US 'probes' Apple's music deals

SPOT THE BOSS: Apple chief Tim Cook (centre) with students in San Francisco on Monday, when the tech giant launched its music streaming service. The authorities say the music streaming industry is being probed for anticompetitive behaviour. PHOTO: AGENCE FRANCE-PRESSE


    Jun 12, 2015

    US 'probes' Apple's music deals


    ATTORNEYS-GENERAL in New York and Connecticut are investigating whether the deals that Apple has struck with music companies for its new streaming service violate antitrust laws, The New York Times reported.

    Spokesmen for both offices confirmed to Reuters that the music streaming industry was being investigated for anticompetitive behaviour, but would not confirm that Apple was being singled out.

    The tech giant launched its music streaming service, Apple Music, on Monday, aiming to muscle in on an industry led by Spotify, Pandora and others.

    The US$9.99 (S$13) monthly service could alter the dynamics of how consumers listen to music, as the music industry grapples with falls in downloaded songs and tries to figure out new ways to get people to pay for music.

    Matt Mittenthal, a spokesman for New York Attorney General Eric Schneiderman, said the state was looking into Apple's negotiations with music labels to preserve the benefits that consumers have enjoyed from streaming services.

    A lawyer for Universal Music Group - the largest of the three major label conglomerates - said in a letter that the investigation was centred on whether the companies were "working together to suppress the availability to consumers of free, advertising-supported, on-demand music streaming or similar services, such as those offered by Spotify and YouTube".

    The lawyer denied that Universal had reached any deals with the label groups, Sony Music and Warner Music, or with Apple to inhibit free streaming services or stop licensing content to particular companies.

    Universal Music said it offers limited exclusive content to some streaming services where such exclusivity is not part of a deal to restrain competition.

    Connecticut Attorney General George Jepsen said his office was satisfied that Universal did not have anticompetitive agreements to withhold music titles from free streaming services.

    An Apple spokesman declined to comment on the investigation. Several news reports said that Apple had engaged in tough, last-minute talks with the labels before the announcement.


    Meanwhile, messaging app operator Line launched its music streaming service in Japan yesterday, getting a head start in the virtually untapped business for mobile music subscriptions in the world's second-biggest music market.

    Line's move marks the most ambitious attempt yet to reverse the declining market for digital music in Japan, where compact discs still account for more than 80 per cent of total music sales. Hobbled by rights issues, foreign companies have yet to break into Japan's music streaming business.

    Available for Android and iPhone users, the service, called Line Music, will offer unlimited access to a library of more than 1.5 million songs initially for a monthly fee of 1,000 yen (S$11), or 20 hours of access for half of that.

    A Line spokesman told My Paper that its music service has also been released in Thailand and that it will "expand step by step globally". But "there are no specific plans that can be disclosed for the Singapore market yet", its spokesman said.

    Line, Japan's largest social network with 58 million registered domestic users, said in a statement it would offer the service for free for the first two months.

    Line Music is jointly held by Avex Digital, Sony Music and Line, which itself is owned by South Korea's Naver. Universal Music Group is also scheduled to take a stake in Line Music.

    Line said it plans to expand its library, featuring domestic and overseas artists such as Taylor Swift and Sam Smith, to more than five million songs by the end of this year, and over 30 million by next year.

    The global market for streaming music has grown in recent years, offering record companies a boost amid a steady slump in digital downloads.

    Despite its size, the Japanese music industry saw revenues of just 5 million yen from subscription-based mobile music streaming last year, according to the Recording Industry of Japan.

    Overall sales of digital music in Japan fell for the fifth straight year, to about US$350 million, against a peak of US$1 billion in 2009.