Apple is reportedly being investigated by the Department of Justice and Federal Trade Commission for business practices in connection with a relaunch of its Beats music streaming service. Specifically, the company is allegedly pressuring record labels to pull support for freemium streaming services, like Spotify.
Sources told The Verge that Apple is trying to get labels to pressure Spotify and other services to stop offering a free service tier. The site reports that DOJ officials already started interviewing top music executives, but the FTC is now leading the investigation.
When it comes to Spotify, Apple wants to stop labels from renewing Spotify’s license to stream music for free using its ad-supported service. Spotify is up to 60 million subscribers, but only 15 million of them pay for the $10/month ad-free service. If the remaining 45 million listeners have to pay for a service, they might go to Apple, or so Apple thinks.
Apple’s strategy to keep Universal Music Group from working with YouTube is offering to pay YouTube’s licensing fees in exchange for UMG pulling music from the Google-owned site.
This is Apple’s latest effort to get as many subscribers as possible for Beats when it relaunches. Billboard reported in March that Apple actually wanted to offer its subscription service for $7.99 - less than the usual $9.99 a month - but the labels shot that idea down.
Apple bought Beats in May 2014 for $3 billion, but has been struggling to attract listeners. It looks like Apple found the one thing that it wasn’t ahead of the curve on.
image of Ariana Grande courtesy of INFphoto.com