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Spotify and Warner Music gear up for sub-continental slugfest

There is often a pervading impression given in the media that “big corporates” tend to get their ducks in a row before announcing a new plan. That isn’t always the case, and a new dispute between music streaming giant Spotify and music rights giant Warner/Chappell Music (a sub division of Warner Music that we shall just call “Warner”) is perfect evidence of that.

Last year Spotify announced that it was going to launch in India. As the second most populous country and a significant growth market for tech this was no surprise. What is surprising, is that Spotify did not obtain territorial licenses to use the music in its existing catalogue in India. While Spotify benefitted from licenses from all of the major rights holders (and most of the minor ones too) for the EU and US (its current biggest markets), not all of them were ‘worldwide’ licenses.

While it has secured amendments to many of its licenses to include India (and possibly other areas of South or South East Asia also: those details do not appear to be public), Warner maintains that it has not been contacted until the 11th hour.

Last week, on 20 February, Spotify filed a notice of its intention to apply for a ‘statutory license to the rights’ of Warner’s music catalogue before India’s highest first instance Intellectual Property court – the IPAB. The intention was that the Court would determine a fair license fee for the rights for an initial 1 year term, and Spotify would pay it. Spotify then (apparently without consulting Warner) transferred €528,000 to Warner via a copyright transfer platform.

Warner was particularly unhappy that Spotify had tried to circumvent its discretion to determine its licensing terms in this way, and has now issued High Court proceedings in Delhi seeking an injunction to prevent Spotify from using any of Warner’s music in India.

There are two competing rationales at play here: from Warner’s perspective, it says it should be able to determine its own license terms, and Spotify should have sought to engage in the matter with sufficient time to agree a deal, rather than announcing and leaving it until the last minute. Spotify, on the other hand, claims that it is unreasonable and anti-competitive for Warner to now refuse to grant a license for use in India.

This is particularly important for Spotify as Warner’s catalogue includes both modern and classic hits including those performed by Led Zeppelin, Radiohead, Madonna, Ed Sheeran, Coldplay, and Enya (amongst dozens of other household names). Not offering such a huge back catalogue of popular music might be critical to Spotify’s penetration in to the Indian market.

If you have any questions on the above, please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.