Apple Has Earned $156 Million From Its Rival Spotify Over Four Years

Harin - Mar 15, 2019

Apple has made $156 million in revenue over the last four years from Spotify, the music streaming service complaining that App Store fees are unfair.

For Apple, Spotify is a competitor and at the same time a side-earner. For the past four years, the Sweden-based streaming has handed over subscription fees of $156 million to the iPhone maker.

According to estimation from Sensor Tower, an app analytics company, from 2015 to 2018, iOS subscribers contributed $670 million to Spotify. Due to Apple’s tax on in-app subscriptions and purchases, Spotify was required to hand more than one-fifth of that revenue over to the Cupertino giant.

The war between Spotify and Apple has started as on Wednesday, the company had filed for an antitrust complaint against the Cupertino giant with the European Commission.

The reason behind its decision is Apple’s 15-30% tax on in-app subscriptions and purchases which Spotify thinks is anti-competitive and gives Apple Music, a service product of Apple, an upper hand.

This chart demonstrates the economics behind the fight with Apple of Spotify.

The blue part shows how much money Spotify gets from its iOS subscribers while the red part shows how much Apple takes.

It is clear that in 2015 and 2016, Apple received its biggest cut. This was when Spotify became the top-grossing app on the App Store. This was also before Spotify took action with Apple’s 30% levy.

After 2016, there is a substantial drop in recorded iOS revenue of Spotify. That is because the Swedish music streaming service began to direct subscribers to pay for the subscription fees on its own website instead of the App Store.

It’s difficult to make a calculation on how much money slipped out of Apple’s hand because of Spotify’s workaround. But rough calculation suggests that the number could be $98 million over the past four years.

So, instead of $156 million, the Cupertino giant could have earned $254 million.

For Apple $156 million seems to be a small change as in 2018 financial year, it made $60 billion. But for Spotify, it needs each and every single penny it can get. An operating loss of as much as $407 million for 2019 has been predicted by Spotify.