But certainly, if I subscribe to The Economist I want as much of my money as possible to go to the journalists who actually write the content.
The ad-supported users outnumbers premium users (236 million to 180 million) but bring in only 1/6th the revenue. So that's a factor depressing the payout per stream.
https://investors.spotify.com/financials/press-release-detai...
The only "pull factor" Spotify has is the userbase, which is arguably fair. For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store.
One could argue (on Android) that it's possible that you can install third-party markets, and that's true, but there's also pretty big roadblocks to installing, whereas selling on another music platform is much easier in comparison. (Don't believe me? Send your father an APK file and ask him to install it. Let alone iOS where this is not possible at all..
Couldn't you replace "Google" and "Play Store" with "Spotify"?
You can "sell" your app directly to users through your own site (see Fortnite) or dubious sites like https://en.uptodown.com/android/general-android but you have the same "pull factor" with the Play Store that you do with Spotify (the user base).
The Google + Play Store and Spotify (company) + Spotify (platforms) situations don't seem fundamentally different to me, just different by degrees. Google's monopoly on Android app distribution is unparalleled.
You can try to find alternatives for an app store, but that doesn't change the fact that inherently within Android, there are certain roadblocks that simply don't exist for a Spotify competitor, for example.
Spotify is just a convenience service in the end. They could sell their music through their own app, site, Magnatune, etc.
Even Google Play is iffy, as developers could distribute through 3rd party app stores or sideloading, though Google makes that harder than it should be.
Apple is really the only one of the 3 you mentioned that forces a 15/30% cut if developers want to distribute an app on their platform.
Isn't this the definition of a monopoly?
A company that is not easy to undercut could just be an efficient business that operates roughly at cost without excessive margins.
Monopoly doesn't apply, does it?
Even DAB/FM radio takes their lunch.
This classic article by Steve Albini captures what monetizing music was like for artists before the Internet: https://thebaffler.com/salvos/the-problem-with-music
That said, many artists have objected to subscription models like Spotify’s (Taylor Swift notably), or a la carte like Apple’s (Pink Floyd and Beatles’ estates notably). Most paid Internet music services have been a mixed bag of inconsistent payouts and artistic control. Spotify is definitely among them, even if it might be more attractive than a Record Deal^tm.
In my experience and inferred from experiences of other artists, SoundCloud has the best exposure benefits for lesser known artists combined with the most freedom to monetize, and Bandcamp is the most straightforward self publishing platform for built in monetization.
Comparatively, Spotify is basically, like Apple, filling the void of the record labels they usurped. While their terms are comparably “fair”, it’s easy to understand why they’re not ideal for a lot of artists.
I think Spotify is an excellent example of labels using a 3rd party to mislead where they money is really going when Spotify is paying nearly 80% of its income as fees to 3rd parties.
They have a license to play music, and they pay for the songs at a rate that the labels charge for. If artists do not get enough money from streaming then their label should negotiate more from Spotify. If they are already taking 80% of Spotifys income then that means that either they aren't charging Spotify enough, and Spotify should charge users more, or they are taking a larger chunk and deflecting blame.
With them using the RIAA for the longest time as a distraction from it actually being Sony et al that was suing it's customers, I would not be surprised if this is misguided blame again.
But again, if artists do not get enough money from streaming music, then that is not Spotifys fault. It has paid for a product that it is reselling. You don't then get to bitch that you sold someone something for below the cost that you wanted to.
Maybe Spotify should offer a discount.
Anyways, this is a bit like looking at Walmart's COGS and declaring that they've never screwed over a supplier by forcing them to cut prices to the bone.
Current:
totalMoney x (totalListenTimeForArtist/totalListenTime)
PerUserMoney x (PerUserListenTimeForArtist/TotalUserListenTime)
Also, there's far worse people than Joe Rogan who make a full living off YouTube, so yeah just completely ideologically inconsistent if someone is going to reject Spotify because of Rogan and still use YouTube.
It seems that there is some kind of disparity between how Joe Rogan is being portrayed.
But if you need another example, I'd love to see a single person who stops Rogans randomly inserted anti-trans rants he manages to somehow have on every episode, even if it is not topical. Aside from the fact he had a lot of "anti trans" people on (Debora Soh, Abigail Shrier, Jordan Peterson, Blair White... I mean the list is essentially endless) and not one person who is invited because they're pro trans.
At this point I'm really curious who makes most of the booking decisions for the show. They seem to maximize for right-leaning outrage culture / reactionaries, comedians and some people with very milquetoast politics. I can only remember Bernie as a big left voice on the JRE.
