Antitrust and Music Streaming Services
4.1 billion dollars. That was the revenue that Apple Music made in the year 2020. Music streaming services have revolutionized how we listen to music. However, the only three competitors in the music streaming market are Apple Music, Spotify, and Amazon. Together these three companies combine for 67% of the international market. The high market concentration makes one consider the potential antitrust violations due to such a high market concentration. Therefore, I want to discuss the possibility that the streaming services’ uniform monthly subscription plans are a potential Section 1 violation of the Sherman Antitrust Act.
To prove an antitrust violation under Section 1 of the Sherman Act, a plaintiff must prove that the parties had an agreement and that the agreement was illegal. Satisfying the first element requires the plaintiff to prove that there was an explicit agreement in a contract, email, or some other form of communication. If evidence of such an explicit agreement is nonexistent, the plaintiff can fulfill this agreement by showing a tacit agreement. See American Tobacco Co. v. United States, 328 U.S. 781 (1946).
At the pleading stage, the plaintiffs cannot merely allege that they believe there is some evidence of an agreement because of the parallel conduct. See Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007). Under Twombley, there must be a plausible chance that the agreement exists, and merely alleging that parallel conduct does not make it plausible an explicit agreement exists. Id. So, plaintiffs may only prove there is a tacit agreement because the explicit agreement theory fails the Twombly plausibility test.
Proving a tacit agreement exists requires parallel conduct plus: (1) a usual act indicating an express agreement; or (2) poor market performance; or (3) the market is prime for oligopoly or; (4) acts against interests or; (5) facilitating practices. The most likely theory is that the adoption of a uniform subscription fee is an unusual act.
However, this factor is unlikely to succeed. See Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939). In Interstate Circuit, the Court held that all the parties simultaneously agreeing to exclude 4 out of 5 cities in the state was enough to infer the states reached an agreement. Id. A similar unusual act is not likely to be found, regarding the streaming services, because there are no facts to support that Spotify, Apple, and Amazon simultaneously changed their pricing model to a uniform subscription model.
On the other hand, perhaps some evidence that these companies all began simultaneously offering similar monthly plans to students, families, or senior citizens (after none of the companies offered such a deal) would be enough to establish an unusual act. Yet, there is no evidence of this occurring. Spotify, Apple, and Amazon have not simultaneously introduced similar subscription plans into the market. Spotify introduced a student discount plan in 2014, and Apple Music did not announce its student discount plan until 2016. A two-year difference is likely too long of a time to conclude that this was an unusual act because there is not similar simultaneous conduct like there was in Interstate Circuit.
Thus, without either direct evidence proving the probable likelihood that Apple Music, Spotify, and Amazon Music explicitly joined a cartel – or parallel conduct plus some unusual act allowing one to infer such an agreement – a future plaintiff will fail in bringing a Section 1 Sherman suit.