Spotify’s third-party billing option has now reached over 140 global markets – TechCrunch
In its fourth quarter results, Spotify today announced that its user-choice billing program is now expanding to more than 140 markets worldwide, allowing the music streaming service to reduce commissions it pays Google on Play Store purchases associated with its Android app. The User Choice Billing pilot program gives Android users the option to pay an app developer directly. It was introduced last spring, with Spotify slated as the first tester. But neither company had shared an update on the program’s progress until last November, when they announced that Spotify would then begin rolling out its tests in select markets.
At the time, Spotify said the program would only be available in a few markets to begin with and would later roll out to others in the “coming weeks”. It didn’t say which markets would see the third-party billing option or when it expected the choice to hit its global Android app user base.
Today, the company confirmed that it has made solid progress in rolling out the program. As part of its earnings announcement, where the company also hit its user growth targets with 205 million paid subscribers, it shared that its November rollout of User Choice Billing then became available to users. of “10+ markets”. In recent months, Spotify said it has expanded the option to more than 140 markets around the world.
However, Spotify has yet to release a detailed list of countries where the program is offered, but told TechCrunch that it plans to implement the option in “all markets” where it offers Spotify Premium today. and where Google Play Billing is available. Currently, Spotify Premium subscribers can be found in 184 global markets, according to the company’s website.
It’s no surprise that Google chose Spotify as the first tester of its new billing offering, given that the music streaming service has long been a fierce critic of the App Store, sharing complaints about the required commissions with the US Department of Justice and EU regulators. If an outspoken voice like Spotify could be appeased by a reduced commission on in-app purchases, Google hopes that could ease concerns about its alleged abuses of market power that are currently under investigation.
In March, Google introduced the third-party billing option to Android app developers as looming threats of antitrust litigation and increased regulation loomed. Already, the tech giant had been forced to support alternative billing systems in South Korea, with the passage of a new law, and was being sued by major app makers, including Epic Games from Fortnite, for antitrust issues. However, the user-chosen billing option didn’t offer much savings to app developers, as Google only reduced the required commissions on app purchases and in-app payments by 4%. .
Last November, Google announced that it was opening the User Choice Billing pilot to new markets, including the United States, Brazil and South Africa, and invited other developers to participate. Dating app Bumble later joined Spotify as an early adopter.
Developers who participate in the program must follow certain UX guidelines set by Google that detail how to implement the feature in their apps. These guidelines currently require developers to display an information screen and a separate billing choice screen. The information screen should only be presented to each user the first time they initiate a purchase, but the billing choice screen should be presented before each purchase.
While the terms and conditions offer a 4% discount on commissions paid to Google when third-party billing is used, Spotify would not comment on its confidential agreement with Google, noting only that it meets Google’s “fairness standards”. the company. It’s unclear if the streamer was offered more favorable terms as an early tester.
Spotify’s deal with Google could potentially boost subscription revenue at a time when the streamer faces increased pressure from investors to boost margins and make the service profitable. As Spotify continued to invest in areas like ad tech, podcasts, audiobooks, and more. in previous years, its losses widened last year, causing its market capitalization to decline by more than 60%. In a note posted on Spotify’s website this month, as the company announcement layoffs affecting 600 people, CEO Daniel Ek admitted the situation was the result of being “too ambitious in investing ahead of our revenue growth”.
The company’s solid progress in user growth in the fourth quarter saw its shares rise after the earnings announcement earlier this morning. In addition to its 205 million paid subscribers, up 14% year-over-year, it also announced that the total number of users increased 20% year-over-year for reach 489 million. Revenue was €3.17 billion, just ahead of estimates of €3.16 billion, but Spotify’s loss per share was €1.40 ($1.52) , higher than the expected loss of 1.27 euro.
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