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The world of music is booming. Encouraged by streaming, sales have been increasing for at least three years, and music labels, which once resembled DOA, are once again promising properties. That's why Spotify, the world's leading music subscription service, is engaged in a legal battle with Warner Music Group, one of the world's largest music labels.
It is not uncommon for major record companies to negotiate controversially with the big tech companies that broadcast their songs. But a full court case is something new.
The question is whether this is an isolated case or whether it will become a feature of the industry. If this is the last case, consumers who have become accustomed to listening to what they want, when they wish, may end up in a world where their favorite music service will darken one day – or , just as disturbing, in a world where their songs
A brief reminder in the background: for now, this is a dispute between Spotify and Warner about the price that Spotify should pay to do business in India, where she just started. 19659006] Usually it works well, it is that Spotify, or any service wishing to do business in a new country, enters into agreements with Warner and a handful of other major music labels, which control at 85% of the music streamed by Spotify. .
Previously, it could take a very long time (Spotify took years to put in place its agreements for the United States). But as streaming has become the default business model, things are generally moving pretty fast now
In India, however, Spotify managed to make deals with everyone but Warner. The stories of both parties differ, but the bottom line is that this week Warner sued Spotify in court to try to prevent it from getting into India. This failed and Spotify was officially launched in India on Wednesday.
The trap: Indian users of Spotify can not listen to Warner Music artists like Cardi B, Ed Sheeran or Bruno Mars. For now, at least, they can listen to artists like Katy Perry, who records for other labels, even though Warner owns the rights to publish these artists – the rights of the underlying compositions of the songs.
This is a confusing and unsatisfactory situation for all concerned: for Spotify, which offers an incomplete service; for Warner, which is obliged by a court to give Spotify access to some of its content on terms that it has not negotiated; for artists and other music owners who are not paid; and of course to ordinary Indian music fans, who should not be kept informed of this.
There is a good chance that this fight will be punctual because, as stated above, all the people involved lose.
In particular, Spotify and Warner have to work together, even if they do not like it. Warner (like everyone else in the music industry) has become dependent on streaming revenue generated by Spotify. Spotify can not perform a music service without Ed Sheeran or Cardi B, or any of the other famous artists recording for Warner – especially when users can obtain from these artists legal alternatives like Apple Music or YouTube, or good old hacking.
But the fight highlights a permanent tension between the labels and the major technological platforms. The majors, although they never say it in public, are terrified by the fact that Spotify or Apple Music, or anyone else will eventually cut them by entering into direct contracts with artists.
This scenario has yet to unfold (it's worth noting that Taylor Swift, who has both the influence and the business acumen to manage his own music label or work directly with Apple , etc., concluded a giant deal with Universal Music last fall), but it is definitely in the spirit of the labels. Especially because Spotify actually wants to enter into more direct contracts with artists, while vowing not to replace the labels.
The labels also fear that the sums that Spotify earns from each subscriber no longer decrease. Clip stable because Spotify offers promotions such as offers for students or families with multiple users. In 2016, average subscribers at Spotify generated an average income of $ 7.06 per month. Last year it had dropped to $ 5.48.
Spotify claims that it's not a problem because these promotions help it keep its customers longer, which means that, throughout the term of their subscriptions, everything goes away.
are less optimistic, especially because Spotify's target markets are likely to weigh even more heavily on its per-user business. In India, for example, Spotify charges $ 1.65 a month for its premium service.
This means that it's possible to imagine a future where Warner, or another big label, plays even harder with Spotify in the next transaction. A territory like the United States – Warner signed its last deal with Spotify in August 2017, which means it should be renewed soon. And this sets a precedent: under a different ownership group, Warner withdrew its music videos from YouTube in 2008 over a licensing stalemate; he returned to the world's largest video service nine months later.
I think that a more likely story is that we could see more fights in the handful of larger territories that Spotify has not yet opened because it's easier to fight for the ### 39 theoretical money that risk losing real money that you earn today. A good country to watch to see if this scenario develops: Russia.
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