The Spotify Clause: How Streaming Royalty Disputes are Exposing The Fault Lines in India’s Copyright Act

Introduction

Spotify, one of the leading music platforms in India, entered the market on 28 February 2019, though with its entry into the market, most of the major music labels went against it, landing it in a legal storm. Warner Music Group and Saregama India filed for injunctions, and Saregama succeeded. The launch that had been waited for was immediately mired in litigation. This was not merely corporate posturing, it was a symptom of a much deeper structural problem embedded in Indian copyright law.

India’s Copyright Act, 1957, as amended in 2012, is the primary statute governing music rights in the country. It is a law conceived for a world of physical cassettes, radio broadcasts, and cable television. The collision between a 1957 statute and a 2019 digital reality had not been adequately prepared by the industry, Parliament, and the regulatory organisations, and the statute had never imagined on-demand music streaming as a business model.

The controversy commonly referred to as the “Spotify Clause” refers to the legal conflict regarding the ability of streaming services to claim that they can use statutory licensing to stream music without prior licensing with the rightsholders on a case-by-case basis, specifically, to use Section 31D. They raise questions that go far beyond royalty rates and licensing terms: Who defines a “broadcaster” in the age of algorithms? The legal battles between Spotify and music publishers have highlighted ambiguities in India’s copyright regime, raising questions that make it question if India is building a durable copyright framework - or merely patching a leaking dam?

The Statutory Licensing Debate : Section 31D

Section 31D of the Copyright Act, 1957, was introduced through the landmark 2012 amendment. Purposely, it is a provision that benefits consumers and involves interests, it permits any broadcasting organisation to disseminate a literary or musical work to the populace without obtaining a voluntary licence from the copyright holder, so long as it provides prior notice and remits royalty to the regulatory authority. The reasoning behind this is valid, as it would mean that the copyright owners cannot have the airwaves as a ransom by withholding the issuance of their catalogues, but at the same time, it would provide them with fair compensation as decided by a third party.

Most importantly, Section 31D reveals individual royalty rates on radio broadcasting and television broadcasting, but does not mention the internet. In 2012, the provision was being formulated, no form of streaming platforms existed in India in a form that would be considered significant. Spotify itself could not go worldwide in its present shape till 2011, and it would not enter India till another eight years. Perhaps the drafters of the law can be excused, as they did not foresee what was impossible to see. Though Spotify attempted to rely on Section 31D while launching in India in 2019, arguing that it qualified as a broadcasting organisation. Music publishers, however, strongly opposed this interpretation.

They claimed that streaming websites offer on-demand, as opposed to traditional broadcasting, and demand reproduction licenses, not to be provided in Section 31D. This controversy was the starting point of one of the most popular copyright conflicts in the Indian music digital industry.

The TIPS vs. WYNK SAGA: India’s Copyright Battle

No case better illustrates the fault lines in India’s copyright framework than the protracted legal battle between Tips Industries Limited and Wynk Music Ltd., a dispute that began in 2016 and concluded only with a settlement in June 2024.

One of the leading music labels with its headquarters in India is Tips Industries Limited, which is the copyright holder of a list of nearly 25,000 sound recordings. Wynk Music is a digital streaming service run by Bharti Airtel, which, for a number of years, was a licensed user of the same catalogue. This licence also expired in August 2016. The renewal negotiations collapsed, and Tips wanted an estimated ₹4.5 crores as licence fee that Wynk would have found excessive. The issue took on a full-blown litigation after a cease-and-desist letter from Tips was sent in November 2017.

The legal strategy used by Wynk was daring. Instead of simply challenging the royalty payment, it used Section 31D, which argued that, as a broadcasting organisation, it had statutory options to be licensable with regard to streaming Tips music so long as it paid royalties which it had earlier determined on its own at 10 paise per download. Tips did not take this and brought two copyright infringement cases before the Bombay High Court.

In April 2019, Justice S.J. Kathawalla of the Bombay High Court delivered a landmark ruling that reshaped India’s streaming landscape. The court, with considerable finality, decided that Section 31D had no application to the sale or commercial rental of the sound recordings, that internet broadcasting operators were not a broadcasting organisation as defined by statutory licensing in Section 31D and that the office memorandum of DPIIT in 2016 was not statutorily authoritative and did not comply with the ordinary meaning of the Act and Rules.

The court made the key difference between traditional broadcasting and on-demand streaming. Any consumer listening to the radio, it reasoned, has no control over play next. A Wynk customer, in its turn, pays a subscription fee, downloads individual songs of their choice, and has offline access to playlists created by the company. It is not broadcasting in any usual meaning of this word and is more like commercial rental or sale of sound recordings, rights, which are solely in the rights of the copyright owner under Section 14(1)(e) of the Act.

