Spotify's business model and copyright infringement issue
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- Time: February 2014 - Organization: College(undergraduate) - Class: Network Economy (Economics) - Project description: Research on Spotify's business model and copyright infringement issue.
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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
- 14. 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
- 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?