Their Request for Special Treatment is Unorthodox and Embarrassing
Spotify has taken their embarrassing complaints to a whole new level this week. They’ve filed a formal complaint with the European Commission over App Store policies. They’ve also launched a website to decry how unfair Apple is being with their App Store and subscription policies. So they’re also advertising their ignorance of normal business practices for all to see.
I thought this would be a good time to resurrect an article I wrote a few weeks ago about the value of distribution. In a nutshell, you’re not just paying for administrative duties, you are also paying for access to customers.
But I thought of a simpler way to describe the stupidity of Spotify’s gripes. Imagine that Apple is Walmart (a large American superstore) and Android is like a large farmers market across the street. Apple has built an entire retail environment. Android simply lets you setup shop and do as much or little with it as you please.
Walmart pays to build large buildings in which they can tailor exactly the selling environment they want for their customers. Once you drive into a Walmart parking lot everything is as they want you to experience it. You park your car where they want you to park it. You can browse the carefully selected merchandise that they’ve displayed. You deal with only the cashiers that they’ve selected and trained. And when you check out, Walmart gets their piece of the revenue.
But across the street there is an open farmers market. The owner of the land will provide an open field for potential sellers but that’s it. It’s up to all the vendors to set up their own tables, setup their own tents, and process their own sales for cash. But in return they get to keep all of the proceeds.
Can you imagine one of those farmers deciding that he’d like to take his tent over to Walmart on a really hot day? That would be farmer heaven. Walmart would bring in all of the foot traffic and pay for the air conditioning. Meanwhile, the farmer could setup a tent and undercut Walmarts prices pocketing 100% of the proceeds. Customers would love it too. They would get a better price and only have to travel to one destination instead of two. But where is the fairness if only 2 out of 3 parties are happy with the deal?
I think you can see the ludicrous argument that Spotify is trying to make. This is not Apple’s problem. Spotify either has a pricing power problem or their costs are too high. They are like a farmer who can only make a buck by selling for cash. Fine, then keep selling your wares in the open farmer’s market but don’t expect the big retailers to welcome you with open arms. Spotify isn’t advocating for fairness, what they’re really after is special treatment at the expense of the big retailer.
But I thought of a simpler way to describe the stupidity of Spotify’s gripes. Imagine that Apple is Walmart (a large American superstore) and Android is like a large farmers market across the street. Apple has built an entire retail environment. Android simply lets you setup shop and do as much or little with it as you please.
Walmart pays to build large buildings in which they can tailor exactly the selling environment they want for their customers. Once you drive into a Walmart parking lot everything is as they want you to experience it. You park your car where they want you to park it. You can browse the carefully selected merchandise that they’ve displayed. You deal with only the cashiers that they’ve selected and trained. And when you check out, Walmart gets their piece of the revenue.
But across the street there is an open farmers market. The owner of the land will provide an open field for potential sellers but that’s it. It’s up to all the vendors to set up their own tables, setup their own tents, and process their own sales for cash. But in return they get to keep all of the proceeds.
Can you imagine one of those farmers deciding that he’d like to take his tent over to Walmart on a really hot day? That would be farmer heaven. Walmart would bring in all of the foot traffic and pay for the air conditioning. Meanwhile, the farmer could setup a tent and undercut Walmarts prices pocketing 100% of the proceeds. Customers would love it too. They would get a better price and only have to travel to one destination instead of two. But where is the fairness if only 2 out of 3 parties are happy with the deal?
I think you can see the ludicrous argument that Spotify is trying to make. This is not Apple’s problem. Spotify either has a pricing power problem or their costs are too high. They are like a farmer who can only make a buck by selling for cash. Fine, then keep selling your wares in the open farmer’s market but don’t expect the big retailers to welcome you with open arms. Spotify isn’t advocating for fairness, what they’re really after is special treatment at the expense of the big retailer.
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