Apple's Epic Loss Could Be A Game Changer For Spotify

·4 min read

Last week, Apple (NASDAQ: AAPL) lost a court case to Fortnite creator Epic Games and was ordered to allow developers to send their app's users to outside payment systems. Opening Apple's ecosystem up to third-party payment options translates to freeing users from paying Apple 15% to 30% commission fees. This turn of events threaten the revenue Apple gains by charging fees to app developers and therefore, it could be a game changer for companies like Spotify (NYSE: SPOT).

The Bigger Picture

While there's a chance the ruling will be overturned upon appeal, Apple didn't lose it all as it is still allowed to collect fees on transactions, when the payment is made via its system. But the bigger picture here is the reinforced a trend that clearly suggests Apple's grip is loosening. Earlier this month, Apple revealed it will allow "reader apps" to use a single link to sign up customers on their own websites, allowing them to be independent from its payment system.

The impact of these changes could be profound as the court has basically ruled Apple has gone too far in its efforts to control how app developers can make money. Developers were not even allowed to let their customers know there is a way to pay for their services outside the App Store, let alone provide a link or offer a third-party payment platform.

A Potential Game Changer For Spotify

This policy has caused many headaches to growing tech companies such as Spotify that have a free user-friendly ad-supported business model that aims to woo customers to get the premium service. In an effort to get around Apple'srestrictions, the company is literally apologizing to its users for the fact that upgrading to a premium account is far from "ideal".

The fact that it won't be subject to that 30% fee could easily be a game-changer for Spotify, allowing its business model to blossom. For one thing, it'll undoubtedly make its job to convert more of its free service customers into paid subscriber much easier.

However, the benefits go beyond the fee as when Spotify was forced to use Apple's payment system, it gave up the ability to gather information about its customers, something that Apple is very protective of. Spotify can finally get that precious information, either by getting users to sign up outside of Apple's ecosystem or by simply asking the questions. In simple words, Spotify will no longer have to jump through hoops to be able to increase the efficiency of ads its serves, which could easily be the source of its future revenue and profit growth.

2021 Mission

In 2021, the company was set to unlock the potential of human creativity. It embarked on this journey with a list of commitments, such as equipping artists with training to maximize their streams and earnings on the platform, to help them get out there and even pay them to do so.

What Spotify has done right is adapt its approach by moving beyond the simplistic technological approach by engaging with users and artists and putting an emotional need at the heart of its mission.

From "Just An App" To An "Artist-Loving" Brand

In other words, Spotify has become more than app the moment it made an emotional promise and put it into action with engagement like the Year Unwrapped round up where it put users at the heart of their own story by celebrating their listening habits.

Not only do initiatives like this help win brand loyalty by humanizing Spotify beyond a functional faceless tech platform, they also differentiate the brand from other competitors as replicating emotion is much harder than copying an app.

With long-term brand thinking, Spotify's future seems bright. One month ago, the music streaming service announced that its board approved a $1 billion stock buyback. CFO Paul Vogel described this decision as a clear demonstration of the company's confidence in both its business model as well as long-term growth opportunities.

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