In a lengthy response, Apple has addressed many of the allegations leveled against it by Spotify earlier this week. As we reported, Spotify has filed a complaint with the European Commission alleging that Apple’s treatment of the music streaming service is unfair and anti-competitive. Today, Apple fired back with a response to many of Spotify’s contentions.
Apple denies it has blocked access to its products and updates. To the contrary, the company says it has approved over 200 updates to Spotify’s app and reached out to inquire about the adoption of features like Siri and AirPlay 2. Apple says the only time it has requested changes to Spotify’s apps is when the company ‘has tried to sidestep the same rules that every other app follows.’
Apple also takes issue with what it characterizes as Spotify’s desire for the benefits of a free app without being free. Long gone are the days when apps were either free or paid. Spotify, like many other apps, offers a free music streaming tier. Spotify doesn’t pay Apple anything for those free users or users that sign up for streaming through other channels like mobile carriers. For Spotify’s paid subscribers, Apple receives 30% in year one and 15% after that for access to its platform and payment system, which the company says Spotify is unfairly trying to sidestep.
Finally, Apple claims that Spotify’s complaints against it are just one facet of a pattern of actions that are in Spotify’s economic interests but are damaging to musicians and the music industry. As evidence of this, Apple raises recent moves by Spotify against songwriters after the US Copyright Royalty Board required Spotify to increase royalty payments.
I don’t know whether Apple’s actions constitute unfair and anti-competitive behavior under EU law. Separate and apart from the legalities of the situation though, Spotify’s complaints have struck a chord because they come at a time when new online app stores are taking a significantly smaller cut of revenue. Spotify has other legitimate complaints, like its frustrations with App Review, but what seems to really be driving the dispute is how much Apple charges for access to the App Store and its payment system. Now more than ever, Apple’s 30% cut looks like a bad deal even when that cut is reduced to 15% for the second year of subscriptions.
What makes this dispute unique is that Spotify competes with Apple Music and is big enough to grab public attention and raise the stakes for Apple by getting European regulators involved. Usually, this sort of fight would play out privately, but by making their disagreement very public and involving regulators, Spotify may have taken the outcome out of its and Apple’s control.
Hot on the heels of yesterday’s announcement regarding disappointing holiday iPhone sales, today Apple has better news to share: the App Store enjoyed a record breaking sales period recently, with over $1.22 billion in App Store spending taking place between Christmas Eve and New Year’s Eve. This marks the biggest sales week ever for the App Store, and it was followed by the biggest single day ever: New Year’s Day 2019 brought $322 million in sales, up from last year’s then-record $300 million.
Apple’s press release provides more color on some apps and categories that were particularly successful:
Gaming and self-care were the most popular categories of app downloads and subscriptions during the holidays. Globally, multiplayer games including Fortnite and PUBG were among the top downloaded games over the holidays, along with Brawl Stars, Asphalt 9 and Monster Strike. Productivity, Health & Fitness and Education apps are already capturing the attention of customers in the first few days of the year with 1Password, Sweat and Luminosity charting in their respective categories.
$1.22 billion is a major increase from last year’s $890 million figure, and a remarkable number for one of Apple’s most profitable services. As Apple continues beating the drum that services are of growing importance to the company, news like this helps prove that claim’s validity.
Over the course of a year, the MacStories team tries hundreds of apps. We test them, live with them, poke, prod, and break them, and then we write and talk about them. Collectively, it amounts to thousands of hours of thought and analysis that on a macro level seeks to answer the question: what makes a good app? There’s no single factor or simple formula; if there was, nearly every app would achieve greatness. But after evaluating as many apps as we have, each of us has a fine-tuned instinct for standout apps when they come onto our radar.
We write about lots of terrific apps, but every year a handful stand out as exceptional. The precise quality that sets an app apart is often harder to identify than the app itself. Some are apps that push the boundaries of Apple’s OSes into new territory, while others are fresh takes on old problems. Despite the millions of apps on the App Store, every so often an app emerges that is truly inventive and opens up a whole new category of apps.
