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Sample Business Contracts

Digital Distribution Agreement - Sony Music Entertainment and Spotify AB

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25 MADISON AVENUE, NEW YORK, NEW YORK 10010, UNITED STATES

As of April 1, 2017 (the "Effective Date")

Spotify AB

Birger Jarlsgatan 61,

Stockholm, SE 113 56

Sweden

DIGITAL DISTRIBUTION AGREEMENT

This letter agreement together with Exhibit A (the "Term Sheet") and any other exhibits and schedules attached hereto, which are incorporated herein by reference, will constitute the entire agreement between SONY MUSIC ENTERTAINMENT, a Delaware general partnership ("Label") and SPOTIFY AB, a Swedish corporation ("Company") regarding, inter alia, the exploitation of audio and video recordings embodying the performances of various musical recording artists via Company's online and mobile digital distribution service, as owned, controlled and operated by Company (the "Agreement"). Any terms used in this letter agreement but not defined herein will have the meanings ascribed to them in the exhibits hereto. Unless expressly provided to the contrary herein, the different parts of this Agreement shall have the following descending order of priority in the event of any conflicting provisions that cannot reasonably be interpreted so that such provisions are consistent with each other:


  (i) the Term Sheet;

  (ii) other Exhibits to the Agreement, excluding the Technical and Security Specifications

  (iii) the Technical and Security Specifications; and

  (iv) the letter agreement portion of the Agreement.

Unless otherwise stated, references to ‘sections' and ‘sub-sections' within this Agreement shall be references to provisions within this letter agreement, whereas references to ‘paragraphs' and ‘sub-paragraphs' shall be references to provisions in the Term Sheet.

1. Confidentiality; Press Releases:

(a) Each party (each a "Disclosing Party") agrees that it will, and it will instruct in writing its respective attorneys, accountants and other professional advisors (collectively, "Advisors") to, hold in confidence and not communicate, transmit, publish, disseminate or otherwise disclose any of the terms and conditions of this Agreement or any information regarding the other party's business learned in the course of dealing or performance hereunder (collectively, "Confidential Information"); provided, however, that nothing in this subsection 1(a) will prohibit disclosure of such Confidential Information: (i) by each party to its respective financial officers, management, Affiliates, bankers or others as may be reasonably necessary in the operation of its respective business; (ii) by each party to its respective Advisors to the extent that such disclosure is in the opinion of such Advisors required to enable such Advisors fully to represent the party concerned; (iii) in connection with any legal or governmental proceeding; or (iv) to any judicial, governmental or regulatory agencies; or (v) by Company to any of its investors and bona fide potential investors (unless such investor or potential investor is an Other Party, subject to paragraph 13(l) of the Term Sheet), provided that such Persons are obligated by a written agreement, policy or other duty of confidentiality; provided, however, that, prior to any such disclosure under (iii) or (iv), Company will give Label reasonable advance notice of any such disclosure and will cooperate with Label in protecting against any such disclosure and/or, to the extent possible, obtaining a protective order narrowing the scope of such disclosure of the Agreement including redacting key economic terms. Notwithstanding anything to the contrary herein, Confidential Information shall not include information that: (i) at or prior to the time of disclosure by the Disclosing Party was known to or independently developed by the party receiving such information (a "Receiving Party"), except to the extent unlawfully appropriated by the Receiving Party or a third party; (ii) at or after the time of disclosure by the Disclosing Party becomes generally available to the public through no wrongful or negligent act or omission on the Receiving Party's part; (iii) the Receiving Party receives from a third party free to make such disclosure without breach of any legal obligation; and/or (iv) is required to be disclosed pursuant to any statute, regulation, order, subpoena or document discovery request.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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(b) Subject to sub-paragraph 8(a)(19), Company agrees that all information relating to the performance of Authorized Materials within the Services, including but not limited to analytical data and information concerning amounts paid or payable by Company hereunder shall constitute Confidential Information hereunder. Unless permitted in accordance with sub-section 1(a) above, sub-paragraph 8(a)(19) or otherwise explicitly approved under this Agreement, Company shall obtain Label's prior written approval before disclosing such information to any third party or class of third parties, including but not limited to Label Artists and managers thereof, whether in response to any request or as part of any Company-created tool or API.

(c) No press releases or other public statements are permitted without prior mutual written approval.

2. Reporting and Payment:

(a) Unless otherwise provided hereunder, Company will compute all amounts payable to Label and Orchard pursuant to the Term Sheet and any other payments accrued hereunder on a country-by-country basis as of the end of each calendar month hereunder (such proceeds and other monies, the "Wholesale Fees").

(b) In connection with each such calendar month, Company will send within **** thereafter:


  (1) to Label (i) an accounting statement covering the calculation and determination of Wholesale Fees and other sums so accrued and payable in respect of the calendar month concerned in the country concerned in the format set out in Part II of Exhibit B (each, a "Financial Statement"), such statement covering both SME Materials and Orchard Materials; and (ii) a machine-readable report containing the data and information described in (and otherwise in accordance with) the relevant reporting specifications attached hereto as Part I of Exhibit B (each, a "Monthly Report") relating to SME Materials only; and

(2) to Orchard (i) a Financial Statement covering Orchard Materials only; and (ii) a Monthly Report relating to Orchard Materials only.

Monthly Reports and Financial Statements shall only be deemed received by Label and Orchard once uploaded by Company in an appropriate form to the correct directory on Label's and Orchard's FTP servers using access credentials issued by Label and Orchard; provided that Label and Orchard shall be solely responsible for procuring that access to such server is available to Company at all relevant times.

(c) Upon receipt of each Financial Statement, Label will prepare and send to Company a full invoice in respect of Wholesale Fees due in relation to SME Materials, and will procure that Orchard prepares and sends to Company a full invoice in respect of Wholesale Fees due in relation to Orchard Materials. Company shall thereafter pay **** (i) Wholesale Fees due in relation to SME Materials that have accrued and are payable to the Label into the bank account designated by Label for such purpose from time-to-time; and (ii) Wholesale Fees due in relation to Orchard Materials that have accrued and are payable to the Label into the bank account designated by Orchard for such purpose from time-to-time, in both cases **** following the date of the relevant invoice. At the same time that Company makes a payment into Label's bank account, Company shall send an email indicating the amount paid to the email address(es) designated from time to time by Label (as of the Effective Date, such email address designated by Label is ****). For the avoidance of doubt, Label agrees that Company's payment of Orchard's share of Wholesale Fees directly to Orchard shall discharge Company's obligation to account to Label for Orchard's share of Wholesale Fees hereunder.

(d) All amounts payable hereunder, whether or not ****, shall be made in United States Dollars. To the extent that any amounts payable hereunder are required to be converted from a currency other than United States Dollars, such conversion shall be made based on the average exchange rate for such other currency published by Reuters for the relevant calendar month. Such exchange rate shall be reported by Company to Label in Financial Statements.

(e) Company shall pay interest at the rate of ****, from the date due, on any required payment hereunder that is not made on or before its due date, without prejudice to any other rights Label may have in connection with such delinquency.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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(f) Taxes.

(1) All amounts payable by Company pursuant to this Agreement are exclusive of any applicable Taxes (as defined below). Company warrants and represents that Company will collect, bear, pay **** any and all taxes, duties and customs of any kind, however designated, levied or based in any way, including but not limited to withholding taxes (subject to subsections 2(f)(2) and 2(f)(3) below), anywhere in the Territory with respect to the sale or resale or other exploitation of any products or services by Company, including, for the avoidance of doubt and without limitation, all sales, use, excise, purchase, value-added or similar taxes (other than income or franchise taxes payable by Label or Orchard on net income earned by Label or Orchard under this Agreement), including any applicable interest and penalties (individually and collectively, "Taxes"). If applicable, Label will accept appropriate documentation, such as ****, satisfactory to Label in the exercise of its sole, reasonable discretion, timely provided by Company to evidence Company's ****. If any claim is made against Label ****, Company will promptly remit to Label ****. In the event that Company reasonably requests Label to contest the imposition of such Taxes, Label shall **** provided that Company has **** for the **** with the **** over the ****. Label shall control any such contest and, upon Company's written request in each instance, Label will reasonably consult with Company, provided that Company is reasonably available for such consultation. Company's obligation to **** shall survive the termination or expiration of this Agreement.

