MR. KOJO NNAMDIFrom WAMU 88.5, at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's Tech Tuesday. The Internet has gotten a little clubby lately. First, there were the oh-so-coveted invitations to Google Plus, and now, anyone who's anyone is getting an invitation to Spotify. After much hype, the music service that makes 15 million tracks available for free has finally crossed the pond.

MR. KOJO NNAMDIAnd after a little more than a week, Spotify already has 70,000 paying subscribers. At that rate, Spotify would have more than 3 million paying U.S. customers by the end of the year. But 15 million free songs seems a little too good to be true, especially for a service that borrows from techniques that were honed through media piracy. So what's the catch? And why is the music industry embracing this new model?

MR. KOJO NNAMDIJoining us for this Tech Tuesday conversation in our studio is Brendan Greeley. He's a reporter at Bloomberg Businessweek. He also wrote the piece "Daniel Ek's Spotify: Music's Last Best Hope." Brendan Greeley, thank you for joining us.

MR. BRENDAN GREELEYThanks for having me in.

NNAMDIJoining us from studios at the Argo Network in New York City is Joe Karaganis, vice president of The American Assembly, which is a nonpartisan public affairs forum at Columbia University. He's also program director at the Social Science Research Council. Joe, thank you for joining us.

MR. JOE KARAGANISThank you for having me.

NNAMDIBrendan, you spent a week earlier this month with the founder of Spotify, which was just introduced into the U.S. Tell us a little bit of the backstory behind this music-streaming service and how piracy plays into it.

GREELEYWell, so Spotify is a music-streaming service. But that's kind of like saying that that Muhammad Ali was a boxer. It's a -- so it started in 2009. He had the idea -- Daniel Ek, the founder, who's a Swede, had the idea in 2006. He decided that he wanted for it to be possible for anyone to listen to any song at any time, at any place.

GREELEYAnd he's fond of saying that Facebook is successful because it solves only one problem. And that one problem is: What are my friends doing right now? And he wanted Spotify to solve only one problem: What do I want to listen to? So from the outset, he didn't want it to be social. He didn't want it to be everything. He didn't want it to be Amazon. He just wanted it to give you a chance to listen to whatever you wanted to listen to. That's hard enough.

GREELEYHe had a great conversation with somebody he had in the -- somebody he knew in the music industry, where he called him up and said, well, so this is what I would like to do. I need licenses from all the companies all over the world to stream anything at anytime. And his friend said, what you're asking for is not possible. And he said, okay, well, so what are we talking about? He said, does that mean it's going to take six months?

GREELEYAnd the guy said, well, I think it's going to take maybe two years. And that's about what it took. And he likes to say -- Daniel Ek is very fond of saying, I started negotiating with the music industry when I had hair. And he's young, but he has none. So what I think is interesting is that music executives are notoriously difficult to get to talk openly about things. They're on the defensive and have been for about a decade now.

GREELEYAnd I talked to a bunch of music executives who are so excited to talk to me about Spotify. They really -- Per Sundin is the head of Universal...

NNAMDIMm hmm.

GREELEY...in Sweden, and he's kind of a notorious bad guy. He was very public in Sweden in saying, you know, what should be done to music pirates. And he was kind of angry at the time. And around 2006, he was getting into fights with friends at parties who were downloading music. And he'd say, you know, you're stealing from me. And they'd say, well, you know, we have no problem with downloading for personal use.

GREELEYAnd he'd say, you don't understand. That's what we do. We sell songs for personal use. That's -- you know, you're taking my livelihood. But he welcomed me into his office and showed me statistics about Spotify. And what has happened, interestingly, is that the service has been successful enough in Sweden, in particular.

GREELEYBut in the seven markets where it opened in Europe, two years ago, that, you know, he used to be embarrassed to go to international meetings of Universal. He'd have to sort of, you know, cower in shame in a corner and say, well, I'm the Swede, and our market is so messed up because piracy hit Sweden really hard.

GREELEYAnd now, he's finding that, because of Spotify, because he's making so much more revenue through Spotify than he is through iTunes, that everybody wants to talk to him and find out -- you know, Spotify has made him popular within Universal because everybody wants to know how this Swedish experiment is working so well. So the basic premise for Spotify is you can now -- it's an application that you download to your computer.

GREELEYYou sign up for an account. You pay about between $10 and $15 a month, depending on what country you're in, and you can listen to anything at anytime. And some percentage of the revenue, that comes in through your subscription fees, goes to the artists you're listening to. So there's a great quote from Joe Strummer, who was the guitarist for The Clash, who died quite poor, actually.

GREELEYAnd he said, you know, the problem with being famous is that everybody thinks you get a quarter when somebody mentions your name. But that's just not true. It is true now with Spotify. The labels are reclaiming revenue that had been completely lost. So anytime anybody plays The Clash, not Joe Strummer, but Joe Strummer's estate now gets a small piece of what people are paying in subscription fees.