This year, we’re starting something new to celebrate those apps that stand out from the pack with a new feature we call MacStories Selects. For this inaugural year, we are covering three app categories: Best New App, Best App Update, and Best New Game. Along with a top pick for each category, we have selected runners-up that also stood out from the crowd. Before the end of the year, we’ll reveal two other components of MacStories Selects as well:
- Federico’s App of the Year, which will be published as part of his annual Must-Have iOS Apps of 2018; and
- Picks for our favorite new hardware accessories of 2018.
In making today’s app picks, we only looked at titles released in 2018. In addition, for Best App Update we evaluated each stand-alone update independent from any others, as opposed to aggregating updates from throughout the year.
Selects is something new for us here at MacStories that we expect to grow over time. We hope you enjoy. Now, on to our picks…
Apple today published its picks for the best media in 2018 across its various platforms and services. These include selections for best app on iPhone, iPad, Mac, and Apple TV, as well as top picks in categories of music, TV and movies, podcasts, and books. Alongside these editorial selections, Apple has published top charts for the year across the App Store, Apple Music, Apple Podcasts, and Apple Books.
David Barnard, developer of apps like Weather Up and Launch Center Pro, has written an extensive overview of tactics that are commonly used each day to game the App Store. He writes:
Any one of these tactics might seem somewhat bland individually, but when tens of thousands of apps deploy multiple tactics across many categories of apps, the impact can be measured in hundreds of millions of users and likely billions of dollars.
Tactics mentioned include employing specific keywords, buying fake reviews, implementing misleading subscriptions, and more. The idea is that bad actors can squeeze the most money out of users by following the approach Barnard outlines, which ultimately provides a bad user experience that degrades the App Store’s reputation.
Barnard concludes the article with a challenge to Apple:
Featuring an app is a great carrot, and Apple doesn’t generally feature apps that so blatantly flaunt App Store manipulation and user hostile tactics, but the carrot of getting featured pales in comparison to how much money can be made by gaming the App Store. It’s well past time for Apple to employ more carrots to create great experiences on the App Store, and to use a bigger stick on those manipulating the App Store and creating terrible user experiences for Apple’s customers.
I love this idea as a potential solution to encourage quality apps on the App Store. The revamped App Store from iOS 11 with daily feature articles is great, as are things like the Apple Design Awards at each WWDC, but if Apple wants to retain a strong quality brand for the App Store, it wouldn’t hurt to find more ways to reward good developers.
Many app developers already provide privacy policies and are transparent about the information they collect from users and how they use it. I’m glad to see privacy policies become a requirement though because for some apps it’s not easy to track down how they use your data and there have been too many instances in the recent past where it’s been discovered that an app has used data in ways that users might not expect.
Kif Leswing reports for Business Insider on a meeting Apple held with select app developers last year where the subscription model was pushed:
An Apple representative said at the meeting that paid apps represent 15% of total app sales and is on the decline, according to a person who was there who did not want to be identified to maintain their relationship with Apple.
The message was clear: successful apps now focus on getting regular engagement from their users, not one-time sales. For developers, that meant embracing the subscription model.
If you focus on paid apps, instead of subscriptions, Apple warned, your business will eventually hit a cap.
This report comes hot on the heels of Apple’s recent quarterly earnings report, during which Tim Cook shared, “Paid subscriptions from Apple and third parties have now surpassed 300 million, an increase of more than 60 percent in the past year alone.”
That increase is fairly staggering to consider. Two years ago when Apple opened up subscriptions to all app types, many users and developers feared the potential for subscription fatigue. It looks like that hasn’t prevented significant growth from happening – at least for now. I’ll be curious to see if growth like this, and a further shift toward subscriptions over paid apps, is sustainable in the long-term.