(2) Company shall be entitled to deduct from amounts payable to Label or Orchard pursuant to this Agreement such portion as Company is required by law to pay as withholding tax provided, however, that upon Label's request, Company shall provide Label with (a) **** (b) such reasonable assistance as may be required by Label (or any of its Affiliates) to ****. In the event that there is a double tax treaty between any applicable countries, Company shall use commercially reasonable efforts to obtain the benefits of any reduced rate of withholding tax under the treaty and, upon Label's request, provide Label with copies of any documentation required to be completed to obtain such benefits. If Company shall **** then it shall ****.

(3) If for any reason any **** would be required to be made from any of the amounts payable by Company to Label or Orchard or by Label or Orchard to any of their Affiliates pursuant to clause (2) above or otherwise then Label may elect **** to the **** from an **** in the **** as the **** to the **** such that such ****.

3. Books and Records:

(a) Company will maintain accurate and complete records and books of account in accordance with GAAP applied on a consistent basis, which will include, at a minimum, all documentation needed by Label to compute and verify the amounts required to be credited to Label's account and paid to Label hereunder, and to verify all of the information required to be delivered to or otherwise made available to Label in connection with the performance of this Agreement (the "Books and Records"). At all times during the Term, Company shall maintain comprehensive standard management reporting systems capable of tracking accurately (and maintaining the integrity of) all information which is required to be included in Financial Statements (or required to undertake accurate calculations in connection therewith) and any other reports required under this Agreement.

(b) Not more than:


  (1) once during the period inclusive of **** in respect of ****,

  (2) once during the **** in respect of ****,

  (3) once during the period inclusive of **** in respect of ****; and

  (4) once during the **** in respect of ****,

upon reasonable advance written notice, Label, or an independent reputable auditing firm appointed by Label ("Auditor"), will have the right to examine the Books and Records at any time during Company's normal business hours at the place where such Books and Records are normally maintained, and to make copies of them and extract information from them. Company shall cooperate reasonably with the Auditor, providing sufficient access


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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to such Books and Records, as well as any and all relevant systems containing applicable financial information, transaction and usage logs, in order to permit the Auditor to verify Company's compliance with its obligations hereunder. For a period of **** following the last day of the Term, Company shall retain all transaction data, customer information and other data or information reasonably necessary for Label to determine and verify all amounts due or payable hereunder and for accounting purposes.

(c) If any audit conducted pursuant to sub-section (b) shows a deficiency in the Wholesale Fees due hereunder, Company shall pay such shortfall to Label **** unless Company has a good faith basis for disputing the alleged deficiency. In the event that Company has a good faith basis for disputing the alleged deficiency, it shall promptly provide to the Auditor and Label detailed reasons for such dispute, following which the Parties shall discuss in good faith how to resolve such dispute. If the audit reveals that in the period being audited Company has underpaid Label by an amount greater than **** of the payments due, or Company has breached any terms of this Agreement leading to the inability of the auditor to reach a meaningful conclusion with respect to potential underpayment, then Company shall bear the reasonable expenses and costs of such audit. Label shall not have the right to audit a given accounting statement more than once.

(d) The **** of any **** of **** of ****, or other ****, whether **** or otherwise, **** in which **** this Agreement may be **** shall be **** of the **** of any notice from Label to Company regarding its **** pursuant to **** above, provided that Label **** of the date of such notice. The **** associated with such **** also shall not be ****, or similar **** concerning the **** respecting this Agreement.

(e) Not more than **** (in respect of ****, if applicable, upon reasonable advance notice, Label will have the right, at its own expense, to conduct (or to appoint an independent reputable third party to conduct) **** of the Company for the purpose of observing and verifying the **** any materials furnished or selected by Label for use by Company, including, for the avoidance of doubt and without limitation, all ****, and all documentation setting forth **** with respect to ****, wherever any such **** and documentation are maintained or stored, as applicable, including, without limitation, any and all **** in connection with or on behalf of the Company.

4. Representations and Warranties:

(a) Each party represents and warrants that: (i) it has the right, power and authority to enter into this Agreement and to fully perform its obligations hereunder; (ii) it shall comply with its privacy policy and shall not engage in any fraud or any deceptive, misleading or unethical or unfair competitive practices; (iii) it shall not act in any manner which conflicts or interferes with any existing commitment or obligation of such party; (iv) no agreement previously entered into by such party will interfere with such party's performance of its obligations under this Agreement; and (v) it shall perform in compliance with any applicable local laws, rules and regulations of any governmental authority.

(b) Company hereby represents and warrants to Label that:


  (i) Company is a corporation duly organized and in good standing under the laws of Sweden;

  (ii) Company will not make any use of any customer or end user information except to the extent permitted by law;

  (iii)

Company's operation of the Services in performance of its obligations hereunder (excluding, for avoidance of doubt, the use of Authorized Materials as authorized in accordance with this Agreement, to the extent Label assumes responsibility pursuant to section 4(c)) during the Term will not to the best of the Company's knowledge violate any law or regulation, or infringe upon or violate the rights of any Person, in whole or in part, directly or indirectly, it being understood and agreed that nothing contained in this clause (iii) shall be deemed to limit any of Company's indemnification obligations under section 6(d)(1) below, which shall apply in full force and effect with respect to any and all acts of infringement of a material nature alleged by any persons or


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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  entities arising out of the use or operation of any Authorized Materials regardless of the state of Company's conduct, omissions or the state of Company's knowledge of the possibility, likelihood or actual such infringement, or the efforts that Company may have undertaken to eliminate entirely or mitigate such infringement;

  (iv) Company will not at any time through Company's intentional or grossly negligent acts and/or omissions, either directly or indirectly, in whole or in part, cause "viruses," "worms", "spyware", and/or "destructive codes", or any materially intrusive "adware" that is deployed or embedded without the informed consent and affirmative acknowledgment and permission of the "adware" recipient, to be embodied in or along with the software used by Company in connection with the operation of the Services;

  (v) all streams embodying Authorized Materials will be served by Company solely from Distribution Servers and/or, solely to the extent in accordance with the Technical and Security Specifications, ****;

  (vi) Company will not knowingly participate in any unethical or unfair competitive practices, including without limitation, product disparagement, or any other practices that are or might be detrimental to Label's affiliates;

  (vii) except as expressly provided in the Term Sheet, Company will obtain and maintain in full force and effect (at Company's sole cost and expense) all necessary licenses, permits and other authorizations required by law to operate its business and to offer streams and otherwise use copyrighted audio, audiovisual and other materials as contemplated herein, and all necessary licenses and other rights (including, but not limited to, copyright, patent and trade mark rights and other rights and licenses) necessary to provide the services and functions contemplated herein in relation to Authorized Materials, **** in respect of **** in respect of **** for which it is **** (by way of example only, ****), free of claims from any Person;

  (viii) Company will ensure that the Services will not contain or utilize any content or other materials that constitute Objectionable Activities. "Objectionable Activities" means, with respect to the Services, any one (1) or more of the following activities that is knowingly caused, controlled, encouraged, induced or facilitated by Company or its affiliates:

    facilitating and/or promoting illegal activity,

    depicting sexually explicit images,

    promoting violence,

    promoting unlawful discrimination,

    incorporating any materials or functionality primarily intended to infringe or assist others in infringing upon any intellectual property rights, provided that infrequent incorporation of particular materials which result in unintended, unconnected infringements shall not be deemed an Objectionable Activity hereunder),

    engaging in the endorsement of political positions or political candidates, or engaging in the sale or advertisement of tobacco, firearms, pornography, or religious causes,

as Label deems in its sole, reasonable discretion to be objectionable, but for the avoidance of doubt shall exclude integration of the Services into (or access to any part thereof via) widgets/iframes into third party websites hosting or otherwise incorporating user contributed materials, provided such websites maintain and enforce a policy against uploading infringing or otherwise unlawful content. Notwithstanding the foregoing, at all times, the availability via the Services of recordings, videos and other content provided by or on behalf of SME hereunder or by any other Record Labels, including any Other Party, shall not be deemed Objectionable Activities;


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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  (ix) Company will not make any use of any Authorized Materials, or authorize any third party to make any use of any Authorized Materials, except as specifically permitted in this Agreement;

  (x) Company will not **** without the express prior written consent of Label in each instance, nor will it facilitate such activities by third parties including end users of the Services;

  (xi) Company will not alter or delete any title, credit or copyright notice, any trade marks or service marks, or the talent, writing, producing, directing or music credits contained in the Authorized Materials;

  (xii) **** provided by Company to Label is true and accurate in all material respects, as of ****;

  (xii) Between March 1, 2017 and the date of signature of this Agreement, Company, its Affiliates (or any shareholder of Company or any of its Affiliates) did not **** the right to **** or any **** to any **** into a ****;

  (xiii) Company agrees that between the date of signature of this Agreement and July 31, 2017, Company, its Affiliates (or any shareholder of Company or any of its Affiliates), shall not **** pursuant to which **** will be **** the right to **** at any time during the Term **** into a ****.

