Apple Strong-Arming Labels to Cut Spotify’s Free Tier…


If streaming is the future, then it’s a cut-throat future for us all.  According to details now leaking profusely, Apple has been exerting heavy pressure on the major labels to cut Spotify’s free tier, and hand them a massive market advantage in the process.

Unfortunately for Apple, the ugliness is spilling everywhere.  “Apple has been pushing major music labels to force streaming services like Spotify to abandon their free tiers, which will dramatically reduce the competition for Apple’s upcoming offering,” the Verge just reported.

That follows highly-vocal statements by top label executives Doug Morris (CEO, Sony Music Entertainment) and Lucian Grainge (CEO, UMG) against free streaming, not to mention the presence of top Universal Music Group executive Jimmy Iovine inside Beats/Apple.

This inside job might explain why European regulatory officials are already getting involved and taking interviews.  “The European Union’s Competition Commission has launched a probe of Apple and other premium music-streaming services to see if they are working with music labels to unfairly squash no-fee streaming services,” the New York Post reported.

Sadly, this seems to be what Apple ‘innovation’ is post Steve Jobs.  While Apple fumbles with its out-of-reach watch and shrinking mobile market share, the company is years behind Spotify in streaming.  That partly explains the fairly lofty $3 billion purchase of Beats last year, though there’s little sign that Beats is making any substantive impact against market giants Spotify and YouTube.




28 Responses

  1. DavidB

    Something doesn’t compute. The free tier is unprofitable for the labels, and their bosses are saying so loudly. So why would Apple need to ‘strong arm’ the labels into doing something they want to do anyway? This sounds to me like anti-Apple propaganda. In DMN? Surely not!

    • GGG

      It’s certainly a way to potentially cause irreconcilable rifts between the majors and Spotify. Majors and Spotify can’t come to a mutually beneficial agreement, in comes Apple to save the day.

    • Anonymous

      It actually could make sense.

      Spotify is a big source of money for them, even if they don’t think it pays enough. So they’re unhappy with Spotify’s free tier, but too scared of losing out on money to do anything about it.

      Which is a shame, because they do have the leverage here and they’d come out the winner. It’s fascinating to see a small group of companies hold so much power and fail to use it effectively. If only they could see past the immediate paycheck from Spotify and think long term…. they still haven’t figured out this newfangled “digital” world, have they?

      • Musicservices4less

        Here’s what has mostly likely been going on for at least the past 6 months. First, the comment below by Anonymous about the major labels failing to use their “power” effectively has been the problem for the last 20 or so years in the music industry. Keep in mind that the leadership of the major labels over this period has been through the promotion of employees (yes, highly paid) and is not run by owners i.e. entrepreneurs. Therefore, their decisions and actions are always conscious of have to get their pay checks and not rocking the boat nor steering it in the proper direction.

        The majors knew from day one that the basic selling principal of “you can’t compete with free” applies no matter what the “technology of the day” might be. The majors just didn’t know how to attack it. We all sadly watched the stupidity of how they went about it but that is nothing new for the major music labels. The people that run the labels are just employees and are always, always first concerned about their paychecks.

        Luckily, as the years passed, events changed, and they are now in a position to come out of the dark ages of tech music distribution with their paychecks not in play. They have other supporters and it is not just Apple.

        See today’s (May 5th ) NY Times piece on the piracy that went on with mobile apps related to bit torrent file sharing (Popcorn Time) regarding the Mayweather-Pacquiao fight. Hollywood is now stepping into the piracy streaming fight in a very big way. People in the business have always knew that it would take the muscle both political and financial to fight piracy regarding big tech companies such as Google and also the ISPs themselves.

        Regarding the ISPs, see what happened in Britain last week as reported in the same NY Times article where the MPAA got a court to order the five major ISPs to block all the downloading sites that make Popcorn Time available.

        And for those of you who think that Apple is acting in anyway near an anti-competitive manner (which I don’t think they are), just look at the biggest monopoly of all time, Google, and what has the Justice Department been able to do about that? Then again, Google’s time is probably coming and is another reason why Google will also eventually be forced to stop the free Youtube, ads or no ads.

        Piracy will always be here, no doubt. For the music industry and other content providers, it will be a constant battle as it always has been. These past 20 years or so have left many of my friends and competitors behind and that was a bad thing. And for those of us who have survived and kept the lights on, it is now our turn.

        And eventually because of the financial revival of the music business, the music itself that has been bubbling under for some many years, not being able to come to the surface because so many people drank the kool-aid of “free music”, that music will surface and make great music available again to all those that appreciate it.

        And to those of you who may say if that is so I will just find another way to get it for free, I say we know. And we do not care who you are, we stop and slow you down by attacking and eliminating the methods you use.

        And the battle continues. . . (Star Wars theme here or big sync opportunity for better new music)

    • jen

      It’s because Spotify planted this article on The Verge.

