Providing a legal alternative top piracy has been Spotify's goal all along, according to the company's General Counsel Horacio Gutierrez.
In an interview with the Journal on Sports and Entertainment Law, Gutierrez confirmed what many had known all along, that Spotify based their core business model on attracting and monetizing pirates.
"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."
Spotify's freemium model has been a hit with pirates, and it has helped to reduce the piracy rate in some regions by as much as 80 percent. However, not all are happy with Spotify.
Many in the music industry complain that Spotify's solution to piracy simply replaced one type of lost revenue with another, suggesting that Spotify simply does not pay enough to artists. Spotify has countered these criticism by pointing out that labels and artists would have received nothing from the previous alternative, piracy, and that Spotify should be compared more to other promotional platforms such as radio, as opposed to sell through platforms like CDs and digital downloads.
Spotify's Gutierrez also correctly points out that since Spotify's introduction, the music industry has reversed the trend of revenue losses, thanks to revenue from streaming music.
"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," notes Gutierrez.
Gutierrez is also confident that more and more former pirates will start to pay for the premium version of Spotify, which removes ads and the limitations associated with the free account.
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