Is Apple Trying To Force Spotify Users Onto Its Own Beats Music Service?

Apple Beats vs Spotify

After Apple acquired Beats music, a company that makes headphones and owns a relatively unsuccessful music service, for $3m at this time last year many were puzzled. But recent developments have cleared the way for better understanding of what Apple is trying to achieve, ahead of the expected announcement of the revamped streaming service at Apple’s WWDC event in June.

The European Commission, US Department of Justice and Federal Trade Commission are all investigating Apple’s plans for its re-launch of the Beats service, following reports of Apple’s music related tactics. Apple already has Radio 1’s Zane Lowe on board for the re-launch and is in talks with producers and record labels to gain the licenses it needs for the Beats service, but it is now being investigated due to its ‘unfair competitive advantage’.
Questionnaires have been sent to other streaming services and record labels in order to garner information about Apple’s future plans and the relationships it currently holds. Reports from The Verge and Bloomberg have uncovered practices by Apple that suggest it is trying to prevent artists and music labels from renewing the license that allows their music to be listened to for free on Spotify. Investigations have been focussing on the fact that Apple may use iTunes as the platform for its streaming service and therefore may have an unfair advantage as it already boasts large music sales.

Spotify currently has a free tier through which anyone can listen to music without paying, as well as a paid tier which removes adverts and costs $9.99 a month. Currently Beats offers only a paid tier which also costs $9.99 per month but has around 300,000 paid users compared to Spotify’s 15 million paid subscribers.
Apple already offers a free music streaming service called iTunes Radio which launched two years ago, but users can only choose the genre of music they listen to rather than individual artists, albums or tracks. It is unclear whether the Beats service will become part of iTunes Radio, replace it or will stand alone, but so far Apple has reportedly not secured the licenses it needs to complete its venture.

One of the major complaints against Apple is that it may be nobbling music labels to prevent them from providing their music for free on Spotify. Spotify’s free tier currently boasts around 45 million users, and without free music to listen to they will be forced to either pay Spotify’s fees or find another music service.
Another complaint concerns exclusivity deals- Apple is reportedly trying to secure deals with major artists that give the Beats service exclusive access to new music for a time period after release. New music streaming service Tidal, fronted by artist Jay Z, has similar deals with Taylor Swift and other musicians, but uptake has been slow for the on-demand music provider.
Thirdly, other streaming services with iOS apps available through Apple’s App Store allow their users to pay for subscriptions through in-app purchases, from which Apple takes a 30% share. Therefore, prices may have to be increased in order to offset fees paid to Apple for each iOS subscriber, especially if Apple continues to prevent large app-owners from accepting payments through methods other than its own in-app purchases. Re-launched Beats won’t have this problem, and it has been suggested that Apple will be able to pre-load the service onto iOS devices through the iTunes Store app or even a new app in future iOS updates.

While it may prove true that Apple has been trying to poach artists from Spotify’s free level onto its own paid Beats tiers to reduce competition, a 2014 study by Wells Fargo and Pandora found that 81% of US internet users were most concerned with whether tracks were free or low cost when searching for music online.  Despite this, Apple is not the only large company with a paid music service. Google Play offers a paid on-demand subscription and YouTube plans to launch YouTube Music Key which will cost $9.99 and include unlimited access to Google Play Music.

According to reports, the re-launch of Beats will be formally announced at the World Wide Developer Conference which begins on 8th June and the service will launch in many countries at the end of the month. However, ongoing investigations from the EC, FTC and DoJ across the US and EU may prove to delay things, especially if Apple is found guilty of anti-competitive practices.

 

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