An Indian court has made its ruling on Warner Music Group’s application for an injunction as part of its dispute with Spotify over publishing licensing in the country. Does the ruling settle the matter one way or the other? Unsurprisingly, it’s complicated.
Here’s Spotify’s statement, sent out to journalists this morning:
“We’re pleased with today’s outcome. It ensures songwriters, artists, labels and publishers will benefit from the financial opportunity of the Indian market and that consumers will enjoy an excellent Spotify experience. As we’ve said all along, we’re hopeful for a negotiated solution with Warner based on market rates.”
But Warner Music Group has put out its own statement offering a different take on this morning’s ruling:
“We welcome the Court’s decision to direct Spotify to deposit monies with the Court and to maintain complete records of any use of our music as well as all advertising and subscription revenue earned by Spotify. These are positive steps to protect our songwriters’ interests. We’re also pleased that Spotify cannot pursue proceedings for their claim to a statutory license before the Intellectual Property Appellate Board for a period of 4 weeks. Our copyright infringement case will continue on an expedited basis. Spotify’s comments yesterday about our fair market negotiations were appalling to us, and we’re shocked that they would exploit the valuable rights of songwriters without a license. That said, we remain optimistic that we can reach a strong, balanced commercial agreement.”
This is a fluid situation: some reports earlier today suggested that the court ruling paved the way for Spotify to launch in India as early as today or tomorrow, including recordings of works wholly or partly owned by Warner/Chappell. However, WMG’s mention of ‘4 weeks’ casts that into doubt.
In any case, it’s clear that beyond the ruling itself, the significant loss of goodwill between the two companies (see: “appalling”) is just as big an issue. We will keep you posted on any new developments over the coming hours and days.
To recap, though: Spotify had asserted a statutory licence for works by WMG’s publishing division Warner/Chappell in India: meaning it wouldn’t have to agree a voluntary licence for them. WMG hit back with its injunction to prevent the move, while describing the disagreement as hopefully just “a speed bump in the expansion of our long and successful global partnership”.
Spotify’s retaliatory statement about “WMG’s abusive behaviour” had already suggested that the speed-bump theory may be optimistic, with the streaming service arguing that it’s perfectly entitled to apply for a statutory licence. “Under the statutory license, Spotify will pay WCM and their rights holders rates that are in-line with the rates Spotify agreed to pay the leading Indian music entities. We will continue to assess our options at this stage,” said the company – you can read both statements in full here.
This is about Warner/Chappell’s catalogue of songs, rather than Warner Music’s catalogue of recordings. In its application for the statutory licence, Spotify explained why: Warner/Chappell owns ‘fractional’ shares in a host of songs that have been recorded for other labels (“in some instances as low as 1% of a composition”), and so without a licensing deal for those works, Spotify wouldn’t be able to make all those recordings available in India.
The application (which you can read in full here) also went in to more detail about the dispute, claiming that Warner/Chappell “initially clarified that it was willing to grant Spotify a voluntary licence for India” before the publisher “suddenly – and shortly prior to Spotify’s planned launch in India – refused to grant Spotify a licence for India without providing any reasonable grounds whatsoever for its refusal”. Additional note: Spotify’s statement to the media claims that “all other major labels and publishers have already agreed on economics and to license their music” for its Indian launch.
To get to grips with what’s likely to happen next, we’re all going to have to dig in to Indian copyright law, and in particular Section 31D of the 1957 Copyright Act there – which covers statutory licensing for “broadcasters”. Thankfully, journalist Dani Deahl has done the hard work in tracing the legislation back for The Verge, to explain how and why Spotify was able to (or, depending on your view, thought it was able to) take this move.
The key point in Spotify and WMG’s battle is whether a streaming service counts as a broadcaster, under legislation originally focused on TV and radio stations. The good news for Spotify is that a clarification issued by the Indian government in 2016 states clearly that “the provisions of section 31D are not restricted to radio and television broadcasting organisations only, but cover internet broadcasting organisations also”.
Spotify may be entitled to a statutory licence for publishing works in India, then – that’s what this morning’s ruling was all about – but its decision to actually trigger this licence is unsurprisingly controversial. A proper can of worms both in terms of how the Indian streaming market works, and Spotify’s global partnerships with rightsholders.
It’s also wider than this streaming service: Deahl also spotted that the IFPI suggested in a report last year that India’s 2016 interpretation of “broadcaster” in section 31D “would run foul of obligations under international treaties”.
This is more than just a licensing spat (or “drama” as Spotify CFO Barry McCarthy might describe it) then: it’s a dispute that goes to the heart of how publishing-licensing works in what’s *potentially* one of the biggest music-subscription markets in the world.
That’s why Spotify’s attempt to go statutory in India will cause consternation (and, indeed, anger) well beyond Warner Music Group – and also why the decision won’t have been taken lightly by the streaming service at a sensitive point in its growth.
What happens next in India will have important repercussions, especially with Spotify’s global-licensing renewals looming in the near future.