spotify's business model and copyright infringement issue

YeonKyung Lee

Spotify’s business model in digital music industry and copyright infringement issue

Network Economy

목차: A Brief Company History Financial Data And Statistics Major Competitors

Copyright law Infringement issue Copyright law Advantages And disadvantages

01 02 03

04 05

Contents

목차: A Brief Company History

01

A Brief Company History

What is Spotify?

02 • Cloud-based music

streaming service

• Founded in Sweden (2006)

• Library of 16 million songs

• Available in 9 countries including 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


How Cloud-Based Services Work?

- 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.



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


User Interface


Price Model

목차: Financial Data And Statistics

02

Financial Data and Statistics

Financial Data – Revenue and Net Income/Loss


Financial Data – Paid/Unpaid subscribers in the U.S. from August 2011 to April 2012


Statistics

16 M songs

10,000 New tracks

everyday

20M Monthly

Active users

700+ Playlists

Created everyday

목차: Major Competitors

03

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: Copyright Law Infringement issue

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 intellectual property”

Copyright law infringement issue

Spotify Sued Over User-Created Playlists (Sep 2013)

목차: Copyright Law 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’s positive impact on 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

Financial Loss of the Company

- 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.


Does copyright law protects artists?


Does copyright law protects artists?

spotify's business model and copyright infringement issue

Business