Spotify Bets on Apple Antitrust
Their new paid podcast feature only makes sense in a world where in-app purchase rules are relaxed.
This week Spotify announced that anyone in the US can now offer paid subscription podcasts through their platform. When I heard about this, I thought it was pretty cool! Spotify has a huge audience—365 million monthly listeners–and any feature that reduces the friction for that many people to discover and pay creators for their work is great.
The only problem is, it’s profoundly broken.
On Spotify’s desktop app for Mac, when you try to play a locked episode from a paid podcast, it shows you a blue pop-up that just says “Go to the show notes, or visit the creator’s site for more information.” No link, no button, nothing. The iOS app is even worse. Not only does it lack any sort of clear subscribe button, it doesn’t even tell you to look at the show notes! It just says, “Support the show to unlock access to every episode, plus any extra content,” and then there’s a button that says “Got it.”
No! We don’t “got it”!!
If you’ve ever developed an iPhone app with in-app payments, you know exactly what’s going on here. The reason this feature is broken has nothing to do with incompetence on Spotify’s part. In fact, I find this design to be sort of hilariously brilliant. Usually when you design a product, the only constraints you need to worry about are your users’ psychology, or the limits of technology and physics. But as any iOS app designer understands, there’s another consideration here that cannot be ignored: Apple’s desires. And in this case, Spotify has done an amazing job evading the spirit of Apple’s policies to better serve podcast creators and listeners, while obeying the letter of Apple’s law.
I like to imagine the app review negotiation went something like this:
Apple: You can’t sell digital content or functionality in apps without using our in-app purchase system, which gives us control over the customer relationship and allows us to take a 30% cut off the top. If you don’t like it, don’t make an iPhone app.
Spotify: Ok, but if people buy subscriptions to our podcasts elsewhere, can they consume it in the app?
Apple: Fine, but you can’t drive people from the app to the “elsewhere” where you’re collecting payments.
Spotify: Sure thing. But the content should show up in search results and stuff even if it’s behind a paywall, right? And we can just use a lock icon instead of a play button next to it? And then if they tap that lock button we have to tell them something, right?
Apple: Lol dude. Just don’t tell people where they can go to pay!
Spotify: Of course! We would never. But, just to be clear, if a podcaster decides to put a link in their show notes there’s nothing we can do about that, right?
Apple: Are you serious?
Spotify: We can’t stop podcasters from putting links in their show notes!
Apple: I mean, you literally own the podcast hosting service, and when creators turn on paid subscriptions you tell them to put a link in the show notes, but whatever. We make more money off Candy Crush in 3 hours than the entire podcast industry made last year. Next!
No matter how brilliantly Spotify navigates Apple’s rules, ultimately their podcasting feature is going to be mostly dysfunctional unless they adopt Apple’s payment system. And they’re not going to do that, because 30% is too big a cut to take out of creators’ margins.
So why launch this at all? And why now?
My theory is that Spotify thinks Apple is going to have to relax these rules. I’m pretty sure they understand that this feature, as currently implemented, is not all that competitive or effective. I wouldn’t be surprised if they have some of the world’s best intelligence on what’s going on with the various lawmakers and lawsuits that may determine Apple’s future. Perhaps it’s not a coincidence that just yesterday Apple settled a class-action lawsuit and will now allow apps to email users directing them to alternative payment methods.
Of course, I am speculating here! But I am willing to bet this was an active conversation inside Spotify.
What do you think?