Wynk also lost its appeals against claims that its users were only engaging in fair use of the music to have some fun. The court said that allowing a subscriber to obtain more than 25,000 sound recordings under the subscription charge of a commercial site cannot, by any legal imagination, be considered as fair dealing under personal use. The activities carried out by Wynk were identified as an apparent violation of the sole copyright of Tips.

Wynk appealed the 2019 ruling to a Division Bench of the Bombay High Court, comprising Justices G.S. Patel and Gauri Godse. In October 2023, the Division Bench upheld the single judge’s interpretation in its entirety, upheld the earlier ruling, confirming that statutory licensing under Section 31D does not apply to on-demand streaming services.

Finally, in June 2024, Justice R. I. Chagla approved a settlement where Wynk (then operating as Xtelify Ltd.) agreed to pay ₹12 crore plus taxes to Tips for using its music from 2016–2020.

The Spotify-Warner Chappell Dispute

In 2019, Warner Chappell Music, the music publishing arm of Warner Music Group, was petitioning in the Bombay High Court against Spotify, seeking an injunction to stop Spotify from streaming its library without the due licensing agreements. Spotify retaliated by seeking a statutory license under Section 31D, arguing that it was within its legal entitlement to stream songs and pay royalties in accordance with the tribunal.

The court did not award an injunction at the time but ordered that Spotify post an interim payment of ₹6.5 crore in the form of a security payment pending the case. The litigation would eventually end when the parties reached a multi-territory licensing deal. Even though the case was settled, it revealed that there are major legal gaps when defining the statutory licensing of digital streaming.

The Spotify episode sends a strong message to all global streaming sites that have any ambitions in India that the Indian copyright market is a completely different reality from the Western markets. Streaming does not have a forced licensing system, there is no unified database of rights, and the negotiation system is streamlined. Each catalogue should be licensed separately, and the inability to do so, intentionally or not, leads to great legal and financial repercussions.

The Artist at the bottom as the Royalties Fail Them

The courts triumph in the label battles in Tips v. On the one hand, the Wynk and Spotify controversies are victories of copyright owners. However, they do not necessarily equate to good remuneration of the musicians who actually compose the music. The royalty pipeline in the music industry in India is still very flawed, and the amendment of 2012, though with a positive motive, has not yet been able to provide the promised results in the streaming era.

With the amendment of 2012, a revolutionary protection of lyricists and composers, even once licensed, was created: authors of literary and musical works have an unwaivable right to be paid royalties whenever their work is commercially exploited. Theoretically, a lyricist, such as Irshad Kamil, can receive streaming royalties on Spotify each time a song he has written is played on the site, even though the copyright in the sound recording may belong to a large record label. It was a major departure from the old regime, where a single non-refundable fee payment was then allowed to settle all future entitlements to royalty income.

Practically, though, this has not been evenly carried out. The extension of the 2012 amendment to Section 18 requires royalty payments but fails to explicitly bifurcate the responsibility to pay the royalty, so the provision will rely upon the drafting of the contract, along with the industry and judicial interpretation. Big labels, having both legal facilities and commercial strength, have often arranged deals in a manner that reduces royalty payments to creators. Independent artists, who constitute a significant percentage of new music being released in India, are often unable to bargain for their statutory rights.

Recent industry data indicated that independent stream growth in regional languages was rising by an average of almost 45 per cent from 2020 to 2025, whereas royalty revenues to the same artists were only rising by some 12 per cent over the same period, with recoupment models being highly skewed to major labels. The Indian Singers’ Rights Association (ISRA) have a very crucial role in addition to consolidation and distribution of royalty however, the issue of transparency and accuracy of the royalty distribution has always been a worry among all parts of the industry.

The case of legendary composer Ilaiyaraaja is illustrative. In the decades, his music has been incorporated, re-licensed and commercially abused in a manner that he has continuously objected to as an infringement of his rights under the copyright law. His legal battles over the use of his music show that composers of works created before the 2012 amendment often struggle to enforce their rights, revealing persistent structural inequalities in the music industry.

The Legislative Gap

The most important thing, perhaps in the Tips v. It is the Wynk and Spotify dispute that informs about the inefficiency of the current legislative structure. The 2019 single judge decision and the 2023 Division Bench decision expressly state that the Copyright Act, which was designed prior to the emergence of digital media, is structurally ill-suited to deal with the realities of on-demand streaming. This was an omission of the courts, they refused to do it, rightly believing that, to add internet streaming to Section 31D, a legislative change, not judicial interpretation, would be needed.