So, you don't use YouTube at all?
What video streaming sites do you use as an alternative? Or do you just not consume online video that isn't behind a strict publisher?
My understanding of the YouTube-alternatives is that they tend to be more anti-censorship, so they're likely to host even more "worse" content then Joe Rogan vs. YouTube.
If at all possible! I used to, but mostly either for streaming music (it was a convenient way to play full albums instead of finding CDs I never got around to ripping). I stopped doing that when the recommendation algorithm started trying to show me shit like Alex Jones after I listened to a Pink Floyd album or whatever.
> What video streaming sites do you use as an alternative? Or do you just not consume online video that isn't behind a strict publisher?
I mostly don’t consume a lot of video content at all. Even at times when I have it’s been mostly listening while doing other things. When I do now it’s almost entirely Netflix, and probably half the time I’m just listening while snuggling my pup.
FWIW I don’t think Netflix is any kind of a morally better alternative, either. My distaste for both Spotify for audio and YouTube for video is the same: I don’t like to consume lots of small bursts of information, especially with a lot of context switching and interaction, especially with a lot of sensory input. And I don’t like to pay extra to turn off shuffle.
As far as the moral aspect of content on these platforms, I mostly think they’re all garbage or waiting to be. And yep, consuming the ones I do does make me a hypocrite. But I appreciate the opportunity to put that fact in evidence.
"It's much easier not to switch" is just a peculiar way to spell "I don't care enough to switch" in this case.
If someone doesn't care enough to do something as easy as switch music streaming services, do they actually care?
He got popular on YouTube BTW.
Just so that we're talking on equal terms here, card processors and networks solve a massive amount of problems that existed with cash. Pre-card, many stores setup credit accounts with individuals, had book keeping practices to deal with, and had to chase down credit lines they themselves offered. Even with debit cards, card networks facilitate the ability to automatically move money between parties and give customers the ability to dispute/chargeback fraudulent transactions easily. If you physically hand a merchant cash, you can't claw that back without a legal process, whereas you're afforded protections by the card network.
But the 30% cut is completely different from card processors. Of the 30% to Google Play or to Apple, a small fraction (2.9%ish) is actually the card overhead. The rest is split between pure profit, infrastructure, and whatever else gets tacked on.
Cards definitely offer important things to facilitate transactions that are objectively better than a pure cash world for most people. But it's important to call out crazy cash grabs like 30%, which is unheard of even in the payment network world.
As an example, Apple's profit margin on the App Store was about 80% in 2019[1].
[1] https://www.bloomberg.com/news/articles/2021-05-01/apple-s-a...
That was the thing though, a business could decline to accept particular cards or cards at all and still perform transactions. That "opportunity" has generally not extended to the app store world in a practical way. If you want to play, they had their cut and customers and vendors didn't have a whole lot of say in what was reasonable. There is no simple default transaction (like cash) that they were trying to out compete.
Source: Involved in multiple such deals over the years.
Also, MC/Visa charge basically nothing for debit cards, and they do not take on any of the chargeback/default risk of credit cards, so I assume the rest of the fees are for the rewards for the most part. Which is why Discover/Amex fees are similar too.
In the EU it’s legally capped at 0.3% for all transactions (0.2 for debit cards).
However to be clear, that percent is in the same area that game consoles and I believe Steam (someone correct me?) charge. And we accept that. When the 30% rule for the App Store came down, our smart phones were basically the same as a game console. Most people did not expect these devices to become the central part of all of our lives. At least not in this way.
Now that it has, than sure the percent needs to be lowered and I am not arguing that (I said in another comment the 30% is worth it for me personally but doesn't mean I am ok with it).
Steam isn't a monopoly like Apple and Google are with their respective marketplaces so it doesn't make sense to compare the two. If I want to publish or play a game there are a lot of different ways to do so that don't involve Steam.
Why should software get a free pass?
The only viable path towards finding a fair price for this service (apparently deemed essential and basically a steal by Apple and Google, but worth less than nothing by many app developers) would seem to be competition.
Why not offer both, explicitly allowing for different prices, special deals only for non-store subscriptions etc.?
In Australia, the Reserve Bank regulates interchange fees and requires the end user to be made aware of card processing fees which can't exceed a percentage/value of the transaction.
Similar regulation applies in the EU.
There's no reason why Google/Apple/etc stores can't be similarly regulated.
Of course it would also be possible to do both, i.e. to mandate either a fixed rate or alternatively allowing out-of-band payments.
Though there is fair-use policy that Steam users shouldn't be given worse deal. E.g you're not allowed to only run 30%-off discount exclusively on your store without offering same discount for Steam store users sometime later.
