Music has always remained an indispensable part of human lives. The transition from listening to music on CDs to Spotify where music is just a click away, is nothing short of a miracle. This transition has allowed companies to expand their business to international markets easily.
While the innovation brought by music streaming platforms has transformed the way of music streaming for the world, what was not anticipated was the abuse by these platforms to curb consumer choice & preferences through their practices. Big tech companies such as Spotify, YouTube, etc. have often indulged in anti-competitive practices to boost their position by either eliminating the competition / degrading the consumer experiences.
The article lists out all the practices, in brief, committed by Spotify, Apple Music, & YouTube (the Big-three in Music industry). It also details the problems that are often faced by consumers & artists who are using these services.
Spotify: in pursuit of “THE ONE” platform!?
Global Revenue of the Music Industry crossed $17.5 Billion in 2025. Out of this, 84% of revenue is attributed to applications and platforms that are streaming music. YouTube, Apple Music, Tencent Music, Spotify and other platforms constitute the music streaming market. Amongst all of them, Spotify bags the highest market share of approximately 30%, with over 200 million subscribers.
The credit of Spotify’s dominance in the market has always been challenged in light of various allegations levied over the company for engaging in practises that abuse both the consumers and artists.
Firstly, there is the matter of Spotify’s killer acquisitions.
Killer acquisitions refers to the practice where an established player eliminates a new product or buys out a potential competitor entirely in its nascent stages. A look back at the history of spotify’s acquisition, reflect that in order to expand the services, Spotify has acquired multiple companies over the years such as Gimlet, Anchor, Betty Labs.
Gimlet and Anchor were known for their high quality original podcast content. Spotify acquired them for $340 million. The acquisition came as an effort of spotify to reduce market competition and strengthen its podcasting capabilities.
Betty labs was a live audio app that provided sports commentary was also acquired. According to the company Chief Research and Development Officer at Spotify, the Acquisition’s intent was to build on their work to create the future format of audios and accelerate Spotify’s entry into the live audio space.
In an SEC filing, spotify thereafter disclosed investments in acquisitions which amounted to a sum of €295 million for purchases.
These amounts were used to purchase Findaway (an Audiobook platform), Chartable and Podsights (analytics platforms, which help expand podcast listener base through promotional attribution). These were acquired to address the concerns with ad-assessment and attributions which were a hurdle for podcast advertisers, thus hampering spotify’s business.
Similarly it acquired Sonatic, which specializes in creating hyper-realistic AI generated voice from text. Soon after the acquisition Spotify introduced its own AI-Powered DJ, X. which curated a playlist with a side of commentary, personalised for all users.
These acquisitions, when they happened, were not pronounced illegal / anti-competitive. However, in the long-run, their role in Spotify’s rise to fame cannot be denied.
Secondly, there is the issue of royalty pay-out discrepancies.
Spotify is an example of a multi sided platform, which essentially means that it is built on a business model that facilitates the interaction between two or more groups of users, in case of spotify, the artist, labels and the listeners.
In regards to artist, a 2023 report indicate that Spotify’s royalty payout rate is the lowest in the industry, despite controlling 55% of the streaming market share. The report further indicates that competitors like Apple music and Prime music, having much lesser share, pay upto 4 times as the same.
Spotify royalty distribution has often come under fire, where celebrities like Taylor Swift and Thom Yorke, have removed their entire catalogues from the Platform after they companied that the royalty rates are too low. The conflict with Swift is unique, because her being a top selling artist, gave her stronger negotiation power to take her music off the platform. Sadly, a luxury, not enjoyed by many.
Lastly, there is the issue with the features that Spotify tried to adapt / is in the process of adapting.
Spotify has been alleged to introduce distinct features, promising artists of better reach to the audience through algorithmic manipulation in return of low royalty pay outs. These instances reflect the attempt of Spotify to retain maximum music revenue, thus providing greater consumer choice but lowballing the artists.
Spotify is also alleged to have created AI generated music, to evade paying out royalties to the artist. In addition to this, it has often been accused of algorithmic manipulation, market manipulation and artificial artists.
Apple: In the pursuit of the “The ONLY” music platform?
Apple has had its own fair share of allegations for acting in an anti-competitive manner vis-a-vis it’s Music Application.