  (xiv) Company will not (A) attempt to pledge, mortgage or otherwise encumber the Authorized Materials, Company's rights under this Agreement or any other tangible or intangible property of Label provided to Company pursuant to this Agreement or otherwise furnished or provided to Company, or (B) contest, attack or challenge the validity of any of Label's or its licensors' copyrights, patents, trade marks or other intellectual property rights or licenses, or assist others in doing any of the foregoing.

(c) Label hereby represents and warrants to Company that:


  (i) it owns or controls the Authorized Materials in those parts of the Territory for which it communicates clearances by way of metadata from time to time during the Term, and it has the power and authority to enter into this Agreement;

  (ii) the use by Company of the Authorized Materials to the extent authorized by Label or Orchard herein will not infringe any third party rights which Label is responsible for obtaining hereunder; and

  (iii) Label shall be solely responsible for obtaining any and all necessary sound recording and audiovisual master licenses and consents, and for making all associated payments due to Label Artists and any and all producers, remixers, directors, unions ****, in respect of Company's exploitation of the Authorized Recordings and recordings being Authorized Ancillary Materials (subject always to Section 4(b)(vii) above) together with any payments due to owners of copyright in Authorized Artwork and any artwork being Authorized Ancillary Materials, provided in all cases that all Company's exploitation of the same is authorized pursuant to this Agreement.

5. Termination:

(a) (1) Upon the occurrence of any Default Event, in addition to any other rights and remedies which Label has under this Agreement or otherwise, Label may terminate the Term upon notice to Company, following any applicable cure period set out below. No exercise of any right or remedy hereunder will limit Label's right to recover damages by reason of Company's default, Label's right to exercise any other right or remedy under this paragraph, or any of Label's other rights or remedies. Notwithstanding the foregoing or anything elsewhere herein, if the Default Event arises by reason, alone, of (a) a Change of Control pursuant to clause (vii) of section 5(a)(2) below or (b) a breach of clause (viii) of section 5(a)(2) below, Label's sole remedy shall be termination of the Term of the Agreement by notice to Company, provided that it is agreed that the provisions of section 5(b) below shall apply upon such termination.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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(2) "Default Event" means:

(i) Company's failure to make timely payments as required hereunder or render reports or accountings as and when due or cooperate or render any information or documents required to be furnished or otherwise made available to Label as and when required hereunder; provided, however, that, with respect to any such breach which is non-repetitive, and unless any other cure period is provided, Company shall have a period of fifteen (15) business days from its receipt of Label's notice of such breach in which to cure said breach before it shall be considered a "Default Event";

(ii) Company's breach of any of Company's representations, warranties, covenants or obligations hereunder, or Company's failure to fulfill any of Company's material obligations hereunder; provided, however, that, with respect to any such breach in respect of which a shorter cure period is not expressly provided herein, and provided that the breach concerned is non-repetitive, Company shall have a period of fifteen (15) business days from the date of Label's notice of such breach in which to cure said breach before it shall be considered a "Default Event";

(iii) Company's bankruptcy or insolvency, or the dissolution or the liquidation of Company's assets, or the filing of a petition in bankruptcy or insolvency for an arrangement or reorganization by, for or against Company, or the appointment of a receiver or a trustee for all or a portion of Company's property, or Company's making an assignment for the benefit of creditors; provided, however, that Company shall have a period of sixty (60) consecutive days from its receipt of any involuntary petition in bankruptcy filed against Company in which to cure said breach before it shall be considered a "Default Event";

(iv) Company's attempt to assign any of Company's rights under this Agreement in contravention of this Agreement without Label's prior written consent, or the succession of any of those rights to any other person or entity by operation of law;

(v) If as a result of Company's acts or omissions any person or entity obtains access to the Authorized Materials in contravention of the terms, limitations and eligibility criteria regarding access thereto prescribed in the Term Sheet;

(vi) If for any reason Company ceases doing business in the ordinary course and/or there is a substantial diminution in the ability of Company to effectively carry on its business in general or any aspect thereof, or in particular the business of distributing Authorized Materials and/or the other products referred to in this Agreement;

(vii) In the event of a Change of Control of Company, where such control passes to an entity:


  (aa) that is a **** in its ****,

  (bb) with whom **** in a ****, provided that Label has made Company aware of the same following receipt of a Change of Control Notice,

  (cc) that operates or supports a **** and **** in relation to **** and **** thereto,

  (dd) is ****, in a ****, to comply with ****,

  (ee) with whom **** on the terms set out in this Agreement **** for Label, or

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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  (ff) which Label has objectively reasonable grounds to believe **** Company hereunder;

For the avoidance of doubt, **** or any of its **** will not, of itself, be deemed a "Change Of Control" under this clause.

(viii) In the event of Company's breach of its covenant in section 6(k) below.

Notwithstanding the foregoing or anything elsewhere in this Agreement save for paragraph 8(b)(1) of the Term Sheet, Company may, in the exercise of its sole, unrestricted discretion, not launch, or cease to continue offering after launching, as the case may be, any one or more of the Services in any one or more countries of the Territory at any time during the Term, and any such failure to launch, or such cessation to offer after launch, shall not constitute a "Default Event" hereunder.

(3) Upon the occurrence of any SME Default Event, in addition to any other rights and remedies which Company has under this Agreement or otherwise, Company may terminate the Term upon notice to Label; provided, however, that, with respect to any such breach which is non-repetitive, and unless any other cure period is provided, Label shall have a period of fifteen (15) business days from its receipt of Company's notice of such breach in which to cure said breach before it shall be considered an "SME Default Event." No exercise of any right or remedy hereunder will limit Company's right to recover damages by reason of Label's or Orchard's default, Company's right to exercise any other right or remedy under this paragraph, or any of Company's other rights or remedies. As used herein, an "SME Default Event" means: Label's bankruptcy or insolvency, or the dissolution or the liquidation of Label's assets, or the filing of a petition in bankruptcy or insolvency for an arrangement or reorganization by, for or against Label, or the appointment of a receiver or a trustee for all or a portion of Label‘s property, or Label's making an assignment for the benefit of creditors; provided, however, that Label shall have a period of sixty (60) consecutive days from its receipt of any involuntary petition in bankruptcy filed against Label in which to cure said breach before it shall be considered an "SME Default Event." Notwithstanding the foregoing or anything elsewhere in this Agreement, Company may terminate the Term upon notice to Label in the event that (x) Company ceases doing business in the ordinary course (unless such business is transferred to a valid assignee of Company's rights hereunder), and/or (y) Company and its Affiliates cease to operate the Services throughout the Territory on a permanent basis. Notwithstanding the foregoing or anything elsewhere in the this Agreement, in the event this Agreement is terminated pursuant to (a) a Termination Event, (b) a breach of sub-section 5(a)(2)(vii) or (c) sub-section 5(a)(2)(viii)the otherwise applicable **** of the **** and the **** shall be **** such otherwise **** by the ****.

