Google to Let Spotify Use its Own Billing System on Android

Posted on March 24, 2022 by Laurent Giret in Google, Android, Spotify with 9 Comments

Google announced yesterday that Spotify will be the first Android app to be allowed to use its own billing system instead of Google Play’s. This follows Google’s recent move to allow an additional billing system on the Google Play Store for Android users in South Korea.

“This pilot will allow a small number of participating developers to offer an additional billing option next to Google Play’s billing system and is designed to help us explore ways to offer this choice to users, while maintaining our ability to invest in the ecosystem. This is a significant milestone and the first on any major app store — whether on mobile, desktop, or game consoles,” explained Sameer Samat, Vice President, Product Management at Google.

In recent years, Google and Apple have been pressured to allow developers selling in-app purchases to use their own billing system instead of those imposed by Apple and Google. This tight control over their app stores allowed both companies to take a cut on all in-app purchases, and Apple and Google have been justifying these service fees with the inherent costs of running an app store. This is the “maintaining our ability to invest in the ecosystem” bit in Samat’s statement.

Spotify has been one of the biggest advocates for alternative payment options on mobile app stores, among with Epic Games, and the music streaming service will get the ball rolling with Google in the coming months. “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,” the company explained today.

Overall, this announcement is an important milestone for mobile app stores, and it will be interesting to see the other companies Google will choose to trial user choice billing on the Play Store. Apple will likely be keeping a close eye on this experiment, especially after the company recently announced that it would allow developers of dating apps on the Netherlands App Store to use an alternate payment method.

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Comments (9)

9 responses to “Google to Let Spotify Use its Own Billing System on Android”

  1. JH_Radio

    I'd rather use the ones provided by Google or Apple myself.

    I'm thinking of all of the new pa pplaces I'd have to go to update payments etc if it wasn't just those two.

    • Paul Thurrott

      Then you can make that choice. Ideally, this would be transparent to the user. For now, it's there because Google is terrible and is trying to prevent antitrust problems.

      • pungkuss

        I think this space is going to be super interesting! What happens when Spotify offers a better price to users if they use Spotify pay? What if 50, 60, 70 percent of the consumers pay thru alternate payment systems, will Google collect its vig in a different way? Do they start charging app developers per download? What about not-for-profits who pay nothing today, do they have to pay in the future? Right now the gaming industry is footing the bill for the majority of apps on these stores. Some estimates have 80% of Appstore revenues coming from Games (we now see why Epic is fighting so hard lol). If that revenue is severely affected, how do they make that up? My guess is they charge everyone in the future for putting apps on the Playstore, even if your app is free, may $1 per download or something. We will see though either way it will be exciting.

        • christophercollins

          Likely, Google will still charge them the same cut, just like Apple plans to do when they allow third party billing.

          It's almost pointless to choose an alternative payment system if they are still going to charge the 30%.

          Just a song and dance (no pun intended). The only way this works for a company is really if they allow a redirect button to sign up on the website, no 30% required.

          Typical credit card processing fees vary from 3% to 5%.

  2. Sykeward

    The devil is in the details here. The problem with this announcement is that many assumed (just as they did when Apple made a similar announcement recently) that it would allow developers to sidestep the 15%-30% cut that Google takes from sales, but that's not the case. Apple still charges the same cut as it would for purchases using the built-in payment processing, and Google is also going to charge fees for 3rd party purchases, albeit reduced by 4% (e.g., 30% cut using Google payment services vs 26% cut using a 3rd payment processor). All these little moves do is highlight how petulant Apple and Google are being about this entire issue.

    • pungkuss

      See we know the 30% is an issue, but lets be honest here allowing 3rd party payment system to side-step the vig is also an issue. If everyone starts using the 3rd party payment processors that doesn't pay anything, that's not a business either. If Google's plan is to still charge 26% when 3rd processor is used, this seems like BS as well. I would like to see more solutions that Google/Apple/Developers can live with. Allowing 3rd party payment systems with no vig is out of the question, because its unreasonable to ask this company to invest into the playstore & android (Sundar claims the playstore pays for the android work) with no profits from the playstore what would be fair to both sides?

      • Sykeward

        I think the 70/30 split is a relic that made more sense at the time the App Store was new—ecommerce was a lot more complex back then and brick-and-mortar retailers routinely took cuts of software sales that were much higher than 30%. In that environment, one could make a case that a 30% cut of sales was not a terrible deal (although the ongoing 30% cut from subscriptions was always unreasonable IMO) and that the Apple (and Google) took away a lot of headaches for the fees they charged. This isn't the reality of the software marketplace today, and developers have a lot of options for selling their products that take a hella lot less than 30% of the sale and that don't dictate things like how they're permitted to communicate with their own customers.

        Apple obviously knows this. Phil Schiller was floating a fee structure years ago where the Apple would lower their cut across the board once a certain dollar amount in profit had been reached, like a kicker of sorts. Steve Jobs himself said that he never wanted the App Store to be a profit-generator, that any missed revenue from there would be made up by the increased phone sales that resulted from iOS having a robust app ecosystem.

        How different would things look today if that's the path they chose? Doesn't really matter: Steve Jobs is gone, and executives like Eddy Cue who were pushing for Apple to take a 40% or more are the ones who have Tim Cook's ear. Meanwhile, everyone who has a store for other developers has coalesced around this 30% figure (until otherwise compelled to) because Apple was the first and basically provided air cover for that practice. Now I think the only way out is going to be a mishmash of changes made under the threat of regulation, and who knows where that will end up.

  3. scovious

    It finally looks like Epic's lawsuit is paying off. I hope Google isn't somehow taking a massive cut (~30%) for letting developers use their own payment systems, because that would defeat the entire purpose.

    I wish I could vote with my wallet, but it seems like there are no phones made by companies that take less than a 30% tax on my digital purchases.