Apple’s hefty fees on in-app subscription services are being called into serious question. In a letter addressed to both the Federal Trade Commission and the Department of Justice, Sen. Al Franken called on federal regulators to look into possible Apple Music antitrust violations in the music streaming market.
Franken pointed to a number of non-competitive guidelines that he believes suppress app developers and stifle innovations that benefit the consumer.
“Increased competition in the music-streaming market should mean that consumers will ultimately benefit through more choices of better products and at lower prices,” Franken wrote in today’s letter. “I am concerned, however, that Apple’s position as a dominant platform operator may actually undermine many of the potential consumer benefits of its entry into the market. To protect consumer choice and promote greater transparency of pricing, I ask that you review Apple’s business practices with respect to its competitors in the music streaming market.”
Of particular interest to the Minnesota Democrat was the hefty 30 percent fee on recurring in-app purchases that Apple is currently shaking down other app developers for. For a subscription service like Spotify that generally runs the standard streaming rate of $9.99 per month, that means them having to tack on an extra $3 per for subscription sales that are facilitated through the app.
Spotify has been trying to raise awareness of this issue over the past few weeks by urging consumers to sign up for the service through the Spotify website rather than through the App Store (for $12.99), and save three bucks in the process. In doing so, they’re making a pretty obvious statement on how they believe Apple’s fee structure is directly harming consumers and making the music streaming market less competitive. Subscribers to Apple Music obviously don’t have to worry about paying the company an extra $3 to use the service.
Franken isn’t the only one raising flags about whether Apple Music is harming consumers. Yesterday, The Verge reported that the FTC had already begun issuing subpoenas to music streaming services as they looked into the issue.
While Apple runs a great platform that facilitates a number of sales for other music streaming services, 30 percent really is way too steep a fee for recurring in-app purchases, especially when deals with record companies pretty much mandate the $10 monthly subscription price as a minimum price point.
Apple charging a much lower 10 percent fee per month would definitely be more palatable, but perhaps Apple shouldn’t be collecting monthly fees on recurring in-app purchases at all. A one-time 30 percent fee on the first month for facilitating the sign-up transaction seems perfectly reasonable, and helps consumers not to get slammed with sustained high monthly fees for other services.
Franken is right to herald Apple in his letter for its innovation, which has enabled the App Store to garner so many subscriptions for developers, but he’s also correct to bring about the assertion that it’s time for them to change up their fee structures so as to benefit consumers.
Apple did manage to appease Taylor Swift (no small feat); let’s see if it can do the same with Al Franken.