(b) Upon termination or earlier expiration of the Term: (1) all rights granted to Company herein will immediately terminate, and Company will not thereafter have any right to make any use of any Authorized Materials or any other materials provided by Label to Company; (2) Company will immediately return, delete or destroy all materials furnished or selected by Label for use by Company, including all Authorized Materials and any phonorecords or copies derived therefrom in any and all forms, formats and media, as Label will direct in Label's sole discretion; (3) Company will immediately remove all links to web sites or other properties owned or controlled by Label; and (4) all monies then due or to become due to Label will become **** and payable, subject to the last sentence of section 5(a)(3) above in the case of (a) an SME Default Event, (b) a termination by Label pursuant to sub-section 5(a)(2)(vii) or (c) a termination by Label pursuant to sub-section 5(a)(2)(viii).

(c) Reference is hereby made to that certain Digital Audio Distribution Agreement by and between Label and Company dated as of July 1, 2013, as amended or otherwise supplemented (the "Prior Agreement"). Notwithstanding the termination of the Term (as defined in the Prior Agreement) of the Prior Agreement, the Parties hereby agree that the provisions of clauses (1), (2) and (3) of Section 5(b) of the Prior Agreement shall be measured by the termination or earlier expiration of the Term of this Agreement, instead of the termination or earlier expiration of the Term (as defined in the Prior Agreement) of the Prior Agreement.

(d) The following provisions of this Agreement shall survive the termination or expiration of the Term: sections 1, 2, 3, 4, the last sentence of section 5(a)(3), 5(d), 6(a), 6(b), 6(d), 6(e), 6(f) and 6(g).


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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6. Miscellaneous:

(a) Except as otherwise specifically provided herein, all notices under this Agreement will be in writing and will be given by courier or other personal delivery or by registered or certified mail at the appropriate address set forth on page 1 of this Agreement or at a substitute address designated by notice by the party concerned. Each notice to Company will be addressed to the attention of Company's CEO; provided, however that notwithstanding anything elsewhere herein, take-down notices from Label may be given via metadata, facsimile, electronic mail or any other effective method of written communication. Each notice to the Label will be addressed to the attention of its EVP, Business and Legal Affairs, Global Digital Business, with copies of each notice sent simultaneously to Label's General Counsel. Notices will be deemed given when mailed or, if personally delivered, when so delivered, except that a notice of change of address will be effective only from the date of its receipt.

(b) THIS AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF NEW YORK, AND THE VALIDITY, INTERPRETATION AND LEGAL EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES UNDER NEW YORK LAW). OTHER THAN TO THE EXTENT EXPLICITLY PROVIDED IN THIS AGREEMENT, THE NEW YORK COURTS (STATE AND FEDERAL) SHALL HAVE SOLE JURISDICTION OVER ANY CONTROVERSIES REGARDING THIS AGREEMENT, ANY ACTION OR OTHER PROCEEDING WHICH INVOLVES SUCH A CONTROVERSY SHALL BE BROUGHT IN THOSE COURTS IN NEW YORK COUNTY AND NOT ELSEWHERE, AND THE PARTIES WAIVE ANY AND ALL OBJECTIONS TO VENUE IN THOSE COURTS AND HEREBY SUBMIT TO THE JURISDICTION OF THOSE COURTS.

(c) Label may assign Label's rights under this Agreement in whole or in part to any subsidiary, affiliated or controlling corporation, to any person or entity owning or acquiring a substantial portion of the stock or assets of Label, or to any partnership or other venture in which Label participates, and such rights may be similarly assigned by any assignee. Company will not have the right to assign or sub-license this Agreement or any of Company's rights hereunder without Label's prior written consent, EXCEPT that Company shall have the right to assign its rights and delegate its duties under this Agreement, subject to Section 5(a)(2)(vii), to: (i) any affiliate controlling, controlled by or under common control with Company and (ii) any entity that acquires control of Company or otherwise succeeds to substantially all of the assets or stock of Company and that is not an entity falling within any of the categories listed in Section 5(a)(2)(vii) above and is not engaged in Objectionable Activities, and any purported assignment by Company in violation of this subparagraph will be void (it being understood and agreed that if Company effects an assignment or sub-license in contravention of Label's approval rights pursuant to the foregoing provisions of this section, the foregoing shall not be deemed to mean that the associated transaction event (without such assignment or sub-license of this Agreement) is itself void or otherwise of no force or effect).

(d) (1) Company will at all times indemnify and hold harmless the Label and its affiliates and each of their respective officers, agents, employees, directors, and advisors (collectively, the "Label Indemnified Parties") from and against any and all claims asserted by a third party against any of the Label Indemnified Parties for damages, liabilities, costs and expenses (including court expenses and reasonable counsel fees) arising out of (w) any claim or alleged claim that results from ****; (x) any breach or alleged breach by Company of any representation, warranty, covenant or agreement made by Company herein, (y) the distribution or operation of the Services, or (z) any allegation that any materials used or exploited by or on behalf of Company in connection with the Services (except for allegations relating to rights granted by Label or Orchard hereunder in Authorized Materials or any other materials substantially in the form provided to Company by Label or Orchard for use in connection with this Agreement and where Company's use thereof is authorized hereunder), in whole or in part, directly or indirectly, infringe upon, misappropriate or otherwise violate the rights of any third party (the "Company Claims"). In the event of any Company Claim: (i) the applicable Label Indemnified Party shall notify Company of the Company Claim concerned immediately following the date that such Label Indemnified Party


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

9


becomes aware of it (provided that such failure to immediately notify Company shall not affect any Label Indemnified Party's right to indemnification hereunder if such delay did not materially prejudice the defense of such claim); (ii) Company shall defend against the Company Claim concerned (at Company's own expense) through legal counsel selected by Company; and (iii) each party shall reasonably cooperate with the other in the defense of the Company Claim concerned. Company shall be solely responsible for the amount of any settlement or judgment for such Company Claim and all legal expenses and counsel fees incurred by Company in connection therewith; provided, however, that any settlement acknowledging any wrongdoing on behalf of any of the Label Indemnified Parties or creating any additional obligations or payments or potential liabilities for any of the Label Indemnified Parties shall be subject to the written approval of such Label Indemnified Parties. The applicable Label Indemnified Parties shall have the right at all times to actively participate in the defense thereof, and to employ legal counsel selected by such Label Indemnified Parties at their own expense, it being understood that Company shall have the right at all times, in Company's sole discretion, to maintain control of the conduct of the defense.

(2) Label will at all times indemnify and hold harmless the Company and its affiliates and each of their respective officers, agents, employees, directors, and advisors (collectively, the "Company Indemnified Parties") from and against any and all claims asserted by a third party against any of the Company Indemnified Parties for damages, liabilities, costs and expenses (including court expenses and reasonable counsel fees) arising out of (x) any breach or alleged breach by Label of any representation, warranty, covenant or agreement made by Label herein, or (y) any claims that items of Authorized Materials **** in respect of which the **** under the Agreement, whether pursuant to **** exploited by Company in accordance with the authorizations, terms, conditions and limitations prescribed elsewhere in or agreed pursuant to this Agreement, infringe upon misappropriate or otherwise violate the rights of any third party (the "Label Claims"), provided that Label shall not be required to indemnify and hold harmless the Company Indemnified Parties with respect to any damages, liabilities, costs and expenses arising from Company's reckless and/or willful conduct (for example, with respect to any damages relating to Company's making available of particular Authorized Materials following Label's request for Company to cease making the same available). In the event of any Label Claim: (i) the applicable Company Indemnified Party shall notify Label of the Label Claim concerned immediately following the date that such Company Indemnified Party becomes aware of it (provided that such failure to immediately notify Label shall not affect any Company Indemnified Party's right to indemnification hereunder if such delay did not materially prejudice the defense of such claim); (ii) Label shall defend against the Label Claim concerned (at Label's own expense) through legal counsel selected by Label; and (iii) each party shall reasonably cooperate with the other in the defense of the Label Claim concerned. Label shall be solely responsible for the amount of any settlement or judgment for such Label Claim and all legal expenses and counsel fees incurred by Label in connection therewith; provided, however, that any settlement acknowledging any wrongdoing on behalf of any of the Company Indemnified Parties or creating any additional obligations or payments or potential liabilities for any of the Company Indemnified Parties shall be subject to the written approval of such Company Indemnified Parties. The applicable Company Indemnified Parties shall have the right at all times to actively participate in the defense thereof, and to employ legal counsel selected by such Company Indemnified Parties at their own expense, it being understood that Label shall have the right at all times, in Label's sole discretion, to maintain control of the conduct of the defense.

