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Show Notes

The battle over the App Store is far from over: In March, Spotify launched Time to Play Fair, a website outlining how Apple mistreats companies like Spotify by charging excessive fees, blocking upgrades, and promoting its own services in its App Store. Shortly after, Apple fired back in a press release, making the case that Spotify’s claims are misleading. This week, Paul and Rich weigh in on the squabble. Is Apple really muscling in on Spotify? How symbiotic is their relationship? Why is Spotify making this case now? What are the implications of opting into the platform economy?

Transcript

Paul Ford Right, you’re JCPenney, I’m Chess King. I’m Hot Topic and you suddenly start spelling—

Rich Ziade No—nobody is—they’re—they’re [Paul laughs]. Nobody’s 70 years old here, Paul [Paul’s laugh turns into a boisterous cackle, music fades in, plays alone for 18 seconds, ramps down]. 

PF Hey Rich?

RZ Yes, sir? 

PF You ever visit a website called timetoplayfair.com? 

RZ . . . No. No. 

PF Well—

RZ Tell me about it, Paul. 

PF When you go to timetoplayfair.com, there’s a green guy with headphones on [music fades out], and the title is “Levelling the Playing Field”, and this—it’s a letter. It’s a letter from our friends at Spotify to our friends at Apple. 

RZ Ooooof! 

PF I don’t know why you’d pu—

RZ Is it really a letter? 

PF Why would you publish such a letter? What would you do? 

RZ You know it’s—it’s—

PF Oh no, don’t even! Don’t—

RZ Ok. 

PF—no, cuz—

RZ Let’s not go there. 

PF—let me—I’ve got five—  

RZ What’s—what’s Spotify upset about, Paul? 

PF Well, I’m glad you asked because right here at my fingertips I have five fast facts about Apple’s anticompetitive behavior. 

[1:10]

RZ Ok. 

PF Pretty excited about the copywriter who got that down—

RZ Set this up for us. 

PF Hmm. And they all have oh there’s so many icons and illustrations and there’s a lot of like a guy in glasses who’s—who’s being denied free choice [Rich laughs]. It’s pretty good. Let’s—let’s get at fast facts. 

RZ Alright. 

PF Here we go. Apple charges a discriminatory tax, 30 percent. I don’t know if people know this but when you put an app in the App Store and you charge for something inside of that app, 30 percent goes straight to Apple. That’s why Amazon makes you literally do like the samba when you wanna go, you know, and buy something. You have to go over to their webpage. Apple won’t let us share deals we know you’d love. You know, so they won’t let you market. 

RZ Like 20 percent off or [yeah] a free month or whatever. 

PF They don’t allow you to upgrade to Spotify Premium with ease. Ok? They make you take multiple steps, going to browser desktop—it’s like [yeah], you know, the Amazon story. They reject our app enhancements. Now this is an old [chuckles] story with Apple, right? Like [yeah] there always like, “Oh! You—you—you screwed up on bylaw 75! Yeah.” 

RZ I—I—yeah. That’s real. 

PF You went through this with Readability. 

RZ I did [yeah]. It took about eight months to get approved. 

PF And Apple won’t let you access Spotify on all your devices. So that—that is truly one for The Hague [chuckles]. 

RZ Yeah. 

PF So here’s the open letter, right? And so—so Spotify has decided that the court of public opinion will somehow move Apple, a friendly one-trillion-dollar company that has never really cared before about this sort of thing. “Please Apple, please, make an exception and cut us off from that 30 percent deal and give us something a little bit better.” 

[2:49]

RZ Well I think their—I think their grievances are broader than that. 

PF Ok. 

RZ What their—what’s implicit in this, and they’re stating facts, they’re trying to just lay out the facts [mm hmm], right? But what they’re saying is: “Apple’s muscling us out because they have Apple Music.” Right? 

PF Sure. 

RZ The motivation here like if—if they had no music service, Spotify is a wonderful thing for Apple, right? A beautiful Spotify app leads to more hardware sales, right? 

