Spotify Gains A Million Users In A Week In India Amidst Legal Dispute

Spotify pushed operation in India despite dispute from Warner/ChapellPhoto By: Jon Åslund/Flickr

Spotify may have delayed its debut in India, the up and rising market, but it only took them a record six days to gain its first million users.

A Spotify spokesperson declined to comment on how many of those new listeners were paying subscribers rather than users of Spotify’s free ad-based service. The company also won’t say how many users it hopes to attract in India.

It finally launched Wednesday despite legal disputes with music labels.

The initial announcement by Spotify was to expand to India in March 2018, but the global music streaming platform faced delays in signing deals with major record labels.

Moreover, Spotify had a hard time figuring out a way around the nature of India’s music rights marketplace. Scores of local Indian labels and publishers make it challenging to pull all the rights together; there are multiple regional languages to contend with.

It also had issues over the rights to stream songs by the likes of Katy Perry, Ed Sheeran, Cardi B, Bruno Mars, and Coldplay, among others. Music label Warner/Chappell was preventing Spotify from streaming their songs in India.

However, Spotify found a loophole through India’s laws that would allow them to stream songs without the permission of music labels.

Spotify used India’s Copyright Act of 1957. Accurately, in one of its provisions in section 31D, which says “broadcasters,” the company can obtain a license for copyrighted works even if the copyright owner denies use.

This move made Warner/Chappell Music file an injunction with the Bombay High Court to prohibit Spotify from streaming their catalog in their region. At the heart of this is whether or not Spotify falls under the umbrella of “broadcaster” in India’s Copyright Act of 1957. In the act, a “broadcast” is defined as “communication to the public.” Warner/Chappell argues that it only refers to traditional media such as radio and television.

The law was amended six times, but it claims for “broadcasters” remained the same since its passing in 1957. However, as leverage, Spotify uses the memorandum issued by the Indian Copyright Office in 2016 saying that it’s expanding the definition of “broadcast” in 31D, stating that “the provisions of section 31D are not restricted to radio and television broadcasting organizations only, but cover internet broadcasting organizations also.”

It’s unclear why Warner and Spotify have so far been unable to land on a deal — Warner has agreements with other streaming services in India, like freemium music streaming service, JioSaavn. It seems Warner knows Spotify needs to launch in India to grow and is using its power to block that launch to extract some other concessions. What happens next could change how artists, labels, and streaming services work in India for years to come.

Legal fight aside, there are significant revenue consequences for Warner if Spotify prevails. The common voluntary agreements between broadcasters and labels can contain terms that are well beyond the scope of how much is paid out per stream. Sony’s deal with Spotify, for example, also included a cut of ad sales revenue and up to $9 million in additional ad spots. If Spotify can sidestep a direct deal with Warner in India, then Warner potentially loses out, not just on streaming payouts, but on a myriad of alternative revenue streams. And, those other revenue streams are a big deal in emerging markets like India.

In particular, most of India avail their music for free from alternatives like YouTube and the good old-fashioned piracy. Only some Indians have credit cards, and those who pay, don’t pay much.

In India, Spotify’s pricing structure offers a lot more payment flexibility than other markets. The service can cost as little a 99 rupees ($1.39) per month for a one-year plan. But, the service also offers the ability to buy just a single day of access for 13 rupees ($0.18), one week for 39 rupees ($0.55), and one single month for 129 rupees ($1.81), among other plans. A student plan offers up to 50 percent off per month.

Despite its strong start, Spotify has a long way to go if it wants to catch up with big local players like Gaana and JioSaavn. Gaana, backed by Chinese tech giant Tencent, reportedly has over 80 million users in India, while JioSaavn — owned by India’s richest man Mukesh Ambani — has access to more than 250 million users of his massive Jio mobile network.

Many of Spotify’s global competitors, including the music streaming services run by Apple, Google, and Amazon also have an established presence in India.

The streaming platform has plenty of other music to offer, however, including a deal with Bollywood’s most prominent record label, T-Series, and it will be hoping to leverage its India presence to shore up its global user base of more than 200 million.

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