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Saturday, April 4, 2015

European Regulators Sticking their Nose into Apple's Streaming Music Business before it even get's off the Ground


Sticking their nose in Apple's business is becoming an annual affair with European Regulators of one kind or another. Last year they warned Apple that they had to adopt the charging standard for mobile devices that was adopted by Android because, well, they felt like it. Now, one year later, and they're at it again. European regulators are scrutinizing Apple's dealings with record labels, amid an intensifying battle over the future of free, ad-supported music streaming services such as Spotify.

The Financial Times reports that several music labels "have been sent questionnaires requesting information about agreements between the labels and Apple ahead of the planned summer launch of the company's own music streaming service, putting it into competition with the likes of Spotify, Deezer and Google." Of course, let's be absolutely blunt here, Spotify and Deezer are European. To be specific, they originate in England and France respectively.

The Financial Times notes that "Such questionnaires are often triggered by a formal complaint to the commission, the EU's top competition authority. The information gathering is the first step in a probe and does not necessarily mean Brussels will launch a formal antitrust investigation. If the commission concludes there is wrongdoing it is empowered to require changes to business practices and can impose hefty fines.

According to the Financial Times, "The commission's probe has prompted finger-pointing within the music industry about the source of the complaint, with some suspecting one of the companies that currently offers free streaming services. But it comes at a critical moment for the music business, as its income has shifted away from digital downloads towards a new generation of streaming services, led by Spotify. Spotify has 15m subscribers who pay $10 a month for unlimited listening, with 60m people using its free, ad-supported service."

Last month we posted a report titled "The Music Industry is frowning on Freemium Streaming Services just as Apple's New Service is Around the Corner." In that report we noted that the music industry had been re-thinking the so-called "freemium" music streaming business model.

The issue exploded onto the scene with the very public incident of Taylor Swift yanking her music from Spotify. In November the Rolling Stone noted that Taylor Swift had never been the most enthusiastic supporter of free music. Swift had written at an earlier time that "Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for."

Apple is banging the drum to basically wipe out those services. They're willing to sell a streaming service and drop the freemium tier which is hurting the industry and artists like Taylor Swift. That in turn would hurt the European music streaming services and hence a magical complaint was filed because a new business model being introduced by Apple and supported by the U.S. music labels could upset the Apple cart for the European brands that got away with giving music away without paying for it for too long. What the European regulators are quietly threatening now reeks of politics, pure and simple.

The New York Times reported just last week that Apple failed to get Pricing Concessions from Record Labels for their Upcoming Streaming Music Service. But the Europeans of course don't trust the U.S. for anything. They prefer to stir things up, get big headlines in the press and show U.S. businesses that they're the boss. The Europeans demand communistic rules when it comes to business. No, honest negotiations with the music labels isn't allowed. I hope that the music label will tell Europe in no uncertain terms to shove their questionnaires into unpleasant locales. But they won't even though they should.

What's next? Perhaps some European regulator will decide that Apple's iOS is just too damn different and that Android must run on Apple's iPhone to make it easier for Europeans. That's how stupid European regulators (or parliament) were when forcing USB down Apple's throat instead of allowing them to run their business as they saw fit and provide better market solutions. Until the U.S. regulators start barking back, this European nonsense is never going to end.

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