Apple Music’s edge over streaming services like Spotify, Rdio and Pandora means that Apple gets to take a 30 percent cut of rivals’ App Store subscriptions — thereby forcing them to jack up their prices or lose money.
It’s the subject of a current FTC antitrust investigation, but according to Rutgers University law professor Michael Carrier, while it may be harsh, it’s probably not illegal.
“[You have to ask] whether or not Apple is taking actions that make no sense for its business other than harming competitors,” Carrier tells Wired, adding that “This is not a slam dunk antitrust case.”
“At the end of the day, what does the consumer view as a substitute?” Carrier says elsewhere in the article. “If the iPhone is really a unique market, then you could make the argument that the iPhone is the market, the App Store has a huge percentage there.”
However, due to the presence of Android — and the fact that companies can choose not to sell through the App Store, it’s likely that Apple’s “take it or leave it approach” is tough, but not antitrust-worthy. That could change if Apple’s share of the streaming market changes drastically in the years to come, though.
If it’s not illegal, then Apple’s definitely played a master game, though. As Rdio’s CEO explains in the article, because 70 percent of revenue from music streaming immediately goes to music labels, publishers, and distributors to pay for music rights, Apple’s extra fee means that companies like Tidal and co. make no money at all — or even lose it — if they try and match Apple at the $10 per month rate.
Game, set, and match?
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
11 responses to “Apple Music is ‘not a slam dunk antitrust case,’ says law professor”
So Spotify wants Apple to carry their app for free and not take any of the in-app purchase? How is that fair? Apple handles doling out the app and handles their money transactions. There has to be a fee for that somewhere, and regular transactions should require a regular fee. It is more a question of what a fair fee would be, and Apple should expect to show some profit for their service in infrastructure. The question is, then, what is a fair percentage of what becomes a regular income stream from ongoing subscriptions and whether that should indeed be 30%.
I don’t think the case is over Apple Music, from the sounds of it, it’s over what Apple charges Spotify and other 3rd party streaming app services when a user downloads the app from the Apple App Store. So, if you dl Spotify from Apple’s App Store, the user pays Spotify $12.99 (or whatever they charge) a month for the service and out of that monthly rate, Apple gets 30% because it’s an in app purchase. Google, apparently doesn’t charge as they have exceptions to their 30% fee. I don’t know what Microsoft charges, so we don’t know that. This is not over Apple Music from what I’ve read, it’s about the in-app purchases of 3rd party streaming services apps.
That’s not completely true. You can download the Spotify app and still pay the same amount as everyone else. You just have to start your subscription through the website and not the app. Then just sign in to your account on the app. Seriously, this antitrust business is just jealousy because Apple is moving in on their business and has the clout to overtake them. Apple Music already has half as many subscribers as Spotify.
I gather that Apple Music hasn’t got off to a good start in terms of user feedback. Vast libraries of owned content vanishing etc. Maybe Apple’s argument will be that Apple Music service is so poor that it’s not really competing at all? %)
They have half as many subscribers as Spotify in one month. Apple Music is doing just fine. There’s even an app now that moves your playlists and stuff from Spotify or Rdio to Apple Music.
Paid up or on the one month trial? If the former then it doesn’t mean they’ll be happy users right?
It’s a three month trial. No one is paying for Apple Music yet, which is still irrelevant to the conversation considering it took Spotify 10 YEARS to get twice as many users as Apple got in a MONTH.
But it’s rather foisted on users isn’t it? Doesn’t say much about whether its any good!
More important perhaps is it strengthens the argument that Apple is abusing it’s position by preloading it’s own service without prompting users to consider other options as well as effectively pricing it at a discount to rival services.
Apple isn’t abusing anything. They aren’t forcing anyone to subscribe to Apple Music. I still use my Music app to only access my iTunes Match music (because I don’t care for the other streaming services). After the update, I opened the app and said “no thanks” to the trial. Not that difficult.
It’s up to the users to be aware of their options and not act like dumb sheep. Apple Music is the same price as Spotify Premium if you subscribed outside of the iOS app. If people don’t know they are paying more to subscribe through the app, that’s their fault and not Apple’s.
And the reviews have been very good for Apple Music.
Good one! Nearly got me to bite there on the dumb sheep reference.
these companies should not be offering in app purchases. just like netflix doesn’t. I’m not sure why they want to jack up prices. customers wouldn’t buy it, and those who do are just silly.