In Depth

Google And Apple’s Pricing Cold War

In the age of digital commerce, what platform content appears on might have as much of an impact on sales as the content itself. As a result, platform owners like Google and Apple have big decisions to make when it comes to pricing new services or features. Is the right move to prioritize content on native platforms or standardize pricing across all mediums?

If Google’s pricing strategy with its new YouTube Red subscription is any indication, digital pricing spats could soon be a veritable eCommerce Cold War.

In question is YouTube’s new premium subscription-based service, YouTube Red, which Google promises will deliver users high-quality, downloadable, ad-free videos, including exclusive content created by some of the site’s most popular creators. Taking advantage of Google’s ubiquity on desktop, Android and mobile Web platforms, the company offers access on all three platforms for a flat fee of $9.99 per month.

However, customers who subscribe through iOS have to shell out $12.99, nearly 30 percent more, for the privilege of YouTube Red.

Why the seemingly arbitrary price hike? Though Google has made no official statement, Ars Technica explained that the most likely reasoning stems from a longstanding Apple policy to take 30 percent off the top of all subscription-based purchases from its App Store. TechInsider explained that users are still able to purchase a YouTube Red subscription and simply sign into the service on iOS, but Google’s pricing decisions seem to indicate an unwillingness to gift Apple, a major competitor, a third of its YouTube Red revenue on iOS.

Google may be the most recent company to list an app on iOS with pricing that seems to flaunt Apple’s 30-percent cut policy, but it is certainly not the first. The Verge explained that the popular music streaming service Spotify also notified users in July that it would be raising its subscription price on iOS from $9.99 to $12.99.

“In case you didn’t know, the normal Premium price is only $9.99, but Apple charges 30 percent on all payments made through iTunes,” an email from Spotify read, according to The Verge. “You can get the exact same Spotify for only $9.99/month, and it’s super simple.”

As companies like Google and Spotify draw a line in the proverbial sand when it comes to Apple’s App Store policies, the fight between content creators and platform owners looks to be heating up. Not one to take these kinds of things lying down, though, Apple made its own moves in June to offer pricing strategies that would throw its competitors off balance.

With the release of Apple Music, The Verge reported that Apple would offer family plans for up to six users for just $14.99. Why is this number significant? Spotify offers its own family plan, but at the same cost as Apple Music’s subscription, only two users are allowed on the account, and paying $29.99 will bump the number of profiles up to five.

To their credit, Spotify did tell The Verge that they were planning on matching or at least in some way responding to Apple’s pricing moves. Jonathan Price, global head of communications and public policy at Spotify, explained they already have the capability to offer such aggressive pricing in other regions.

“We already have similar family pricing in some markets and we expect to offer competitive pricing everywhere in the near future,” Price told The Verge.

History has shown that competitors are not shy about refusing to give their market rivals a leg-up when it comes to product availability on their native platforms, but if pricing is to be the next weapon in the battle between platform owners and content creators, the collateral damage on the market could be massive.

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