Google Will Let Spotify Add In-App Billing on Android and Lowers App-Store Fee Cut

Under new agreement, Spotify will pay less than the standard 15% commission to Google

Spotify Podcast Subscriptions

For years, Spotify subscribers have been unable to pay through Apple’s App Store or Google Play, as the audio streamer has balked at the tech giants’ demands to fork over as much as 30% of the payments processed through their platforms. Both app stores also have disallowed third-party billing systems.

Now, Spotify and Google have reached détente on this issue.

The companies on Wednesday announced a multiyear agreement that will give users who have downloaded the Spotify Android app from the Google Play Store the choice to pay with either Spotify’s payment system or with Google Play Billing.

For the first time, the two payment options will live side-by-side in the app; previously, Google Play has not allowed developers to let their apps accept direct payment. (Currently, you have to sign up and pay for Spotify outside of the Android app.)

Spotify will be paying Google a cut of subscription fees under the new arrangement — which is some percentage less than the standard 15% that Google now charges developers for subscriptions, but neither company would confirm what that number is — for purchases made through Google’s app store. Google also will charge a fee for purchases made through Spotify’s billing system, but that figure isn’t public either.

Last fall, when Google announced its change to a 15% commission for subscriptions from the get-go (instead of 30% in the first year), the company said music streaming services were eligible “for a service fee as low as 10%.”

Spotify has publicly railed against the practices adopted by Google and Apple’s app stores. Spotify still does not allow customers to pay through Apple’s App Store. Spotify sided with Epic Games, maker of “Fortnite,” in the game company’s legal challenge to Apple App Store policies for developers; Epic mostly lost in an initial ruling, which it has appealed.

Apple, under its regular policies, collects 30% of first-year subscription payments; it reduces that to 15% starting in the second year of a subscription.

The new agreement “will give everyone the freedom to subscribe and make purchases, using the payment option of their choice, directly in the Spotify app,” Spotify said in a blog announcing the Google deal. Spotify said it will continue to “freely communicate with users about our Premium subscription service, promote discounts and promotions, and give listeners on our free tier the ability to convert to Premium, directly in the app.”

Over the next few months, Spotify said, it will work with Google’s product and engineering teams to build the new experience. Google and Spotify expect to launch the first iteration of “User Choice Billing” later this year.

“Spotify is on a years-long journey to ensure app developers have the freedom to innovate and compete on a level playing field,” Alex Norström, Spotify’s chief freemium business officer, said in a statement. “We’re excited to be partnering with Google to explore this approach to payment choice and opportunities for developers, users and the entire internet ecosystem. We hope the work we’ll do together blazes a path that will benefit the rest of the industry.”

Sameer Samat, Google’s VP of product management, commented: “This step is an important milestone for mobile app stores and I can’t imagine a better first partner than Spotify. They value choice as much as we do and understand the importance and continued investment in Android and Play to the health of the entire ecosystem. This is an exciting first step and we look forward to adding new partners and learning how this model could be expanded across the platform.”