(e) Except with respect to the parties' respective indemnification obligations pursuant to Section 6(d), neither party to this Agreement shall be liable to the other under or in connection with this Agreement whether in contract, tort (including negligence), misrepresentation (other than where made fraudulently), breach of statutory duty or otherwise for any indirect or consequential loss whatsoever incurred by either party whether or not the party was advised in advance of the possibility of any such loss. Nothing in this Agreement shall restrict or limit the liability of either party for fraud or fraudulent misrepresentation or death or personal injury caused by negligence. Except as expressly provided in this Agreement, no warranties or conditions, express or implied, including, without limitation, implied warranties or conditions of merchantability and fitness for a particular purpose shall apply.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

10


(f) No amendment to this Agreement shall be binding upon Label unless it is made by an instrument signed by an authorized officer of Label. A waiver by either party of any provision of this Agreement in any instance will not be deemed a waiver of such provision, or any other provision hereof, as to any future instance or occurrence. All remedies, rights, undertakings, and obligations contained in this Agreement will be cumulative and none of them will be in limitation of any other remedy, right, undertaking, or obligation of either party. If any part of this Agreement, or the application thereof to any party, will be adjudged by a court of competent jurisdiction to be invalid, such judgment will not affect the remainder of this Agreement, which will continue in full force and effect, or the application of this Agreement to the remaining parties.

(g) Save only in respect of the foregoing this Agreement is made solely and specifically between the Company and Label and is not intended to be for the benefit of or enforceable by any other person save in respect of permitted assignees pursuant to the terms of this Agreement.

(h) This Agreement represents the entire agreement between Label and Company with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements and understandings, whether written or oral, between Label and Company with respect to the subject matter hereof.

(i) In entering into this Agreement, Company has and shall have the status of independent contractor. Nothing herein contained shall contemplate or constitute either party as the other's agent, except to the extent expressly set forth herein, or employee, and nothing herein shall constitute a partnership, joint venture or fiduciary relationship between Company and Label.

(j) For the avoidance of doubt, subject to the remainder of this subsection (j), unless otherwise agreed in writing by Label, in the event of **** shall not be subject to the terms and conditions of this Agreement, and Company's **** via the Services shall not be deemed authorized hereunder. In the case of Label's ****, Label shall only be entitled to take advantage of this section in the event that ****. Where the value of any **** is not publicly available information, in order to take advantage of this section Label shall be required to warrant and represent to Company that the value exceeds ****.

(k) In order to **** Company covenants with Label (for itself and as agent for each of its own Affiliates) that it shall not (**** that its **** shall not) during the Term be **** in the Territory in a ****. For the purposes of this section 6(k), "****" means the **** or an **** in such **** (in respect of one or more countries); and/or **** pursuant to which such **** (in respect of one or more countries) **** on behalf of **** and/or **** such that **** in any country of the Territory; and/or **** as a ****. Notwithstanding the preceding definition of ****, Company shall not be in breach of the covenant in this section 6(k) as a result of **** pursuant to which it is **** solely as part of the **** solely for the ****.


Very truly yours,


SONY MUSIC ENTERTAINMENT


By:      /s/ Dennis Kooker                                

Title:   President, Digital Global Business


Date:   July 7, 2017

  

ACCEPTED AND AGREED:


SPOTIFY AB


By:     /s/ Peter Grandelius                                

Title:  Associate General Counsel


Date:   July 7, 2017


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

11


Exhibit A

Term Sheet

1. Definitions:

"Active User" means any user who has accessed via the Ad Supported Service at least 1 (one) Royalty Bearing Play of audio or audiovisual content (whether or not such content embodies an Authorized Recording).

"Ads Studio" means Company's advertising self service platform, whereby advertisers, including Label, can create advertisements on a self-service basis.

"Ad Supported" means a transmission of audio that is made available to members of the general public without charge of any kind, directly or indirectly (i.e. not on a subscription basis or any other business model).

"Ad Supported On-Demand Service" means the service offering an End User via Approved Interfaces both on-demand and pre-programmed access to Streams of audio and audiovisual recordings (together with corresponding cover artwork), including but not limited to Authorized Recordings in an Approved Format (together with Authorized Artwork), solely on Static Devices and on an Ad Supported basis, through such End User's single User Profile, in compliance with the terms, conditions and limitations prescribed in this Agreement, including the Technical and Security Specifications, provided that such access shall always be offered in accordance with the Content Usage Rules.

"Ad Supported Release Date" means the date on which an item of SME Materials or Orchard Materials is permitted by Label or Orchard, as applicable, to be made available by Company via the Ad Supported Service.

"Ad Supported Service" means, individually and collectively, the Ad-Supported On-Demand Service and the Mobile Shuffle Service.

"Advertisements" means any and all audio, audiovisual, graphic, textual and other advertisements, messages, sponsorships or other commercial space, however delivered via any web pages, application or other electronic properties, as the case may be, that is leased, licensed or sold to or on behalf of Persons for purposes of advertising, promotion, marketing, trade or otherwise (e.g., the development, maintenance or enhancement of general goodwill) including for the avoidance of doubt sponsored playlists, listening/viewing sessions and any other inventory/units developed in the future.

"Affiliate" means, with respect to any specified Person, any other Person that, directly or indirectly, through one or more intermediaries, owns or controls, is owned or controlled by, or is under common ownership or control with, such specified Person. As used in this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the ownership of at least fifty percent (50%) of the equity of that Person or possessing the power to direct or cause the direction of the management of that Person.

"Album" means a collection of Authorized Recordings which when made available together are designated an album by Label or Orchard and which has **** or more **** of at least ****.

"Annualized" means the amount **** to any party divided by the number of twelve (12) month periods comprised in the **** to the agreement between Company and such party, By way of example, if Company has ****, which is ****.

"App Remote" means Company's proprietary library and related functionality embedded into third party applications that allows an End User to launch the Spotify client and remote control the Services, provided that any such third party applications incorporate Company Branding in connection with such remote control features, and any user who is not an End User attempting to utilize such remote control features will be invited to become an End User.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

12


"App Store Providers" means third party application stores (e.g. Apple, Google) which facilitate subscriptions to the Subscription Services.

"Approved Device" means types of electronic device approved by Label in writing in advance in each instance, for use in connection with Authorized Materials delivered via particular Services. As of the Effective Date, Static Devices and Mobile Devices shall be deemed so approved by Label as "Approved Devices" for the purposes hereof.

"Approved Format" means the following:


  (i) In respect of Streams and Cached Streams of Authorized Audio Recordings delivered to End Users as part of the Ad Supported Service: WMA, AAC (and all its variants), Ogg Vorbis, Opus and MP3 at a bit rate of up to **** with a maximum of 2 audio channels (stereo), and such additional codecs and bit rates as Label may approve in writing from time-to-time;

  (ii) In respect of Streams and Cached Downloads of Authorized Audio Recordings delivered to Subscribers as part of the Subscription Service: WMA, AAC (and all its variants), Ogg Vorbis, Opus and MP3 at a bit rate of up to **** with a maximum of 2 audio channels (stereo), and such additional codecs and bit rates as Label may approve in writing from time-to-time; and

  (iii) in respect of Streams and Cached Downloads of Authorized Video Recordings delivered to End Users (including Subscribers) as part of any of the Services: MPEG-4, MPEG-TS or WebM containers with H.264 or VP8/VP9 video codecs at **** and , in all cases with a maximum frame size of ****, in respect of video, and WMA, AAC (and all its variants), Ogg Vorbis, Opus and MP3 at a bit rate of up to **** with a maximum of 2 audio channels (stereo) in respect of audio; and such additional codecs and bit rates as Label may approve in writing from time-to-time. Video playback uses adaptive bitrate switching to adapt playback to the desired quality for the user.

