Is Music the Next Ebooks? An Antitrust Analysis of Windowing in the Music Industry
Posted: 8 Apr 2015 Last revised: 20 Jul 2015
Date Written: February 14, 2015
Windowing is the act of withholding the release of content on certain services while providing exclusive access for a period of time to only one service. It involves staggering a title’s release-date, resulting in consumers having access to content at different times on different services. Windowing agreements are a form of exclusive dealings. Windowing, while widespread in the movie industry, has only recently become popular in the music industry. Windowing is now viewed as a way for artists to increase music sales, appealing to those dissatisfied with current streaming royalties. Exclusive dealings may be deemed unreasonable under the federal antitrust laws if they foreclose outlets or supplies to potential entrants, raise barriers to entry, and make it easier for firms to exploit their power. With an industry dominated by technology giant Apple and three music companies who together control 89% of global music sales, exclusive licensing agreements that enable windowing should be examined cautiously for antitrust concerns.
This Note engages in the first antitrust analysis of windowing in the music industry. It claims that windowing can have anticompetitive effects depending on the terms of the agreements and the parties involved. The Note examines the structure of the music industry and why exclusionary tactics are particularly troubling given the interdependent nature of an industry dominated by large market powers. The Note engages in an examination of the strength of section 1 and section 2 Sherman Act claims against technology giant Apple. The Note concludes by providing recommendations for how to structure windowing agreements to avoid federal antitrust law violations.
Keywords: antitrust, windowing, music, streaming
JEL Classification: L4, L82
Suggested Citation: Suggested Citation