PF That’s right. 

RZ But what you have with Apple Music is something that really is in place out of the box and for millions and millions of people is pretty much the music player [well there’s the—]. They don’t go shopping for Spotify. 

PF No, and Apple make it really easy to get on Apple Music and give them money every month. Apple’s so good at getting your money. 

RZ Yes. 

PF Spotify is too, right? 

RZ Alright, so, it’s not just, “Hey, why are you taking 30 percent off the subscription?” They’re also saying, “You’re nudging us out because you have Apple Music and you’d rather see us lose on your platform.” 

PF Well and deep down underneath there’s all this—there’s a slightly—you know, is this a monopoly?”Are you exerting power in the marketplace so that we, Spotify, can’t truly compete.” 

RZ Correct. 

PF That’s the danger zone. I mean, this is akin—in some ways it’s different but it’s akin also to  Internet Explorer having to get unbundled from Microsoft Windows. 

RZ Yes. 

[4:05]

PF Back when, you know, Bill Gates had to depo—

RZ Sort of. But—

PF—was deposed. Sort of. It’s different. That was a browser. It was a piece of software. These are two different platforms with access to all music [yes] and it’s the difference between where we were then and where we are now. 

RZ Yeah. So where do you sta—oh, so Apple responded. 

PF Well, so you go to Spotify’s page and it’s got cartoon characters and it’s like really—it’s designed [yeah] and it’s so friendly and—and really just, “We’re so sorry we have to even bring this up. And here’s a little green guy in a plaid shirt, who—all he wants to do is listen to Aoki and Fleet Foxes but, you know, it’s tricky. And he doesn’t have his choice between giant monopolistic music platforms that screw the end band. So, you know, we gotta—” And then you go to Apple. And it is just a white background, black text, and if any web design could say, “Go, ferck [sic] yourself more than this.” I can’t tell you. 

RZ Yeah. 

PF I almost like—you should all go read it as a just what true corporate influence and power looks and feels like cuz the—I mean lemme just read the first paragraph [reading], clear my throat as if I’m Apple [clears throat]. “We believe the technology achieves its true potential when we infuse it with human creativity and ingenuity. From our earliest days, we’ve built our devices, software, and services to help artists, musicians, creators, and visionaries do what the do best.” Like they’re almost bored. They’re like, [listless tone] “Uh huh. Really?” 

RZ Yeah. 

PF And then it goes—it’s like a timeline. “16 years ago we launched the iTunes store, paragraph, paragraph, 11! years ago the App Store brought that same passion for creativity to mobile apps,” and then it sort of explains why and why and why and so they say, “Spotify claims we’re blocking access to the products and updates to their app.” And they say, “When we reached out to Spotify about Siri and AirPlay 2 support, they told us they’re workin’ on it. Spotify is deeply integrated into platforms like CarPlay. We found their claims about Apple Watch especially surprising,” et cetera, et cetera. Apple’s just going like, “Dude, we got facts too. Come on!” 

RZ Yeah. That’s what they’re saying. 

[6:16]

PF I—it just feels like two giants hitting each other on the head with sticks. And one is truly big and the other just wants to be that big. 

RZ Well, yeah, I—I think—I think—I think they’re trying to craft a case and, frankly, I don’t think they are doing it effectively, that there is—there are, sort of, you know, the monopolistic antitrust violations going on here. 

PF Yeah. 

RZ This is really hard for them. This is really, really hard to pull off and I’ll tell you why, for a couple of reasons. First off: when the browsers came with Microsoft, there was only Windows. It was [yeah it really was]—it was 99 percent of—

PF Mac was not viable platform. 

RZ Mac was not a via—it—it pretty much still isn’t. It’s got ten percent or whatever it is. And so you have Apple now it’s like when Intel—like Intel letting AMD stick around [snort chuckles] [right] so they can never get pulled—pulled in for antitrust. You’ve got—and it’s not AMD. I mean, Android is a monster [right]. Google is a monster. Right? And all the—all the device companies are out there. So they actually don’t dominate the phone. Apple doesn’t dominate the phone. 

