Pixel Envy

Written by Nick Heer.

FTC Reportedly Subpoenas Streaming Music Services Regarding Apple Music

Micah Singleton of the Verge demonstrates the case against Apple:

As you would expect, Apple Music doesn’t need to raise its price to make up for lost revenue, nor is it subject to other restrictions that the App Store rules place on competition streaming services, essentially giving the service a built-in advantage.

If Spotify wanted to point iOS users who try to sign up through its app to its website, where the subscription price is cheaper, it wouldn’t be allowed according to the App Store rules. “Apps that link to external mechanisms for purchases or subscriptions to be used in the App, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected,” Apple wrote in section 11.13 of its App Store review guidelines.

This makes sense to me. If we assume that all streaming services have broadly comparable licensing terms with record labels, Apple can book $10 in monthly revenue from the sale of a $10 per month plan, while competing services can only book $7 per month of a $10 plan, if sold through an in-app purchase. And, it’s worth mentioning, Apple gets to book their full $3 per month cut from those competing in-app sales; they don’t have to pay a dime of that to labels.

Here’s where Singleton loses me a bit:

Competing music streaming services also aren’t allowed to offer free promos, according to the App Store guidelines, even as a three-month free trial is currently being offered for Apple Music. Music streaming services are also forbidden from offering family plans through the service, which again, Apple Music does.

When it was independent, Beats Music offered a free trial at launch, though through what mechanism I’m not sure.

The gist remains, however. I think the most likely outcome of this, should it be found against Apple, will be for the ban on advertising alternative points of purchase within an app to be overturned. But this is one of those cases where there is little precedent. It all smells like anticompetitive behaviour, but it’s up to the FTC to decide.