      Nobody, including labels and artists, wants free anything. Free is only a business model for venture captial folks to build and sell off Spotify.

      Spotify plants articles all the time in the media.

      • Anonymous

        …and now they are doing the $1 for 3 months offer to capitalize on the buzz

        super shady

  2. Central Scrutinizer

    “Sadly, this seems to be what Apple ‘innovation’ is post Steve Jobs.”

    Seems more like business as usual in the music industry to me

  3. Mr. truth

    Paul, come on. Just more anti-Apple propaganda.

    First off, YES, we NEED to get rid of FREE. Free is what is killing the industry.

    Secondly, fumbling Watch and shrinking mobile share? Are u flicking joking? They can’t ship Watches fast enough (massive demand) and out of every single dollar spent in mobile, Apple is getting the lion share.

    You are really hurting your credibility by just throwing out baseless and idiotic claims.

    • Anonymous

      If this story that is being spread by many reputable news groups is even half true, it is clearly illegal and this company deserves any and all the negativity they get. Antitrust regulators should be all over this. Maybe it is time to split up the big Apple.

  4. Down With DMN

    Hey Paulie, how’s the Belize venture going my man? Hurts doesn’t it when its back on you.

  5. Anonymous

    “Apple has been exerting heavy pressure on the major labels to cut Spotify’s free tier”

    Sounds like a good idea.

  6. Anonymous

    What’s “sad” or wrong about this?
    The free tier has to go.
    Apple is right.
    The labels want the free tier gone, with or without Apple’s influence.
    So do I, as a music producer and artist.

      • so

        It’s actually a huge story with huge implications. 2015 is the defining year for music streaming. The map is being drawn right in front of our eyes, right now, and there is going to be a single winner by the end of the year.

        What sense does it make to go after Spotify but not YouTube? Spotify free tier and YouTube are essentially the same, and pay a similar rate. A part of the answer must be that Apple sees Spotify as more of a competitor, and more of a threat, than YouTube, but it’s not clear why exactly. Apple, like the rest of us, is ultimately competing with free. If Spotify drops free, those people are going straight to YouTube or, more likely, straight to the next Grooveshark. How many years did it take to get rid of it? Maybe Apple is realizing that Spotify’s free tier actually *is* converting subscriptions, and that gives them an advantage. Hope that someone is thinking down the road – as in, what happens to the 45 million people on the free side of Spotify if they shut that down?

        • Amyt

          Except Apple is going after YouTube as well. Apparently, they have even offered labels to pay YouTube licensing costs to convince them. Their stance is against all free streaming, and not just Spotify.

  7. gwyn

    spotify free tier doesnt make money but neither do most startups in cashburn mode.

    free ad supported is killing the industry? what about free ad supported gmail, facebook, twitter, ota tv? get rid of those too?

    • FarePlay

      Somebody better save the day. The whole Euro thing smacks of Amazon and their behind the scenes dealing to get a price fixing inquiry into Apples e-book pricing.

      If it’s true that the labels are demanding a paid tier only for Apple Beats than sure as hell Spotify et al need parity. Sorry Paul, but Apple may be our only shot to salvage this disaster. We’ll find out in June, hopefully.

  8. Pulitzer worthy article

    I love how many anti-Spotify articles there are on this website, the main theme of which seems to be how their business model with a free tier is unsustainable and continued financing rounds ridiculous. That is until Apple is somehow involved, then it’s suddenly “poor Spotify”.
    Paul, contradict yourself much?

    Also…type “Apple mobile share 2015” in your favorite search engine and you’ll realize what an idiotic statement that was. I guess research in “journalism” takes too long these days. Paul, you should start an “editorial” section on your site so you’re not duping your readers into thinking these kinds of articles are objective or based on fact.

  9. Name2

    More collusion! Higher prices!!

    DMN lets out a collective “Yay!”

  10. P$$$

    I think that Spotify’s free tier will be cut, or severely limited (much like Pandora used to limit to 40 hours a month of free listening) because it’s my understanding the majors own a stake in Spotify. So, they’re not about to completely cut ties with a company they have equity in that’s now valued over 1B. Come on now.. Apple is definitely struggling, because Spotify is already so much more established. Once Beats/iTunes streaming service comes out, it will struggle to capture market share regardless of if everyone is charging 9.99 for streaming or not. It’s hard to quit a good thing, especially when people already have playlists and favorites and are used to the spotify platform. Sure, you’ll have the Apple faithful move over; but I tend to agree with the comment in the article here that implies the lack of innovation at Apple without Steve Jobs at the helm. Oh well, there’s always a changing of the guard.

  11. Wooly

    Nobody is “strong-arming” anyone. There is no requirement that labels use Apple. Screw them.

  12. HelloGoodbye

    “The New York Post reported”
    The NY Post ? Is that considered a serious source ? Isn’t it as reliable as TMZ ?


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