Spotify, The Apple App Store and Why Progressive Web Apps Rule
Spotify is the latest tech brand to lash out against Apple and the AppStore policies, namely the Apple tax. There are more claims, really venting about the app experience on iOS as well as conflict in competition.
Collectively the Spotify claims point out major issues not only with Apple's AppStore, but mobile app store distribution issues.
Spotify has made a dedicated website to express their arguments call Time to Play Fair.
The store model is not favorable to the businesses developing native apps and many are questioning if they really need applications as more and more are migrating their client strategies to progressive web applications.
"In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience—essentially acting as both a player and referee to deliberately disadvantage other app developers." Daniel Ek
Let me list Spotify's claims:
- 30% Purchase Tax
- Limiting Communication with Users that Pay Outside the AppStore
- Blocking Experience Enhancing Upgrade
- Routinely Blocking Application Updates
- Locking Competitors out of Siri, HomePod, and Apple Watch
- Apple Customers Do Not Have A Payment Choice
Apple released a response to Ek's claims, which of course denies everything.
"At its core, the App Store is a safe, secure platform where users can have faith in the apps they discover and the transactions they make. And developers, from first-time engineers to larger companies, can rest assured that everyone is playing by the same set of rules. " - Apple
I am not someone who knows the details of the interactions between Apple and Spotify. So I can't speak to the availability of the platform features and what payouts the services make to the artists.
I do know more and more application brands are phasing out their dependence on app stores and migrating to a PWA strategy. Netflix fired a brutal punch to Apple over Christmas when they pulled the ability for new subscriptions to use Apple as a payment service.
Netflix earned over $850M in subscriptions via the AppStore in 2018, generating between $130 and $260M for Apple. In fact subscription services like Netflix and Spotify generate a significant amount of AppStore revenue, approximately $3.7B from the top 10 apps to be fair.
The disagreement only heightens the appeal progressive web applications have, even on iOS, where support is still somewhat limited.
I am receiving an increasing number of inquiries about replacing native apps with PWAs. Many fear issues highlighted by Spotify's claims. Others have either suffered a '4.2.6' removal or denial.
The more I discuss the merits of progressive web applications over native apps with clients and potential clients I have formulated a simple way to determine if you should develop and ship a mobile app:
"Does your app help sell iPhones or generate significant store revenue for Apple?"
If your answer is yes then you should think about developing an app. Otherwise a progressive web app is probably your better choice.
Why Hasn't Spotify Gone to a Progressive Web Application?
Right now there are not many native APIs that do not have an available API in the browser. Unfortunately the ability to play music after the lock screen engages is not one of them. At least not consistently and definitely not on iPhones.
You can continue to stream music while you are engaged with the device, for example while working on your desktop. But that is not the primary usage pattern on mobile. This means you and I could not start a great playlist at the beginning of a run and continue jamming for more than a few meters.
This does limit brands like Spotify, Pandora, Sticher, Audible and other audio services from migrating to progressive web applications.
Don't worry there is work being done to finalize a standard (wake-lock) to support this functionality. So one day it will be available. Of course Apple will be the last to support the feature based on their history, which is always being a few years behind the curve.
Music and audio streaming is the exception to the rule when it comes to platform integration needs. At least when it comes to capabilities customers have approached me about.
Just about every 'app' scenario brought to my attention can be done as a progressive web application.
This means the development and distribution costs are lower and more attractive for businesses.
Why Doesn't Spotify Eliminate AppStore Payments?
I can't speak for Spotify, but I would do exactly what Netflix did.
ApplePay is just one payment provider. The web has been monetized for 25+ years. I have built numerous sites with real-time credit card, ACH, PayPal and other payment providers.
Today the options have increased even more with cryptocurrencies and other more modern methods.
For the record Safari does support the Payment Request API and you can use ApplePay in the other browsers as well as Android Pay and Microsoft Pay.
The ability to receive money online are easier than ever, even on a website. Mobile apps do not have a monopoly on montetization.
And here is the thing, credit card transactions cost less than 3%, even for the more expensive providers. Generally the transaction fee is 1-2.5%.
This is much, much lower than the 30% Apple takes when someone buys a digital good or service through your app.
This is something I have never understood, why would any business be happy with a third party taking a 30% cut of their pre-tax revenues?
Apple's tax laws are 30% of all sales, except for subscriptions. The first year of a subscription has the 30% penalty, it then drops to 15%. The fee only applies to digital goods purchased through the app, not physical goods.
Does Apple really offer that much value? Could these businesses succeed through the web?
