US Edition 
‘Spotify risks being derailed by Apple subscription charge’, says music boss
Spotify risks having its whole business model derailed by Apple’s App Store subscription service fee, according to Ben Drury, chief executive of 7digital, an online music retailer and partner of the popular Swedish streaming service.
Talking to The Telegraph, Drury said that in spite of the latest news that Spotify is raising $100 million of investment which would value the two year old company at $1 billion, if Apple went ahead and forced the music service to pay 30 per cent of its in app subscriptions to Apple, the service would become loss making.
He said: “If Apple forces this change on to Spotify, it would become loss-making as it and other digital music subscription services, cannot afford to pay Apple 30 per cent of their revenues. The big question is whether Apple will actually force this through… As it stands, if Apple does force this upon services like Spotify, it makes it impossible for subscription music services to stay on the Apple platform.”
Last week Apple announced the terms of its new App Store subscription service which will see Apple take a 30 per cent cut from any content publishers selling a subscription within their app, and also forces a publisher, or music service provider, which offers a subscription or purchase option outside of their app, than that option must exist within the app, at the same price or less.
According to Drury, whose company 7digital powers Spotify’s buy-to-own option and main rival is Apple’s iTunes, if Apple forced Spotify to offer its subscription models within its app, it would be extremely detrimental to its profits and survival, regardless of its latest large funding raising efforts.
“If Spotify gets this funding from Digital Sky Technologies then it has a good shot of breaking America – as it will have enough money to pay the labels the necessary cash advances to secure some level of free service. However, if the Apple subscription changes come about by the end of June, Spotify still risks being derailed, even with such a large investment…Spotify’s subscription model really took off because of its success on the iPhone. If it has to come off that platform, just as it launches in the US, it could potentially derail Spotify.”
Spotify refused to comment on Apple’s new app subscription terms or about its fundraising efforts.
The majority of Spotify’s revenues come from its subscription service, rather than from advertising.
Drury, said it was amazing that a European company was in the running for such large investment from DST, a company which has, up until now, backed mainly US tech heavyweights, such as Facebook and Zynga, apart from its Russian investments.
He added: “Spotify’s growth trajectory is amazing. It can crack the US market – but needs this injection of cash and to sort a solution with Apple."