- Time: February 2014
- Organization: College(undergraduate)
- Class: Network Economy (Economics)
- Project description: Research on Spotify's business model and copyright infringement issue.
4. A Brief Company History
Whatis Spotify?
02
• Cloud-based music
streaming service
• Founded in Sweden (2006)
• Library of 16 million songs
• Available in 9 countries incl
uding Sweden and USA
• Major deals with Sony,
Universal, EMI, and Merlin
• The service operates under
complete Digital Rights
Management (DRM)
• Spotify strictly enforces access
control to avoid copyright
infringement
01
5. A Brief Company History
HowCloud-BasedServicesWork?
- Instead of downloading every single
music file independently and saving
it to your hard drive, it allows you to
listen music stored on a separate
system.
- The music is essentially kept “in the
cloud” where you can access it from
any computer, laptop, smart phone,
or table device with an Internet
connection.
6. A Brief Company History
ABriefCompanyHistory
2006 Oct
2008
Sep
2009
Founded
In Sweden Launch
Mobile
app
July
2011
3M
Active Users
1.3M
Subscribers
U.S. launch
Feb
2012
Facebook
integration
2013
20M
Active Users
5M
Subscribers
15. Major Competitors
PANDORA
- 150+ million registration
- Lost 20M on 81M revenue (2011)
- Operates under the compulsory
licensing provision of federal
copyright law (paid 54% of its
revenue for content acquisition)
- Most revenue relies on advertising
SPOTIFY
- 20 million active users
- Lost 57M on 236M revenue(2011)
- Negotiate with record labels to
use their songs(paid 96% of its
revenue for licensing)
- Most revenue relies on
subscription
17. - Spotify provides a service of user-generated playlists
- Ministry of Sound, a dance-music record label based in the U.K. is
suing Spotify for playlists that mimic the order of the label’s
popular compilation albums
- The company is seeking to remove these playlists and collect
damage
“Curation of songs chosen for particular compilations is a form of in
tellectual property”
Copyright law infringement issue
SpotifySuedOverUser-CreatedPlaylists
(Sep2013)
19. Spotify’s expectation that ‘given a free and legal alternative, people
will pirate less’ has been proven over the last 5 years with significant
reductions in piracy across the territories where Spotify is established.
Copyright law and advantages
Spotify’spositiveimpacton piracy
20. - They pay 97% of its revenue for licensing
- Music industry hasn’t yet figured out the balance
between licensing costs and how much money a
digital service can make
Copyright law and disadvantages
FinancialLossof theCompany
21. - Spotify pays artists between $0.006 and $0.0084 per song stream
- Right Holders: Labels, publishers, distributors, digital distributors,
independent artists
- According to a study conducted by Peter DiCola of the
Northwestern University School of Law, artists are now, on average,
deriving a relatively tiny percentage of their income directly from
copyrights.
Copyright law and disadvantages
Doescopyrightlawprotectsartists?