In the fourth quarter, Spotify announced today that its User Choice Billing program has now expanded to more than 140 markets worldwide, allowing the streaming music service to reduce the commission it pays Google on Play Store purchases associated with its Android app. a. The User Choice Billing pilot program gives Android users the option to pay an app developer directly. It was introduced last spring, and Spotify was planned as a first tester. But neither company shared an update on the program’s progress until last November when it was announced that Spotify would begin rolling out its tests in select markets.
At the time, Spotify said the program would be available in select markets only to begin with and would later be rolled out to others in the “coming weeks.” It did not share which markets would see the third-party billing option or when it expected the choice to reach its global Android app user base.
Today, the company confirmed that it has made solid progress on the program’s deployment. As part of its earnings announcement, in which the company also beat user growth goals with 205 million paid subscribers, it shared that its November rollout of User Choice Billing became available to users in “10+ markets. ” Over the past several months, Spotify said it has expanded the option to now more than 140 markets around the world.
However, Spotify has not yet released a detailed list of countries where the program is offered but told TechCrunch it expects to implement the option in “every market” where it offers Spotify Premium today and where Google Play Billing is available. Spotify Premium subscribers are now available across 184 global markets, according to the company’s website.
It’s not surprising that Google chose Spotify as an early tester of its new billing offering, given that the streaming music service has long been a fierce critic of the app store, sharing its complaints about the necessary commissions with the US Department of Justice and EU regulators. they If a well-spoken voice like Spotify could be appeased by a reduced commission on in-app purchases, Google hopes it could ease concerns about its alleged abuse of market power now being investigated.
In March, Google introduced third-party billing options to Android app developers, as the looming threat of antitrust and regulatory litigation loomed closer. Already, the tech giant has been forced to support alternative billing systems in South Korea, with the passing of a new law, and has been sued by top app makers, including the Epic Fortnite game, over antitrust issues. However, the User Choice Billing option did not offer much savings to app developers, as Google only reduced the mandatory commissions on app purchases and in-app payments by 4%.
Last November, Google said it was opening the User Billing pilot further to new markets, including the United States, Brazil and South Africa, and invited other developers to participate. Dating app Bumble then joined Spotify as one of the early adopters.
Developers participating in the program must follow certain UX guidelines set by Google that detail how to implement features in their apps. These guidelines now require developers to display an information screen and a separate billing options screen. Each user only has to show the information screen the first time they start a purchase, but the invoice selection screen has to be shown before each purchase.
While the general terms offer a 4% reduction on commissions paid to Google when using third-party billing, Spotify would not comment on its confidential deal with Google, only noting that it meets the company’s “standards of fairness.” It is not clear if the streamer was offered more favorable conditions as an early tester.
Spotify’s deal with Google could provide a boost to subscription revenue at a time when the streamer is facing an increasing push from investors to increase its margins and make the service profitable. As Spotify chased investments in areas such as ad technology, podcasts, audiobooks, and more over the previous years, its losses widened last year causing its market cap to decrease by more than 60%. In a note published on the Spotify website this month, as the company announced layoffs affecting 600 people, CEO Daniel Ek admits the situation is the result of “too ambitious to invest in front of our revenue growth.”
The company’s solid progress on user growth in the fourth quarter saw its shares pop after results were announced earlier this morning. In addition to its 205 million paid subscribers, up 14% year over year, it also announced that total users were up 20% year over year to 489 million. Revenue came in at €3.17 billion, just ahead of the estimate of €3.16 billion, but Spotify’s loss per share was 1.40 euros ($1.52), greater than the expected loss of 1.27 euros.