NNAMDIThe four major labels have signed on. And if you'd like to sign on to this conversation, you can call us at 800-433-8850. Have you signed up for Spotify? What do you think of it? Do you download music without paying for it? 800-433-8850. You can go to our website, kojoshow.org. Join the conversation there.

NNAMDIYou can keep up with the conversations on Twitter. Just use the Tech Tuesday hashtag, or send email to kojo@wamu.org, or a tweet, @kojoshow. Spotify borrows legally from techniques that were honed through illegal media piracy. How does it work?

GREELEYSo there's a technology called BitTorrent, which a lot of your listeners are probably already familiar with. But it basically -- what it does is if you want to call up a file, instead of pulling it from some central server somewhere else, what you do is you pull pieces of it from lots of other people who happen to have that file on their hard drives around you.

GREELEYAnd what that does is it shares the bandwidth a lot, so whoever has the central file isn't paying to send it to you. And it also increases the speed because you're getting bits and pieces from lots of different places. It's just a -- it's a brilliant technology. It has very often been used for media piracy. It's sort of -- you can't say -- BitTorrent is not an illegal technology. It's kind of an amazing technology, but is very often used for illegal ends.

GREELEYIf you look at the places where you can go to find torrent files, as they're called, you know, large percentages of -- by no means all those catalogs, but very often large percentages of those catalogs are pirated TV shows and music files. What Spotify has done is there was a very popular application used to download BitTorrent files called uTorrent. Now, the guy who wrote uTorrent was the lead developer for Spotify's beta. He's a Swede.

GREELEYHis name is Ludvig Strigeus. And what he did -- and this is what makes Spotify different from all the other streaming services. There's a traditional way of streaming where you're basically calling up a file from a central server. And those services -- the other services can stutter. They can be slow. What Spotify does is the second you punch a button, it calls up only 15 seconds of the song from the central server.

GREELEYAnd then it uses BitTorrent-like technology to look for who else on Spotify has the song that you're listening to on their hard drive so that you can get the rest of it. And what that does is - - that seems like a small advantage. It's faster. But they're obsessed. Both the engineers and Daniel Ek at Spotify are obsessed with the count of 200 milliseconds.

GREELEYThey believe that if you get a file, if something -- if you push a button on a computer and something happens within 200 milliseconds, you believe that you're in control. Otherwise, you believe that you're asking the machine to do something if it takes longer than that, so about 98 percent of the files in Spotify will load within 200 milliseconds.

GREELEYAnd this is what's crucial, is that we then begin psychologically to believe that we own the music, that it's sitting right there in our hard drive. And once that shift takes place, then maybe we prefer to pay for access to all the music in the world, rather than holding what we have on our own hard drives. And that's a pretty profound shift in the way we look at music.

NNAMDIDaniel Ek's got my psychology down pat.

GREELEYIs that all you want?

NNAMDIYes.

GREELEYYou just want to push a button and get everything?

NNAMDIYeah, he's got it covered. Joe Karaganis, music piracy is almost standard practice in markets beyond the U.S. and Europe. Will a service like Spotify cut down piracy in developing economies, even priced at, oh, $5 or $10 per month? Joe, are you there?

KARAGANISWell -- yes, I'm here. Can you hear me?

NNAMDIYes, we can.

KARAGANISOkay. Yeah, well, price and convenience is, of course, the main issue. And there you have additional challenges, namely the fact that local incomes in most developing countries are a fraction of what they are in the U.S. and Europe. And additionally, there's just much less technological infrastructure for things like streaming audio or streaming video for that matter.

KARAGANISSo broadband adoption is happening very quickly, but it's still only a fraction of levels in the U.S. or Europe. So there are some technological challenges, at least in the short term. In the long term, I just want to -- I mean, I think, yes, streaming services like Spotify are almost certain to be a big part of the music experience. But, you know, as Brendan points out in his piece, I mean, Spotify is really only one of many competing services in this space.

KARAGANISThere have been others that have, you know, come to the fore in the last few years or faded out. And Spotify is the one that the big labels are placing their bets on. But I want to just draw attention to a couple of the risks that come with, you know, placing these kinds of big bets. One is that they win, and they become the dominant provider for music to everyone. There are some real problems associated with that.

KARAGANISFor example, I think it's almost guaranteed that as the record companies see their CD revenues declining and as Spotify's revenue is increasing, there's going to be a lot of pressure on Spotify to raise prices. I mean, we've just seen that with Netflix. So if they succeed in the...

NNAMDIGo ahead.

KARAGANISIf they succeed in the next couple of years and locking in a huge user base and you've invested all that time in your playlists and then the major labels decide that Spotify really needs to be charging 25 bucks a month rather than $10 or $15, you know, then we begin to see some real difficulties. You have a locked-in user community.

KARAGANISYou have -- you know, the potential for a backlash kind of thrown back into the same environment where piracy is providing, in effect, the default low-cost option for people.

GREELEYI think that's a really good point. I spoke with somebody in Sweden who's loosely involved with The Pirate Bay, which is a file-sharing site. And what he said was, you know, I have this massive archive on several hard drives of all the music I'd ever want to listen to. But I'm not using it because Spotify is better, and it's easier. But I've still got it. I've still got that archive. At some point, I'm going to move apartments. I'm going to go somewhere.