Parliament has, however, been as remarkably tardy as to do anything. In 2019, the Ministry of Commerce and Industry suggested the fix in the form of draft Copyright Amendment Rules, which suggested replacing the text in Rule 29 stating by way of radio broadcast or television broadcast with the text stating for each mode of broadcast, a comparatively minor change in text that would have put streaming platforms under the statutory licensing regime. The industry was generally welcomed with this proposal. It was, though, silently excluded in the last Copyright Rules (Amendment) of 2021, presumably in respect to the Tips v. Wynk litigation that was undergoing litigation at that time and the music label lobbying.

Streaming systems have no access to statutory licensing and have to deal with dozens of right owners on an individual basis, which is both expensive and time-intensive, and often controversial. The independent artists and composers do not have a clear model for asserting their statutory royalties on platforms. The fact that the rights holders are now empowered with the interpretation of the courts requires them to engage in costly litigation to enforce their rights instead of having a well-defined, codified regime. And consumers are paying that price with different gaps in the catalogues, slow launches, and a lack of competition on the streaming market.

The way Forward

The Tips v. Wynk settlement and the Spotify disputes have clarified that streaming platforms are not allowed to take statutory licensing under Section 31D. It is no longer an issue of what the law says, but what law should say. This poses a need and an opportunity for legislative reform.

The first step should be to revise Section 31D to have an express provision of on-demand internet streaming, and implement a royalty framework based on the economics of streaming, including micro-payments, advertising revenue, and subscription models, not the current radio and television system.

Second, Parliament must establish a central digital music rights registry, a public database containing the rights of owners of sound recordings/musical works. This would lower the cost of licensing and avoid inadvertent infringement, and assist independent creators in claiming their rights.

Third, the royalty rights of authors and composers in 2012 ought to be explained with specific guidelines on the payment of royalties to whom and how it is calculated in the streaming and how a performer can impose his or her royalty.

Lastly, India ought to come up with a special streaming royalty regulatory authority to decide and implement royalty rates without political or industry pressure.

Conclusion

The Tips v. Spotify launch crisis story, the crisis. The case of Wynk battle, and the royalty wrangles in the streaming sector, generally in India, is in essence a tale of judicial ex post facto. The Indian courts have achieved extraordinary success in seizing the gap in legislation, the 2019 and 2023 Bombay High Court decisions are sound and sensible and rightly respectful of the text of the legislation. Any statute, however, can only be interpreted by the judge so far. It is what the courts can say that Section 31D does not include in its coverage. The so-called Spotify Clause debate demonstrates that copyright law must evolve alongside technological innovation.

The music streaming economy in India is expanding at a low rate. Sub fees are on the increase, local language programming is booming, and the foreign companies are exerting more investments in the market. It is against this context that a legal system that places both the platforms and artists in permanent states of uncertainty, i.e. every licensing deal a possible lawsuit and every stream a latent lawsuit, is not just inefficient: it is a structural constraint of an industry that might be creating a significantly larger economic and cultural value.

The settlement of 12 crore in Tips v. Wynk is a landmark. It is also a warning. There are thousands of independent artists and composers who cannot afford to litigate for even 8 years, as every Tips Industries possesses the resources and the determination to do so. Dozens of small platforms have just left the market or existed in the legal grey areas, to every Wynk that eventually pays what it should have paid in 2016. The Copyright Act is a 1957 law that is performing a 2026 task.

Author: Yashaswini Jain, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

Endnotes

1. The Copyright Act, 1957, No. 14 of 1957, § 31D (India), as amended by the Copyright (Amendment) Act, 2012.

2. Tips Industries Ltd. v. Wynk Music Ltd. & Anr., 2019 SCC OnLine Bom 391, Bombay High Court.

3. Wynk Music Ltd. v. Tips Industries Ltd., Commercial Appeal (L) No. 482 of 2019, decided by the Division Bench of the Bombay High Court (2023).

4. Department for Promotion of Industry and Internal Trade (DPIIT), Office Memorandum F. No. 12(14)/2016-IPR-III dated 5 September 2016 concerning the applicability of Section 31D to internet broadcasting.

5. Warner Chappell Music Ltd. v. Spotify AB & Ors., Commercial IP Suit No. 114 of 2019, Bombay High Court.

6. Government of India, Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade, Draft Copyright (Amendment) Rules, 2019, proposing amendments to Rule 29 relating to statutory licensing.

7. The Copyright (Amendment) Act, 2012, §§ 18 and 19, introducing authors' inalienable right to receive royalties from commercial exploitation of literary and musical works.

8. Indian Singers' Rights Association (ISRA), "Performers' Rights and Royalty Distribution Framework," available through the official ISRA website and related statutory licensing mechanisms under the Copyright Act, 1957.