Spotify’s ongoing commission war with Apple has taken another twist as the music streamer revealed it had beaten the group’s 30% charge on in-app purchases in Europe.
But for listeners on the continent, a faster route to subscribing or buying an audiobook also means they’ll be faced with more potentially annoying promotions.
In an announcement Thursday, Spotify said the passing of the EU Digital Markets Act (DMA) meant the streaming group would no longer be forced to pay a 30% commission on in-app purchases, most notably subscriptions, made by customers accessing the platform through the App Store.
“For years, even in our own app, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where or how to buy it. We know, pretty nuts,” the company wrote.
“The DMA means that we’ll finally be able to share details about deals, promotions, and better-value payment options in the EU.
“What’s more? All of this can now come without the burden of a mandatory ~30% tax imposed by Apple, which is prohibited under the DMA.”
The change means the app will look quite different to users in Europe compared with those in the U.S come March 7, thanks to new rules imposed on Apple.
A representative for Apple didn’t immediately respond to Coins2Day’s request for comment.
More promotions in Spotify app
The new regulations mean that from March onward, Spotify listeners will be able to pay for a subscription directly through the app rather than signing up on a web browser, vastly reducing the number of steps to make a purchase.
They’ll also have transparency about how much something costs on the app, a feature currently not available to users, while being notified more easily about events in their area.
This levels the playing field with Apple’s own music streaming platform, Apple Music, which lets users seamlessly subscribe and make purchases with a double-click of the power button.
However, it also means Spotify listeners will face more in-app promotions and marketing for things they aren’t currently subscribed to, like audiobooks, while also being encouraged to upgrade their subscription plans to pay more each month.
Spotify’s demonstration shows a prospective user being asked if they want to upgrade to a family plan, priced at €17.99 ($19.59) per month. It also appears users will be promoted audiobooks for sale on their home page.
This is a similar concept to video streamers like Amazon Prime that interlink subscriber content with purchasable movies and TV shows on their home pages.
The jury is currently out on how much the added convenience of staying on the app to make purchases will be outweighed by the irksomeness of promotions on what is currently a relatively simple, user-friendly platform for people who are already subscribed.
For Spotify, though, it’s likely to mark a path to fresh revenue streams for a company seeking to make efficiency gains following major layoffs announced in December. Shares in the group rose more than 2% Wednesday following the announcement.
It’s unclear how much extra revenue Spotify might raise from shaking Apple’s 30% commission and in-app marketing restrictions, or whether the company might pass on any gains to its European customers.
A representative for Spotify declined to comment further on the announcement.
Spotify wins latest battle in App Store wars
Spotify has long been in a bitter public feud with Apple over commission fees the latter charges for purchases and in-app purchases on the App Store. For big companies like Spotify, this commission is as high as 30%.
Spotify and its CEO Daniel Ek argue this charge stymies competition and prevents small developers from expanding. Indeed, Ek says he couldn’t have grown Spotify into the $40 billion company it is today if the commission fee had existed when he founded the platform.
Apple has repeatedly argued that its fees are justifiable because of the service it provides to developers, as well as access to its 650 million weekly visitors. The company also points out that smaller developers pay a 15% charge, while 85% pay no commission at all.
However, the commission fee provides an obvious competitive advantage over companies like Spotify in particular. Purchases on Apple Music, for example, aren’t subject to the 30% charge faced by Apple’s streaming competitors by design.
Europe is just the latest battleground in a global fight between Spotify and Apple over the group’s commission fees. Apple recently created a new charge in the U.S. Of up to 27% on purchases linked out from apps, something Spotify last week labeled “outrageous.”
Spotify is currently pushing for the 30% charge to be eliminated in the U.K., via the Digital Markets, Competition and Consumers Bill, while its big fish of North America remains in its scope.
“We’ll keep fighting because freedom from gatekeepers means more choice for consumers and positive impact for artists, authors, creators, and developers everywhere,” Spotify wrote.