GREELEYIt's just not going to be worth it to hold onto this archive. And what he said was, you know, they've got me. They're working with me, and I'm -- you know, I had all this music already. Once I give up my archive, I've got no leverage over them whatsoever. And Spotify only happened -- it only brought the labels to the table because they had lost the leverage because -- that they had because everybody, at least in Sweden and a lot of countries in Europe, already owned all the music they might sell.

GREELEYSo they really -- they couldn't sell the music anymore, so they had to sell a service. They had to sell convenience. But when we all let go of our archives and we stop collecting and owning music, they do have tremendous leverage over us. And I think Joe is absolutely right. It's really important to point out that, although Spotify itself is kind of a fascinating, plucky upstart, it's only been as successful as it has because it has complete buy-in from the labels.

GREELEYIt went to the labels first before it launched. The labels love it. And it's important to recognize that Spotify is essentially exactly what the labels want, even though they weren't smart enough to know that that was what they wanted five years ago.

NNAMDISpeaking of the labels loving it, joining us by telephone now for this Tech Tuesday conversation on Spotify and media piracy is Steven Marks, vice president and deputy general counsel of the Recording Industry Association of America. Steven, thank you for joining us.

MR. STEVEN MARKSGlad to be here.

NNAMDISteven, is this service, Spotify, a game changer for the music industry?

MARKSWell, we're obviously excited about any new service that has the buzz that Spotify has both abroad and in the U.S. It's reported that 70,000 subscribers in the first week. Those are actually paid subscribers, a very impressive number. But, you know, Spotify is part of a broader strategy for the record industry to license many different kinds of services that hopefully will be appealing to consumers across the board.

MARKSYou know, that includes downloads on iTunes, on-demand streaming services, like Rhapsody and Napster, Spotify, cloud services. For us, you know, we view technology as enabling music fans to access music any way and anywhere that they can. So Spotify is a positive thing. And licensing and having a broad array of services is a good thing for our industry.

NNAMDIGot to take a short break. When we come back, we'll continue this Tech Tuesday conversation. You can keep up with it on Twitter. Just use the Tech Tuesday hashtag. Or call us on the phone, 800-433-8850. Send us an email to kojo@wamu.org. Or simply go to our website, kojoshow.org, and join the conversation there. I'm Kojo Nnamdi.

NNAMDIIt's a Tech Tuesday conversation on the impact of the music service Spotify and its relationship, if any, to media piracy. We're talking with Brendan Greeley. He's a reporter at Bloomberg Businessweek, who wrote the piece "Daniel Ek's Spotify: Music's Last Best Hope." You can find a link to that piece at our website, kojoshow.org. Brendan joins us in our Washington studio.

NNAMDIJoining us from the studios of the Argo Network in New York City is Joe Karaganis, vice president of The American Assembly, which is a non-partisan public affairs forum at Columbia University. He's also a program director at the Social Science Research Council. And the Social Science Research Council put out a report, with which Joe authored back in March, called "Media Piracy in Emerging Economies."

NNAMDIYou can find a link to that at our website, kojoshow.org. Also joining us by phone is Steven Marks, vice president and deputy general counsel of the Recording Industry Association of America. We'd like to hear from you. What do you consider an appropriate price to play for music, for songs or albums? 800-433-8850. Have you signed up for Spotify? What do you think of it? You can simply go to Twitter and use the Tech Tuesday hashtag.

NNAMDIAlso to join the conversation -- I'll start with the phones -- here is Timothy in Warrenton, Va. Timothy, you're on the air. Go ahead, please.

TIMOTHYHi. This is for Steven Marks. This is a general comment about -- on Trent Reznor of Nine Inch Nails. I first heard of Spotify through him on his website. You know, he's a big advocate of piracy. And he feels like -- he even told his fans to go steal his music. And he's so much against the RIAA. And he is no longer on a record label, but, you know, he uses the service. And now I use the service because of him. I just want to know how you feel about that.

NNAMDIYou use the service, Spotify, because...?

TIMOTHYBecause Trent Reznor on his website, Nine Inch Nails, nin.com, he put up, you know, a post on there and his Twitter. You could find him on, you know, Nine Inch Nails in Twitter. But Trent Reznor, he's an advocate of stealing music, his own music even. He tells his fans to steal his music and -- but now he uses Spotify.

NNAMDIWell, how does he feel about this, Steven Marks? The recording industry gets a percentage on every stream from Spotify, does it not? And what else does the recording industry get from this service?

MARKSWell, I think there are a lot of artists, as well as the labels, as we were just talking before, who are excited about Spotify. And just the other day, I was hearing that Spotify was working with artists who were tweeting to their fans about free subscription. So I think this goes back to the point that Brendan was making earlier about how Spotify did it the right way. They went to the labels. They had the conversations. And, you know, they have licenses now.

