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Spotify Complained and now the FTC is Considering an Investigation into Apple Music

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On Wednesday we posted a report titled "Spotify Attempting to Stir Up More Trouble for Apple." The report noted that "E-mails from Spotify explained to users that they pay $13 when they purchase subscriptions through the Apple app store, compared with $10 on Spotify's website. The price difference is because Apple takes a 30 percent cut of subscriptions purchased through its app store. The e-mails explained how to cancel the app store subscriptions and sign up on the Spotify website." Late yesterday, the U.S. government antitrust regulators have decided to investigate these claims by Spotify as to whether Apple's treatment of rival music apps is illegal under antitrust law.


While $9.99 has emerged as the going monthly rate for music subscriptions, including Apple's, some streaming companies complain that Apple's cut forces them to either charge more in the App Store than they do on other platforms or erode their profit margins.


Reuters reported that while "The Federal Trade Commission is looking at the issue but has not begun a formal investigation, said the three industry sources, who requested anonymity. The agency has had meetings with multiple concerned parties, one source said. The agency meets with companies routinely, and a formal investigation may not materialize.


Antitrust lawyers interviewed by Reuters were divided on whether Apple's policies had the makings of an antitrust violation."


Reuters further noted that "Two of the industry sources say that the antitrust concerns focus on restrictions in the App Store. These include a prohibition on advertising in the app that the company is on other platforms, a ban on marketing in the app that consumers can also buy directly from the company's website, and a ban on linking to a company's website from within the app."


Yet these restrictions apply to all apps, not just music streaming apps. There's nothing new here, there's no singling out Music streaming Apps. This wasn't an issue for years. So why should it be different for music streaming apps now? The App Store is Apple's business model that has worked for years and everyone knows the rules, including Spotify. Yet when Spotify complains, every governmental agency is falling over themselves to start an investigation.


Reuters later notes that "Antitrust lawyers knowledgeable about the tech industry were split on whether Apple's policies violated antitrust law. Apple is free to charge whatever fee it likes for transactions in the App Store, some argue, and companies do not have to sell their goods there.


It is legal to have a monopoly but it is not legal for monopolies to use their clout to hurt competitors, said Jeffrey Jacobovitz of the law firm Arnall Golden Gregory."


Isn't the ganging up on Apple getting a little out of hand? You have the European Regulators investigating Apple along with the Department of Justice, the U.S. Government Antitrust Regulators and possibly the Federal Trade Commission. It's simply amazing how one shit-disturber has all of these governmental agencies dancing to their tune like the Pied Piper.


It's basically one company creating this havoc. A company whose biggest subscriber base pay nothing for listening to music based on a "freemium" business model that is known to be hurting artists. Artists are really hurting with this freemium model and yet it's Apple that's being made to look like the bad guy for trying to raise the bar in the streaming music industry so that artists could be paid fairly.


It was reported late yesterday that Apple is even beginning to  create their own music videos to promote artists on Apple Music. Apple supposedly made one for Drake in-house as well as the one for Pharrell William's "Freedom" and Eminem's "Phenomenal." This is a positive for music artists.


In the end it's truly a shame at how Apple is being attacked on all fronts because of complaints from those who want to keep a freemium model alive for their benefit at any cost. The latest complaint about the App Store wasn't raised prior to Apple starting Apple Music. Not a word from Spotify then. They clearly understood Apple's long standing rules for putting an App in their store. No one put a gun to their head. So this is so beyond hypocrisy it's not funny. Crazier is the fact that an investigation may be opened on this issue.  


Like many Apple fans (including myself), they're willing to pay Apple's premium on a TV channel or app because they want one charge at the end of the month for multiple services/rentals and/or purchases. Secondly they trust Apple with their private information instead of a foreign company from Sweden or elsewhere who may be selling off their personal data to make hidden profits. It's not illegal for consumers to actually choose the service they want. If I want to use Spotify for music streaming now or in the future, I'd rent the service through Apple's app store and gladly pay the premium for reasons I just outlined. Spotify sees this as a great evil conspiracy against them. Someone is definitely grasping at straws here and adding a little too much jet fuel to their morning coffee.   


At the end of the day when you're an industry leader like Apple is, it's sadly par for the course and business as usual to deal with these kinds of industry player tactics and investigations. Apple will get through this latest round of investigations and likely go on to become one of the leading streaming music services available. They'll offer a better service at a fair price and hopefully make money for themselves, and more importantly, added profits for the music artists that continually entertain us.      


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Side Note and Related Report:


Why aren't these same agencies investigating Apple looking into the complaint by UK's Ministry of Sound streaming music service who claims that the labels are supporting Spotify's freemium model because they have a stake in Spotify's IPO? This was a point raised in a May 15, 2015 report titled "A New Dirty Little Music Industry Secret Should end the Investigations into Apple's Music Streaming Business." 




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