Top Spotify Lawyer: Attracting Pirates is in Our DNA

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Spotify is not only one of the world's most popular music platforms, it's also one that's proven particularly popular with both current and former pirates. In a new interview, General Counsel of Spotify Horacio Gutierrez explains that tackling the piracy problem was one of the company's key goals, describing the effort as being embedded in the company's DNA.

spotifyAlmost eight years ago and just months after its release, TF published an article which pondered whether the fledgling Spotify service could become a true alternative to Internet piracy.

From the beginning, one of the key software engineers at Spotify has been Ludvig Strigeus, the creator of uTorrent, so clearly the company already knew a lot about file-sharers. In the early days the company was fairly open about its aim to provide an alternative to piracy, but perhaps one of the earliest indications of growing success came when early invites were shared among users of private torrent sites.

Today Spotify is indeed huge. The service has an estimated 100 million users, many of them taking advantage of its ad-supported free tier. This is the gateway for many subscribers, including millions of former and even current pirates who augment their sharing with the desirable service.

Over the years, Spotify has made no secret of its desire to recruit more pirates to its service. In 2014, Spotify Australia managing director Kate Vale said it was one of their key aims.

“People that are pirating music and not paying for it, they are the ones we want on our platform. It’s important for us to be reaching these individuals that have never paid for music before in their life, and get them onto a service that’s legal and gives money back to the rights holders,” Vale said.

Now, in a new interview with The Journal on Sports and Entertainment Law, General Counsel of Spotify Horacio Gutierrez reveals just how deeply this philosophy runs in the company. It’s absolutely fundamental to its being, he explains.

“One of the things that inspired the creation of Spotify and is part of the DNA of the company from the day it launched (and remember the service was launched for the first time around 8 years ago) was addressing one of the biggest questions that everyone in the music industry had at the time — how would one tackle and combat online piracy in music?” Gutierrez says.

“Spotify was determined from the very beginning to provide a fully licensed, legal alternative for online music consumption that people would prefer over piracy.”

The signs that just might be possible came very early on. Just months after Spotify’s initial launch the quality of its service was celebrated on what was to become the world’s best music torrent site, What.cd.

“Honestly it’s going to be huge,” a What.cd user predicted in 2008.

“I’ve been browsing and playing from its seemingly endless music catalogue all afternoon, it loads as if it’s playing from local files, so fast, so easy. If it’s this great in such early beta stages then I can’t imagine where it’s going. I feel like buying another laptop to have permanently rigged.”

Of course, hardcore pirates aren’t always easily encouraged to part with their cash, so Spotify needed an equivalent to the no-cost approach of many torrent sites. That is still being achieved today via its ad-supported entry level, Gutierrez says.

“I think one just has to look at data to recognize that the freemium model for online music consumption works. Our free tier is a key to attracting users away from online piracy, and Spotify’s success is proof that the model works.

“We have data around the world that shows that it works, that in fact we are making inroads against piracy because we offer an ability for those users to have a better experience with higher quality content, variety richer catalogue, and a number of other user-minded features that make the experience much better for the user.”

Spotify’s general counsel says that the company is enjoying success, not only by bringing pirates onboard, but also by converting them to premium customers via a formula that benefits everyone in the industry.

“If you look at what has happened since the launch of the Spotify service, we have been incredibly successful on that score. Figures coming out the music industry show that after 15 years of revenue losses in music industry, the music industry is once again growing thanks to music streaming,” he concludes.

With the shutdown of What.cd in recent weeks, it’s likely that former users will be considering the Spotify option again this Christmas, if they aren’t customers already.

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