MARKSAnd the services have launched with the full support of the music industry. And we have always supported the rights of artists, like Trent Reznor, to give away their music if they want. That's in -- that's all about choice. And that's the only thing that we've ever said about whether somebody can or can't take music. It's about the choice of the person that owns it. If somebody wants to give it away for free, that's fine.

MARKSThat's their choice. But if others don't want to do so, it's not okay to steal it.

NNAMDIBut as I said earlier, the record labels will be getting revenue from Spotify. The other thing is that there's a piece in The Washington Post today about how do we know what's the number one tune in the nation or the number one album. And one of the things that the labels get from Spotify is data, very specific data about when an album is sold, when people listen to it, what age they are, what gender they are, every single time a track is played.

NNAMDIHow useful is that?

MARKSWell, it's useful in terms of marketing and understanding what kind of music your music fans and consumers are listening to. As most people probably don't know, you know, record labels play a very vital role not just in helping to create the recording, but in terms of marketing it. So that kind of information is vital for any organization or company that is marketing the products that they create.

NNAMDIBrendan, to clarify, on iTunes we buy our music. But does Spotify essentially turn us all into renters?

GREELEYYeah, I think it's important to point out here also that not only Trent Reznor of Nine Inch Nails, but Britney Spears tweeted an invitation to her followers on Twitter. So we're sort of -- Spotify is bringing worlds together. But -- so what Spotify does is it allows you to pay for convenience.

GREELEYAnd this is something that I think is really interesting in some of the work that Joe has done, which is that Daniel Ek, the founder of Spotify, is very fond of saying, in order to win in this game, you have to be more convenient than piracy. You can't...

NNAMDIIs Spotify more convenient than piracy?

GREELEYOh, yeah.

NNAMDIIt is.

GREELEYOh, yeah. I mean, there's really good evidence in Sweden that it's brought a lot of illegal file sharers in from the cold. And the trick for that is it can't just be more legal than piracy. It has to be more convenient than piracy. So what it's doing is -- so piracy is -- it's free, but it's also -- there's a time cost associated with it. You have to learn how to use BitTorrent, which is not impossible, but, you know, it's a little unwieldy.

GREELEYAnd you've got to have file storage to -- you know, you've got to spend some time downloading. You've got to search for it. A lot of times the sites where you find torrents aren't reliable, or they'll sometimes even sort of introduce viruses into your computer. So there's a cost to piracy, even completely forgetting the legal cost to it. So what Spotify does is that it removes all of that inconvenience of having to work to get the music immediately.

GREELEYBut in exchange, you don't own the music. So what you're paying for, what the labels are offering you is you can pay for the convenience of not having to run around and take the music. But what that's done is it's introduced a shift, particularly in Sweden, but generally in the countries that use Spotify where people are no longer paying to own their music. They're paying for access to music.

GREELEYSo there's this fascinating idea that came from the recording industry, actually, and what I was told was that it came out of an RIAA meeting in the late '80s. But -- is the idea of a celestial jukebox. So this was sort of before we even knew what the Internet could be.

GREELEYRecording executives, you know, thought of this idea of a low-Earth orbit satellite that could beam down to, you know, to the waiting ears of anybody who wanted any song that they wanted at anytime. And there's also -- there's something sort of almost religious about it, the celestial jukebox. And what it would do is sort of it would shift from -- it would shift the relationship between the labels and consumers from ownership to access.

GREELEYAnd that's -- and I don't really want to place a value on either of those. But I think there has been a model from recording Edison wax cylinders all the way through iTunes, where no matter what the medium is, we pay for music and then we get it, and then we own it forever. And what we're seeing with Spotify and some other music streaming services -- but certainly none have been as successful as Spotify -- is the shift where you no longer own your music.

GREELEYYou rent it. So I don't know whether we're prepared in America to give up ownership and begin renting. And as Joe pointed out, once we all rent, that gives the labels a lot of leverage that they had lost.

NNAMDI800-433-8850. Are you prepared to give up ownership of your music in exchange for renting in the convenience of access? 800-433-8850, or go to our website. Or just go to our Twitter and use the Tech Tuesday hashtag. Join the conversation there. Our website is kojoshow.org.

NNAMDIJoe, your report, which took three years and 35 researchers to complete -- it's my understanding anyway -- basically concludes that piracy is not necessarily a result of morally deficient societies. It's a pricing problem. So why don't international media companies simply lower their prices?

KARAGANISWell, we wrote 400 pages to try and answer that question.

NNAMDINow, you got 10 seconds. Go ahead.

KARAGANISWell, I mean, the answer differs by industry. So, you know, we looked at things like DVD prices and realized very quickly that there was a floor for DVD prices, pretty much wherever you wanted to buy them. You could -- they were almost never less than $14 or $15.

KARAGANISSo there's a very, you know, strong global pricing system in place for DVDs that meant that for people in Brazil or India or Mexico, the prices relative to local incomes were just astronomical. And so the markets were tiny and, you know, consequently, local investment was small.

KARAGANISBut there was a kind of low equilibrium problem associated with those markets that, you know, by and large, the big media companies were content to stay with because the alternatives were complicated. The alternatives would be things like lowering prices, you know, to bring them more in line with local incomes, to have a whole array of prices in different markets around the world.