"Approved Interface" means a website, software application or other interface created, owned and controlled by (or on behalf of) Company which provides access to or control of the Services and is used in (i) the selection of materials; (ii) the reception of such materials (from nodes including Distribution Servers and other End Users' active, network-connected instances of the application), and/or (iii) the rendering of such materials (which process may include decryption, caching and playback of digital data embodying sound recordings); and which in all cases carries solely Company Branding in visual or audio format (subject to the inclusion of Advertisements in the case of the Ad Supported Service). For clarity, Approved Interfaces will be deemed to include, without limitation, (i) the Spotify Client, (ii) the Spotify Web Player, (iii) interfaces utilizing the App Remote, (iv) the Play Button, (v) interfaces utilizing the Company API (as defined in Exhibit M (API/SDK Requirements)), (vi) Company Branded widgets/iFrames capable of being embedded into third party websites and third party applications using the Company API, and (vii) Company Branded interfaces utilizing Spotify Connect.

"Approved Server Copies" means the limited number of Content Files as encoded into Approved Formats solely as reasonably necessary in connection with delivery via each Service in accordance with the terms and conditions of this Agreement.

"Authorized Ancillary Materials" means materials provided to Company by Label or Orchard outside of Label's and Orchard's automated content delivery feeds which are the subject of a written authorization (which may include by way of email) by a person who, objectively, has sufficient seniority to bind Label for Company's use thereof, which authorization may be limited in scope by reference to territory, time period and/or distribution channels.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

13


"Authorized Artwork" means the cover art, as used by Label or Orchard in connection with the Authorized Recording as distributed by Label or Orchard (as the case may be) in the Territory that is delivered to Company by Label or Orchard for use in connection with the applicable Services pursuant to paragraph 12 below (or was delivered by Label and/or Orchard to Company via Label's or Orchard's automated content feed under the Prior Agreement, as applicable). Notwithstanding the foregoing or anything elsewhere in this Agreement, all artwork delivered by Label or Orchard to Company for use under this Agreement pursuant to paragraph 12 below (and delivered via Label's or Orchard's automated content feed pursuant to the Prior Agreement) shall be deemed Authorized Artwork for all purposes under this Agreement, including for the avoidance of doubt, for purposes of section 6(d)(2) of the letter agreement portion of this Agreement, through and including the expiration of the period for taking down the artwork concerned in accordance with and subject to paragraph 7(e) below (unless previously taken down pursuant to the Prior Agreement).

"Authorized Audio Recording" means an audio recording delivered by Label and/or Orchard to Company pursuant to paragraph 12 below (or was delivered by Label and/or Orchard to Company via Label's or Orchard's automated content feed under the Prior Agreement, as applicable), which Label has the right to exploit via the Services in one or more parts of the Territory. Notwithstanding the foregoing or anything elsewhere in this Agreement, all audio recordings delivered by Label or Orchard to Company for use under this Agreement pursuant to paragraph 12 below (and delivered via Label's or Orchard's automated content feed pursuant to the Prior Agreement) shall be deemed Authorized Audio Recordings for all purposes under this Agreement, including for the avoidance of doubt, for purposes of section 6(d)(2) of the letter agreement portion of this Agreement, through and including the expiration of the period for taking down the audio recording concerned in accordance with and subject to paragraph 7(e) below (unless previously taken down pursuant to the Prior Agreement).

"Authorized Materials" means individually and collectively, Authorized Recordings, Authorized Artwork, associated metadata and any Preview Clips and all other artistic and literary materials delivered to Company under this Agreement pursuant to paragraph 12 below (and delivered via Label's or Orchard's automated content feed pursuant to the Prior Agreement) for use in connection with the Services, together with Authorized Ancillary Materials. For the avoidance of doubt, Local Files may include sound recordings owned or controlled by Label, but shall not be considered Authorized Materials for the purposes of this Agreement.

"Authorized Recordings" means Authorized Audio Recordings and Authorized Video Recordings.

"Authorized Trade Marks" means any Trade Mark owned and/or controlled by Label or Orchard and made available to Company pursuant to the terms and conditions of this Agreement.

"Authorized Video Recording" means an audiovisual recording delivered by Label and/or Orchard to Company pursuant to paragraph 12 below (or was delivered via Label's or Orchard's automated content feed pursuant to the Prior Agreement) for exploitation via the Services in one or more parts of the Territory. Notwithstanding the foregoing or anything elsewhere in this Agreement, all audiovisual recordings delivered by Label or Orchard to Company for use under this Agreement pursuant to paragraph 12 below (and delivered via Label's or Orchard's automated content feed pursuant to the Prior Agreement) shall be deemed Authorized Video Recordings for all purposes under this Agreement, including for the avoidance of doubt, for purposes of section 6(d)(2) of the letter agreement portion of this Agreement, through and including the expiration of the period for taking down the audiovisual recording concerned in accordance with and subject to paragraph 7(e) below (unless previously taken down pursuant to the Prior Agreement).

"Billing Providers" means mobile network operators, fixed line internet service providers and Label-approved providers of payment services.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

14


"Cached Downloads" means encrypted digital files embodying audio or audiovisual recordings that are downloaded and securely stored on an Approved Device utilizing an appropriate technical solution approved by Label, for the purposes of caching particular recordings for offline playback, provided always that such device may only render the files for playback in the event that the device remains authorized as a result of the Subscriber having a valid, subsisting Premium Subscription, subject to any **** provided for Authorized Recordings in the Content Usage Rules, and provided further that Local Files shall not be within the scope of this definition.

"Cached Streams" means encrypted digital files embodying audio or audiovisual recordings that are downloaded and temporarily cached on an Approved Device utilizing an appropriate technical solution approved by Label, ****, for the purposes set forth below in the definition of "****", provided always that such device may only render the files for playback in the event that the device remains, **** in accordance with the Technical and Security Specifications and provided further that Local Files shall not be within the scope of this definition.

"Change of Control" means the closing of a transaction as a result of which those Persons who held 100% of the issued share capital of the ultimate parent company of Company and its Affiliates (collectively, the "Spotify Group") immediately prior to the transaction hold less than **** of the issued share capital of, or voting power in respect of, the ultimate parent company of the Spotify Group immediately after the closing of the transaction, unless the transaction consists of an internal restructuring or a listing of equity securities of the Company, its parent or any of its Affiliates on an internationally recognized stock exchange or similar marketplace of recognized national standing ("IPO").

"Company Branding" means the "Spotify" Trade Mark and any other indicia of branding owned by Company and generally used by Company in conjunction with the applicable Service together with the "Spotify" Trade Mark. Unless otherwise agreed by Label, such indicia of branding shall not include those owned by parties who, at the date of signature of this Agreement, are third parties (other than affiliates of Company, parties that become affiliates of the Company, or that Company or its affiliates acquire during the Term). "Company Branded" shall be construed accordingly.

"Company Servers" means secure internal computer servers utilized in connection with the Services, provided always that Company and/or Service Providers have the sole right and ability to access or manage such servers and to make directions with respect to storage, hosting, delivery and other use of content thereon, including but not restricted to the right and ability to require the addition and removal of particular Content Files (unless Service Providers are otherwise authorized by Label to use such Content Files on behalf of third parties).

"Content File" means a digital file (or set of files) consisting of one or more Authorized Recordings, together with corresponding Authorized Artwork and metadata as designated by (or on behalf of) Label or Orchard in its sole discretion in each instance, which is delivered to Company hereunder (or was delivered to or on behalf of Company under the Prior Agreement) in accordance with the applicable Content Preparation and Delivery Specifications.

"Content Preparation and Delivery Specifications" means the content preparation and delivery specifications for Authorized Materials mutually agreed by the parties hereto, which at the Effective Date shall be those attached as Exhibit I. Label may change such specifications from time-to-time in its sole discretion.

"Content Usage Rules" means a set of electronic instructions (or contractual requirements, as the case may be) that directs, enables and governs the performance of permitted operations or the restriction of unauthorized operations with respect to the use of Authorized Recordings via any particular Service, as set out in Exhibit C.

"Dispute" means any dispute, controversy or claim arising out of or relating to this Agreement or the breach or validity hereof.