This isn't an Apple/Google/Spotify thing, it's a service thing.
An app store costs money too - the creation and maintenance of the billing platform/API, bandwidth, human curation, cross-device storage of saved configurations, user acquisition, etc.
What makes musicians so different from software developers that it's perfectly acceptable for Spotify to take such a large share of the revenue their music has earned?
(To make my own position clear, I don't think any of them deserve 30%)
Why not internet provider? Verizon's infrastructure costs money, too - should they also be eligible for a 30% tax?
The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those
What about the phone manufacturer - Xiaomi or Samsung would definitely not reject their fair share
None of this would happen without electricity - power transmission companies deserve a portion
There really isn't a coherent moral argument in favor of the current status quo - it's simply about market power, nothing else
Had Verizon singlehandedly created the internet and had no real competitors they might have been able to tax it’s usage. Thank God that did not happen, though…
Since HN is a lot more familiar with the cuts the stores take out of developers earnings, it makes for a nice point of comparison.
> The data will be transmitted through Cisco routers or Nokia's BTS - it costs a lot of R&D to develop those
This is a novel idea. Verizon and Cisco could charge a price above their cost. They could call this a "profit margin". You might be on to something here.
Access to listener, or even if you limit to Mobile listener, are not bound to Spotify.
If 30% is too much, publish your content as a web app. If you want to play in the walled garden, pay the cover charge.
On the other hand if you want to write an app for a mobile device you're, realistically, either going to write it for Android or iOS. On the Android side you can distribute it as an apk assuming you can handle the cost of writing self-updating code - but on the iOS side you're hooped. Mobile devices are a part of modern life, the fact that one company dominates the market (and another company takes the remainder) leaves the market extremely unhealthy.
Musicians have about the same freedom in this respect as any application developer, practically speaking. AKA, they're just as exploited (if not moreso, see other comments about how musicians are also being screwed over by studios).
With Spotify, however, musicians can't choose how much their music is worth, and the payment of royalties is also not exactly transparent.
These companies created something that grew into a foundational element of modern life in about a decade. That’s amazing and should be awarded with trillions of dollars. The market should reward this corporate behaviour extremely well, and punish the IBMs and GEs and Boeings harshly.
As an aside, Apple et al are also not resting on their laurels, and keep pushing the envelope. My 2 y.o. + iPhone is literally better than on the day I bought it. I’m more than happy to pay more for apps / subs to get this.
Apple makes very popular computers in their iPhones, but other phones, tablets, laptops, gaming consoles, etc all do the same stuff.
Eg. When your phone is broken, you can still call people over your laptop, and you can access an internet browser from basically anything
Both firms leveraged their dominance in the mobile OS market to dominate the mobile app distribution market, and then they leveraged their dominance in the mobile app distribution market to dominate the mobile app payments market.
When talking about monopolies, the working definition is firms that have significant and durable market power such that they can set prices and exclude competitors[2]. Both Apple and Google fit that bill for the mobile OS, app distribution and payments markets. Whether you use the words monopoly, duopoly or cartel to describe them doesn't really matter, because all of those terms are accurate descriptors.
[1] https://www.businessofapps.com/data/app-revenues/
[2] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
What’s the difference?
I dont think that is the correct way of looking at it. As you stated at the end, you think it is worth it.
The question is value delivery. Not percentage. I could argue in cases where even 90% is acceptable. The question is how much value is delivered and how much of those 90% are used, or was it pure profits, i.e rent seeking. For some categories of Apps, 30% doesn't make sense.
A noble position but it seems to have been going other way unfortunately. Not sure how you would do that … further regulation or introducing artificial competition in the market. I think the most pro-business approach is to quash the monopoly and open up the market.
Likewise would you be equally OK if the dollar figures involved were much larger for example your cable subscription?
You do. I certainly don’t. And you’re just doing that because it’s the status quo, not out of any analysis.
Yes to 0% and any percentage of revenue should be made illegal. Google and Apple can charge whatever fixed values they want or even charge based on a wide variety of vectors but a % of revenue should be explicitly illegal that kind of blatant rent seeking is a quintessential example of something the government needs to stamp out.
To be clear, 30% is too much, but aside from payment handling and taking on fraud risk as a result of that (3-4% is generally the industry standard for card not present transactions), they provide a subscription management/payment API for IAPs, as well as app packaging and distribution, reviews, etc.
That certainly is worth more than 0%.
