Google Play to pilot third-party billing option globally, starting with Spotify – TechCrunch

Amid increasing global regulations over app stores and their commission structures, Google today announced the launch of a pilot program designed to explore what it calls “user billing choice.” The program will allow a small number of participating developers, starting with Spotify, to offer an additional third-party billing option next to Google Play’s own billing system in their apps. While Google already offers a similar system in South Korea following the arrival of new legislation requiring it, this will be the first time it will test the system in global markets.

As the debut pilot partner, Spotify will introduce both their own billing system alongside Google Play’s own when the pilot goes live. Google did not say which other developers it has lined up for future tests, but noted Spotify was a “natural first partner” on the effort given its reach as one of the “world’s largest subscription developers with a global footprint” and its “integrations across a wide range of device form factors.”

Spotify, of course, has also been one of the larger developers to push for regulatory changes to app stores’ existing billing systems, having testified before Congress on the matter, joined lobbying groups, and backed app store legislation, including the Open Markets Act, that would require companies like Apple and Google to permit alternatives to existing app stores.

The fight is not just about wanting to have a more direct relationship with customers — it’s also about money. Today’s app stores charge commissions ranging from 15%-30%, generally speaking, for apps offering subscriptions through their platforms. Even in the case of South Korea where Google was required to permit alternative billing systems, it only reduced commissions by 4% for developers that directed users to their own billing systems.

Reached for comment, Spotify declined to say what sort of commission it would be paying Google — if any — as a part of this pilot test, noting that the agreement was confidential. But a company spokesperson suggested that the commercial terms met Spotify’s “standards of fairness.”

Google also declined to detail the commission structure involved. However, it noted that user choice billing, such as is the case in South Korea, will still involve a service fee regardless of which billing system the user chooses.

The system is not immediately available as of this announcement. Rather, it will take Google’s product and engineering teams time to build the new experience over the coming months. Once live, users will see the two billing options presented side-by-side directly in the Spotify app. If they choose the Spotify payment method, they’ll continue to checkout with Spotify’s own billing system and user interface. If they choose Google Play Billing, they will transition into the Google Play Billing experience instead.

Spotify will also remain primarily responsible for customer communications regarding their Spotify subscription. But users who elected to pay via Google Play Billing will be able to see their Spotify subscription within the Google Play Store Subscription Center, as usual.

Spotify says it anticipates launching pilots of the first iteration sometime later this year. It will be offered in every market where Spotify’s Premium subscription is available today.

 

Google noted the pilot is still early days and the company will be working through various details about how the system works and how it appears to users as it builds and iterates on the experience alongside Spotify.