Spotify and other streaming music services are upset with Apple’s App Store policies, which they say effectively prevent them from competing with iTunes or Beats Music, a report claimed on Wednesday.
The issue, according to industry sources for The Verge, is the 30 percent cut Apple takes from all App Store purchases, including in-app transactions. In the case of Spotify, the company has to charge $13 a month for a Premium subscription bought through its iOS app to make the same amount of money it does from a $10 fee elsewhere. App Store rules further prevent apps from linking to external storefronts.
More importantly, Apple has been venturing deeper into the streaming world. The company now pulls in revenue from both iTunes Radio and Beats Music, while benefiting from reduced competition on its industry-standard mobile store. Apple is believed to be working on rebranding Beats Music for an on-demand service launching later this year.
“They control iOS to give themselves a price advantage,” one of the sources said. “Thirty percent doesn’t go to any artist, it doesn’t go to us, it goes to Apple.”
Similar arguments arose when the App Store first began allowing in-app subscriptions. At the time, however, complaints were mostly from magazines and newspapers. Some publications caved in order to reach the lucrative iPhone and iPad market, but many still prefer that people sign up for a subscription elsewhere and use a login to unlock content. Indeed, music and video services have generally adopted the same model for iOS.
Spotify is believed to be a primary target for Apple. Earlier this week, The Verge claimed that Apple wants record labels to pressure Spotify into dropping its free tier, giving the company an edge with its upcoming service. This and actions involving YouTube have reportedly led to a U.S. Department of Justice probe.
On Tuesday, Bloomberg said the Federal Trade Commission is also looking into Apple’s streaming music negotiations. The chance of government intervention could nudge Apple into making changes to its new service before it even launches.