Despite getting hurt by Apple’s unfair advantages, Spotify remains ahead.
Why Spotify is better than Apple Music.
With Spotify’s 248 million active monthly users (Oct. 2019), 124 million paid subscribers, and paid user base growing at over 30% year-over-year, we have to wonder how they’ve managed to differentiate themselves as the leading music streaming service in the world. Comparatively, Apple Music has ~60 million paid subscribers (last updated in June 2019). Although the two apps have very similar features, Spotify prevails in its ability to work cross-functionally with other devices and subscription packages.
How Apple plays an unfair game
(1) The “30% Apple Tax”
According to Spotify’s “Time to play fair” video, they claimed that they have to pay 30% of all Spotify Premium subscription fees to Apple as a result of being forced to use their payment system for in-app upgrades. This makes it extremely difficult for Spotify to sustain competitive pricing. Apple later rebutted against this point claiming that Spotify only pays a 15% “app tax” under it’s revenue sharing model, which only affected about 0.5% of their 100 million subscribers before Spotify started using their own payment system outside of the app.
(2) Apple is the creator of iOS and the App Store
As the owner of the App Store and iOS, Apple maintains a competitive advantage in controlling Spotify’s ability to submit updates to their app, communicate with customers, and provide excellent user experiences. Spotify has claimed for years that Apple has previously blocked their iOS upgrades or ability to send emails to Apple users. In fact, it wasn’t until October 2019 that Apple allowed Spotify and other third party music apps to integrate Siri into their user experience (a massive disadvantage for Spotify users). As Apple Music is the default music application for all iOS devices, Spotify is fighting an uphill battle that doesn’t seem to be ethical. Upon buying an iPhone or iPad, users that do not choose to sign up with Apple Music may receive frequent notifications similar to Figure 1 below.
This ability to serve push notification advertisements directly to potential users at no extra cost proves to be immensely advantageous (especially considering Spotify spent almost $1 billion on ads in 2019). Several Apple users have even reported having trouble getting these Apple Music notifications to disappear.
For Spotify to have the privilege of sending push notifications to users, they first have to fight the battle of getting them to download the application from the App Store. However, Apple doesn’t believe that they are in the wrong. In a statement released on their website in March 2019, they directly fought back against many of the complaints made from the Spotify team.
“After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace.”
….
“The majority of customers use their free, ad-supported product, which makes no contribution to the App Store.
A significant portion of Spotify’s customers come through partnerships with mobile carriers. This generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers.
Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.” — Apple
Is Apple being ethical?
This debate elicits a much larger conversation about where the line should be drawn between ethical business practices and sustained competitive advantages. Should Apple be allowed to make their music app the default on all iPhones and iPads? If not, what precedent does this set for Apple calendar, mail, and other utility apps that we know and love to use? Is the fact that Apple nudges users toward their own music streaming service on Apple products an unethical business practice or the outcome of an amazing business model?
Why Spotify excels
Apple Music and Spotify are nearly identical in their ease of use, pricing, music catalog, and social sharing features. For these features, big proponents of either product could make strong arguments to say why one is advantageous over the other.
The largest difference between the two platforms is their music recommendation algorithms. Spotify is famous for their “Daily Mix” and “Discover Weekly” playlists while Apple creates a culmination of music “For You.” From my personal experience with both products, I think that Spotify does a much better job providing new music recommendations tailored to my preferences. I find that while Apple does well recommending new music from the same artists already in my library, Spotify is able to introduce new artists based on my listening patterns that has immensely grown the breadth of my knowledge. While this experience is surely anecdotal, Spotify proves to lead the mark due to cross-functional compatibility and subscription packages.
(1) Cross-Functional Compatibility
For Spotify, the desktop app is intuitive on both Mac and Windows, and can be easily controlled from the mobile application. However, for Apple, the desktop application is built into iTunes which introduces increased complexity, especially trying to setup with Windows. In order to control the desktop app from mobile, users have to download the Apple HomeKit, which can be a cumbersome task. For Android, without control of the operating system, Apple Music also loses the many advantages it used to enjoy on iOS (free advertising, compatibility with Siri, serving as the default application, etc.).
(2) Subscription Packages
Spotify recently launched a partnership with Hulu, the popular video-streaming service, that grants free ad-supported accounts to premium subscribers. For students, they also partnered with SHOWTIME, another popular video-streaming service, providing a bundle deal priced at $4.99/month. These are remarkable luxuries that have set Spotify apart from Apple Music in a substantial way. Additionally, Spotify provides a free ad-supported version for users while Apple Music does not. Thus, for the millions of users who wish to avoid paying music subscription fees, Spotify is the clear option between the two.
Features Spotify should integrate to stay on top
Spotify, my favorite music streaming product, is an amazing platform that has completely revolutionized the variety of music that I enjoy. With their particular focus on college students and the younger demographic, there are three features that I would suggest implementing if I was running the product team: (1) “Play Next”: Allowing users to add songs to the beginning of the queue, (2) “Fork Playlist”: Allowing users to download their own versions of created playlists and alter them, and (3) “Song Requests”: Allowing users to push song requests to their friends’ queues.
As part of the younger demographic, the music listening experience is becoming increasingly social. Users are taking advantage of social media and group chats to share their favorite songs, new albums, or their own custom playlists. As these trends continue to spike, the long term winner of the Spotify x Apple Music battle is going to be whichever product is able to build an ecosystem around their platform that is enhanced by network effects. This means that the value of you downloading Spotify increases when your friends also download Spotify. In order to build that ecosystem, Spotify should implement the following features:
(1) “Play Next”
The “queue” is a feature used by both Apple Music and Spotify that allows the user to manage the order of songs being played next. For Apple Music, you can add music to either the front or the back of the queue depending on when you prefer it to be played. Additionally, they make it very easy to clear the queue or view its history. However, for Spotify, you can only add music to the back of the queue, the history is hidden, and there is no obvious way to clear. As a result, trying to add a song to the front of the queue becomes a big user pain point. This is only solvable by first adding to the back, and then dragging the last song all the way to the top — a frustrating process that can lead to many unintended consequences.
(2) “Fork Playlist”
In the current version of Spotify, if I download a playlist from my “Daily Mix” or from a friend, I can only listen to that exact version. If I wanted to contribute, I would have to either text him or her offline to add/delete music, or copy a new version from scratch (an extremely daunting task with large playlists). To solve this user pain point, similar to GitHub, Spotify should build a feature to allow users to “fork playlists” and edit their own versions. In an effort to build an ecosystem, this would promote increased social sharing amongst users in the community.
(3) “Song Requests”
As more and more users are listening to music in group settings, Spotify should implement a feature to allow friends to send each other song requests. These requests can then be added to the front or the back of the queue. This feature would make big strides in building out network effects, similar to Apple’s iMessage, by creating a fear of missing out: the right to send song requests only exists for those with Spotify.