PF Yeah, that’s real. Like I’ve got an Android device that’s got Google Play. I’m happy with my—I use Spotify, I pay for it. 

RZ Yeah. It’s the same game. I mean they could probably write the r—I mean Apple’s more defensive and more aggressive, definitely than Google cuz Google . . . they let the hardware guys like make their own versions and all this shit. 

PF [Crosstalk] Don’t forget, too, the—the App Store is one probably relatively small revenue stream for Google compared to any kind of advertising. 

RZ For sure. 

PF Apple—The App Store is a major source of revenue, it’s a—it’s a big part of their bottom line. 

RZ I don’t know if I’d call it a major source of revenue. 

[7:52]

PF But it’s billions and billions of dollar. It’s their developer ecosystem; it supports the hardware in a way that like . . . Google—it’s more integral to their overall like vertically integrated everything strategy. 

RZ Yes. Yes. 

PF And Apple is like, “Nah, nah. You’re in our world. It’s buttoned up.” Google’s a lot more leakier around the edges. 

RZ Yeah. I think because Google doesn’t sell hardware. 

PF Well and it doesn’t have a 30 percent commission on every transaction. 

RZ I—I actually don’t think that’s what that’s that interesting to them. 

PF You really—you don’t’ think so? 

RZ No, I don’t. I’ll tell you why because I think—I think Apple just looks at the long game which is selling the most expensive phones out there and the most expensive devices out there. And a good, healthy, buttoned up app ecosystem drives hardware sales. 30 percent on I think it’s a hundred billion dollars in app sales [yeah] or something. It’s a sliver of apps revenue. The 30 percent [ok] is a [ok, ok, it’s a sliver] is a tiny sliver . . . of Apple’s revenue. But it’s hugely important to Apple because it makes their hardware shine, obviously. 

PF Right. 

RZ But, also, Apple is coming to somewhat of a reality which is that it’s starting to flatten out; it’s startin’—getting harder to distinguish the hardware and, Paul, you come from publishing, content, it turns out, is really, really, really important [yeah Paul chuckles] and lock in around—

PF Whatever’s left! [Chuckles

RZ Whatever’s left. And, you know, Apple’s—

PF Facebook is complaining recently cuz they’re like, “We just don’t have enough local news to promote!” [Rich laughs] And you’re like, [makes moaning sound like] “Rauuuahhhhg!” 

RZ And Apple’s starting a TV, like—

PF Oh yeah I can’t wait. 

RZ—subscription. Like a Netflix competitor of some kind which is gonna have, you know, some sort of, you know, [Paul cackles] you know, weird, offensive thing that would never get approved in an app store but is gonna have to get approved to be interesting on a TV show. 

[9:38]

PF This is gonna be wild because Apple doesn’t like most things. 

RZ Yeah. So we’re going—we’re going astray a little bit here [yeah]. So you do have three hundred million installs [music fades in] of Spotify on Apple devices [music plays alone for eight seconds, ramps down]. 

PF Hey, Rich! 

RZ Yo. 

PF What if I need to get [music fades out] an app built that was a little bit like Spotify? 


RZ Let’s pause all these hostilities and talk about building big, great, beautiful experiences. 

PF You actually did build a Spotify alike for electronic dance music right before we started Postlight [yeah]. That was one of your big engagements [Rich says something inaudibly]. We know—we know how to make these things. And we know how to make ‘em really, really good looking. 

RZ Beautifully. Beautifully. 

PF Yeah. Crafted [music fades back in] at the design level. That’s what we do. So if you need us, [email protected] [music plays alone for eight seconds, ramps down]. 

RZ I’m gonna be Apple for a second, I want you to. 

PF God, I’d love to be Apple for a second [music fades out]. 

RZ Let’s get into a fight. Let’s get into a fight. 

PF I’ll be Spotify? 