"Distribution Servers" means publicly accessible computer servers utilized in connection with distribution of content via the Services, including but not limited to servers forming part of content distribution networks (CDNs), provided always that Company and/or Service Providers have the right and ability to access or manage such servers and to make directions with respect to storage, hosting, delivery and other use of content thereon, including but not restricted to the right and ability to require the addition, disabling and/or removal of particular Approved Server Copies.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

15


"Eligible Recordings" means ****, **** and ****.

"End User" means, at any particular time, a natural person who has registered for one of the Services—including for the avoidance of doubt any person who has registered for a Free Trial, and in all cases remains in good standing pursuant to the Service's terms of service and privacy policy. For the avoidance of doubt, in relation to Subscription Services, an End User is sometimes referred to herein as a "Subscriber."

"****" means a **** of no fewer than **** and no greater than **** audio recordings and **** audiovisual recordings, **** by or on behalf of Company or its rights holder partners ****, and solely in relation to the use and exploitation of Authorized Recordings, subject to **** rules when accessed by End Users of the ****, as further described herein.

"Excluded Deal Point" means the **** (but excluding the **** and the ****), which shall be **** with respect to **** of the **** as the case may be.

"Family Average" means (calculated on a monthly and country-by-country basis) a fraction, the numerator of which **** of the **** and the denominator of which ****.

"Family Member" means each Subscriber added to and linked with a particular Family Premium Subscription by the corresponding Master Subscriber, subject to and in accordance with Paragraph 8(c)(4).

"First Tier Executives" means **** (as of the Effective Date, ****) on behalf of Company, and **** (as of the Effective Date, ****) on behalf of Label.

"Fulfillment Services" means services and activities involving the possession and/or control of Authorized Materials via Distribution Servers.

"****" means a period of up to **** from the date that a Subscriber **** to Company for a Subscription Service as a result of any **** provided, however, that (i) for the avoidance of doubt, if a **** shall not be eligible for a **** and (ii) any payment received during a **** will be applied to the period commencing on the first day of the ****.

"Gross Revenues" means, with respect to audio and audiovisual Streams, Cached Streams and/or Cached Downloads, with respect to the applicable Service in the applicable country of the Territory, the sum of: (i) all revenues attributable to **** and/or **** generated from Approved Interfaces through which the Services are made available; (ii) all revenues attributable to **** however characterized), generated via the Service, whether structured as a **** or as a ****, (iii) all revenues directly attributable to the **** sold by Company or its agents through the applicable offering of the Service, including Approved Interfaces, ****; (iv) solely with respect to the Subscription Services, all subscription fees paid by Subscribers in consideration of access to the Subscription Services (excluding any charges, fees, or monies paid or payable to or on behalf of Company or any other Person for the **** to the **** to any other **** or other ****) and income from providing access to the same for any fixed period of time or as part of any retail promotion, ****; (v) any share of **** received by Company for delivery of the Services that Company may be able to secure from **** in consideration of the distribution of the Services; (vi) all revenues directly attributable to ****; and (vii) all gross monies paid or payable by or on behalf of any Person (including so-called ****, so-called **** and ****), whether structured as a one-time payment or as a recurrent payment or revenue share, **** from any Approved Interface that is accessible only by End Users of the applicable Service, directly or indirectly, to any ****, or other **** but for the avoidance of doubt, excluding gross monies recognized by Company in accordance with GAAP and paid or payable by or on behalf of End Users attributable to **** via the applicable Service, in each of the cases set forth in the foregoing provisions of


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

16


clauses (i) through (vii) of this definition, to the extent such revenues, subscription fees or gross monies, as applicable, are recognized by Company in accordance with GAAP, and subject to **** of (aa) in the case of the Subscription Services, VAT and/or other sales tax (solely to the extent such taxes are collected from End Users and paid to an appropriate authority (or accrued by Company for eventual remittance to an appropriate authority, as applicable), and (bb) in the case of the Ad Supported Services, ****subject to **** of such ****. For the avoidance of doubt, "Gross Revenues" expressly **** in connection with **** derived from the **** in connection with Company's provision of ****. Notwithstanding any other part of this definition, it is agreed that Company shall not ****, or conduct business with third parties (including but not limited to advertisers) (x) in a manner that is **** or (y) in a manner that is otherwise intended to frustrate the intent and purpose of this Agreement.

For the avoidance of doubt, revenues derived from ****, revenues derived from Company's performing **** in connection with such ****, revenue from **** and other ****, shall not be considered "****" for purposes of the definition of "Gross Revenues". For purposes of determining **** hereunder, any **** shall be accounted for on the basis of the **** of the **** concerned; provided, however, that the **** shall not be deemed "Gross Revenues." As between Company and Label, Company shall be solely responsible for the **** that would otherwise constitute "gross revenue" hereunder **** (i.e., Company shall be solely responsible for ****).

For the further avoidance of doubt, in scenarios where Company elects to ****, whether or not involving a **** (each such scenario, a "****") then provided (i) such **** is not otherwise prohibited under this Agreement and (ii) the **** concerned does not also include, as a primary component thereof, access to sound recordings owned or controlled by Label and/or Orchard, whether using a Company API or otherwise), and (iii) the ****has been, or will be from the date of commencement of **** in the applicable country or countries on a **** or such third party product or service is an ****; and (iv) the primary purpose of the **** is not the **** to one or more of the Services, then any **** by Company **** of the applicable Subscription Service in the applicable country shall be **** Gross Revenues, provided always that such **** are offered via Company at a **** that is **** not offered via Company. To the extent that Company wishes to retail access to a Subscription Service bundled with any **** in a manner which is non-compliant with the preceding sentence, then absent Label's prior written approval on a case-by-case basis, all ****. For the avoidance of doubt, Label's prior written approval shall not be required if the **** is otherwise in compliance with this paragraph and also includes ****.

"HD Quality" means either or both (i) higher audio quality than that offered by the Services in accordance with the terms of this Agreement being either (aa) at a higher than CD quality compressed with a lossy codec or (bb) any lossless codec or (ii) higher video quality (being at 720p or a higher quality).

"Internet" means the publicly accessible worldwide system of computer networks that transmits data by means of packet switching based on a global network infrastructure with the following attributes: (i) it is logically linked together by an address system based on the Internet Protocol (IP); and (ii) it effectuates data transmissions by means of Transmission Control Protocol/Internet Protocol (TCP/IP).

"Growth Offers" mean offers to subscribe to the Subscription Services at rates below standard retail prices in the applicable country, including Intro Offers and Winback Offers.

"Label Artist" means a recording artist whose musical performances are embodied in Authorized Recordings.

"****" means a value for the applicable part of the Territory as set out in Exhibit L below.

"Local Files" means permanent downloads of digital audio or audiovisual material that a user has stored locally for playback on an Approved Device. Local Files may include sound recordings owned and/or controlled by Label and/or Orchard.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

17


"****" shall mean, in relation to Authorized Materials, a feature of the **** which purpose is to (a) **** use (b) **** to improve playback, and (c) improve user engagement by **** is not **** due to **** as set forth in the Content Usage Rules applicable to ****.

"Marketing and Promotional Support" means, but shall not be restricted to, so-called ‘spotlights'; contests; features; **** and **** and/or ****including, without limitation, ****e.g. **** and/or any other marketing and promotional opportunities for **** on all parts of the Services.

"Master Subscriber" means, in the case of any particular Family Premium Subscription account, the Subscriber who subscribes to the Family Premium Subscription and maintains control of Family Members registered to such Family Premium Subscription account from time to time.

"Mobile Device" means a cellphone, mp3 player, handheld video games console, multi-room entertainment device (e.g., SONOS or Logitech Squeezebox, etc.), Wearable, ****, and any other device approved in writing by SME, that (a) connects directly or indirectly to Distribution Servers and, optionally, to other peers running an Approved Interface, (b) ****, (c) is capable of connecting to Distribution Servers via the Internet using a fixed line, Wi-Fi and/or cellular data connection, and (d) complies with the terms, conditions and limitations prescribed in this Agreement, including the applicable Technical and Security Specifications.

