Apple fires back: Spotify pays fees on less than 1% of its members
Spotify has largely opted out of the Apple systems that require fees, specifically because it claims Apple abuses the power of the App Store to stifle rivals.
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The Spotify app for iPhones hasn't offered a way to sign up for a membership in the app itself since 2016.
Spotify pays Apple a 15% fee for only about 0.5% of its paid members, according to Apple's response to Spotify's complaint about App Store fees. In March, Spotify filed a complaint against Apple to Europe's antitrust watchdog, claiming that Apple uses App Store policies and a system of fees to smother competition.
In its response, Apple said that Spotify doesn't currently pay the highest fee of 30% on any of its members and that it's paying a lower rate (15%) for only about 680,000 Spotify premium-tier members. Apple's response was meant to underline how little Spotify pays in fees and emphasize that Spotify continues to grow under the current App Store policies.
Spotify pays Apple so little in fees because Spotify opted out of Apple's in-app payment system in 2016, specifically because the company believed the fees associated with it were unfair.
Spotify declined to comment directly on the Apple response. German newspaper Der Spiegel first reported the news.
The feud pits Apple, a gadget giant whose App Store is essential for mobile services to thrive, against the biggest subscription music service in the world and one of the most popular iOS apps. The outcome of their face-off could change what you're able to buy -- and how easy it is to buy things from Apple's competitors -- on Apple devices and in iOS apps.
Spotify's original complaint argued that Apple wields the App Store's power to benefit its own products, like Apple Music subscriptions that go head-to-head with Spotify. It claimed that some of Apple's practices -- like charging subscription companies a 30% fee for in-app purchases and allegedly rejecting updates to Spotify's app for opaque reasons -- abuse the market power of the App Store.
Because Spotify pulled out of in-app purchases in 2016, it no longer acquires any new customers through its iPhone or iPad apps. That's why it's paying a 15% fee to Apple -- the 30% fee drops to 15% after the first year of a subscription, and Spotify's members acquired through an iOS app have long since passed that one-year point.
That's also a factor in why Spotify owes fees to Apple for such a small number of members; Spotify has been adding members during some of its most rapid years of growth in ways that circumvent the App Store in-app purchase system.
If Spotify were to resume in-app purchases and let listeners sign up to be paid members in its app, any of those new members would be subject to the 30% fee.
Originally published at 8:08 a.m. PT.
Updated at 2:52 p.m. PT: With more details and context.