RZ Yeah! 

PF Hold on, Rich, I need to go give the guy from The War on Drugs 38 cents for the last two trillion plays [Rich laughs] of his awesome album and this DJ is about to get 4,000 dollars cuz someone just left his song on repeat overnight. Ok. I’m back. I’m back. “It’s me, Spotify, how you doin’? How you doin’? Billions of dollars! That’s what I’m worth. I recently paid out over 400 dollars to—to every artist you love.” 

RZ I think it’s not that bad. I don’t know how it works. 

[11:01]

PF It’s—no, it’s real bad. Unless you’re like—

RZ You end up in like the coffee shop playlist, you actually get—

PF No, the thing you wanna do is like get—you need to be Ariana Grande. That’s the first problem you need to solve. And then once you’ve got, you really can make some off of Spotify. 

RZ “So, what do you want from me?” 

PF “Me? Spotify?” 

RZ “I gave you the App Store; I gave you the device; it’s a marketplace. Yes, it is a marketplace. You’re arguing that I’m being—I’m playing unfairly but I created the marketplace; I created the space for you to come in on.” 

PF Alright, what is Spotify’s voice? Spotify’s voice is [nasally], “Alright, Apple, well, I’ll tell you: you deny consumers true choice!” 

RZ Oh! Spotify’s from Queens! 

PF “Yeah! [Both chuckle] And you—you impose a discriminatory 30 percent tax on every transaction! It’s completely unfair!” 

RZ “We have an app store. You can sell anything you want outside of the App Store, but we have an app store that requires tons of energy to make sure that the quality of the apps and the quality of the experience on the iPhone stays at a certain level. And that requires a lot of overhead and a lot of coverage there.” 

PF “Listen to me! Listen to me! You control the platform! You’ve got it all—ok, fine! And then we’re on there, I’ll give my 30 percent. Ok. That’s—that’s—that’s—you know, I pay my artists two percent. So that’s fin—whatever you wanna do [Rich laughs] but listen to me! You control the platform! You’ve got—I go the store, I don’t buy a Spotify phone, I buy an iPhone. I!! It’s got an apple on the back and then you [stammers] turn that on and it’s like, ‘Hey, how you doin’? You wanna get some Apple Music here? You wanna come on and get to listenin’ to music? I got your—I got your Beyonce’.”

RZ That’s right. Uh—I mean—[Paul chuckles] that’s right. I mean you’ve got hundreds of millions of installs. You’ve got hundreds of millions of dollars . . . coming in. 

[12:43]

PF [Agro-nasally] “Yeah but you’ve got two billion users and you get to tell them, ‘Here: have this crappy, garbage, U2 album! I’ll give to you for free!’ I don’t get to do that!” 

RZ You know what this equivalent to? 

PF Yeah, what? 

RZ This is equivalent to me making the investment to open a mall, pay for the staff to keep it pristine [mm hmm], to pay for security, and you’ve asked to lease a space in the mall, right? “I created the space. And I’m allowed [right] to lease to whoever I want. In fact, I’m allowed to lease to the highest bidder.”

PF Well, what we’re talking about—Let’s—let’s destroy this metaphor. This tortured metaphor which is that you’re the mall that is also Macy’s. Like, you have—you’re like, “Oh! I’m gonna open a department store.” Not just lease but [that’s right] like, “I own this department store.” 

RZ “I own the whole property. [That’s right] I have decided to take the marquis location in the property.” 

PF That’s right. 

RZ “The Macy’s, at the very front.” 

PF “And here I am, I’m Sephora. I’m there.”

RZ You’re Sephora. 

PF And I’m like, “Could you please stop selling all the makeup?” 

RZ “I own the whole property.” 

PF I walk in the door and you say, “Don’t go to Sephora. Come over here. Come over here [you know what you do? You know—] I’ll give you a free U2 album, kid.” 

RZ “You know what you should do?”

PF “What?” 

RZ “Leave the mall [mm] and see how that feels and go open the Sephora across the street, next to Waffle House.”

