Spotify tries to nix Apple’s 30% “tax” by directing Premium customers to $10 web option

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Faced with a direct challenge from Apple Music, rival Spotify will contact App Store subscribers to its Premium music service to suggest that they switch to $10/month web billing rather than $13/month iTunes billing, reports The Verge. Spotify is marketing the switch as a way for Apple users to save $3 per month on its Premium service, giving Spotify a greater ability to compete with Apple Music’s $10/month offering.

Earlier this year, Spotify was said to have instigated American and European Union antitrust investigations into Apple, claiming that music labels were being pressured by Apple to end deals for free, ad-supported streaming music services ahead of Apple Music’s launch as a paid service. Spotify has complained that Apple’s 30% “tax” on rival services gives it an unfair advantage over competitors in the App Store.

According to the latest report, an email planned by Spotify will note that “the normal Premium price is only $9.99, but Apple charges 30 percent on all payments made through iTunes,” explaining the higher price of in-app Spotify subscriptions. The email will then offer users a tutorial on shutting off iTunes auto-renewal and transferring their accounts to Spotify’s web site, including a “Happy-Go-Lucky” playlist for dancing with the “bit of extra cash in your pocket each month.” As the strategy of contacting customers outside of the App Store to offer the lower-priced subscription option is not prohibited by Apple, rdio has used a similar tactic, noting the lower web subscription price in its FAQs.

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Comments

  1. paulywalnuts23 - 8 years ago

    Someone’s getting nervous.

    • David Molina - 8 years ago

      I don’t get it. They want to be able to subscribe customers through iTunes but, they complain when Apple wants to charge them for it ? LOL !!!

    • Abraham Song - 8 years ago

      I doubt Spotify is getting nervous. I’m a fan of Apple Music, but I really doubt you’re going to see a mass exodus of Spotify users.

      • Eric Swinson - 8 years ago

        You may not see an exodus of current users but you may see stunted growth for Spotify as the friction for signup for streaming music is less with apple music. Especially with first time iPhone owners.

      • Robert Nixon - 8 years ago

        Spotify ought to be shitting their pants. Spotify’s existing users don’t even come close to covering their operating costs. They are growing further and further from profitability, and now they’re going to feel pressure to expand even more rapidly than they already are, which means their losses are only going to accelerate. I give them two years, tops, before they fold.

  2. David Molina - 8 years ago

    Someone is getting nervous indeed…..

  3. This could easily backfire. If Spotify shows people how to cancel their Spotify subscription, what’s stopping said customers from thinking “hmm, I might as well try out Apple Music for three months before switching back to Spotify. It’s free after all”. And then a portion of those customers will forget to end auto-renew on Apple Music.

    …unless Spotify notifies those customers as well how to do so. =D

  4. arrowson - 8 years ago

    Doesn’t Apple’s App Store stipulate that companies have to match in-app purchase prices to the lowest price found online?

    • galley99 - 8 years ago

      They did, back in the day. Hulu is the only one I know for sure charges the same price in app. I believe MLB. TV charges the same as well.

  5. rogifan - 8 years ago

    Spotify really wants people unsubscribing from their service right now? What if someone unsubscribes and then decides to use Apple music for three months and never resubscribes?

    • David Molina - 8 years ago

      Thats exactly what I did and after trying out Apple Music for a week, i know i’m not going back to Spotify.

      • Kevin Stuckey - 8 years ago

        I did the same thing. I only had a few playlists on Spotify so I just recreated them with Apple Music. Plus everyone in my family has an iPhone so we signed up for the family plan. The best part is my parents are paying so it would be stupid not to do it.

  6. ChristianGeek - 8 years ago

    I’m pretty sure this violates Apple’s terms for iOS apps, in which case Spotify risks giving Apple a valid reason for yanking them from the app store.

  7. Lastminuteguy - 8 years ago

    First the extended trail period, now this. Damn they must be really getting scared? BTW their publicized user count isn’t significant if they don’t show us how many users are free users. I myself for example would officially be counted as a Spotify user, even though I have canceled my subscription in favor of Music.

    My account just exists to transfer playlists, but I don’t use it anymore and I will be thorough as to delete my account eventually, but most users will just ignore there account, not willing to figure out how to completely delete their Spotify account.

  8. incredibilistic - 8 years ago

    So wait, I’m confused. What’s $13 a month? I understand Spotify has to pay 30% to Apple for all subscriptions through iTunes but it’s not $10 AND 30% it’s 30% of $10. The customer isn’t paying anything extra, they’re just paying $10 month just like they will with Apple Music but even less for the family plan that has no rival. $15 a month for up to 6 people?! Sorry Spotify.

    Anyway, it’s pretty clear the “sigh of relief” from Spotify’s CEO is turning into short, nervous breaths.

    I had about 6 or so playlists that I’ve already recreated in Apple Music and I have no desire to return to Spotify. It was good but having my iTunes collection, streaming music, the amazing Beats 1 Radio — that plays worldwide premiere songs before they’re available to stream and/or download — and some seriously cool Siri integration will keep me locked in.

    And now that Shazam is offering Apple Music links I’m good.

    • Lastminuteguy - 8 years ago

      You are right, but to prevent the loss of revenue they raised the subscription costs through IAP with 30%

    • Smigit - 8 years ago

      $13 is what Spotify charges in app purchased subscriptions so that once the 30% App Store cut goes to Apple, Spotify pockets the same amount of money from an in app purchase as they do to one directly from their site.

      It makes sense given that Spotify runs on low margins (and currently isn’t profitable), but as some other services do they arguably could have not supported in app purchases from day one, and instead used their website for sign ups.

    • joshblinney - 8 years ago

      I agree. At first I thought Apple music could be a flop. Like ping. But no. I was so wrong. Since I buy most my music from iTunes it’s self and I have CDs. Then like over half of iTunes available at a tap with Apple music it’s a dream come true. I had loads of Spotify playlist. I just deleted it straight away. I don’t usually pay for stuff but Apple is worth it. It’s at its peak with getting things right

  9. Mike - 8 years ago

    Getting the subscription through the app store has always been more expensive. This is nothing new as I realized the price difference around 6 months ago when I promptly cancelled and resubscribed through the website. Also the same is true of Tidal as well.

  10. Tim LeVier - 8 years ago

    Just don’t do in-app billing. Amazon does it with kindle by only developing an App as a portal and not an App as a store.

  11. e. w. parris (@ewparris) - 8 years ago

    Because that $3 is going to just bring Apple to its knees.

  12. jacosta45 - 8 years ago

    Spotify is shaking in their boots!! #teamapple