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YeonKyungLee
Spotify’s business model
in digital music industry
and copyright infringement issue
Network Economy
목차:
ABrief
CompanyHistory
FinancialData
AndStatistics
Major
Competitors
Copyrightlaw
Infringementissue
Copyrightlaw
Advantages
Anddisadvantages
01
02
03
04
05
Contents
목차:
ABrief
CompanyHistory
01
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
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.
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
A Brief Company History
UserInterface
A Brief Company History
PriceModel
목차:
FinancialData
AndStatistics
02
Financial Data and Statistics
FinancialData– Revenue and NetIncome/Loss
Financial Data and Statistics
FinancialData– Paid/Unpaidsubscribers in
theU.S.fromAugust 2011toApril2012
Financial Data and Statistics
Statistics
16 M
songs
10,000
New tracks
everyday
20M
Monthly
Active users
700+
Playlists
Created everyday
목차:
MajorCompetitors03
Major Competitors
DIRECT SALE
iTunes
CD
STREAMING
Rhapsody
MOG
Rdio
Napster
RADIO
Last.fm
Pandora
STORAGE
Google Music
Amazon Cloud Drive
Apple iCloud
PIRACY
RapidShare
Torrent
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
목차:
CopyrightLaw
Infringementissue
04
- 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)
목차:
CopyrightLaw
And advantages
/disadvantages
05
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
- 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
- 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?
Copyright law and disadvantages
Doescopyrightlawprotectsartists?

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Spotify's business model and copyright infringement issue

  • 1. YeonKyungLee Spotify’s business model in digital music industry and copyright infringement issue Network Economy
  • 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
  • 7. A Brief Company History UserInterface
  • 8. A Brief Company History PriceModel
  • 10. Financial Data and Statistics FinancialData– Revenue and NetIncome/Loss
  • 11. Financial Data and Statistics FinancialData– Paid/Unpaidsubscribers in theU.S.fromAugust 2011toApril2012
  • 12. Financial Data and Statistics Statistics 16 M songs 10,000 New tracks everyday 20M Monthly Active users 700+ Playlists Created everyday
  • 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?
  • 22. Copyright law and disadvantages Doescopyrightlawprotectsartists?