[13:57]

PF “On what? Like Firefox Phone? What are you doing to me here?!?”

RZ “Do what you like!”

PF “I don’t have a choice.” 

RZ “It’s my real estate that I’ve fenced out.” 

PF “I, Spotify, don’t have a choice. I gotta be where you are.” 

RZ “You’re welcome to be where we are.” 

PF “Well, this isn’t fair.” 

RZ Here’s what’s interesting, let’s come out of this ridiculous [mm hmm, mm hmm]—what is interesting here is there is—Spotify has to wait for a certain point to be able to make this case because, in fact, if Spotify—I mean if you think about the tension between a Facebook and an Apple, right? Cuz Facebook has hundreds of millions of users. They could decimate Apple. 

PF Mm hmm. 

RZ If they—if they took the app down. Right? 

PF Mm hmm. 

RZ But if they took the app down—

PF Oh if Facebook said, “You know what? We’re only on Android right now.” [Exactly] It would—it would—it would destroy—everybody would be in terrible pain. 

RZ Exactly, that’s the thing, right? 

PF Facebook doesn’t get the advertisements that it needs to put out in the world. 

RZ It’s actually very symbiotic. 

PF That’s right. 

RZ The relationship is [people—] actually adversarial but actually incredibly symbiotic so—

[14:56]

PF People except social—Facebook tried. Tried to make a phone. Remember? 

RZ [Scoffs] Yeah. 

PF It wasn’t good. 

RZ Yeah. 

PF It wasn’t good. 

RZ Well it was shaped like Zuckerberg’s head. 

PF No, [chuckles] that’s the thing—

RZ So there was an issue there. 

PF You had to stroke it. 

RZ You had to—[laughs] God! 

PF Yeah, I mean that’s—I reviewed it . . . for the MIT Tech Review, actually. And it was—It was just an Android phone with like—and you just went like right into Facebook. Here you go. 

RZ Yeah,  yeah, yeah. There was nowhere else to go. 

PF But the reality is that human beings, for the most part, expect access to social media and social media chat on their mobile devices. Whatever those are. 

RZ Yes. 

PF You are not a viable app ecosystem unless you have that. The same is also true, actually, of Spotify. Spotify needs to be wherever I am. 

RZ Yes. 

PF And vice versa, right? Spotify has some power here. 

RZ Yeah. 

PF Apple has much, much more. 

[15:40]

RZ Yes, and look—

PF And a competing product! If Apple had its own social network or Google or Google Plus had not been a complete atrocity. 

RZ Yeah. 

PF We might be having a very different conversations. 

RZ This is the power of the platform. Amazon has taken a [sic] very similar criticisms because they created a marketplace. They don’t care. Anybody can sell on Amazon. 

PF Yeah. 

RZ These third party sellers. There’s tons of them. They’re everywhere. But guess what they do. 

PF Usually they can clone someone else’s product, too, and just sell it right on Amazon. 

RZ Well, there’s that. [Yeah] There’s Amazon Basics and all that. But here’s what they do: they actually watch. When they opened up Jewellery they watched how stuff was sold; how sales were put through and whatnot; they looked at all this data; and then they went in and opened Amazon Jewellery. And crushed them all. [Mm hmm] And then the jewellers are like, “What are you doing?” It’s like, “Dude, what do you want? You’re in my space! You’re inside of Amazon. You are living in the platform.” 

PF But that’s the thing! Amazon acted like a mall but it was actually a department store, and you have to go in and kind of license the ability to sell your stuff. 

RZ You’re like a shitty booth. 

PF Yeah, and if they say, “Nah! We’re gonna sell it. We’re gonna sell the store brand.” 

RZ You can keep selling it. No, no, they’ll never kick you off. 

PF Yeah but they’re gonna sell the store brand two inches from your left. 

