Last month, The Verge reported that Apple had been putting pressure on music labels to get rid of Spotify and YouTube’s free music tiers ahead of the release of Apple Music, and that those tactics had garnered scrutiny of the FTC and the European Commission, among others. Today — in response to a subpoena — Universal Music Group has addressed the antitrust investigation for the first time in a letter to the New York Attorney General’s Office.
In the letter sent by UMG’s attorneys, the company admits that a joint investigation by the Attorney Generals of New York and Connecticut into whether collusion within the music streaming industry against free ad-supported music services has been taking place.
Investigations into whether collusion has taken place in the music streaming industry are ongoing
UMG denies any wrongdoing in the letter, stating that it has no agreements with Sony Music Group, Warner Music Group, or Apple to "impede the availability of third-party free or ad-supported music streaming services," but notes that music’s "business models have undergone substantial changes over the past few years, and further change is inevitable." It should be noted that until last year, Apple Music boss Jimmy Iovine was previously the chairman and CEO of Interscope Geffen A&M, a UMG subsidiary. UMG also reserved the right to offer exclusives in the future, as long as it’s "not part of an agreement to restrain competition."
Matt Mittenthal, the spokesman for New York Attorney General Eric Schneiderman told The Verge the investigation into the music streaming industry would continue. "This letter is part of an ongoing investigation of the music streaming business, an industry in which competition has recently led to new and different ways for consumers to listen to music. To preserve these benefits, it's important to ensure that the market continues to develop free from collusion and other anticompetitive practices."
In a statement to The Verge, UMG says it is happy to provide the Attorneys General with any information they need, and are expecting to be left out of the rest of this investigation. "UMG shares the Attorneys General’s commitment to a robust and competitive market for music streaming services in the mutual best interest of consumers, artists, services and content companies alike – and we have a long track record to that effect. We are pleased to have provided the Attorneys General information demonstrating that conduct. It is our understanding that, given these representations, the Attorneys General have no present intention to make further inquiries of UMG in this regard."
How much, if any, impact this letter has on the investigation is yet to be determined, but the fact that local, federal, and European governmental organizations are continuing to look into the music streaming industry’s practices may not bode well for the music labels or Apple. The ongoing investigations could also be why Apple is reportedly considering a change to the App Store payment structure — which has been seen as anticompetitive by its rivals — as it pushes further into streaming.
Update: June 9th, 8:15PM: Updated with a statement from Universal Music Group