Report: The FTC Is Probing Apples Communications With Record Labels

Author

John Paul Titlow

May 7, 2015

This summer, Apple could start to reshape the music industry yet again, with the relaunch of the Beats streaming music service. But streaming is already a crowded space, and Apple is aggressively trying to set itself apart. Now the U.S. government wants to know: How aggressively?

The Federal Trade Commission is reportedly probing Apple’s approach to securing streaming rights from the record labels, according to Bloomberg, confirming a similar report made by The Verge on Monday. This includes Apple’s apparent pursuit of exclusive deals with popular artists like Florence and the Machine and Taylor Swift, which is one of the few ways it could set Beats apart from otherwise similar products from Spotify, Deezer, Google, and Rdio.

As Bloomberg explains:

The FTC’s investigators, still in the early stages of their inquiry, are asking whether Apple’s efforts will change the way music labels work with other streaming services, for example curtailing ad-supported music and pushing more songs into paid tiers of service at higher rates, according to one of the people.

With so many companies competing in the music streaming subscription market, the focus has shifted from details like sound quality, mobile access, and catalog size to questions that are much more valuable to fans, such as: Which service has Taylor Swift’s newest album? Swift famously pulled her catalog from Spotify in November of last year, reigniting the debate over the economics of streaming music, how artists are compensated and whether these services can really afford to offer a free tier of music access (Swift obviously doesn’t think so).

Things heated up even further in March when Jay Z bought Tidal, a Swedish competitor to Spotify and the rest of the streaming services. Angling for a more artist-friendly streaming market, Jay Z relaunched Tidal shortly thereafter and wasted no time pursuing exclusive music licenses. He even pulled his own albums from Spotify.

If Beats manages to launch with Swift’s catalog—as well as other exclusive content from popular artists—it could make a big enough splash to threaten Spotify, the front-runner in the streaming music space with over 60 million users.

Apple has an incredible amount of muscle to flex here, not to mention cash to spend. Through its iTunes music store, the company already has well-established relationships with labels and artists, including the entire catalog from The Beatles, which Apple finally obtained in 2009. If it managed to convert that relationship into a streaming music rights deal for The Beatles albums, Spotify would have cause to panic.

But is Apple going too far in its quest to challenge Spotify, Google, and the other companies entrenched in this space? That’s what the FTC’s inquiry will be focusing on. Depending on what they find, Apple’s Worldwide Developers Conference keynote in June could wind up having one announcement that’s conspicuously absent.

 

This article was written by John Paul Titlow from Fast Company and was legally licensed through the NewsCred publisher network.


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