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Business News Digital
Spotify to shift customers making payments via Apple to its own transactions system
By Chris Cooke | Published on Thursday 6 July 2023
Spotify has told premium subscribers currently making their monthly subscription payments via the Apple transactions system that they will need to switch to an alternative platform for making those payments moving forward. The move comes as Spotify continues to try to force a change to Apple’s rules regarding in-app payments on iOS devices.
Currently many apps taking in-app payments on such devices are obliged to use the Apple transactions system, which charges at 15-30% commission. And another Apple rule bans app makers from sign-posting within their apps other places online where payments can be made.
Given Spotify’s own profit margin is around 30%, it can’t afford to pay the Apple commissions. Which means if it allowed subscribers to sign up for premium accounts within its iOS app, it would have to pass on the Apple commission to the customer. Which would make it look like a Spotify subscription was more expensive than an Apple Music subscription.
Which is why, since May 2016, Spotify hasn’t offered the option to sign up within its app. Instead subscribers set up payments with Spotify directly on its website, which cuts Apple out of the process, even if the subscriber then subsequently accesses the service via an Apple device.
However – given that other rule banning the sign-posting of alternative payment options – by not allowing in-app payments Spotify has to hope that people looking to sign up for a premium account will think to look for the streaming firm’s website.
Spotify – and many other app-makers – have been lobbying law-makers in various countries asking them to force Apple to abandon its App Store rules around in-app payments. Which would mean Spotify could then take direct payments from within its app.
Meanwhile, because you could sign up for a premium account within the Spotify iOS app from June 2014 to May 2016, a number of the firm’s subscribers are still making their monthly subscription payments via Apple, which is taking its 15% commission. But not for much longer.
According to Variety, Spotify has emailed those subscribers to say that the company will no longer be accepting payments via the Apple system. Which means those people will now have to set up payments directly with Spotify itself.
The process for achieving that is slightly tedious. When the user’s subscription next comes up for renewal, their premium subscription will end, meaning they will find themselves on Spotify’s free tier, with all the ads and limited functionality on their iPhone. They will then need to go the Spotify’s website to set up a new premium account.
There is the risk, of course, that some of those subscribers will just stay on the free tier. Though, in the wider scheme of things, not that many subscribers are actually making payments through the Apple system.
In a submission to the European Commission in 2019, responding to a complaint made by Spotify about the App Store rules, Apple said that only about 680,000 Spotify subscribers were making payments via is transactions system. And you have to think that number has gone down since then.
