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Saving the Spotify Revolution: Recalibrating the Power Imbalance

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Saving the Spotify Revolution: Recalibrating the Power Imbalance JOURNAL OF LAW, TECHNOLOGY& THE INTERNET· VOL. 4 ·No. l · 2012 JouRNALOFLAw, TECHNOLOGY&THElNTERNET · VoL.4 · No.4 · 2012 Searching the Clouds SAVING THE SPOTIFY REVOLUTION: Until law enforcement routinely recognizes the Fourth Amendment protects the cloud network, an additional added protection is to continue to allow magistrates to impose restrictions RECALIBRATING THE POWER on computer warrants. Magistrates can do this by strictly enforcing the particularity requirement and by placing strict parameters on IMBALANCE IN DIGITAL COPYRIGHT computer warrants. If a magistrate grants a warrant for a computer hard drive, he should specifically note that the search cannot expand onto the cloud. Then, if the agent oversteps his bounds, the defense 1 may use the warrant's imposed limitations to suppress any data seized E. Jordan Teague unlawfully from the cloud. Restrictions 'Such as limiting the search ABSTRACT parameters to the physical hard drive, requiring searches to be conducted on copies of the hard drive instead of the actual computer, Many believed that Spotify would revolutionize the music or requiring that search of the computer takes place off-line223 will industry, offering a legal alternative to file sharing that compensates prevent law enforcement from even "accidently" exceeding the bounds musicians for use of their digital music. Why, then, have artists been of the warrant. If magistrates clearly and consistently apply abandoning the Spotify revolution in droves? Because the revolution restrictions to computer search warrants and suppress unlawfully has a dark side. Since Spotify is partly-owned by major record labels, seized evidence from the cloud, law enforcement will get the message: it has a serious conflict of interest with independent artists. Spotify's if they want to go beyond the physical hard drive, they must obtain a lack of transparency about its financial flows gives musicians further separate warrant. reason to question whether the service has their interests in mind, These additional steps will not interfere with law enforcement's particularly in light of the microscopic royalties Spotify has paid ability to continue to perform effective searches and seizures. Users of artists to date. This climate of suspicion has caused many artists to the cloud network have not given up their expectation of privacy abandon the service and pursue alternative means of digital simply because they choose to use the best means of data storage distribution and promotion. Even listeners have begun leaving available. When the user has not shared the documents through a Spotify on account of how it treats artists. Ironically, Spotify has network beyond one he has created for himself, he has not exposed managed to alienate the very audiences it needs as allies: artists, who the documents to the public and maintains his reasonable expectation supply Spotify's "unlimited" song library; and listeners, who fund the of privacy. The law must recognize this and must be willing to service through subscriptions and advertising. As such, the Spotify develop criteria for the expectation of privacy to meet the demands of revolution is destined to fail-an unfortunate reality, as the streaming the evolving technological world. music business model has great potential to benefit artists and serve the underlying goals of copyright. I argue that the most effective way to save the Spotify revolution is through a compulsory licensing scheme. This is because the primary impediment to Spotify changing its treatment of artists is its insulation from competitive pressures, which ultimately stems from the major labels' formidable bargaining position in digital sound recordings. The labels have assumed a gatekeeping function in streaming music, demanding corporate equity in exchange for access to their so"und recordings, which every streaming service needs to build a comprehensive catalog. As a result, the streaming music market has very few participants, all of which are partially controlled 1. Jordan Teague is an associate at Burr & Forman LLP in Birmingham, Alabama. She received her J .D. in 2012 from Vanderbilt University Law School, where she was the Senior Technology Editor of the Vanderbilt Journal of Entertainment and Technology Law. Jordan 223. In some cases, data saved in a cloud network account is not accessible received her B.A. magna cum laude in Mathematics-Economics from from a device that is off-line. Furman University in 2005. 