Erica Flores

The fight for the launch of Spotify in India is …

The fight to launch Spotify in India could change India’s copyright law and shape the way streaming services and tags interact around the world.

The present day, Bloomberg reported that Warner Music Group had asked an Indian court to block Spotify from playing music from its catalog on the streaming service. Spotify is scheduled to launch in India, although it has not secured a license for the Warner catalog. But according to Indian law, you might be able to use music from Warner’s publishing division, Warner / Chappell Music, anyway. At the crux of this lawsuit: a 2016 reinterpretation of a 2012 amendment to a 1957 law that Spotify is using in 2019 as leverage against Warner in a global licensing fight.

Spotify and Warner had been in discussions about licenses, but could not reach an agreement. According to Spotify, Warner “revoked a previously agreed publishing license for reasons that have nothing to do with the launch of Spotify in India.” Because Warner owns a small percentage of so many songs, Spotify says it simply cannot be released in India without a deal. As a result, Spotify turned to a controversial provision in India’s copyright law, which says that “broadcasters” can obtain a license for copyrighted works even if the copyright owner denies their use.

Warner asked India to block this request, saying that Spotify is taking advantage of a law targeting traditional broadcasters, radio and television, which is not broadcast on demand. “After months of negotiations,” says Warner, “Spotify abruptly changed course and has falsely claimed a legal license for the music publishing rights of our composers in India. We had no choice but to ask a court in India. a court order to prevent this. Our goal is to reach an agreement that works for everyone. We hope this is just an increase in speed in expanding our long and successful global partnership. “

“Spotify abruptly changed course and has falsely claimed a statutory license”

In Spotify’s request for the statutory license (see below), it says: “WCM has yet to give us a reasonable justification explaining why it is refusing to license Spotify for the Works in India. This is particularly serious given We understand that WCM has licensed other services to use Works in India. In the absence of a reasonable justification, we conclude that WCM’s intention is to prevent our entry into the Indian market, deny Indian users access to one of the world’s leading music services and causing irreparable harm to Spotify. “

The Indian Copyright Act 1957 has been amended six times in total, but the part that applies to Warner’s complaint with Spotify begins with a change passed in 2012. This was when controversial section 31D was added, that expands the compulsory license of copyrighted works for broadcasters.

Of all the things that have changed in Indian copyright law over the years, there is one part that has not: the definition of “emission”. Today it is the same as when the act was approved in 1957 and is only defined by “communication to the public.” In 2016, the Copyright Office of India issued a memorandum expanding the definition of “transmission” in 31D, stating that “the provisions of section 31D are not limited to radio and television organizations only, but to the Internet “. Broadcasters too. ”This expanded interpretation is what Spotify relies on to gain access to Warner’s catalog, and likely to gain leverage and bring Warner back to the negotiating table.

Warner has major revenue consequences if Spotify prevails

The potential for streaming services to use Indian copyright law as an influence against labels is not a total shock, and is a subject of international controversy. Kwee Tiang Ang, the Asia-Pacific regional director of the International Federation of the Phonographic Industry, expressed concern about the use of the 31D in this way last year, saying: “If India continues to apply the interpretation of Section 31D, you will have no obligations. ” under international treaties. IFPI is pleased to work with the Government of India to address this issue and ensure that interactive online broadcasts are not subject to a compulsory license. “

The legal fight aside, there are major consequences for Warner if Spotify prevails. Common voluntary agreements between broadcasters and labels can contain terms that go far beyond the scope of how much you pay per stream. Sony’s deal with Spotify, for example, also included a cut in ad sales revenue and up to $ 9 million in additional ads. If Spotify is able to bypass a direct deal with Warner in India, Warner may potentially lose out on not just real-time payments, but a host of alternative revenue streams. And those other sources of income are big business in emerging markets like India.

Most of the people in India get their music for free, and those who pay don’t pay much. For example, an Apple Music subscription in India costs Rs 120, or $ 1.69, compared to $ 9.99 a month in the United States. Spotify’s ad-free price is likely to hit roughly the same mark, and its main income in India will come not from subscriptions but from ads and telecom subsidies – money Warner won’t be able to touch if Indian courts are on the side. Spotify.

It’s unclear why Warner and Spotify have so far failed to reach an agreement: Warner has deals with other streaming services in India, such as the free music streaming service JioSaavn. Warner seems to know that 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 the way artists, labels, and streaming services operate in India for years to come.