‘Call it Apple tax’: why iPhone users often overpay for music streaming and other apps
The US tech giant takes a 30 per cent cut on app subscription revenues, which forces companies like Spotify and Amazon to choose between forcing the extra charge on consumers or taking the loss
When Lauren Higgins tried to sign up for Spotify’s premium plan on her iPhone, she was irked that the music service asked for US$13 (HK$100) a month, which was US$3 more than the gift subscription she had given her boyfriend.
“I was upset and I wasn’t going to do it,” says Higgins, a 25-year-old public-relations executive in New York. She tweeted her annoyance. Within five minutes, a member of Spotify’s social media team reached out to tell her that she could get Spotify for a monthly US$10 fee if she signed up on the web rather than through Apple. She did just that.
Call it a US$3 tax on ignorance, as Apple prohibits apps from pointing to lower prices available elsewhere.
Spotify says it charges a “significant” number of its 30 million paying subscribers US$3 more per month because they sign up through Apple, which takes a cut of up to 30 per cent. Spotify says 70 per cent of its revenue already goes to artists, recording labels and music publishers, so turning over another 30 per cent to Apple would leave Spotify with nothing unless it passes along the fee to customers.
The price gap is especially grating to music services like Spotify because Apple’s own Apple Music service doesn’t have to pay the same fee and can charge just US$10.
“They’re trying to have their cake and eat ours, too,” Spotify spokesman Jonathan Prince says. “We find it bad for consumers, unfair to consumers and ultimately something that could stifle music streaming subscriptions across the board.”
