The service will be launching later this month on multiple platforms. It will only be offered as a $10/month subscription service as no free ad-supported variant will be available.
The Consumerist explains how this could help Apple’s service to get established by incentivising music publishers to only release content on Apple Music. It could make it more expensive for competitors with free options such as Spotify and Pandora to gain new content.
Only 25 percent of Spotify’s users pay for its “Premium” option while the figure is only 20 percent for Pandora. It would therefore be relatively simple for Apple to hurt their business by conspiring with the music industry so that Spotify and Pandora find it harder to buy new content.
The attorney generals for the states of New York and Connecticut have now begun an investigation into Apple’s involvements with record labels, according to the New York Times. The aim is to establish whether Apple pressured or conspired with the music industry to gradually push freemium services like Spotify out of business.
New York Attorney General Eric Schneiderman told the New York Times “It’s important to ensure that the market continues to develop from collusion and other anticompetitive practises.”
In a letter sent to the paper, Universal Music Group denies any unusual involvement with Apple, writing that it does not “currently have any agreements with Apple Inc. to impede the availability of third-party free or ad-supported music streaming services or that limit, restrict, or prevent UMG from licensing its recorded music repertoire to any third-party music streaming service on any terms that UMG may choose. Nor does UMG intend to enter into any such agreements.”
Spotify has already moved to defend against the looming threat of Apple Music by raising another $526 million in funding today. The company is now valued at $8.53 billion.
Apple is not alone in refusing to offer a free version of its music streaming service. Microsoft discontinued its freemium Xbox Music service last December and an $8.99/month Xbox Music Pass is now required. Apple may be able to use this to claim that it is competing more with Microsoft than with the “freemium” offerings of Spotify and Pandora.
The Consumerist notes how the news of the probe into Apple Music seems strikingly similar to Apple’s entry into the e-book market several years ago. The company was eventually found liable at trial to conspiring with some of the largest book publishers so that they fixed their prices and allowed Apple to get established in the market.