There is a definite cost to all these so 0% is unreasonable. Epic is trying to be the "good" games distribution store and they reportedly take a 12% cut. Something around there, maybe down to 10% would be a reasonable place for Apple/Google to be.
1. https://www.pcgamer.com/epic-has-sunk-dollar500m-into-the-ep...
Of course they can, but we can acknowledge it's a moving target. I'm at least confident it will be better than Steam.
> loses immense amounts of money
This is the same for any growth business/product where you front-load marketing and business development costs, and is not an indicator of future trends.
I think we can legitimately talk about the costs of maintaining the app-store as a marketplace, and we can talk about the future costs of providing updates free of charge in perpetuity and orchestrating the infrastructure to host those various downloads... but that's about where their service offering ends. App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).
I'd question whether Apple and Google are really providing a service or just exploiting a captive market.
Absolutely not, the bank initiates a chargeback, which the payment processing network directs back to the one who handled the payments. They generally are then tasked with "proving" the purchase is authorized. Enough chargebacks, even fraudulent ones, and the payment provider cuts ties with you (although, at Google scale, I don't see this happening) as you're too great a risk.
> App review is a joke, the rating systems on both platforms as absolute trash and often gamed by publishers (remember Uber's in app prompt about how many stars you'd give them that forwarded you to the app-store if you gave them 5 and otherwise just offered you an internal complaint form if you gave them anything else? Everyone does that).
The implementation being a joke doesn't mean it's not a service with COGS that need to be accounted for.
No – for online/e-commerce payments, the liability is generally with the merchant, not the card issuing bank.
If it was about risk/fraud, debit cards would be an economic non-starter, as their interchange is capped to 0.05% + 0.24$ for almost all issuers.
EU issuers also get by (probably not too comfortably so, but still) with the recently introduced interchange cap of 0.3%/0.2%.
On top of that there's a hefty fee for any fraud or chargeback that's not refundable even if it's resolved in your favor. Usually in the range of $40 per instance.
30% is between 10 and 20 times a reasonable fee.
For example, a smalltime dev isn't going to see hardly any refunds, but a dev on the scale of Epic Games is going to be seeing something on the order of tens or hundreds per minute. Should that not be accounted for?
That said, this could be accomplished with tiered fixed fees. An indie dev would probably land in a low rung where costs are tiny, where a triple-A game studio would get charged substantially more.
The revenue from paid services covers that support.
Would I prefer the cut was lower, but at the same time the 15% (for most)-30% cut seems to match every other platform
That's an unlikely combination. So the viable alternative is a middle ground. A central app store and subscription management takes a cut/adds a tax. I'm ready to pay say 1% or 2% for that service.
Never ever in all these accusations do people mention The Big Four [1]. It's always Apple to blame. And Spotify. And Deezer. And Pandora. And...
Even though music distributors control all f the market, collect all the royalties, and pay artists peanuts. Does Spotify pay artists directly? No, it can't do that. It pays the license holders which are, in 99% of the cases [1]
[1] https://en.wikipedia.org/wiki/Music_industry#Consolidation
Edit: it's worse now, it's Big Three. They control 88.5% of the market, but by popularity of music that is listened to on streaming platforms, it's likely closer to 100%.
It can be that Apple, Spotify, and Google can all be screwing over creators in conjunction with their publishers.
That said, not all musicians on Spotify go through publishers.
I've yet to see any of these discussions to blame both. And your own comment literally never mentions the Big Three.
> can all be screwing over creators in conjunction with their publishers.
I prefer not to wade in to conspiracy territory. Apple may have power over the industry, but they are an outlier. The rest do whatever the industry tels them to.
Quote, [1]. Emphasis mine
--- start quote ---
Spotify primarily makes money for music from two sources — from Spotify Premium subscribers as well as from advertisers on Spotify’s free tier. Roughly ⅔ of this money is paid out to music rights holders.
--- end quote ---
Guess who are the rights holders. They get 60-65% percent of Spotify's revenue (not profit). Care to ask them where this money goes? No one ever dares to.
> That said, not all musicians on Spotify go through publishers.
It's either publishers or indie aggregators (two or three of them). Spotify doesn't pay artists directly. If it tried to do that, the big publishers would immediately pull their catalogs. And the vast majority of popular music on the platform is likely to come from big publishers, not from indie aggregators.
[1] https://loudandclear.byspotify.com/?question=how-do-artists-...
Perhaps because they are outside the context of this discussion? For the purposes of this discussion, they are a constant, no matter what Spotify or Google does.
> And your own comment literally never mentions the Big Three.
I added a caveat to my "buying from the musicians directly" exactly because of publishers.
