✖️ Fortnite vs Apple: Facebook enters the ring // Emerging genres, Warner's influencers, digital Burning Man, Instagram & Messenger merge
What Epic Games' battle with Apple may mean for music business revenues
Hi everybody,
This week focuses on the ongoing dispute between Apple and Epic Games and how the fallout may impact the revenue share digital stores take from music streaming subscriptions.
Love,
Bas
Facebook joins Fortnite-maker Epic Games and Spotify in push to reduce 30% App Store cut
🐘 Elephant in the room: Fortnite was removed from the App Store. It’s one of the world’s most popular games and its maker Epic Games decided to add its own in-app payment system. This goes against Apple’s rules. What also goes against Apple’s rules is the discount Epic Games offered users who paid using their own payment system. Epic Games knew what they were doing and purposely picked the fight.
What does it mean for music? Well, Spotify has filed antitrust complaints with the EU over Apple’s practices (investigations already underway), since they take 30% of in-app purchases and don’t allow apps to promote making payments through other mechanisms.
Meanwhile Facebook is now letting people monetize their livestreams on the platform and has joined in, complaining that Apple won’t waive its fees for livestream monetization, nor does it allow users to use Facebook Pay instead.
Likely outcomes? Hard to tell, as the level of escalation (and revenues involved) is unprecedented. Apple’s 70 / 30% split, which dates from the iTunes era of MP3 sales, has become somewhat of an industry standard. Google also takes a 30% cut in the Play Store. In 2018, Epic Games fell out with Valve’s game platform Steam over their 30% cut, after which Epic launched its own game store with a 88 / 12% split and pulled Fortnite off of Steam, which Tim Ingham at the time referred to as:
“the equivalent, perhaps, of Universal Music Group launching a rival to Spotify or Pandora in music”.
Could we end up with the 70 / 30 standard being challenged and moving closer to 12%, say, to the 15% which Apple already charges when users enter their second year of being subscribed? This would make music and entertainment apps that use Apple and Google’s in-app purchase mechanisms suddenly see an increase in the average revenue per user - significantly so if the app heavily depends on platform-native subscription mechanisms.
Final note: while Epic Games’s founder Tim Sweeney has a majority stake in his company, its other shareholder is Tencent which owns 40% of it. And Tencent is no stranger to getting rules changed in the App Store. In 2017, Apple revised its rules to allow for virtual tipping in apps after users of WeChat (owned by Tencent) complained about the removal of its tipping feature on iOS.
💰 Warner Music has purchased IMGN Media for $85m, a “multi-platform social-first media company” without a music catalogue, which gives Warner a better insight into the habits and behaviours of teenage audiences and potentially reduces its reliance “on individual influencers to plug their artists’ music.”
〰️ “Glitch wave” may be the successor to the Cloudrap era of SoundCloud-based genres. The scene consisting of many vocalist-producers makes it easier for them to collaborate with music emerging from conversations on Zoom calls and Discord, with the aesthetic exploding in 2019 on TikTok.
✉️ Facebook has been rebuilding their underlying messaging infrastructure and has now started merging Instagram’s messaging functionality with Facebook Messenger. Once integrated with WhatsApp, it should give Facebook a social layer which has been split out over various platforms for years. For marketers: this should also make it easier to get Instagram audiences to engage with chat bots and apps currently sitting on the Messenger platform.
(On a sidenote, if you’re thinking about growing your fanbase through Facebook ads, watch Jesse Cannon break down why that probably is a bad idea in most cases.)
💝 While Burning Man is cancelled in real life, an online version of the event will happen ‘url’ instead of ‘irl’ from August 30 to September 6. In keeping with the community nature of the event, various people have been creating virtual experiences for social interaction which Burning Man refers to as the Multiverse. Go behind the scenes.
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