Why the Apple payment model needs to change
With the recent unveiling of Apple Music at WWDC 2015, Apple also announced that the service which will compete directly with services such as Spotify, Tidal, and Pandora only will cost $9.99/ month.
I’m extremely excited for Apple Music, and I believe it’ll completely change the music industry by enclosing it in Apple’s famed ecosystem. This is a massive advancement to the industry, but there’s one thing that’ll suffer: the competition.
Because of the features Apple Music offers, it being pre-installed on all iPhones, iPads, iPods and Macs, and the global brand recognition Apple has, these other services will struggle from day one.
But there’s one thing that’ll leave them unable to even survive: the pricing. Apple takes 30% of all payments made on the iPhone, either through in-app purchases or directly through the cost of the app. And they don’t allow apps to redirect to other websites to pay.
This means that if Spotify charges $9.99/ month, only $6.99 will go to them. They are now unable to pay the artists the same amount as Apple , because unlike Apple which makes a lot of money elsewhere, Spotify will also need some of this to survive.
Either artists will start to drop Spotify and Pandora in favor of Apple Music because they’re able to pay more, or Spotify and Pandora will have to close their doors because they can’t survive on the little income they have.
Apple pride themselves on thriving the world forward through innovations in technology, but by eliminating the competition they also eliminate the number one important factor in factor in innovation: competition.
Apple needs to level the playing field, not only for music streaming services, but for all developers out there. Taking 30% of the only income for many people, just so they can add it to their already huge list of income sources, doesn’t seem fair to me.
Apple’s payment model needs to change, and we have to make sure that happens.