KARAGANISFor a variety of reasons, the big media companies that operate internationally have decided that protecting their high-value markets is much more important than trying to expand in low-value markets through lower prices. That was our primary conclusion.

NNAMDISteven, album sales edged up 1 percent in the first half of this year. Why are they going up? And how will the growth of services like Spotify, in your view, impact sales?

MARKSWell, I think the more kinds of services that you have, like Spotify or many of the other services that are around, only help. I mean, in our view, the best tool for anti-piracy is to have a compelling marketplace. So Spotify and other services only help us. In terms of the reason that albums are up -- and, by the way, digital sales are up approximately 20 percent this year, and digital singles are also up about 10 percent as part of that growth.

MARKSSo we think there are probably many factors. One is there's no coincidence that the uptick began at the time that LimeWire closed. We had a very long litigation with a P2P company called LimeWire. We were -- we won that case, and that service shut down. And within a month of that service shutting down, we saw an appreciable uptick in the purchases, at least, of legal sales. So we think that's one factor.

MARKSThere's also -- and there's -- generally, we're seeing a migration to legitimate services overall, not just from LimeWire, but that illegal activity is decreasing. Physical albums are selling better this year than they were last year. There's different marketing practices, non-traditional kind of retail outlets that are being tapped into. We've had a strong release schedule.

MARKSAnd I think there's also -- getting back to your original question about albums, consumers are obviously recognizing the value of albums. There's a certain sign of a comfort with a new format for people who may have, in the past, dabbled with a single here and there as they were getting into digital, but are now more committed to the digital format and, therefore, more willing to spend dollars on complete albums.

NNAMDIOn to the telephones. We start with Brian in Annapolis, Md. Brian, you're on the air. Go ahead, please.

BRIANYeah, Kojo and Brendan, you were talking earlier about this crowded marketplace and a locked-in user community. And I certainly felt trapped by Apple with their iTunes, iPhone data model. You know, but there's many players in this electronic music delivery business, and perhaps Apple and iTunes is chief among them. And I'm wondering what changes do you think Spotify is going to drive in the U.S. online music marketplace from a firm perspective?

BRIANDo you think iTunes will survive? Are they going to have to change its business model? And then -- and what about the ad-driven services like Pandora, et cetera?

GREELEYI think if there's anything that Apple knows how to do, it's survive. But I do -- what's happened in the European market is it has turned into sort of a two firm contest. There's much smaller entrance. But Spotify is the second largest revenue driver for the labels in Europe, and the first is iTunes. I think it'll probably force iTunes to adapt. For a while, iTunes won on convenience.

GREELEYSo, you know, we're going through the -- basically, the same revolution that we went through four or five years ago when all of the sudden, you know, iTunes provided a reasonable way to buy music and get it onto your hard drive and get it into your music player. And it turns out that there were -- there are things that Apple never had to make convenient for you because it didn't have any real competitors. I think one of those is playlists.

GREELEYI tried recently to integrate all of my wife's albums and my albums, which -- I must add, since we're on the phone with the IRAA -- we bought legally. And, you know, I tried to do this in iTunes and put it all on a single hard drive. And it turned out the real problem was the playlists, that I could import all of my playlists, but it was really difficult.

GREELEYAnd I'm okay with computers. And it -- actually, it defeated me. I finally said to -- I finally said, sweetie, I'm sorry. We're going to lose your playlists if we want to do this. So Spotify has become -- you know, Daniel Ek, the founder of Spotify, believes that the way we look at music will shift. We will no longer think in terms of the ownership of our albums, our collection. We will think of the ownership of the way we organize music.

GREELEYSo right now we think in terms of albums. We bought that album. We have it. We will start to think in terms of, what did the summer of 2011 sound like? Can I go back and get that playlist? So it's as if all the mixed tapes that people made for you, or at least, excuse me, made for me. I'm dating myself by saying tapes. When I was in high school, if they were still accessible as a playlist on a single format, I think Spotify will make that possible.

GREELEYI think iTunes will have to adapt and will have to become more convenient. I don't know that Spotify will immediately be as successful as it was in Europe because iTunes didn't have that much -- nearly as deep of a penetration in Europe as it did in America. And I'm kind of dancing around the big question that I can't answer, which is I don't know whether Americans will be prepared to give up ownership.

GREELEYThere's a much more developed market for digital music ownership in America than there ever was in Sweden, where people came to believe that there was -- there could be no ownership of music. So I don't know whether, psychologically, we're willing to give that up or not.

MARKSI think the important thing here is that...

NNAMDISteven, I was about to ask you about that because paid music services have languished in the U.S. because people prefer to amass personal music collections rather than paying to use an online library or service. Does Spotify have its work cut out for it in this country?

MARKSWell, I think the important thing here is that there's choice in the marketplace. If you look back, you know, 20 years ago, or historically, you had two choices. You could listen to the radio -- terrestrial radio that is -- or you could go out and buy an album. Now, you have many more choices in between those two extremes, if you will.

