In what should be placed firmly in the rumor folder, technology site The Verge is reporting that Apple is pressuring music labels in their Spotify negotiations, and the U.S. Department of Justice is monitoring the situation.
Spotify’s “freemium” plan, which gives listeners no-pay access to some features of the music service, is at the center of this and other controversies. As Spotify negotiates new music licensing deals with labels, it has become clear through multiple leaks that Spotify likes freemium a lot more than the labels do. Spotify Premium (the paid subscription plan) has higher margins which get shared with labels, but has only one-third the audience size of the free side.
From Apple’s perspective, Spotify Free pools audience share disadvantageously — for Apple’s Beats Music, which will launch this summer. As long as a popular free service exists, with a fair degree of interactivity built-in (streaming songs and artists on demand, desktop and mobile), it is difficult for Beats to compete head-to-head with Spotify’s comparable business model (Spotify Premium).
“Apple has been using its considerable power in the music industry to stop the music labels from renewing Spotify’s license to stream music through its free tier,” The Verge reports from unnamed sources.