Just when all the hype about the release of Apple Watch was starting to fade away, Apple made headlines again. This time, it’s due to reports that the company is pushing record labels to force streaming services like Spotify to abandon their free tiers. The same source also indicates that Apple proposed to pay YouTube’s music licensing fee to Universal Music Group, if the label removed its songs from YouTube. This set of aggressive tactics, which could put rival music services at a disadvantage, has triggered preliminary investigations from the Department of Justice, Federal Trade Commission, and even the European Union’s Competition Commission.
Why is Apple so opposed to freemium? First and foremost, Apple wants to clear the way for the re-launch of Beats Music this summer. Last May, Apple acquired the headphone manufacturer Beats for $3 billion, which included its subscription-only music service. Co-founded by music moguls Jimmy Iovine and Dr. Dre, Beats Music positioned itself as “a music service with heart” and promised to offer playlists curated by respected artists instead of computer algorithms. Despite heavy promotions and endorsements from celebrities such as Ellen DeGeneres and Eminem, Beats Music has performed poorly against rival music services such as Spotify which got into the music streaming market earlier, has an ad-supported free tier, and is growing rapidly. If Apple could eliminate the free tier from its rivals, it would largely reduce the competition that Beats Music will face and prepare it for a more successful re-launch.
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