MARKSYou can still purchase music, and you can purchase it in many different formats. But you can do a lot of things in between. And I think Brendan is right that there -- and I thank him for the compliment. I think it's the first time anybody has gone on record saying that the record industry was forward-looking.

MARKSBut we did, back many years ago, see that there was the potential for this change from pure ownership to more of a performance-based kind of consumption and that a certain part of the music community and fans were going to want to be able to experience music in that way. So you have kind of a continuum with many services. The more services, the more offerings, the more technologies, the better for everybody.

MARKSWhether one wins out or another wins out doesn't matter so much as what's available to consumers, and the marketplace will determine.

GREELEYI think...

NNAMDIBrian, thank you for your call. You were about to say, Brendan?

GREELEYWell, I think -- just to go back to Brian's question in Annapolis, I think it's interesting to look at the Swedish market because it's a very small market and different from America's in many ways. But it is a completely Spotified (sic) market. It's basically the only music service that exists there right now.

GREELEYAnd one of the things that they've noticed is that, although revenue from subscriptions have gone up, you can also buy music from within Spotify and purchases. So to have and hold and to keep of music has also gone up within Sweden. It doesn't begin to rival the subscription revenue, but people are still buying albums and holding on to them. We can sort of see that in the statistics, and we can see that anecdotally.

GREELEYThe music executive I talked to, the head of Universal said that -- and, you know, he talked to a teenager at a party who said, you know, she can't wait for a new album to come out. And he said, well, you know, you've already got it on Spotify. And she said, no, I want to really have it. So the one thing we might be looking at is that it used to be, in order to have a library, you had to buy a bunch of cheap paperbacks of everything.

GREELEYAnd we might be looking at music libraries, the things you hold on to, are only the albums that you -- that really mean something to you. So a music library that used to be a sort of a big stack of paperbacks is going to become sort of a nice case of first editions that you really care about, musicians that you want to support that mean something to you. And for the rest of the stuff, if you need it, you can go on a subscription service.

MARKSI think that's also consistent with what we're seeing in terms of sales of digital albums that are the kind of premium editions of those albums. You know, there are different versions of albums that are offered, for example, on iTunes, some with more value put in, liner notes, artwork, other things like that, and sales of those more premiums products are actually -- actually make up a very large portion of overall album sales.

NNAMDIThank you very much for your call, Bryan. We're going to take a short break. When we come back, we'll continue this Tech Tuesday conversation on Spotify and take your calls at 800-433-8850. Or you can simply go to Twitter and use the Tech Tuesday hashtag. I'm Kojo Nnamdi.

NNAMDIIt's a Tech Tuesday conversation on the music service Spotify. We're talking with Steve Marks, vice president and general counsel of the Recording Industry Association of America. Joe Karaganis is vice president of the American Assembly, which is a nonpartisan public affairs forum at Columbia University. He is also program director at the Social Science Council. Joining us in studio is Brendan Greeley.

NNAMDIHe's a reporter at Bloomberg Businessweek, who wrote the piece "Daniel Ek's Spotify: Music's Last Best Hope." You can find links to that and to the Social Science Society's report, "Media Piracy in Emerging Economies," at out website, kojoshow.org. That's the Social Science Research Council. We got an email from somebody who is living abroad, who says, "I live in Thailand nine months of the year.

NNAMDI"Grooveshark and Last.fm are available there, but other sites like Spotify or Hulu are not. I get pop-up messages saying, we have not yet secured the rights to provide this service in your country. Check back later. I suspect this is a red herring. Why do entertainment companies restrict access to their sites to certain countries?" Steven Marks, can you answer that?

MARKSWell, I think it just depends on -- first of all, I don't think you should assume that it's only on the label side or the entertainment side. There are individual companies that make decisions about what markets they want to go into. I don't know, for example, whether Spotify is looking to Thailand as a market that it wants to launch in or not, or whether it has plans to.

MARKSBut I assume these are all part of discussions between copyright owners and services like Spotify.

NNAMDIProbably so. But, Steven, can the music industry itself afford to drop its prices to locally appropriate equivalent, I guess, in places like Thailand? Or could it work with companies like Spotify to do so?

MARKSWell, I think the pricing issues in developing countries is a complex issue, as you were talking about before. It took 400 pages in that report.

NNAMDIYeah, we'll get back to that in a second with Joe.

MARKSRight, exactly. So we probably don't have the time to get into it here. But, you know, we have to recognize that music is not a commodity. It requires investment to create a product and to market the recording. So you're not talking about the price of widgets in a particular country versus another one. And in many of the developing countries, it's local repertoire that sells the most. In Brazil, it's 70 percent. In India, it's 74 percent.

MARKSAnd so you need to have investment in that local repertoire in order to create those recordings and to have them be made available.

NNAMDIJoe, you wrote in a recent Huffington Post piece that the one thing that Democrats and Republicans can agree on these days is tougher enforcement of U.S. intellectual property rights. Did your study find that enforcing and punishing piracy is effective?

