Spotify’s third-party billing option goes global
The Future. Spotify’s test run of the User Choice Billing program — Google Play’s third-party billing option — has been a smash success, reaching 140 markets worldwide. The program allows Android users to pay third-party apps directly when making purchases of or within apps, reducing the commission the apps’ developers have to pay Google. After Spotify’s rough year in 2022, the extra cash from this program could turn things around for the music streamer.
Play on, playa
TechCrunch summarized the pilot program’s details, rollout, and prospects.
- User Choice Billing typically reduces commissions on app purchases and in-app payments by 4%. But Spotify has a confidential deal with Google that may give the streamer more favorable terms.
- Spotify started testing the program last November in about a dozen markets. Since then, that number has grown to 140, and Spotify hopes to eventually roll it out everywhere now that Google Play Billing is available.
- Spotify stands to benefit from User Choice Billing because its user base is expanding — fast. The streamer beat its own user growth targets in Q4 2022, hitting 205 million paid subscribers. More subscribers mean more savings.
Quid pro quo
It makes sense that Google would give Spotify first dibs and good terms for this program. Spotify has historically been a vocal opponent of app stores, and Google faces several lawsuits from third-party developers, along with the growing threat of antitrust legislation. It would certainly help Google’s case if they’re seen playing nice with third-party apps.
Spotify, meanwhile, is seriously struggling to be profitable despite user growth — they lost over 60% of their market cap in 2022 alone. They likely need all the extra cash they can get just to recover their position.