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Business News Digital
Spotify starts testing User Choice Billing on Android devices
By Chris Cooke | Published on Friday 11 November 2022
Spotify has begun piloting Google’s new User Choice Billing system within its app on Android devices, giving users the option to sign up for a premium subscription within the app via the streaming service’s own payments system.
In recent years, Spotify has been very critical of both Apple and Google regarding in-app payments on mobile devices running one of the two companies’ respective operating systems – iOS or Android.
Those transactions have to be taken via the Apple or Google payment systems, both of which charge a 15-30% commission. Given that Spotify’s own profit margin is only around 30%, it has to pass on those transaction fees to the subscriber. But that then makes the Spotify streaming service look more expensive than Apple and Google’s own rival music services.
The other option – which is what Spotify ultimately decided to do – is to just not take in-app payments, so that users go to the Spotify website to sign up for a premium account. However, that makes upselling premium – and adding other monetisation tools like podcast memberships or direct-to-fan sales – all the more tricky. Especially as Apple also has rules regarding how you sign-post payment options outside the app.
Plenty of other app makers have likewise hit out at the Apple and Google app store rules, which they argue are anti-competitive, especially when the tech giants have their own competing products. Responding to that criticism, regulators and law-makers around the world have started to put pressure on both Apple and Google to change some of their rules regarding in-app payments.
Presumably keen to show those regulators and law-makers that it is making some concessions, earlier this year Google announced a pilot project to allow some app makers to integrate their own payments systems into their Android apps, providing paying via the Google system also remains an option.
Google will still receive a fee even when the app maker’s own payments system is used and the specifics of that are not known. Nevertheless, many app makers see this scheme as a step in the right direction.
Spotify was the first company to sign up to the pilot and is now the first app maker to start actually using what is being dubbed User Choice Billing. It confirmed this week that it had started rolling out the “first test implementation” of this new approach.
It said in a blog post: “In March, we announced plans with Google to introduce a first-of-its-kind in-app purchase experience on Android devices called User Choice Billing. This experience would give Spotify users the freedom to subscribe and make purchases using the payment option of their choice”.
“We’ve been hard at work building it ever since”, it added. “Earlier this week, we began rolling out the first test implementation of UCB to Spotify subscribers in select markets around the world. Going forward, Android users will soon be able to choose how to pay for their Spotify subscription in the way that best suits them. In the coming weeks, we’ll expand our test to even more markets”.
“Spotify has been publicly advocating for platform fairness and expanded payment options for years”, it went on. “We believe that fair and open platforms enable better, frictionless consumer experiences that also empower developers to imagine, innovate and thrive. We’re excited to be the first to pilot UCB with Google and we’re especially pleased that our partnership opens up new opportunities for other developers as well”.
“Google has taken a bold step to help level the playing field, but this is just the beginning”, it concluded. “We’re looking forward to testing, learning and iterating a perpetually improving experience for our users in markets all around the world”.
