Apple is currently negotiating with music labels over its new music streaming service, and it is pressing for music labels to end their agreements with free services such as Spotify. Spotify offers an ad-supported music streaming service for free, as well as a paid-for service which has no ads, reports The Verge.
Spotify and YouTube targeted by Apple
According to anonymous sources, Apple is trying to get music labels to shut down the free Spotify service, which 45 million of its 60 million users currently subscribe to. Previous reports claimed that music labels are not entirely happy with free music-streaming tiers, and Apple apparently assured them that its service would become subscription only after an initial trial period.
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If Apple manages to bring about the end of Spotify’s free tier, then it would bring Spotify more in line with Apple’s own service. As a result, Apple could potentially attract users away from Spotify. Apple has also tried to affect YouTube’s ability to broadcast music, offering to pay YouTube’s licensing fee to Universal Music Group if the label ended the site’s access to its music.
Negotiating tactics under scrutiny
“All the way up to Tim Cook, these guys are cutthroat,” an anonymous music industry source told The Verge. This is thought to be one reason for the DOJ’s interest in Apple’s practices. “DOJ officials have already interviewed high-ranking music industry executives about Apple’s business habits,” The Verge said.
Speculation about a Beats-based app for iOS first arose in February, and insiders suggested that Apple will launch a music streaming service that “deeply integrates” the Beats brand, and a selection of popular artists. In April a number of reports claimed that once a free trial period ends, users may have to pay $8-per-month in order to access more music, while iTunes Radio will still be free.
It is thought that Apple will reveal more information about its streaming service at the WWDC event next month. The music streaming market recently gained a new competitor in the shape of Jay Z’s music service, which does not include a free tier.