A post on Google’s official Android Developers Blog about ‘user choice billing’ may not seem like an obvious spark for music industry interest… but when the first ‘innovation partner’ is Spotify, it’s a different story.
What’s going on? It’s a pilot program running on Android’s Google Play app store that will let users choose how they want to pay for some services – and thus also enables those services to offer their own billing rather than use Google’s system.
“Spotify will be introducing Google Play’s billing system alongside their current billing system, and their perspective as our first partner will be invaluable,” wrote Google’s VP of product management Sameer Samat in the post.
“Users who’ve downloaded Spotify from the Google Play Store will be presented with a choice to pay with either Spotify’s payment system or with Google Play Billing. For the first time, these two options will live side by side in the app,” added Spotify’s own announcement.
More details? The important one remains secret: the business terms of the partnership, and – assuming Spotify is paying Google a share of subscription revenues from its own payment system – how that compares to the 15% cut Google takes from subscriptions using Google Play billing.
Music streaming’s margins are famously tight for DSPs, which is why using their own billing systems rather than those of app stores has become such a prominent debate. And of course there is a wider context here: Spotify’s campaign (along with Fortnite maker Epic Games) to win similar concessions from Apple – either voluntarily, or at the behest of regulators.
In fact, as the dominant app store owners, there is pressure on both Apple and Google to evolve their approach to billing. Samat’s post acknowledged that Google has recently allowed ‘alternative billing’ in South Korea following legislation there requiring this – something Apple has also bowed to.
The latter company is also currently at loggerheads with the Netherlands’ antitrust regulator over its response to similar strictures there. Meanwhile, there is proposed legislation in the US (the Open App Markets Act) and in Europe (the Digital Markets Act, whose latest iteration may be unveiled today) covering these issues too.
Nerding out over app-store regulatory developments may seem like a niche pastime, but Spotify’s involvement in Google’s ‘user choice billing’ pilot at this stage a.) may ramp up the pressure on Apple a little more, but b.) suggests that Spotify sees this kind of change as a meaningful one for its business.
And by extension, for the music rightsholders it pays royalties to.
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