Music Business

Apple Strong Arms Labels Ahead Of Music Relaunch, Dept. Of Justice Investigates

image from msl-cdn.radiantforestllc.netdna-cdn.comWe've heard and reported on the rumors, but now we're getting details: Apple is aggressively pushing record labels to end deals with Spotify and others that allow free music streaming; and the U.S. Department of Justice is investigating Apple's tactics.

Ahead of the launch of its own Beats-driven streaming music service, Apple has been rumored to be encouraging record labels to stop allowing free ad supported streaming music on Spotify, YouTube and elsewhere.  According to new reports, that effort has gotten more aggressive and drawn the attention of the U.S. Department of Justice, who has met with label execs in recent days.

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 "All the way up to Tim Cook, these guys are cutthroat," one music industry source told The Verge.  Apple reportedly has gone so far as  to offer to pay the equivalent of YouTube’s music licensing fees to Universal Music Group, if it stopped allowing its songs on YouTube.

If the labels were to block Spotify's free tier, it would cut its 60 million user count by 75%.

Bad Timing?

But Apple's timing may be a uncharacteristically off. In addition to the huge promotional value of free streaming, the major labels each own a significant stake in Spotify. They will not be able to cash out until the company goes public.

Right now, anything that hurts Spotify, hurts the major labels.

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