I say of course they could.
A Quick Review of AppStore Revenues - Who Actually Makes Money?
Apple and Google makes billions through their mobile app stores. There is no denying the revenue amounts.
Sensor Tower seems to be the consensus reporting service when it comes to app popularity and revenues. So I will use their numbers as examples.
Lets start with the subscription apps like Spotify, which by the way is not in the top 10, so I could not find actual revenue numbers.
I already shared the estimated $850M Netflix made last year. Here is a list of the top 10 subscription based services iOS revenues from 1/2018-11/2018 (so not including December revenues):
- Hulu $132.2M
- QQ $159.7M
- YouKu $192.9M
- Pandora $225.7M
- YouTube $244.2M
- Kwai $264.5M
- Tinder $462.2M
- Tencent $490.0M
- Netflix $790.2M
Notice how half of these apps are Chinese?
I should also not that Tinder has released a PWA which is getting great engagement. I expect them to start phasing out their app like other platforms soon.
Tinder is also the only non-media streaming app. If you look at the top dating apps the next 4 account for $235M.
These 10 apps account for about 10% of the overall AppStore revenues, which speaks volumes to me.
Note this list does not include the Major League Baseball package, which I also know drives millions in revenue each season. But the point is streaming subscription services account for a large percentage of Apple's revenue.
Mobile games account for 77% of app store revenues, about $55 billion. That leaves about $16.6 billion for other apps. A large chunk of that is subscription services.
For the record games account for the majority of app downloads too.
So if you are making a game, then mobile apps are probably a reasonable avenue.
Apple's Advantage Against Competition
Another argument Spotify makes against Apple is their distinct advantage over competition like Spotify, Pandora, Amazon Music, etc. These non-Apple services have to pay the Apple tax, and Apple does not. This means Apple is immediately more profitable than the competition can hope to be.
The other advantage is Apple can hold up their application updates, deployments and of course access to undocumented APIs. I can't say if Apple has restricted access to APIs or not, so I wont comment much on that. But I could see them doing this, others have in the past.
I do know Apple does create lots of frustration and friction for deploying apps to the store. This includes new applications and updates.
The 4.2.6 rule gives them free range to almost 'randomly' reject any app anytime they feel like doing so. Personally I think they made the rule intentionally vague so they could create artificial interference with apps they just don't like.
Of course Apple claims they create a safe, trusted environment for their customers, etc. The web is a safe place. One of the reasons web standards take so long to bake and implement is the fight for secure implementations. So I don't see any real 'security' advantage native apps have over the web.
Here's the thing...
Should you outsource the control of your app or your business to a third party like this? It is not always clear, but in most cases no. There is too much to risk.
What if they cut you off, without warning?
And Apple does have a history of doing just that.
But they can also make it difficult for you to even deploy updates. I know I have spoken to numerous developers and companies since the AppStore was created lament the fact that even under perfect circumstances it takes 2 weeks to get an update deployed to fix a bug.
Blocking updates is another major aspect of Spotify's complaints. I know they are not alone, I talk to app owners all the time that express frustration with long update cycles and rejections. It is a trail of frustration for many.
On the web, you find a bug, fix it and deploy an update as fast as you can. That could literally be a couple of minutes to just under an hour if you have your ducks in a row, and it is not a major bug of course.
I know some sites update 1500 or more times a day. Try that with your native app.
Summing It Up
I get why Spotify has filed a complaint. I don't like they decided to get a government entity involved to fight their battle.
They and other streaming services should be brave enough to follow Netlix's lead and just abandon app store payment as an option.
Spotify should also start an aggressive path toward becoming a progressive web application. I realize there may be a technical hurdle for now preventing a good mobile experience, but that can be overcome with some effort. This is one of the very, very few edge cases where an app is limited to native. 99% aren't.
The video streaming services don't really need native apps. So for now Netflix and other video streaming services have the freedom to migrate from their native apps and the restrictions imposed by the stores.
Audio services are still at a disadvantage until we get a supported API to allow audio to play after the lock screen engages.
This is a great opportunity and incentive for Spotify, Pandora, Audible, Stitcher and other audio services to join the W3C working groups and help define a specification to allow audio to play as a background service in the browser.
Spotify is not profitable at the moment and at a disadvantage on iOS because Apple does not have the 30% tax imposed on themselves.
But that is Apple's prerogative, it is their platform they can do what they want. By supporting a common standard on the web Spotify could move away from Apple's platform and maybe force Apple to add support for a great new capability.