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Spotify and Warner duke it out in India. What are they up to?

Updated: Mar 10, 2019

Tensions between Spotify and one of the world’s largest music companies have just spectacularly erupted into full view as the two fight it out over….music publishing licensing in India.

I don’t mean to imply that this spat isn’t a big deal, it is. It’s a very big deal. Warner and Spotify are both trading very harshly worded public statements right now. But it’s important to remember what this is and this isn’t.

The language on both sides is currently uncompromising, and having spent many many years working at major label communications departments putting out public statements I know this kind of wording is both very rare and not used without careful thought and consideration. Feelings are clearly running very high on both sides.

However this is ultimately a commercial dispute and however ugly they may occasionally get they are always resolved in the end because, well business. The exact terms will depend on a number of things, not least the direction the court case in India between Spotify and Warner, but terms for Indian publishing licensing one day will be reached. This isn’t going to be the end of Warner and Spotify working together.

But what is most interesting is what this is. This is a fight both sides are squaring up for right now. Both are showing to everyone else what they think are the other side’s weakest points, and like all partners who have a long history together, they both know what they’re talking about.

Spotify is heavily reliant on a small number of partners for the rights it needs to stream the bulk of the most popular music in the world. Attention for this usually focuses on the record label side, but publishing rights are just as necessary, even if they aren’t well understood outside of the business. And the three majors - Universal, Sony and Warner - are both big labels and big publishers.

If Spotify was unable to secure a licence to Warner’s record labels, that would be bad for the service, but not necessarily fatal. Warner has the smallest market share, and it would be easy for Spotify to identify the tracks it couldn’t use. No disrespect to any Warner artists, the point is that if they were determined to, Spotify could probably go ahead in most markets without them. The service would have lots of big holes, but it could be manageable.

Publishing however is a different ball game entirely. The rights each major publisher has cross the output of multiple labels, not just their own, giving them licensing power way beyond the number of titles they release on their own labels. And there famously is no single authoritative database that can tell you who owns or controls what across the board in the publishing world. Spotify know that Warner’s publishing rights extend much more broadly than recordings stamped with a Warner label, they just don’t really know how much more broadly.

Being reliant on three major companies for the bulk of your best output is not a source of strength for Spotify, and publishing rights are a particularly tricky area given how complex yet essential they are. If Warner is successful, it will prove to Spotify (and everyone else) that it has much greater leverage that its headline market share in records.

However these publishing rights are also extremely lucrative for the majors and so maintaining their value in all areas is always a massive priority for them. Spotify’s strategy in India from what we can see from the outside is to gain the publishing licenses it needs through existing statutory channels - ie eliminating the need to negotiate with publishers at all. If it is successful then both the leverage publishers have in needing Spotify to come to an agreement with them goes away, plus the statutory rates are going to be lower, potentially considerably lower, in what could be one of the biggest streaming markets in the world.

So on one level you could say each side is helping show the other where their weak spots are. We’re going to find out who was most ready for that.

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