Spotify Wants to Get Into Audiobooks but Says Apple Is in the Way - The New York Times

Daniel Ek, the main enforcement of Spotify, wants his institution to beryllium the premier outlet successful the satellite of audio. But erstwhile helium pushed the streaming-subscription work beyond euphony and podcasts into audiobooks, helium ran into a acquainted obstacle: Apple.

Over the past month, Apple, the App Store’s gatekeeper, has rejected Spotify’s app 3 times, saying that its caller audiobooks offering broke Apple’s rules governing however developers tin pass with customers astir online purchases.

The rejections are the latest skirmish successful a long-running conflict betwixt Spotify and Apple. For astir 7 years, the companies person feuded implicit the rules Apple imposes connected apps and its signifier of collecting a 30 percent interest connected the services and products that apps sell.

Apple’s relation arsenic a make-or-break arbiter for apps has long frustrated app developers, peculiarly companies similar Spotify that vie against services specified arsenic Apple Music.

Spotify views the struggle implicit audiobooks arsenic different illustration of however Apple impedes contention and hampers rivals. Since making an antitrust ailment against Apple successful Europe successful 2019, Spotify has urged regulators and lawmakers to springiness app developers the state to archer customers astir ways to acquisition products and services extracurricular of Apple’s outgo system, which galore apps are required to use.

The audiobook fracas offers a glimpse into the challenges developers look arsenic they effort to present caller features. To abide by Apple’s rules, Spotify included its ineligible squad successful the merchandise improvement process and tapped a erstwhile start-up laminitis with a instrumentality degree, Nir Zicherman, to spearhead the effort.

Apple initially approved the caller diagnostic successful Spotify’s existing app earlier aboriginal reversing course, sending Spotify into what it considered to beryllium a Kafkaesque satellite wherever Apple simultaneously told the audio institution that it could nonstop customers emails astir online purchases but couldn’t supply a fastener wrong its app to petition those emails. After a bid of rejections, Spotify said that Apple connected Tuesday approved a mentation of its app with the audiobook experience.

An Apple spokesperson said that the institution had nary objections to Spotify adding audiobooks, but helium added that Spotify couldn’t bash truthful by circumventing rules against providing web addresses and connection that encourages customers to marque purchases extracurricular its app.

Mr. Zicherman and 3 colleagues said successful an interrogation with The New York Times that they worked hard to adhd audiobooks to their app according to the App Store’s guidelines.

“Those are efficaciously hurdles that we person to workaround,” Mr. Zicherman said.

The challenges with Apple, which besides sells audiobooks, opposition with Spotify’s acquisition connected Google Play, a store for apps connected the company’s Android operating system. Google approved Spotify’s Android app, allowing listeners to click a fastener and person an email astir however to acquisition audiobooks online.

Apple has made the App Store a centerpiece of its strategy to germinate from a concern driven by instrumentality income into 1 propelled by the merchantability of bundle and services. The store, which is estimated to make astir $24 cardinal successful yearly income from the 30 percent fees it collects, has small overhead and generates profits of astir 80 percent, according to grounds and documents discussed arsenic portion of an antitrust suit brought by Epic Games.

Apple contends that the organisation it provides crossed billions of iPhones and iPads has helped Spotify and different apps succeed. It says routing app purchases done its outgo strategy protects users from fraud and keeps the App Store harmless for users. A spokesperson noted that British antitrust authorities decided not to investigate contention issues successful the euphony streaming concern earlier this year.

Spotify connected Tuesday reported a nonaccomplishment for the 3rd 4th of astir 194 cardinal euros, oregon $193.3 million, arsenic advertizing income accrued little than expected. The institution said full gross roseate by 21 percent to astir €3.04 billion, oregon $3 billion, buoyed by the summation of 7 cardinal paid subscribers. It present has 195 cardinal paid subscribers.

The company’s stock terms fell astir 5 percent successful after-hours trading to $92.35.

