can.
- Spotify is deeply integrated with platforms like CarPlay, and they have access to the same app development tools and resources as any other developer.
- We found Spotify's claims about the Apple Watch to be particularly surprising. When Spotify submitted its Apple Watch app in September 2018, we reviewed and approved it using the same process and speed as any other app. The Spotify Watch app is currently the No. 1 app in the Watch Music category.
Spotify is free to develop apps for our products and platforms - and to compete on them, and we hope they do.
Spotify wants all the benefits of a free app without offering it for free.
84 percent of the apps in the App Store pay nothing to Apple when users download or use the app. This is not discrimination as Spotify claims; it is planned exactly like this:
- Apple does not charge anything for apps that are free for users.
- Apple does not charge anything for apps that generate revenue solely through advertising - such as some of the free favorite games of many users.
- Business transactions in apps where users subscribe to or buy digital goods outside of the app are not charged by Apple.
- Apple doesn't charge anything for apps that sell physical goods - including driving agents or food delivery services, to name a few.
The only contribution Apple charges is for digital goods and services purchased within the app through our secure in-app purchase system. As Spotify points out, the revenue share in the first year of an annual subscription is 30 percent - but they forgot to mention that it drops to 15 percent in the years thereafter.
That's not the only piece of information Spotify forgot to mention about how its business works:
- The majority of customers use their free, ad-supported product that does not contribute to the App Store.
- A significant portion of Spotify's customers come through partnerships with cellular operators. This does not result in any contribution to the App Store, but does require Spotify to pay a similar distribution fee to merchants and cellular operators.
- Even now, only a tiny fraction of their subscriptions fall under Apple's revenue-sharing model, and Spotify is demanding that that portion be zeroed.
We want to make it clear what that means. Apple connects Spotify with our users. We provide the platform through which users can download and update the Spotify app. We share essential software development tools to aid Spotify's app development. And we've built a secure payment system - not a trivial undertaking - that enables users to trust in-app transactions. Spotify asks to receive all of these benefits while keeping 100 percent of the revenue.
Without the App Store ecosystem, Spotify wouldn't be the company it is today, but now it's using its size to avoid contributing to the preservation of that ecosystem. We think that is wrong.
What does this have to do with music? Very much.
We share Spotify's love for music and her vision of sharing music with the world. What makes us different is how to achieve this goal. Behind the rhetoric lies Spotify's goal of making more money doing the work of others. And it's not just about the App Store, where they're trying to get the most out of it, but also about artists, musicians and songwriters.
Just this week, Spotify sued music creators after the US Copyright Royalty Board ruled that Spotify should increase its license fees. Not only is this wrong, it is a real, significant, and damaging step backwards for the music industry.
Apple's approach has always been to make the cake bigger for everyone. By creating new marketplaces, we are offering more opportunities - not only for our business - but also for artists, creatives, entrepreneurs and anyone "positively crazy" with a good idea. It's in our DNA, it's the right approach to developing the next big app ideas and it's ultimately better for all customers.
We are proud of the work we have done to help Spotify build a successful company that reaches hundreds of millions of music lovers, and we wish them continued success - after all, that is exactly why the app was founded Been store.
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