Spotify: We Make Revenue From Pirates Who Never Pay

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Spotify's chief in Australia has hit back at suggestions that reasonably priced streaming services have done little to reduce piracy. “If you look at the main audience that is on Spotify, a lot of them are former pirates," Kate Vale said. "There are teenagers who have potentially never paid for their music before, and probably never will."

In the continuing piracy debate one thing has been established beyond reasonable doubt. If an entertainment producer wants to make any dent in piracy, at the very least they’re going to have to make their products readily available at a fair price.

This argument has gathered serious momentum in Australia during the past few years, with local consumers regularly criticizing international TV and movie companies for shipping products Down Under months after release and then charging unrealistic prices.

But in a recent opinion piece, the principal analyst at local music royalty collection outfit APRA AMCOS disputed whether the arrival of services like Spotify that give consumers what they want, have actually done anything to reduce piracy rates.

“Music’s had everything everybody now wants for television shows, such as Game of Thrones, for a couple of years: availability, access and a reasonable price. But the piracy issue still has not been solved,” Andrew Harris wrote.

“In fact, results last month from our ongoing national research show that music piracy levels – just as they were almost two years ago – still sit at around the same level as that of movies and television shows.”

Noting that Spotify offers content in Australia at the moment it’s released around the world and does so at one of the best prices, Harris arrives at a familiar conclusion.

“We’ve heard it all before. No matter how loud the minority might shout it in anger as the answer, it’s impossible to compete with free.”

Unsurprisingly that notion doesn’t sit well with Spotify, a company that was designed from the ground up to compete with piracy.

Responding to Harris’s assertions in Australian Financial Review, Spotify Australia and New Zealand chief Kate Vale said that the company’s experiences told a different story.

“We do believe that access, availability and price does contribute and is the answer and we have proven this in other markets across Europe and particularly in Sweden where we have seen a 30 per cent reduction in piracy since we launched about six years ago,” Vale said.

Cracking Sweden was undoubtedly a major feat given the country’s long association with Internet piracy and Vale believes that Spotify now has the right formula to attract the most aggressive file-sharers – and make money from them.

“If you look at the main audience that is on Spotify, a lot of them are former pirates. There are teenagers who have potentially never paid for their music before, and probably never will,” she said.

“If we can get them on to a service that is free but legal, and they are contributing through our advertising on that free tier, then it is giving money back into the industry that they are just never going to get before.”

The ad-supported tier of Spotify is undoubtedly a great incentive to get people to try the service. Globally the company says that it converts around a quarter of free users to premium subscribers but Australia actually tops that with 31%, suggesting that Aussies are happier than most to part with their hard-earned cash in exchange for a good product.

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