KARAGANISWell, we looked primarily in developing countries. So, in this case, it was India, Brazil, Mexico, South Africa, Russia and Bolivia. And the answer in all of those places, at least, is pretty clearly no.

KARAGANISThere's no real capacity to enforce at the street level, against consumers, in the amount of time and energy and expense in countries that have very limited resources, that it would require to actually bring sort of enforcement to bear against all of the different ways in which file sharing happens now, or optical disc piracy, CD piracy and DVD piracy, is really just prohibitive.

KARAGANISSo there's -- you know, one of the things we write about is this sort of -- this wrapping up in the last 10 years of enforcement efforts in these countries, generally, at the behest of the United States and, to a lesser extent, Europe. They've really shown no visible impact on the overall availability of pirated goods. To some extent, you can play whack-a-mole with it. You can crush it in a particular street market, but it moves. It's very resilient.

KARAGANISAnd it's resilient because the ways in which files can be shared, or digital media goods copied, has just grown so enormously, and the technological infrastructure required for this has grown so enormously that there's just no way to get a handle on it anymore.

KARAGANISSo this is something we see playing out in the U.S., too, with, you know, this, you know, on the one hand, this business model innovation around things like Spotify and, on the other, this turn toward increasingly intrusive forms of enforcement that are really designed to squelch the ability to share copies of copyrighted material at the consumer level.

NNAMDIHere's Craig in Beltsville, Md. Craig, your turn.

CRAIGYes. Thanks. I love your show, Kojo. I just want to mention that, you know, I've got Spotify and Slacker and Pandora. And I haven't dropped them all yet because each one has benefits. I love the ability of Spotify to be able to, for instance, download and listen to the content offline, which is great. But with Pandora, it gives me the ability to just put in an artist.

CRAIGInstead of having to build a complete playlist and spend the time doing that, I can just put in an artist. And it'll throw, you know, a lot of music at me that is in that same genre since it's -- you know, it's called the music genome project. And so that gives me, you know, the ability to listen to a variety of music without having to spend the time building playlists.

NNAMDISo have you made a choice as yet?

CRAIGNo. I think I'm going to drop Slacker. But I'm certainly going to keep Pandora because it is so much less costly than the others, that there's really no reason not to keep it, whereas with Slacker, it's a similar cost to Spotify. The benefit of Slacker, though, is that it -- it's easier to build playlists. I like to listen to entire albums so I can really kind of follow the flow of the, you know, the artist's intent and things like that, instead of just individual songs. But it's easier to build...

NNAMDISteven Marks, which of Craig's choices would please the IRAA most?

MARKSI think the fact that he listens to all of them pleases us and illustrates the point that there are many services not only for many different people, but here you have one person who likes many himself. So that's a good thing for us.

NNAMDIOkay. Brendan.

GREELEYI got the impression following this story -- and this is not based on reporting. This is based on sort of deduction -- that the labels were, at the very least -- one of the reasons they embrace Spotify was that they realized that they were about to create a monopoly that they couldn't control with iTunes and that they're very pleased now, at the very least, to have a single strong competitor to iTunes.

GREELEYSo I think the nice counterbalance to the fear -- Joe's very real fear, that once we stop owning music and start renting it, that we abandon our price controls to labels -- is that there will be other services competing. And I think that's the nice thing about Spotify, at the very least, is that it does signal in developed countries, developed economies the arrival of a more competitive marketplace for services to deliver music. I think that's good.

NNAMDIHere's -- go ahead, please, Joe.

KARAGANISSorry. Just to pick up on a couple of these points. I mean, one of the reasons we don't have Spotify launching, at least in the near term, in the developing world is that, you know, our conclusion was that those are just low-value markets. They're tiny. The big media companies generally don't care to cater to them until, you know, they've, you know, maximized the revenues in the developed world.

KARAGANISThe place where that's -- the place that really broke that rule for the purposes of our study was India, where the Indian music market, like the film market, is almost entirely controlled by Indian companies. And when you have domestic companies that are -- that control the production, distribution, ultimately, sale of media goods, they price at much lower levels for local populations.

KARAGANISThe difference between India and Brazil on this context is really stark, where the Brazilian music market is dominated by the big four labels that may be marketing local bands, but they're still pricing them at levels that approximate U.S. and European prices. The local ownership question, surprisingly to us -- 'cause it really wasn't the question we started with -- turned out to be very important in determining people's relative access to music and film and, in some cases, software.

NNAMDIBrendan.

GREELEYI think the -- I just want to sort of go over the broad outlines of the fight that we keep going over sort of year after year after year, which is that in very -- to generalize it, you have the labels saying what's really important is that we need to make sure that the people who steal music are punished, that it's clear that this is illegal, that there are better enforcement mechanisms and that we get to sites, that allow people to share music, shut down.

GREELEYOn the other hand, you have consumer advocates saying, no. What the labels need to do is lower their prices. This fight isn't, by any means, concluded with Spotify or with any of these other services. The labels in Sweden said that their revenue started going back up, or at least the precipitous decline started to ease right around 2009. Two things happened in 2009 in Sweden.