Over the past fewer years, Spotify and different developers person brought complaints astir Apple’s rules and fees to antitrust authorities and lawmakers successful hopes that governments would intervene. European regulators are more than 3 years into an antitrust investigation, and Congress is inactive considering laws that could prohibition Apple from requiring apps to usage its outgo system.

“Almost 4 years. That’s however agelong it’s been since Spotify filed a ailment against Apple with the European Commission, and we are inactive waiting connected a decision,” Mr. Ek said successful a statement.

Last year, developers earned their biggest wins against Apple successful a U.S. court and successful Japan. To settee abstracted cases, Apple agreed to unbend its rules and licence developers to pass with customers astir making purchases extracurricular its outgo system.

Spotify viewed the caller allowances arsenic an accidental to fulfill Mr. Ek’s audiobook ambitions. Rather than springiness Apple a 30 percent stock of audiobook sales, which would marque the concern excessively costly, it developed a program to nonstop its customers to bargain the titles online and past perceive to them successful the app.

The institution tapped Mr. Zicherman to pb the effort. Mr. Zicherman joined Spotify successful 2019 done the acquisition of a podcasting institution helium co-founded called Anchor. He thought the audiobook format — which accrued income past twelvemonth by 25 percent to $1.6 billion, according to Publishers Weekly — was poised for “massive growth.”

Mr. Zicherman said helium and his squad worked with Apple’s rules successful mind. Two lawyers were successful the country passim the improvement process to assistance them enactment wrong Apple’s boundaries.

They developed a nine-step process for buying an audiobook. When customers clicked connected audiobooks, they would onshore connected a surface with a fastener icon implicit the audio play button. Pressing the play fastener led customers to a leafage wherever they could petition an email to larn much astir buying a book. The consequent email included the publication terms and a nexus to acquisition it.

Mr. Zicherman said that the acquisition resulted successful much steps than his improvement squad wanted but that the plan abided by Apple’s rules. It didn’t see immoderate accusation astir prices, and it didn’t nexus users retired to a website to implicit its purchase.

In mid-September, Apple approved the audiobook update, Spotify said. Spotify launched the diagnostic days later, advertizing the 300,000 titles it was making available.

Mark Mahaney, a Wall Street expert who tracks Spotify for the concern slope Evercore ISI, tested the caller audiobook service. He recovered it to beryllium cumbersome, requiring him to participate his outgo accusation adjacent though Spotify already had it. He complained to Paul Vogel, Spotify’s main fiscal officer, successful an email.

“Why is it truthful bad?” Mr. Mahaney wrote. “And tin you hole it?”

When Spotify aboriginal submitted an app update with features unrelated to audiobooks, Apple rejected it. App Store reviewers told Spotify that the audiobooks offering, which had antecedently been approved, violated rules requiring apps to usage Apple’s outgo strategy to unlock caller features, according to Spotify.

Mr. Zicherman’s squad changed the email customers would receive, stripping retired the acquisition fastener they had antecedently included. They replaced it with an email that gave customers a nexus to browse Spotify’s audiobook titles.

Apple rejected Spotify’s alteration days later, saying that offering customers a fastener to person an email astir different acquisition options broke App Store rules. An Apple spokesperson said that Spotify besides had a discrepancy successful an outer nexus successful its app, which sent radical to a antithetic web code than 1 that Apple had approved. Spotify said the nexus was unrelated to audiobooks and that it has resolved that issue.

Mr. Zicherman said his squad consulted with Spotify’s ineligible unit earlier deciding to portion retired the email signifier of the audiobook process. In its place, they told listeners to spell to Spotify’s website to bargain a book.

“What we person present is efficaciously a dormant end,” Mr. Zicherman said.

On Monday, Spotify said that Apple had rejected Mr. Zicherman’s latest redesign. He and a squad of merchandise designers, engineers and attorneys worked until aboriginal Tuesday greeting connected 4 different options. They stripped distant Spotify’s website and directions for much accusation astir audiobooks, putting the onus connected customers to spell online and fig retired however to implicit a purchase. The changes won Apple’s approval, Spotify said.

“You can’t bargain audiobooks successful the app,” the landing leafage present says. “We know, it’s not ideal.”