The world’s largest record labels are being questioned by EU regulators as part of a probe into their deals with music-streaming services from Apple Inc and Spotify Ltd, according to three people familiar with the case.
The EU sent questionnaires seeking information on record labels’ deals with streaming services, the people said on condition of anonymity because the EU’s early-stage probe is not yet public.
Regulators are not specifically targeting one company, such as Apple, which is working on a Beats Music streaming platform, two of the people said.
Record labels and artists have not managed to replace falling revenues from CDs and vinyl with a boom in music streaming services such as Spotify that offer free music online. Only a quarter of Spotify’s users pay for the premium version of the service.
Singer Taylor Swift pulled her albums from Spotify last year.
Neither Apple nor rapper Jay Z, who is planning an artist-owned service, are to offer free music.
“The record labels have a monopoly supply of content” with three labels accounting for about three-quarters of the music market, Mark Mulligan, a music industry analyst at Midia Research, said in a telephone interview.
“Just one of those record labels saying you can’t have their content on a service effectively kills the service dead in the water,” Mulligan said.
Record labels could counter any EU concerns by arguing that they license music “to virtually any service that comes to them” and face no rules that prevent different commercial treatment of premium and free services, Mulligan said.
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