Spotify and Apple duel over subscription cuts
Music streaming app reluctant to pay 30% the tech giant demands for subscriptions made on iOS
- Other companies may follow Spotify's lead in defying Apple
- Spotify claim the iPhone makers are making efforts to increase popularity of Apple Music at their expense
Updated : 10:40
Spotify is not backing down in its dispute with Apple regarding the 30% the tech giant demands of iOS-purchased subscriptions.
At the end of last month, the highly popular music streaming service accused Apple of "causing grave harm to Spotify and its customers" after they rejected Spotify's attempt to provide its own billing to customers to try to avoid the significant cut. It is Spotify's belief that Apple are trying to get one over on its new music rival's competitiveness.
Apple refuted those claims however, saying that the rules have always been the same for all companies, regardless of whether they compete with the firm or not.
"Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple," wrote general counsel Bruce Sewell.
However, Spotify has been making its case in Washnington and the European Union, hoping to convince lawmakers that their competitors are closing the market for them. 30 million subscribers currently pay up to the streaming service every month, and no doubt a large percentage of those come from iOS.
Other companies will be listening attentively to the debate. Web radio leader Pandora is preparing an on-demand music service, similar to that of Spotify. Like Spotify, Pandora has struggled to turn a profit thanks to steep licensing payments; content acquisition costs equalled 58% of the company's first-quarter revenue.
Amazon has also been complaining about Apple's iOS billing policies for years, turning to workarounds to avoid giving Apple a 30% cut on e-book sales. Obtaining the right to use its own billing system could bolster not only its e-book sales, but also Amazon's ability to sell other digital content and Prime subscriptions through its apps.
The possible losses for Apple are endless really, and time will tell whether they will be able to weather the storm that Spotify is starting to create.