> Apple may have power over the industry, but they are an outlier.
Not exactly - they charge the same percentage as the other players in this space that I mentioned. No conspiracy theories required to point this out.
> Care to ask them where this money goes? No one ever dares to.
Sure, in articles about music producers (I recall more than a few hitting HN over the years, especially when Taylor Swift was raising a ruckus about them and Spotify).
> And the vast majority of popular music on the platform is likely to come from big publishers, not from indie aggregators.
I don't believe anybody is disputing that.
That "constant" is the main reason artists don't get paid. And yet, only streaming services are blamed.
> added a caveat to my "buying from the musicians directly" exactly because of publishers
That's not a caveat. That is wishful thinking. How do you propose streaming services do that?
> they charge the same percentage as the other players in this space that I mentioned. No conspiracy theories required to point this out
Yes, they do charge the same. So it means that 60-65% of their revenue goes to rights holders.
But sure. "They are in on it with rights holders to rip artists off".
> Sure, in articles about music producers
There are very few such articles and most, like your comment, blame streaming services for paying artists too little even though streaming services have nothing to do with paying artists. It's the publishers/rights holders who do that.
It works on the web but it is still a hassle to use on mobile. I imagine Apple can potentially do this using Apple Card, but I don't think this is going to happen any time soon.
I don't really care for this attempt at analogy. The cut that Apple or Google takes is more similar to the price manufacturers pay for shelf space in a retail store. I'm guessing that in many instances these kinds of charges amount to far more than the 2-3% a card processor takes. And frankly, 2-3% is already ridiculous.
What you did there is subtle, but you're comparing apples to oranges. "payment card companies" charge 2-3%. It's platforms like Steam, Play store or App store that charge 30%. Those are not comparable.
I'm not arguing that 30% is the right number, but the analogy is very flawed. Ask anyone what % of their game sales comes from Steam vs their own website/itch/humble/epic. Let alone the dozens of other things that you get with a few lines of code (cloud saves, free in-game text/voice chat, workshop, marketplace, free download and easy patching, achievements, etc) and without having to host a single server or maintain anything. How much would it cost both in development but also hosting cost to code all of that yourself?
What % of payments come through payment card companies vs. cash/crypto/checks/etc. ?
More like a world with only endcaps.
The difference between the app stores and retail is that every SKU has a fixed margin.
At most stores that sell a variety of product, anything you see right away is a paid placement. The first beer you see, Pepsi in the front of one store, Coke in the other. That’s why you don’t see canned corn on the end cap.
The notion that I should have the feels because poor Epic pays a 30% commission to Apple so they can sell my kid a virtual character dance move at 98% margin is absurd. The argument is specious.
The myth of the indie developer held down by Apple and Google is a trope thrown out there just like every supermarket brand evokes images of family farms.
If you care about the musicians you should probably be using Tidal and not Spotify.
Spotify don't give much to musicians compared to other platforms. They are keen on putting hundreds of millions into podcasts though, which is why I left them. Joe Rogan's objectionable behaviour aside - I just don't give a shit about podcasts, so I feel like my sub money would be going to the wrong people.
So by choosing the expensive way of paying, you will eventually endup paying more.
There is no shortage of ways companies can do that: "oh you want this new content, too bad it's for our premium gold users only", "ohh you want improved audio quality, here is upsell", "ohh, traveling a lot lately? Maybe we will limit the amount of offline content you can keep, but not in the premium diamond plan", etc
Careful there. Someone might pipe up and say this is what cryptocurrency was designed to resolve.
Since we are heading to a world with no cash, what's stopping the card companies from doing that after there's no way back? This is why I use cash as much as possible - to delay that day.
A big thing discouraging me from using cash is how suspicious people are of you when you pay in cash. I've definitely gotten weird looks from cashiers when doing so, especially when you pay in larger bills (like $100).
Never went to CVS again, I assure you, but cash definitely has a stigma in some situations.
But with increased transaction prices, the only way I can think of is by legislation, but we know that legislation is typically reactive and not proactive. So if the CC companies go slow enough, it's like boiling a frog. And no, cryptocurrency isn't a solution to this as (the vast majority of) transactions aren't private nor anonymous.
To the people who think the exorbitant fees are okay: Imagine a world with no cash. Now the payment card companies decide they want 30% of all transactions. You think that would be reasonable?
The only reason the phone OS companies get away with it is lack of real competition. The regulatory environment is very slow in catching up - it's not more than a few years ago that the EU finally hit the payment card companies.
And yes, the EU also has something to say when it comes to dark subscription cancelling patterns.