Apple's attempts to stop free music streaming has the DOJ investigating

Apple's new Beats streaming music service is expected to be unveiled along with iOS 8.4 next month. For some time, Apple has been negotiating with performers and labels in an effort to reduce royalty rates. But Apple is also taking another tact. Reports published today suggest that the brass in Cupertino is trying to get music publishers to force streamers like Spotify to stop offering consumers ad-supported free tiers of service. Of Spotify's 60 million subscribers, only 15 million are paying for music.

Apple is believed to be looking to end the free music streaming so that it can aim for Spotify's free and paying customers with a low priced service that undercuts the competition. In addition, Apple is looking to offer exclusive content which it hopes will attract some subscribers. Music labels aren't pleased with the free ad supported tiers offered by Spotify and others, and are willing to listen to what Apple is saying. Apple has reportedly told the labels that it will charge for streaming music after a free trial period. As one music industry source said about the tech titan, "All the way up to Tim Cook, these guys are cutthroat."

But Apple's plans are drawing the attention of the Justice Department. The DOJ has allegedly sent out agents to interview employees working for the labels in order to learn about Apple's business tactics. Besides its attempt to pressure music labels into forcing Spotify and others to stop free streaming, Apple supposedly offered to reimburse Universal for lost royalties if the company stops allowing its music to play on YouTube. By trying to remove competition in this manner, Apple could find itself in hot water with the feds.

Apple also is believed to be under investigation by the European Union’s Competition Commission. The later also is interested in checking out Apple's attempts to stop streamers from offering free ad supported music to consumers.

source: TheVerge via PCMag