RZ No! Even not the store brand. What they do is they look at data. They look at tons and tons of data [yeah, they do] and they’re like, “Oh I see the opening here. I know how to—how to beat this.” And they just do it

[16:56]

PF And suddenly you’re kids wearin’—you know, the diapers are actually made out of bricks, but it’s ok. 

RZ [Snort chuckles] I don’t think there’s Amazon Basics diapers yet.

PF Not yet. 

RZ I think what they’re trying to say—and Amazon says the same thing, like, “The customer’s always gonna win here. If we go to war, you and me? The customer’s always gonna win.” 

PF Ok. 

RZ I mean, that’s their argument. That’s how they rationalize it. And, look, it’s rough. It’s rough. I mean, that’s how it is. I mean, that is how you—I mean, if you can own that platform, there’s gonna be like three in the world. I mean, that’s the other thing we have to just face. There are going to be three platforms and everybody else is playing on top of them. 

PF I know. 

RZ And those platform players can crush you anytime they want. 

PF That’s right. And so you really—if you’re not going to opt-in to the platform economy, you’re seriously opting out. Like, [yeah] you’re—you’re goin’ to a farm in North Carolina. 

RZ I’ll—I’ll tell you this. This—what is it called? Timetoplayfair.com? 

PF Timetoplayfair.com.

RZ I hope they—they put it out in French because I’m sure the EU is like trying to figure out how to fine Apple. 

PF [Chuckles] That is very true. [Rich laughs] Look, I think what you’re gonna—you should look at both of these sites. You should look at timetoplayfair and you should go and look at apple.com/newsroom2019—

RZ Slash 446684. 

PF Exactly! Like Apple is just like, “Oh. All in a day’s work!” 

RZ Yeah, exactly. 

[18:08]

PF Like, “Really? Another charge of monopoly?” You gotta won—like I’m sure Tim Cook was like—you know, “Tim, do you want to read this?” He’s like, “No, I trust you.” 

RZ Yeah. Yeah, yeah, yeah. 

PF [Chuckles] Yeah! Another of those! It’s the giants playing above us [yes] and the, you know, the sand is and the bricks and the—

RZ When David is a 26 billion dollar company [both laugh], we’re in a good place. Everybody’s gonna fine. 

PF Everybody’s gonna be alright, except for the artists who make music [Rich laughs], and they’re in trouble, so, anyway. We’ll—we’ll have some house concerts and we’ll buy some concert tickets and—

RZ Oh, living room shows. That’s a thing now. 

PF It’s tough. It’s tough. You gotta make that money, man. 

RZ Yeah, when the squeeze keeps happening it’s gonna eventually be like dining room shows. 

PF No, I know. 

RZ Just pushed to the back of the house. 

PF Yeah, one day you’ll have a living room band and the dining room band. It’s a good party [Rich laughs]. I have nothing but admiration for the person who goes and does it. 

RZ Ah! You gotta make a living, dude! 

PF Go. Go. Perform. 

RZ What are you gonna do? What are you gonna do? 

PF Alright, well, we solved it [laughs]. 

RZ Yeah, no, we’re good. 

PF Uh there’ll be so many of these in our lifetimes. I love a good open letter. But the—the contrast between Spotify’s like, [excitedly, nasally but more nerdy than before], “Hey guys! Oh boy!” 

RZ “Get a designer!”

PF “Yeah, you know, we’re gonna tell you a story here that everyone can understand.” And Apple saying, [defeated, bored, sighing] “No. [Rich laughs] Not really.” 

RZ It was an email originally, by the way. 

PF Oh, Apple? Yeah—

RZ [Laughing] They put it on the website. 

PF They were gonna—this is just gonna be—it’s like HTML one. It’s really good [Rich chuckles]. [Music fades in] Alright, friends, if you need anything, from Postlight, you send us an email: [email protected] We’re here to build your stuff. 

RZ We can build on iOS, on Android, and we build big, sweeping, sprawling platforms that can crush little platforms. So get in touch: [email protected] 

PF We live in a world of platforms! Bye! [Music ramps up, plays alone for six seconds, fades out to end.]