The pilot program will allow a small number of developers to offer user billing choice. This will be the first time that the system will be tested in multiple markets worldwide, and it will be similar to the one in South Korea.
The pilot will roll out to all markets where the premium service is available. The pilot will begin with select markets and build on the experience over time, and which regions would be first has yet to be determined.
When the pilot goes live, Spotify will introduce their own billing system along with that of the other partner. One of the largest subscription developers in the world is one of the developers it has lined up for future tests.
The Open Markets Act was one of the legislation that Spotify supported, as well as regulatory changes to app stores, having testified before Congress on the matter.
The fight is not just about wanting to have a more direct relationship with customers, it is also about money. Commissions range from 15% to 30% for apps that offer subscriptions and in-app purchases through their platforms. In South Korea, where alternative billing systems were required by the government, it only reduced commission by 4% for developers who directed users to their own billing systems.
Reached for comment, the company wouldn't say what kind of commission it would be paying, noting that the agreement was confidential. The commercial terms met the standards of fairness suggested by a company spokesman.
The commission structure was not revealed by the search engine. In South Korea, user choice billing will still involve a service fee regardless of which billing system the user chooses.
The new system is not currently available. It will take the product and engineering teams time to build the new experience. Once live, users will be able to see the two billing options side-by-side in the app. If they choose the payment method, they will continue to use the billing system and user interface. They will switch to the Google Play Billing experience if they choose it.
Customer communications will remain the main responsibility of the company. Users who pay via Play Billing will be able to see their subscription in the Subscription Center.
The first iteration of this system is expected to be launched later this year. It will be offered in every market where the Premium subscription is available.
The Chief Freemium Business Officer of Spotify said that the company is on a years-long journey to ensure app developers have the freedom to innovate and compete on a level playing field. We hope the work we do together will benefit the rest of the industry.
The pilot is still early days and the company will be working through various details about how the system works and how it looks as it builds and builds. While it wouldn't reveal which partners may follow, we were told that the goal is to learn how to solve the challenges of offering billing choice across countries and developer types. It said it will pilot the program in a few countries with a limited number of developers.
Following a similar move by Apple, the commission for the first $1 million of revenue developers earn using the Play billing system was reduced from 30% to 15%. 99% of developers qualify for a service fee of 15% or less on the company's app store due to the pricing model shift.
Sameer Samat, Vice President, Product Management at Google stated that the step is an important milestone for mobile app stores. They understand the importance of continued investment in Play and the importance of choice as much as we do. We look forward to adding new partners and learning how this model could be expanded across the platform.
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