Apple Music being investigated over alleged conspiracy with labels to kill freemium

10 Jun 2015

Apple's Eddy Cue launching Apple Music at WWDC 2015

It is no secret that Apple wants to decimate Spotify and other streaming rivals. However, it has emerged that legal eagles are investigating whether Apple colluded with music labels to try to kill the freemium model that has built Spotify, Deezer, Rdio and others.

Apple’s brand spanking new Apple Music service goes live in 20 days and for the first three months users will get the service for free before opting to pay US$9.99 a month for access to a library of 30m songs.

As well as streaming and offline services that are par for the course for rivals like Spotify, Apple will be launching a 24/7 online radio station called Beats 1 and a social network connecting fans with artists called Connect.

Negotiations with music labels are believed to have rumbled on to the 11th hour, with the only sign of white smoke emerging on Sunday when the CEO of Sony Music confirmed Apple was launching a streaming service.

However, it has emerged that the attorneys-general of New York and Connecticut are quietly investigating Apple’s negotiations with music companies. If they find what they are looking for, Apple could find itself engaged in an antitrust battle.

The rub of the issue is whether Apple and the labels conspired to withdraw the popular ‘freemium’ services offered by companies like Spotify or YouTube. Such services give users music for free in return for enduring audio and video ads respectively between songs.

Already music label Universal Music Group has written to the attorneys-general stating it has no such agreements with Apple or other labels to impede freemium services, according to The New York Times.

The attorneys-general of New York and Connecticut, Eric Schneiderman and George Jepsen respectively, were both previously involved in the antitrust action against Apple over whether it colluded with book publishers to raise e-book prices above Amazon’s standard US$9.99 pricing for digital books.

The European Commission is also looking into Apple’s negotiations with the music labels.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years