206 207 JOURNAL OF LAW, TECHNOLOGY&THElNTERNET ·VOL. 4 ·No. l · 2012 Saving the Spotify Revolution JOURNAL OF LAW, TECHNOLOGY&THElNTERNET ·VOL. 4 ·No. l · 2012 Saving the Spotify Revolution by the major labels. Compulsory licensing would make the major labels' sound recordings more readily accessible to would-be streaming and pursuing alternate avenues of spreading their artistry. Even listeners have begun leaving Spotify on account of how it treats services. A more competitive marketplace will lead to greater artists. Ironically, Spotify has managed to alienate the very audiences transparency and fairer treatment of artists-and will ultimately enable the Spotify revolution to succeed. it needs as allies: artists, who supply Spotify's "unlimited" song library, and listeners, who fund the service through subscriptions and INTRODUCTION advertising. As such, the Spotify revolution is destined to fail; yet Spotify. continues to bow to the interests of the major labels. When Spotify reached the U.S. market in mid-2011, While artists may have good reason to be distrustful, the commentators acclaimed that "the future of music" was here.2 technology is not the problem. By reducing distribution costs for Finally, legal access to a nearly unlimited catalog of music had artists and improving the public's access to creative works, the become possible.3 Although sharing many of the same characteristics streaming music business model could serve copyright's goals of as its illegal peer-to-peer predecessors like Napster, Spotify claimed to promoting creation and dissemination. 8 Further, Spotify could be a have an objective that distinguished it from other file sharing sites: viable way for musicians to monetize digital recordings if its user base compensating artists.4 With potential to be the holy grail of music­ increases through network effects. 9 With promise to benefit artists, unlimited songs for listeners with a paycheck for artists-Spotify the Spotify revolution does not need to be stifled-it needs to be seemed to be on track to revolutionize the music industry for saved by recalibrating the power imbalance in the digital music market. consumers and musicians. Why, then, have independent artists been abandoning this This Note argues that the most effective way to save the Spotify revolution is to enable a competitive marketplace through compulsory revolution in droves? Because the revolution has a dark side. Artists 10 began growing suspicious of the service after receiving microscopic licensing. Because of the dangerous combination of the labels' royalty checks.5 Though artists have urged it to divulge how it market share and their holdout right under copyright law, the major calculates royalties, Spotify has been far from forthcoming with artists labels sit as a formidable gatekeeper of the streaming music market, about its financial flows, giving artists all the more reason to distrust deciding who will enter and on what terms.11 This has resulted in a the service. 6 Further cementing this climate of suspicion is the fact marketplace consisting of only a handful of key participants, all of that the U.S. major record labels partly own the service, meaning that whom are part-owned by the major labels. 12 I contend that a the labels, as shareholders, did not necessarily have artists' interests compulsory licensing scheme, similar to those already in place in the in mind during negotiations with Spotify.7 Left in the dark, artists Copyright Act for other music markets, would dissolve the labels' must make a seemingly lose-lose choice: stay on Spotify and collect gatekeeping ability, for it would make the labels' catalogs available to 13 miniscule royalties, or leave the service, forgoing Spotify revenue and any potential streaming service. Further, it would prevent the labels exposure. Many musicians have chosen the latter, abandoning Spotify from leveraging copyright ownership into streaming service ownership.14 A more competitive marketplace will lead to greater 2. Randall Roberts, Critic's Notebook: With Spotify, the Future of Music is transparency and fairer treatment of artists-and will ultimately Here, POP & HISS: THE LA TIMES MUSIC BLOG (Jul. 22, 2011, 5:34 PM), enable the Spotify revolution to succeed~ http://latimesblogs.latimes.com/music_blog/2011/07/critics-notebook­ with-spotify-the-future-of-music-is-here.html. 3. Id. ("rUlnlimited access to a huge chunk of the world's recorded music library ... has become reality."). 4. Tom Krazit, @ FB: Highlights from Mark Zuckerberg's Keynote Address, PAIDCONTENT (Sept. 22, 2011, 9:51 PM), 8. See infra Part III.A. http:/ /paidcontent.org/2011/09 /22/419-fS-highlights-from-mark- . 9. See infra Part III.A. zuckerbergs-keynote-address/ (noting that Daniel Ek, creator of Spot1fy, "[S]tated [his service] 's goal was to help people discover more music 10. See infra Part III.C. while fairly compensating artists."). 11. See infra Part III.B. 5. See infra Part II.A.iii. 12. See infra Part III.B. 6. See infra Part II.A.ii. 13. See infra Part III.C. 7. See infra Part II.A.i. 14. See infra Part III.C. 208 209 JOURNAL OF LAW, TECHNOLOGY& THE INTERNET· VOL. 4 ·No. 1 · 2012 Saving the Spotify Revolution JouRNALOFLAw, TECHNOLOGY&THEINTERNET · VoL. 4 ·No. I· 2012 Saving the Spotify Revolution by the major labels. Compulsory licensing would make the major and pursuing alternate avenues of spreading their artistry. Even labels' sound recordings more readily accessible to would-be streaming listeners have begun leaving Spotify on account of how it treats services.
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