Google and Spotify’s app store deal could shake up mobile app economics


Hello and welcome to Protocol Entertainment, your business guide to the gaming and media industries. This Friday, we discuss Google and Spotify’s new app store deal and what it means for the wider app economy, plus what you should be reading, watching and playing this weekend. .

Spotify is a start, but gaming will be the real test

Earlier this week, Google and Spotify announced a joint multi-year deal hinting at a serious shift in how much of the mobile commerce pie the search giant is taking from third-party developers. The deal, which is billed as a pilot program, sees Spotify set up its own in-app payment system instead of the Google Play Store’s: This means the streaming service will bring home a most of every subscription it sells.

The exact commission split is a mystery at this time, but it will be more generous than the current split of 85% to 15%. The implications this could have for the wider mobile economy, much of which is fueled by games, are enormous.

Spotify has been pushing for this for years. Spotify, alongside Epic Games and Netflix, has been one of the most vocal opponents of the App Store’s 30% cut on Android and iOS. Although it directed much of its anger at Apple, Spotify has always supported lobbying efforts, legislation and regulations in the United States and abroad that have begun to undermine the once rigid policies of the two platforms. -forms.

  • Now, however, Spotify appears to have reached a deal with Google that pleases both parties. Spotify is getting a reduced commission, although neither company says exactly what it is, and may call the new feature launching later this year “User-Choice Billing”. Meanwhile, Google is offering third-party developers a win, at least keeping a commission intact, and opening the door for other Android app makers to join the line.
  • Spotify was already paying a reduced rate of 15% on the Play Store for any subscription lasting more than one year since 2017. Last fall, Google permanent reduction in the rate 15% for all subscription apps, regardless of when the user signed up.
  • The flexibility of in-app payments in the app currently being tested reflects changes imposed by the South Korean government, which last year passed an amendment requiring app stores to allow payment competition.
  • google presented a plan to comply in South Korea, saying it would still earn an 11% commission on sales using third-party payment systems. Spotify likely enjoys a better distribution of revenue than that, and this pilot program could ease regulatory pressure from Google in overseas markets.

The game would be the real test. Spotify makes perfect sense as the pilot program’s first partner given the streaming service’s combative history against competitor Google. But Google is not likely to lose so much money here. Indeed, mobile games, not streaming music, represent a much larger share of the mobile app economy.

  • Users spent $133 billion on mobile apps last year, according to the analysis company Sensor Tower, of which about two-thirds goes to Apple. Of this amount, mobile games account for about 67% of all money spent on the App Store and Google Play.
  • Not counting gaming apps, the biggest revenue generators on Android and iOS are streaming video apps, including Disney+, TikTok, YouTube, and HBO Max.
  • Google has been slowly conceding on subscriptions and media apps for years, while managing to keep its big moneymaker – free mobile games with microtransactions – online. Google can afford to concede with an app like Spotify, but it’s much less likely to extend the offering to Genshin Impact, PUBG Mobile or Roblox.

Google is stepping up the pressure on Apple. Much of the backlash against app store legislation in countries like Japan, the Netherlands and South Korea has come from Apple, which has been strong in its defense of its 30% cut. and less willing than Google to budge.

  • Although Apple has made notable concessions, including leaving apps like Netflix and Spotify link to their websites from the appsit looks more and more like the iPhone maker will find itself alone in this battle.
  • Although Spotify appears to be making peace with Google, the company has no intention of relaxing its crusade against Apple. When contacted, lobby group Coalition for App Fairness, of which Spotify and Epic Games are members, told Protocol that it intended to continue pushing for change.
  • “Every member of CAF is committed to fighting for systemic change for all developers,” said CAF Executive Director Rick VanMeter. “We are united to end the monopolistic practices that stand in the way of an open, fair and competitive digital market. Our mission is more important than ever as momentum builds for enforceable policies that level the playing field, including the Open App Markets Act and the Digital Markets Act.

It’s still too early to tell how influential Google and Spotify’s partnership will be, and whether it’ll be the start of a sea change for the mobile app economy or just another concession Big Tech is using to prevent regulation. significant. But until mobile game companies extend the benefits enjoyed by other media apps, companies like Epic Games don’t seem likely to back down.

-Nick Statt

A MESSAGE FROM CLARI

“To earn more revenue for your sales teams, start with the customer. Understand what your customers need and ensure those needs are aligned with clearly defined internal success criteria. what you have sold to the customer is what is to be delivered.” – Pilar Schenk, COO at Cisco Collaboration

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TGIF: How to spend your weekend

“Spider-Man: No Returning Home”. Haven’t seen Spidey’s latest movie at the cinema? Or maybe you did, but really want to see it again from the comfort of your own home? Now’s your chance: the movie has become available on iTunes, Google Play and a bunch of other video-on-demand stores in the past few days; you can buy it for $19.99.

Elisa — Masswerk.at. Joseph Weizenbaum’s pioneering chatbot has fascinated, enraged and amused people for decades. Playing the role of a therapist, Eliza is both very curious and obviously limited in her understanding of what we tell her. And yet, we can’t help but get involved. We try to trip her up, make her say something funny, insult her, or even confide in her. This week, Eliza was honored with a Peabody Award for Digital and Interactive Storytelling, which is a good reason to have a little chat with her again. I highly recommend the online version hosted by Masswerk.at, which lets you experience Eliza in an old-school terminal interface.

Netflix Junior Magazine — Netflixjr.com. For some time, Netflix has been looking to become its best media partner. The company launched a printed magazine, podcastsnewsletters and much more journalism stuff while announcing Netflix movies and shows. The latest addition to this is Netflix Jr. Magazine, a print magazine for students in preschool through early elementary school. Think Highlights High Five, with each page featuring characters from Netflix shows. There are puzzles, mazes, activities and even recipes (“cocomelon toast”, anyone?). Netflix is ​​clearly not trying to reinvent the wheel here, but the magazine should still be fun for toddlers, especially if they like shows like “Ask the StoryBots” or “Ada Twist, Scientist.” Subscription to the print version of Netflix Jr. Magazine is free, and the magazine is also available as a free digital download.

“Enemies” – Unity. Game engines have improved a lot over the years, and there’s no better way to track improvements in visual fidelity than Unity tech demos. His latest looks like a high-end Hollywood visual effects production, but it was all rendered in real time. To add to the wow factor, it’s worth reading this twitter thread from the Head of Technology and Rendering of the Unity Demo Team, which explores all the intricacies of the short in detail.

How SiriusXM botched the Stitcher acquisition – The edge. With the acquisition of Stitcher for $325 million, SiriusXM also got its hands on the Earwolf podcast network. Insiders told The Verge that the acquisition didn’t exactly go to plan. Interesting reading and further proof that monetizing content with a small but engaged audience is difficult.

A MESSAGE FROM CLARI

“Trying to make each transaction as large as possible often adds complexity and prolongs sales cycles. To accelerate growth, salespeople need to focus on landing faster, then expanding and expanding again Getting customers to your solution sooner helps you solve their initial problems, and then later, you can grow together.” – Michael Megerian, Chief Revenue Officer at Yello

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Thoughts, questions, advice? Send them to [email protected] Good day, see you Tuesday.

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