Is Apple colluding with the big music labels to put Spotify, Pandora and Rdio out of business? Two state attorneys-general aim to find out.
The AGs of New York and Connecticut, Eric T. Schneiderman and George Jepsen, seem to suspect a secret, backroom deal: They're investigating whether Apple Music seeks to illegally shut out the free, ad-supported services. That's important because of the services' freemium model -- the free tier acts as a shop window for the paid subscription tier.
Is this the e-books antitrust shenanigans all over again? Or will Apple shake it off? In IT Blogwatch, bloggers gonna blog (blog, blog, blog, blog, blog). Not to mention: Something of a surprise, via Aunty…
Your humble blogwatcher curated these bloggy bits for your entertainment.
Brian X. Chen and Ben Sisario break the story:
While Apple was preparing a splashy introduction for [Apple Music], the attorneys general of New York and Connecticut were quietly investigating the...negotiations with music companies.
Universal Music Group...confirmed it was cooperating with the industrywide investigation. ... The company’s legal firm, Hunton & Williams [said UMG] had no agreements...that would impede the availability of free or ad-supported services [and] that it “shares the attorneys general’s commitment to a robust and competitive market.”
The European Commission is also looking into Apple’s negotiations. ... Apple declined to comment. ... In 2013, a federal judge said Apple violated antitrust law by colluding with book publishers. MORE
And Richard Chirgwin adds:
Apple has barely thrown back the covers on...Apple Music [but] it is already facing anti-trust investigations. [The] attorneys general...are investigating whether Apple has pressured record labels – or colluded with them – to eliminate "freemium" services from rivals like Spotify and Rdio.
Artists have a hostile relationship to the freemium services. ... Most notably, pop star Taylor Swift withdrew her music from Spotify. ... Several major record companies recently announced their revenues from digital streaming exceeded those from physical media for the first time. MORE
So what's the danger here? Alex Fitzpatrick explainifies:
Apple Music is clearly aimed at on-demand streaming king Spotify, even matching the $9.99/month price for Spotify’s...subscription. What Spotify offers that Apple Music doesn’t is a free version.
Only about about 15% of...users pay for the service, but their subscription fees make up around 90% of [Spotify’s] revenue. That...is exactly what Apple is after. ... If Apple converts enough of Spotify’s paid users, it could [kill] Spotify’s business.
The biggest advantage Apple Music will have is...that it will be automatically [in] iOS 8.4. ... Installing an app...is a dead simple process, but it’s still a big barrier. MORE
But Mark Ramsey says Cupertino faces an uphill fight:
Those who argue that “Apple reinvented the music industry in 2003, so it can do it again in 2015″ must recognize that now is not then. ... Today, the biggest problem [is] declining revenue from the iTunes store.
So make no mistake: Music commerce is the definition of success for Apple. ... Not revenue from advertising [but] music sales and music sales only. [So] Apple’s success must come at the expense of Spotify to some degree. [It's] a glancing blow at best to Pandora, where the content is virtually all free.
Still, Apple has...enough cash to effectively sell ice to Eskimos.. MORE
Meanwhile, Prof. Matt Schruers sounds kinda conflicted:
Even as a state antitrust skeptic, I can't fault AG scrutiny of what appears to mirror the ebooks debacle. MORE
However, Sam Gustin finds it hard to believe Apple did wrong, and alleges a simply scurrilous allegation:
After the ebooks scandal, Apple would have to be lunatics to push the limits again..
Eddy Cue is lucky he wasn't charged with perjury. MORE
Wait, you mean she can actually sing?
You have been reading IT Blogwatch by Richi Jennings, who curates the best bloggy bits, finest forums, and weirdest websites… so you don't have to. Catch the key commentary from around the Web every morning. Hatemail may be directed to @RiCHi or firstname.lastname@example.org. Opinions expressed may not represent those of Computerworld. Ask your doctor before reading. Your mileage may vary. E&OE.