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Warner seeks injunction against Spotify in India

By | Published on Tuesday 26 February 2019

Spotify

Warner Music has celebrated Spotify’s long-awaited but now seemingly imminent launch in India by taking a trip to Mumbai and requesting an injunction against the streaming firm. Which is a wonderful way to celebrate.

The court order relates to a dispute over the songs catalogue controlled by the Warner/Chappell music publishing company and what options may or may not be open to the streaming firm for licensing said catalogue.

Getting licensing deals in place for an Indian launch has proven quite a task for Spotify, with at least some execs at the majors expressing concern about the price point of streaming in some key emerging markets, the increased importance of which is dragging down the average revenue per user on a global basis.

On top of that, the majors themselves are not so dominant in India, meaning that getting Spotify live there is arguably more important for the streaming firm than for its global licensing partners. That said, deals have been done with key local catalogue owners – most notably T-Series – and Sony and Universal are reportedly now on board too. Which leaves Warner as the main hold-out.

Concurrent to all this, Spotify’s global deals with the big rights owners are coming up for renewal. That concern about average revenue per user is very much part of those renewal conversations as well, as is Spotify’s long-term objective of reducing its total royalty obligations to the music industry. And, according to Spotify, those other deal negotiations are relevant to the legal spat in India.

Commenting on Warner’s court filing in Mumbai, a Spotify spokesperson told reporters: “Warner Music Group instructed Warner/Chappell Music to file for an injunction in an attempt to leverage WCM’s local Indian publishing rights, to extract concessions in WMG’s global renewal negotiations for musical recordings”.

“WMG revoked a previously agreed upon publishing license for reasons wholly unrelated to Spotify’s launch in India”, they went on. “All other major labels and publishers have already agreed on economics and to license their music, and Spotify has also entered into a licence with the local collecting society, while WCM remains the lone hold-out needed for a Spotify launch in India”.

The licensing of song rights in the streaming space is considerably more complex than recording rights. In many cases the collecting societies license the song rights, either directly to the services, or via their reciprocal agreements with other societies around the world. But the major publishers – and an increasing number of indies too – license their Anglo-American repertoires directly, albeit via slightly complicated joint ventures with the societies.

On top of that you have the problem that streaming services like Spotify don’t really know what songs they are streaming. Labels and distributors provide recordings with songs contained within them. A service can assume the label or distributor controls the recording rights, but doesn’t know who controls the song rights or even what specific song is being used. And because songs are often co-written they are often co-owned by multiple publishers, meaning a single song requires multiple licensing deals.

This all means that excluding one publisher’s catalogue from your service – when you cannot agree a deal – is tricky. Doing so would affect recordings released by other labels and songs co-owned by other publishers. And that’s assuming you could work out what recordings now contained unlicensed songs. The easiest solution, therefore, is to try to ensure that you have the vast majority of songs licensed, via a combination of publisher and collecting society deals.

Warner specifically refusing to license its songs catalogue in India may therefore be a pretty good negotiating tactic. And that’s exactly the move Spotify accuses Warner of making. In a bid to counter it, the streaming firm has seemingly been looking for other options. In some countries in some scenarios there are compulsory or statutory licenses available. This is where copyright law forces rights owners to license, often at a rate set by a court, tribunal or copyright board.

Spotify is now trying to do just that in India, where statutory licences do exist for the mechanical copying and broadcast of songs. The streaming firm’s statement continued: “WMG’s abusive behaviour would harm many non-Warner artists, labels and publishers, and prevent Spotify from competing in the market, leaving us no choice but to file for a statutory licence. This statutory licence, which allows for application to internet-based services, prevents WMG’s abusive practices, while ensuring all rights holders are compensated fairly”.

It then clarified: “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”.

Warner argue that no such statutory licence is actually available for on-demand streaming services in India. Hence the court filing, with the major seeking court confirmation that statutory licensing is not an option for a service like Spotify.

Commenting on the legal dispute, a Warner spokesperson said: “After months of negotiations, Spotify abruptly changed course and has falsely asserted a statutory licence for our songwriters’ music publishing rights in India. We had no choice but to ask an Indian court for an injunction to prevent this. It’s our goal to hammer out a deal that works for everyone. We hope this is just a speed bump in the expansion of our long and successful global partnership”.

Speed bumps, of course, are annoying but often necessary. For Spotify, this dispute will definitely be annoying. Warner might argue that it’s also necessary, otherwise Spotify might set a precedent that an alternative licensing option is available in India that other digital operators would also jump on.

Either way, even if this particular spat can be dealt with quickly and Spotify’s India launch can finally go ahead, these various wheelings and dealings confirm that the ongoing global deal renegotiations – between the world’s biggest premium streaming service and the major rights owners which are increasingly reliant on said service, and really resent that fact – will be, well, lots of fun for everyone. Good times.



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