New Report Says Spotify Used “Pirated” MP3 Files To Launch Service and Why It Matters

[Len]

There has long been suspicion among some the music industry that piracy lies deep in the roots of Spotify since the streaming platform's inception. This theory which, has been lent new credence by new report, says that Spotify threatened researchers on the cusp of revealing its darker origins. David Lowery explains why it matters.

Spotify’s counsel Christopher Sprigman recently made the argument in Bluewater Music Services v. Spotify that the service isn’t required to pay mechanical royalties to songwriters because they aren’t really making copies except for those covered by “fair use” and “ephemeral” exceptions. This extremely aggressive argument seems to many (but not all*) music publishing experts to be dubious and more than a little “piratey.”

IMHO this is because piracy is in the DNA of Spotify. First Spotify CEO Daniel Ek made his first millions as founder of torrenting client uTorrent. Second, one of Spotify’s early investors Sean Parker of Napster fame declared “Spotify would finish what Napster started.” Third, until 2014 Spotify in the US operated as a peer to peer service copying and distributing millions of files using the devices of their customers (and BTW this completely undermines Sprigman’s copy argument).

Now there is this from Torrent Freak:

“Spotify Threatened Researchers Who Revealed ‘Pirate’ History”

BREAKING

A team set to publish a book on the untold history of Spotify were threatened by the company, one of its researchers has revealed. Earlier this year, Rasmus Fleischer, who was also one of the early figures at The Pirate Bay, said that Spotify used ‘pirate’ MP3s to launch its beta. Soon after, the researchers were contacted by a lawyer, with strong suggestions to stop what they’re doing.”

This story all by itself is really interesting. But there is a little subplot here as well. If this story is true, there are several problems that seem to relate back to copyright infringement and make this situation for Spotify extra piratey.

First I’m not sure that the PRO (ASCAP, SESAC, BMI) blanket licenses for public performance rights imagined a service using non-authorized copies of files. Nor do I imagine that direct licenses from publishers allowed this. Certainly I’ve seen at least one direct license for a record label from this era that did not allow Spotify to use third party sources for recordings. So if you’re following along at home when a direct license is violated, there is no license. And that would be copyright infringement.

Second I’m not sure that compulsory mechanical license may not be valid if the service is trying to use unauthorized copies. For how would a service know an unauthorized pirate bay sourced mp3 copy is the right recording? And if it’s the wrong recording this implies the wrong rights holder may get the royalties. Again this would invalidate the license. But it is even more troubling, rarely noted is the fact that a mechanical license is bound to a particular recording of a composition. What if another artist covering the song is mistakenly sourced? Or a live recording? Or more troubling an unauthorized live recording? Isn’t this a completely different set of copyright infringements not covered in recent settlements? Holy shit. If this is not an illegal practice on the part of Spotify it’s certainly another bit of sloppiness from a company that is getting a reputation among investors for recklessness. There is some anecdotal evidence that Spotify was sourcing songs from someplace other than an official library. In the early days of Spotify US I often encountered live versions of songs on albums that were studio albums. Others reported the same thing. Whether this was the P2P architecture copying and streaming the wrong recording of a desired song from a nearby source; pointers linked to the wrong recordings on my local hard drive, or illegally sourced files, it is not clear. But it is dubious and I suspect this is why Spotify dismantled their peer to peer architecture.

Finally did Christopher Sprigman properly disclose to the the court the P2P nature and subsequent copying and distribution made by Spotify software pre 2015? I’m honestly asking this question. I don’t know how much information an attorney is supposed to present to a court when arguing that a use is “fair use.”

This is getting interesting

*some music publishers have been running around with their hair on fire, because they think Spotify will prevail in this no mechanical argument. I think this is ridiculous. My favorite feature of Spotify (as a consumer) is the ability to play songs “offline” without eating through my mobile data. Clearly a copy lives on my smartphone and that copy is more than an ephemeral copy and requires a mechanical. Spotify is bluffing because if the only way to prevail is to disable this popular feature. Second the P2P architecture of Spotify up til 2014 strongly suggests the service was making copies and distributing them. Calm down everybody.