Apple has announced that apps and In-App Purchases will no longer be part of the iTunes Affiliate Program effective October 1, 2018. The iTunes Affiliate Program pays a commission from Apple’s portion of the sale of apps and other media when a purchase is made with a link that contains the affiliate credentials of a member of the program. Anyone can join, but the Affiliate Program is used most heavily by websites that cover media sold by Apple and app developers.
This isn’t the first time Apple has had this part of its affiliate program in its crosshairs. In April 2017 Apple gave participants in the program 6-days notice that it was reducing commissions on apps from 7% to 2.5%. The angry fallout caused Apple to issue a face-saving ‘clarification’ that the change would only apply to In-App Purchases.
What I said then holds true today:
With ad revenue in decline, affiliate commissions are one way that many websites that write about apps generate revenue, MacStories included. Many developers also use affiliate links in their apps and on their websites to supplement their app income. This change will put additional financial pressure on both groups…
The fallout has already begun. In a post titled Apple Kills the App Store Affiliate Program, and I Have No Idea What We Are Going to Do., Eli Hodapp, the Editor-in-Chief of TouchArcade, concluded:
It’s hard to read this in any other way than “We went from seeing a microscopic amount of value in third party editorial to, we now see no value.” I genuinely have no idea what TouchArcade is going to do.
It will be a shame if Apple’s decision results in TouchArcade shutting down because it provides some of the best mobile game coverage available.
What bothers me the most though is the unnecessarily hostile tone of Apple’s announcement email:
With the launch of the new App Store on both iOS and macOS and their increased methods of app discovery, we will be removing apps from the affiliate program.
That sounds an awful lot like ‘Our new App Store is so great we don’t need you anymore, bye.’ If that’s the case, it’s short-sighted, but it’s certainly Apple prerogative to run its programs as it sees fit. Still, it’s not the right way to address the publications, developers, and others that have generated millions of dollars of referrals over the years in exchange for a modest 7% cut. Whatever the motivation, the change has been handled poorly, which is disappointing. Unlike last year, however, I don’t expect Apple will back down from this decision.
One month after the App Store debuted, Nick Wingfield of The Wall Street Journal sat down with Steve Jobs to see how it was going. Today, The Wall Street Journal released a full transcript and audio of the interview on their site. The interview is behind the Journal’s paywall, but it’s worth a read or listen if you have access to it.
At the time of Jobs’ conversation with Wingfield, there were over 1500 apps on the Store, and Jobs estimated around 50 were being added each day. According to Jobs, of the 1500+ apps on the App Store:
27% of them are free, leaving 73% paid. Of the paid apps, over 90% are under $10.
Jobs put the numbers in perspective by comparing them to iTunes downloads:
Users have downloaded over 60 million apps from the App Store in the first 30 days…. That is 30% as big as iTunes for music downloads.
Jobs went on to explain what that meant to developers:
The total revenue has been $30 million in the first 30 days. Developers get 70% of that. Developers get $21 million. Nine of that $21 million is going to the top 10 developers. A lot of small developers are making a lot of money.
What can only be captured by the audio of the interview, is Jobs’ apparently sincere astonishment at the success of the App Store. In retrospect, it’s amusing to hear Jobs speculate that the App Store might someday reach $1 billion in revenue when we know now that it’s paid out a net to developers of $100 billion:
We’re already at a $360 million a year run rate. This thing is going to crest to half a billion soon.
Who knows? Maybe it’ll be a billion dollar marketplace at some point in time. This doesn’t happen very often. A whole new billion dollar market opens up. 360 million in the first 30 days, I’ve never seen anything like this in my career for software.
Although I’m surprised that The Wall Street Journal waited more than two weeks after the 10th anniversary of the App Store to release the interview, I’m glad they did. The interview is full of interesting facts about the early App Store and a unique insight into Steve Jobs’ reaction to the Store’s runaway success. I highly recommend you listen if you can.