Is Kayne West leveraging monopoly power?

enhanced-9201-1435479230-4Kayne West has a new album. I would say ‘out’ except that it is only available on Tidal, a music service owned by Jay Z and other artists. Up until now, the artist owners have released their work on the usual variety of platforms. But last night that changed when West tweeted that his new album would never be available on Apple Music or iTunes. He made no mention of other music services such as Spotify or Google Play nor physical copies.

Now this tweet tingled my antitrust senses. Whenever I see potential exclusionary conduct, I wonder if it might be a leverage of monopoly power. In this case, we have a part owner of a competing music service to Apple who has an upstream product (his album) that he has monopoly power over foreclosing on a single rival. This is as naked as exclusionary conduct gets. West is trying to drive traffic away from Apple and onto Tidal which he has a direct interest in doing.

So how do we unpack this? First of all, we need to decide whether West has monopoly power and that means working out what market he is supplying in to. There is lots of music and so West is really one of thousands on a strict reading there. If he raised the price of his work to $1 million, people would likely consume other music. However, there is a wrinkle. These things are hard to evaluate and it we were looking to intent than West has a different opinion that he is “the greatest living rock star on the planet.” I think what he means there is that he has significant market power; if he is right that is.

Second, if he has market power — specifically enough to drive lots of customers to a downstream service he has an exclusive arrangement with — then we need to work out if this will significantly reduce competition in that market. That is a little harder to tell. Tidal is the entrant and Apple is the incumbent here. Interestingly, the DOJ weren’t too worried about that when it prosecuted Apple in the eBooks case when it was the entrant against Amazon. Thus, the question will rest on whether West is using this to keep music prices high downstream. Tidal appear to have placed their vision on doing just that and serving artists. So it is entirely possible that if West were exclusive to Tidal and consumers were forced to switch, then the price of music services could rise 5% or more above their current levels. We are talking $0.99 to $1.05 or a rise of $1 or so for a monthly subscription.

In summary, there is a prima facie issue here but it rests on whether West is the “greatest” or not. If he is not, then this likely isn’t an issue. But if he is, then I wonder what the DOJ and other authorities around the world will make of this. Suffice it to say, if you are going to engage in naked exclusion, you are gonna need to run your tweets by an antitrust compliance attorney.

4 Replies to “Is Kayne West leveraging monopoly power?”

  1. Don’t forget it’s pretty easy to get a pirate copy of the album from some torrent site somewhere. This would limit the potential to exploit any monopoly as this is an alternative service that you get added to whether you want it or not.

  2. Kanye West isn’t the first rapper to do this. Off the top of my head I know that at least Drake has a similar relationship with Apple as lots of his content is apple exclusive at first.

    even if his words are taken at face value, the market for musicians is so segmented that even artists at the very top can only have a limited sphere of influence.

    Now let’s say that Tidal and Apple get together, you may have a case but a person having an exclusivity contract in place with a firm isn’t a monopoly if competing firms are doing the same thing with other artists.

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