Apple Music has been around for about a year now, and despite being a little late to the game, Apple boasts that it has managed to pick up about 15 million paying subscribers. Spotify has at least twice that many users, but the company is worried that Apple is using its privileged position on iPads and iPhones to push Apple Music at the expense of third-party services.

According to a report from Recode, Apple has blocked an update to the iOS Spotify app, citing "business model rules." Spotify no longer offers iOS users the ability to subscribe to its Premium tier from within the app, a move which inconveniences users but more relevantly denies Apple its typical 30 percent cut of the revenue. Spotify hasn't specified exactly why the update was blocked or whether it has broken one of Apple's App Store review guidelines, but in any case the company's lawyers allege that it "raises serious concerns under both U.S. and EU competition law" and "[diminishes] the competitiveness of Spotify on iOS and as a rival to Apple Music."

The iOS Spotify app used to offer in-app subscriptions but charged users $12.99 instead of the standard $9.99 to compensate for Apple's cut. Spotify recently offered iOS users a three-month trial of Spotify for $0.99 if they signed up through Spotify's site rather than the app, but pressure from Apple prompted the company to remove that promotion and the in-app subscription option altogether.

The Android app, by contrast, continues to offer an in-app subscription option and the three-month promotional subscription offer, but it appears to use an in-app webview (essentially opening up a browser tab within the app, making it seem less jarring to the user) rather than Google's in-app subscription features to avoid paying Google a share of the revenue. Apple doesn't allow this sort of workaround in third-party apps on iPhones and iPads, nor does it allow apps to point users directly to an external subscription site to circumvent in-app purchases.

Apple is making some changes to its revenue split for ongoing service subscriptions, an olive branch of sorts to companies like Spotify and Netflix. When users have subscribed to a given service through an app for more than a year, Apple's cut falls to 15 percent, and when that change goes into effect it will apply retroactively to all currently subscribed users. This is definitely good news for all the service providers who have already made their peace with Apple's typical 70-30 split, but it won't immediately help generate more revenue from new subscribers, which is what these services need to keep growing and adding new content (and to keep shareholders happy, in the case of public companies).

The whole dispute illustrates the precarious positions that third-party service providers like Spotify, Netflix, Amazon, and others can find themselves in while playing on platforms owned by companies like Apple and Google, particularly when those first parties offer competing services. It's not unreasonable for Apple to ask for payment in return for access to the large, active userbase that iOS boasts, but the line between asking for payment and anticompetitive behavior is thin. And it makes sense for Spotify as a company to try and get the same amount of money from every one of its paying users, but directing users to an external site isn't particularly convenient or user-friendly.

Source ARS http://goo.gl/wjSnUe



Thank you :)