Spotify claimed that Apple imposed a surcharge of 30% over the amount paid by users of Spotify / any third party for using the App Store’s in-built in-App-purchase feature. It said that, because of this, it was forced to increase the rates to avoid incurring losses as opposed to Apple Music and other Apple apps, who were not required to comply with this surcharge.
The only way third-party applications (like spotify) can opt out of the 30% surcharge is if either there were no in-app purchase of preimium or other services or if they ask user’s to purchase the service / subscribe to premium on website on laptop.
this an unfair & discrimintive practice against third party apps such as it for using the purchasing mechanism via the Apple’s App Store (IAP), by imposing a surcharge of 30% above the amount paid by users for the Premium services, which included accessing in-app purchases. Further, Apple disallowed any notifications to the users that indicate about alternative ways of subscription / payment links.
This practice is called Anti-steering. Anti steering refers to practices where a platform prevents its users from directing customers to alternative services or offers, thus disrupting competition and limiting consumer choices.
Following the allegations, the European Commission launched an investigation. On March 2024, EU Cmmission fined Apple over €1.8 billion for abusing its dominant position on the market for the distribution of music streaming apps to consumers with iOS software through its Apps Store.
The commission found that Apple controls all aspects of iOS experience, and developers must adhere to their terms and conditions to provide their services to the consumers. The investigation revealed that Apple bans music streaming app developers from fully informing the iOS users regarding alternative and often cheaper music subscription service available outside the app and restricted apps from providing any instruction about how to subscribe to those offers.
The commission found that the Anti-Steering provisions amounted to unfair tradition conditions and thus breaching Article 102(a) of the Treaty on the Functioning of European Union (TFEU). The provisions are not necessary for protection of Apple’s own commercial interest & so they are deemed to be adversely affecting the interest of consumers, who cannot make informed decisions.
Also Read: Is Your Subscription Truly Ad-free?
The commission also noted that these provisions have lasted for almost ten years, causing both monetary harm to consumers, as well as non-monetary in the form of degraded user experience. Following the imposition of the fine, the commission also ordered Apple to remove the anti-steering provisions and abstain from adopting similar practices.
Much like Spotify and it’s “killer” acquisitions Apple acquisition of Shazam also raises eyes for striking out future competitors.
Shazam is a music recognition app, which identifies music by analysing a short audio sample and allowing users to share, and discover music. The app was widely popular across different platforms including Mac. However, to integrate it into Apple, it acquired Shazam for a reported amount of $400 million, which is unusually large even for Apple.
YouTube Music: In the pursuit of “the most used” platform.
YouTube is also not free from allegations for driving other competitors out of the market using anti-competitive practices. In 2023, The South Korea’s Anti-Trust regulator (Korea Fair Trade Commission) launched an investigation into Google Korea, over the allegations in relation to YouTube Music.
The controversy arose when Google was alleged to have violated fair transaction laws in South Korea, by providing YouTube Music streaming service free of charge to users who had subscribed to the ad-free YouTube Premium. This practice, referred to as bundling of service, rose questions about unfair, anti competitive practices committed by YouTube.
Bundling of services refers to a scenario, where a package of two or more products is offered at a discount, thereby increasing the consumer base overall. While bundling is a common commercial practice to boost sales, it becomes problematic where the companies opting to do this acquire substantial degree of market power and thus can harm the competition in the market.
The investigation is also centered to evaluate whether Google has exploited its market dominance by offering music streaming free of cost. The result or report of the investigation is yet to be released by the authoritiesHowever it is all going to pan out, one thing’s for sure YouTube definetly changed the market situation in Korea.
Conclusion
“After silence, that which comes nearest to expressing the inexpressible is music”.
Aldous Huxley, the English writer and philosopher.
The music streaming industry, while revolutionizing access to music, is rife with anti-competitive practices by major players like Spotify, Apple Music, and YouTube. These practices, including killer acquisitions, royalty payout discrepancies, unfair app store policies, and service bundling, raise serious concerns about consumer choice, artist compensation, and market fairness.
Regulatory scrutiny and legal actions, such as the EU’s fine against Apple, highlight the need for greater oversight and accountability. Ultimately, a balanced approach is necessary to foster innovation while ensuring a level playing field that benefits both artists and consumers in the evolving landscape of music streaming.
