Leaked Spotify Memo Begs EU Regulators to Slow Apple Down

Stop! Spotify Begs EU Regulators to Slow Down Apple Music
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Stop! Spotify Begs EU Regulators to Slow Down Apple Music
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Photo: Ndemello

Apple Music is rapidly catching up to Spotify.  But is Apple breaking anti-competitive laws to win?

Depending on which study you read, Apple actually has more active users than Spotify.  And this part is less disputed: after just two years on the market, Apple Music is already half the size of Spotify (which started in 2008).   All of which suggests that Apple Music could easily become the biggest streaming platform as early as 2018.

That is, before Spotify gets to go public.  And before it becomes a billion-dollar company with billionaire investors.

Now, Spotify is crying foul — against both Apple and its less successful rival, Google (at least in music).  In a memo dated May 4th and leaked over the weekend, two of Spotify’s top executives have requested regulatory action against two of the largest behemoths in online media: Apple and Google.

Specifically, the memo was signed by Spotify CEO Daniel Ek and cofounder Martin Lorentzon.  Others in the music space inking the memo were Deezer CEO Hans-Holger Albrecht and its founder & CTO, Daniel Marhely.

Oddly, neither Apple nor Google are specifically named in the memo.  Though it’s hard to imagine who else this memo is referring to (outside of possibly Facebook).

Collectively, both Apple and Google control nearly 100% of the entire mobile app space.  That means that both companies theoretically have the power to crush a rival streaming platform overnight if they so desire (or at least severely handicap them).

That creates a massive vulnerability for Spotify and its investors, and it forms a core argument in the letter.  Here’s a quick excerpt:

Our collective experience is that where online platforms have a strong incentive to turn into gatekeepers because of their dual role, instead of maximizing consumer welfare, they can and do abuse their privileged position and adopt B2B practices with adverse consequences for innovation and competition. These practices range from restricting access to data or interaction with consumers, biased ranking and search results to lack of clarity, imbalanced terms and conditions and preference of their own vertically integrated services.

And here’s the full letter.

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9 Responses

  1. thank-you

    I’m grateful these guys are taking on Apple and Google. They are killing music more than Spotify is.

  2. Remi Swierczek

    Apple is on Ek’s CRACK converting $300B of music goodwill obvious to any normal human and converting it to (we hope by 2025) $25B streaming and advertising TOMB!
    Steve Jobs must be turning in his TOMB!

    UMG suicide wish in PROGRESS to nowhere!

  3. Adam

    Paul – by what measure is Apple “rapidly catching up” to Spotify?

    • Paul Resnikoff

      2 measures:

      (1) paying subscribers
      (2) active users

      • Anonymous

        Wrong and wrong. You say 20 million is half of 50 million for paying subs and reference a debunked study that was shredded when you last posted it Paul. Repeating false statements over and over again doesn’t make them true.

        • Paul Resnikoff

          Love you man, but you’re off. First, Apple’s paid subscriber number is realistically 25 million, if not north of that. The last Apple announcement stated it was more than 22 mm, and that was months ago I believe.

          Second, that study was never ‘debunked’. Roundly and appropriately challenged, yes, but not debunked. In fact, it’s perfectly reasonable that Apple Music may have a very substantial amount of active users (which = free trial + paying users). Their feeder system is much bigger.

          Lastly, keep in mind that a giant percentage of Spotify’s users are extremely cut-rate. Half priced students, $1 for 3 mos., that sort of thing. A lot of sizzle, with less steak than you think.

  4. mike

    Mr Ek is spending other peoples money to rip the artists and then cries when he realize there are other players who want’s to rip him off 🙂

  5. Hessel van Oorschot

    Paul, why is this about Google and Apple only? Looking at the bigger picture and being the first big gatekeeper between a consumer’s voice and online databases with millions of songs ready to serve I can’t dismiss Amazon (Alexa). So the 3 A’s can – overnight – decide to take down Spotify, Deezer and others. All 3 have other forms of income (healthy ones). They can use music as a way to engage, complement other services, sell more products, attract audiences. Spotify’s model is 100% music driven.

    I am interested to learn if Spotify or Deezer has the power to redesign the music industry value chain (together with music makers, managers, labels, publishers, collecting societies, telecom operators, consumers) or if the only way forward is to pump (exponentially) more money in marketing to attract new subscribers, convert some of them to a paid model which is getting cheaper every quarter and defacto keep the current status quo.

    Amazon has the power, business models, infrastructure and cash to come in hard.

    Let’s see