GREELEYOne was Sweden took a European directive that strengthened enforcement for intellectual property laws and implemented it at the Swedish level. And there was a very well-known, well-covered trial of The Pirate Bay, which was a file-sharing site, one of the largest in the world. So that happened right in the same year, in the same month span that Spotify launched.

GREELEYSo the record executives say, you know, look -- told me, enforcement works and the better product works. And based on sort of looking at statistical evidence and also looking at anecdotal evidence, looking at some studies that talked to students in Sweden, I don't have a good answer for you as to which of those is true. It does seem that the students said, well, Spotify is legal. They said it's convenient, fast and legal.

GREELEYIt seemed like all three of those things had to be true in order for a new music service to do well. But I can't discount the work that the labels did in convincing the Swedes that they were going to be punished if they downloaded music.

MARKSWe've always said that the two go hand in hand, that you can't have enforcement without a compelling legal marketplace. And you can't really have a compelling legal marketplace if there's no enforcement. And so I think that Brendan's right. It's the two combined that really make this work.

NNAMDIThank you very much for your call, Craig. On to Carl in Hagerstown, Md. Carl, your turn.

CARLYes. I was curious. You keep talking tunes or song. As a classical musician and listener, I would like to know, will there be great amounts of classical music available as well? Can I listen to a Lindstrom recording of a particular piece, a Bernstein recording of the same piece and then a Gergiev recording of the same piece?

NNAMDISteven Marks?

MARKSI don't know the answer to that with regard to Spotify. I've been on the service, and I'm using it. But I have not done so for classical music yet. I know that other services, certainly some of those that have been mentioned and others like it, do have a broad array of classical music offerings.

GREELEYI think the catalog is deeper than you might think. I poked around a little bit in the jazz catalog, and it was sort of shockingly deep on Spotify. So I don't have a specific answer to your question, but I think you would be pleasantly surprised, both in the classical and the jazz.

NNAMDII'm glad you mentioned the jazz catalog because we got an email from Rob Bamberger, who hosts the "Hot Jazz Saturday Night" program on this station. Rob writes, "The assumption is that online services provide access. However, public libraries are known to remove books from their shelves because they're not in great demand by patrons.

NNAMDI"How do we know that recordings, especially historic ones, available from these services today, will be available five, 10, 15 years from now if there is a low demand for them? Storage is cheap, but not infinite." Brendan?

GREELEYI think that's not true. Storage is infinite. I think we're reaching the point where that's the value of these services, which is that storage is cheaper and cheaper.

NNAMDIAnd we can get to that point where you can have just about anything at all stored.

GREELEYThere's not -- the local library has an incentive to keep its catalog small, which is the local library pays a real estate cost, or at least there's an opportunity cost for the state, which owns the library. So they've got to figure out what to keep on their shelves. They've got a limited catalog, which is why they, you know, why they sell books for a dollar every day out in front of the library.

GREELEYWith the online services, it's entirely possible that they might decide not to keep up a catalog.

NNAMDIOkay.

GREELEYBut there's very little incentive for them to do so. The value -- so this is actually -- this goes to sort of one of the slight drawbacks of Spotify, is that the value of Spotify lies in its comprehensiveness as a catalog. You won't sign up to it unless you believe that you can listen to everything you want, every obscure jazz track you've ever heard of.

GREELEYThe ability to know that you've got everything on demand there strengthens it, which means that the labels have a lot of.

NNAMDIWant to get one more quick caller in, but finish your sentence, please.

GREELEYIt just means that the labels have a lot of power because they've got the largest catalogs. But what that says is Spotify has a very strong incentive to make its catalog as large as possible.

NNAMDIIn other words, Rob Bamberger, chill. Here's Buckner (sp?) in Arlington, Va. Buckner, could you please make your question or comment brief?

BUCKNERYeah, my question is really about quality control issues from Spotify. If you're constantly pulling digital audio files off of other users' computers, there's just myriad mp3 formats of different types of -- and qualities of mp3 files, not just from EQ to level matching and everything else. How -- in other words, how do you...

NNAMDIWe only have about 20 seconds. Allow Brendan Greeley to respond.

GREELEYI can do it in 10. Spotify has its own cache on your computer that it has provided. So you're not pulling off of other people's hard drives. You're pulling off of their Spotify caches. So Spotify guarantees that quality control.

NNAMDIBrendan Greeley is a reporter at Bloomberg Businessweek, who wrote the piece "Daniel Ek's Spotify: Music's Last Best Hope." Brendan, thank you for joining us.

GREELEYThank you.

NNAMDIJoe Karaganis is vice president of the American Assembly, which is a nonpartisan public affairs forum at Columbia University. He's also program director at the Social Science Research Council. Joe, thank you for joining us.

KARAGANISThank you.

NNAMDIYou can find links to Joe's report and Brendan's piece at our website, kojoshow.org. Steven Marks is vice president and general counsel of the Recording Industry Association of America. Steven, thank you for joining us.

MARKSMy pleasure. Thanks for having me.

NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.