The App Retailer, Spotify, and Europe’s thriving digital music market

CUPERTINO, CALIFORNIA At present, the European Fee introduced a call claiming the App Retailer has been a barrier to competitors within the digital music market. The choice was reached regardless of the Fee’s failure to uncover any credible proof of shopper hurt, and ignores the realities of a market that’s thriving, aggressive, and rising quick.

The first advocate for this resolution — and the most important beneficiary — is Spotify, an organization based mostly in Stockholm, Sweden. Spotify has the most important music streaming app on the earth, and has met with the European Fee greater than 65 instances throughout this investigation.

At present, Spotify has a 56 % share of Europe’s music streaming market — greater than double their closest competitor’s — and pays Apple nothing for the companies which have helped make them probably the most recognizable manufacturers on the earth. A big a part of their success is because of the App Retailer, together with all of the instruments and expertise that Spotify makes use of to construct, replace, and share their app with Apple customers around the globe.

We’re proud to play a key function supporting Spotify’s success — as we’ve got for builders of all sizes, from the App Retailer’s earliest days.

The App Retailer Journey

Because the App Retailer launched greater than 15 years in the past, Apple has had two easy targets: making a secure and trusted market for our customers, and an unbelievable enterprise alternative for builders. That strategy appears easy, however the app economic system it impressed helped drive one of many quickest development curves within the historical past of expertise.

At present, builders compete on a degree taking part in area on the App Retailer. Apps are reviewed in accordance with a complete algorithm, that are designed to guard our customers. And assembly these guidelines means builders of all sizes can attain greater than a billion gadgets around the globe.

Over time, the App Retailer has supplied builders much more worth. However the overwhelming majority of builders — about 86 % — by no means pay Apple a fee.

At present, there are simply two circumstances the place a developer on the App Retailer pays Apple a fee. That’s when a consumer buys a paid app from the App Retailer or an in-app digital good or service — like a subscription or a power-up in a sport.

If a developer sells bodily items, serves adverts of their app, or simply shares an app free of charge, they don’t pay Apple something. The identical is true if a developer sells a subscription on the net for customers to purchase, earlier than they use it in an app on their machine. Music app builders may even embody details about different presents obtainable exterior of their app, together with a hyperlink directing customers to a web site to create and handle their account.

Over time, the App Retailer has helped builders of all sizes construct profitable companies and attain individuals around the globe. And few firms embody that story higher than Spotify.

Spotify’s Dominant Share of the Market

Beginning out as a small startup in Stockholm, Sweden, Spotify has grown their firm into the most important digital music enterprise on the earth. They’ve a greater than 50 % share of the European market, and on iOS, Spotify has a good greater share than they do on Android.

However that’s simply a part of the image, as a result of Europe’s digital music market has completely exploded. Corporations compete for brand spanking new prospects. Customers have many choices to select from. And final yr, there have been practically 160 million subscribers — up from 25 million in 2015 — a staggering 27 % development charge per yr.

Corporations like Google, Amazon, Deezer, SoundCloud, and Apple compete for purchasers every single day — however Spotify stands on the high.

Spotify Pays Apple Nothing

Regardless of that success, and the App Retailer’s function in making it attainable, Spotify pays Apple nothing. That’s as a result of Spotify — like many builders on the App Retailer — made a alternative. As a substitute of promoting subscriptions of their app, they promote them on their web site. And Apple doesn’t gather a fee on these purchases.

All advised, the Spotify app has been downloaded, redownloaded, or up to date greater than 119 billion instances on Apple gadgets. It’s obtainable on the App Retailer in over 160 international locations spanning the globe. And there are a lot of extra methods Apple creates worth for Spotify, without charge to their firm:

It takes steady effort and quite a lot of funding for Apple to make the instruments, the expertise, and {the marketplace} that Spotify makes use of every single day. We’ve even flown our engineers to Stockholm to assist Spotify’s groups in individual. And the result’s that when a consumer opens the Spotify app, listens to music on their commute, or asks Siri to play a track from their library, every thing simply works. And once more — Spotify pays Apple nothing.

With regards to doing enterprise, not everybody’s going to agree on one of the best deal. Nevertheless it positive is difficult to beat free.

Spotify Needs Extra

However free isn’t sufficient for Spotify. Additionally they wish to rewrite the principles of the App Retailer — in a means that benefits them much more.

Like many firms, Spotify makes use of emails, social media, textual content messages, net adverts, and lots of different methods to succeed in potential prospects. Beneath the App Retailer’s reader rule, Spotify may embody a hyperlink of their app to a webpage the place customers can create or handle an account.

We launched the reader rule years in the past in response to suggestions from builders like Spotify. And quite a lot of reader apps use that choice to hyperlink customers to a webpage — from e-readers to video streaming companies. Spotify may too — however they’ve chosen to not.

As a substitute, Spotify needs to bend the principles of their favor by embedding subscription costs of their app with out utilizing the App Retailer’s In-App Buy system. They wish to use Apple’s instruments and applied sciences, distribute on the App Retailer, and profit from the belief we’ve constructed with customers — and to pay Apple nothing for it.

In brief, Spotify needs extra.

Spotify’s Coordination with the European Fee

In 2015, Spotify began working with the European Fee on an investigation with little grounding in actuality. They claimed the digital music market had stalled, and that Apple was holding rivals again. Sadly for his or her case, Spotify continued to develop — and thanks partially to the App Retailer, eclipsed each different digital music enterprise on the earth.

Over the following eight years, and greater than 65 conferences with Spotify, the European Fee has tried to construct three completely different instances. With each pivot, they’ve narrowed the scope of their claims — however every concept has had a few options in widespread:

The European Fee is issuing this resolution simply earlier than their new regulation — the Digital Markets Act (DMA) — comes into drive. Apple is about to adjust to the DMA in days, and our plans embody modifications to the principles challenged right here. What’s clear is that this resolution just isn’t grounded in current competitors regulation. It’s an effort by the Fee to implement the DMA earlier than the DMA turns into regulation.

The fact is that European shoppers have extra selections than ever. Satirically, within the title of competitors, at this time’s resolution simply cements the dominant place of a profitable European firm that’s the digital music market’s runaway chief.

What’s Subsequent?

Apple has been part of Europe for over 40 years, and at this time, we assist greater than 2.5 million jobs throughout the continent. We’ve helped markets thrive, selling competitors and innovation at each flip — and the App Retailer is a vital a part of that story. So whereas we respect the European Fee, the details merely don’t assist this resolution. And in consequence, Apple will enchantment.

The digital music market is a superb instance of the app economic system at work. In any case, over the App Retailer’s 15 years, a easy phrase — there’s an app for that — has change into a common reality. And at this time, behind each app is a wildly profitable firm or an aspiring entrepreneur chasing a dream.

Day-after-day, groups at Apple work to maintain that dream alive. We do it by making the App Retailer the most secure and finest expertise for our customers. We do it by giving builders the means to make unbelievable apps. Most of all, we do it as a result of apps have an unbelievable capability to drive improvements that empower individuals and enrich their lives.