"Mobile Shuffle Service" means the service offering End Users pre-programmed access (and, solely in the case of **** in accordance with the definition of "****," the Content Usage Rules and the provisions of Exhibit J), via Approved Interfaces to Streams and Cached Streams of audio and audiovisual recordings (together with corresponding cover artwork), including but not limited to Authorized Recordings (together with Authorized Artwork) in an Approved Format, solely on **** and on an Ad Supported basis, through such End User's single User Profile, and solely in relation to the use and exploitation of Authorized Materials, in compliance with the terms, conditions and limitations prescribed in this Agreement, including the Technical and Security Specifications, provided that such access shall always be offered in accordance with both the Content Usage Rules and the provisions of Exhibit J.

"Monthly Active User" means any End User who has accessed at least one (1) Royalty Bearing Play of audio or audiovisual content (whether or not such content embodied an Authorized Recording) during the preceding thirty (30) days.

"Music Data" means any and all data in connection with, or related to, or consumption or usage of, **** or metadata associated therewith.

"****" means Royalty Bearing Plays of, individually and collectively, (i) **** for such plays **** (as applicable), (ii) **** of the **** in the **** (as applicable), and (iii) any **** in the **** (as applicable) at all, as designated by Company in its sole discretion.

"****" means (i) recordings of **** that are delivered by **** in the course of **** of the ****); (ii) recordings in which **** or **** license, other than ****; or (iii) recordings created by Company or its Affiliates, for which Company, the Company Affiliate or such third party has ****.

"On Demand" means, in relation to a Stream, Cached Stream or Cached Download, the ability of a user to select the specific recording embodied in such Stream, Cached Stream or Cached Download, and the timing of its playback.

"Orchard" means Orchard Enterprises, Inc.

"Orchard Materials" means any and all Authorized Recordings delivered directly to Company via a separate content feed managed by Orchard independently of the content feed managed by Label.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

18


"Orchard's Usage Percentage" means a fraction, the numerator of which is the **** of Orchard Materials and Authorized Ancillary Materials supplied by Orchard or its Affiliates to Company, and the denominator of which is the **** of **** (including Orchard Materials and Authorized Ancillary Materials supplied by Orchard or its Affiliates to Company), subject to, in the month concerned (i) the number of Royalty Bearing Plays of **** being **** of all **** of ****, and (ii) the number of Royalty Bearing Plays of **** in the denominator being **** of all **** of ****. Company shall use a ****, including but not restricted to the manner of ****. This fraction shall be calculated separately for the **** and each of the ****.

"****" means an audio or audiovisual recording **** Company in connection with which Company, any of Company's Affiliates and/or a third party **** a bona-fide arms-length **** for the **** (in respect of audiovisual recordings) or **** (in respect of audio recordings) in such content, but excluding ****.

"Other Party" means **** and any of their Affiliates, successors and assigns.

"Parties" means Label and Company.

"Permitted ****" means (i) in the event that access to a Subscription Service is retailed to Subscribers by Billing Providers on behalf of Company, for each such Billing Provider the **** in connection with transactions related to such Billing Provider, subject always to **** of the **** attributable to all transactions related to such Billing Provider, less any VAT or other sales tax; and (ii) in the event that Company retails access to a Subscription Service via App Store Providers, for each such App Store Provider **** in connection with transactions related to such App Store Provider, subject always to **** of the **** attributable to all transactions related to such App Store Provider, less any VAT or other sales tax. As of the Effective Date, **** are approved payment service providers for the purposes of this Agreement. Company shall notify Label in writing of all new proposed providers of payment services ****.

"Permitted Services" means a service offering on-demand streaming that (i) is owned or controlled ("controlled" meaning the ownership of **** or more of the securities in the company operating such service or the ultimate parent entity thereof) by Label, under any brand or co-brand, and/or (ii) offers only limited duration ****; and/or (iii) offers Ad Supported on-demand streaming in connection with limited term, non-recurring, niche-based offerings (e.g. offerings limited by genre or including a materially reduced number of tracks as compared to the total digital catalogues of its licensors); or (iv) does not offer **** functionality and can reasonably and objectively be viewed as ancillary to the service operator's primary business model of ****.

"Person" means any natural person, legal entity, or other organized group of persons or entities. (All pronouns, whether personal or impersonal, which refer to Persons include natural persons and other Persons).

"Play Button" means a Company Branded and Company controlled widget or web browser plug in, which is a remote control to the Services, provided any user who is not an End User attempting to utilize such remote control feature will be invited to become an End User.

"Premium ****" means an amount, **** to the relevant Subscription Service, as set out in Exhibit H, and, in the context of calculation of Wholesale Fees, sometimes referred to as amount X (in respect of the Premium Subscription) and amount W (in respect of the Online Subscription).

"Preview Clips" means Streams accessible to Approved Devices comprising either (i) the first **** seconds of each relevant Authorized Audio Recording, (ii) the **** second region of each Authorized Audio Recording which is communicated by Company via metadata, or (iii) another **** second region as determined by Company, provided always that (a) Company applies only one of option (i), (ii) or (iii) across all Authorized Audio Recordings, (b) each such Stream is made available in **** the relevant full-length Authorized Audio Recording via an Approved Interface, provided that where a person clicks such link without already being logged into one of the Services on the Approved Device concerned, such person shall be invited to log into his/her User Profile or to sign up to become a Subscriber of one of the Services, provided that **** having listened to a such Stream;


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

19


and (c) in the event Company applies option (iii), it is acknowledged that Label shall be entitled to issue a Take Down Notice in respect of any particular clip in the case of bona fide artist relationship issues, in which case Company shall replace the affected clip with a clip based on a different region of the Authorized Audio Recording in consultation with Label.

"Prohibited Entity" means (A) an entity (or the parent, subsidiary or affiliate of any such entity) against which Label, any affiliate or any licensee of Label has a claim arising out of the unauthorized recording, manufacture, distribution, sale, reproduction (or other use) of any Authorized Materials or other related property or other related tangible or intangible rights, (B) an entity (or the parent, subsidiary or affiliate of any such entity) involved in litigation with Label or any of its affiliates or licensees arising out of the unauthorized recording, manufacture, distribution, sale, reproduction (or other use) of any Authorized Materials or other related property or other related tangible or intangible rights, (C) an entity (or the parent, subsidiary or affiliate of any such entity) engaged in any unauthorized recording, manufacture, distribution, sale or other activity in violation of Label's or its affiliate's or licensee's rights, or (D) ****.

"****" means **** within Approved Interfaces which gives End Users the option to click to Stream a specific recording (which may or may not be an Authorized Recording selected by Label or Orchard) which is available at such point of time on the Services.

"Publishing Costs" means all monies payable to Persons (or to third parties authorized as agents acting on such Persons' behalf) that own or control rights in or to musical compositions (e.g., music publishers or applicable rights societies with appropriate jurisdiction) in connection with exercising Publishing Rights. For the avoidance of doubt, Company shall be ****.

"Publishing Rights" means all rights, consents, licenses and permissions necessary for the following acts undertaken after Company's receipt of the applicable Content File from Label: (i) the reproduction, communication to the public, public performance, digital audio transmission and generally making available in connection with the applicable Service of musical compositions embodied in Authorized Materials, and (ii) the communication to the public of musical compositions embodied in any Advertisements placed on the Service by Label or Orchard on its own behalf or on behalf of any third party. For the avoidance of doubt: (a) Label shall not be responsible for any license required for the reproduction, inclusion or synchronization of any musical compositions embodied in any Advertisements placed on the Service (except in relation to Advertisements embodying musical compositions (and any dramatic, literary or other works, as the case may be) that are placed on the Services by or on behalf of Label or Orchard (A) ****, and/or (B) using Advertisement inventory that is purchased by Label or Orchard pursuant to Exhibit K or otherwise; and (b) as between Label and Company, Company shall be solely responsible for acquiring, administering, and maintaining all Publishing Rights (except in relation to Advertisements embodying musical compositions (and any dramatic, literary or other works, as the case may be) that are placed on the Services by or on behalf of Label or Orchard (A) ****, and/or (B) using Advertisement inventory that is purchased by Label or Orchard pursuant to Exhibit K or otherwise.

"Radio Type Service" means (i) a radio type non on demand streaming service that has a link to a terrestrial, cable or satellite radio or broadcast service, or (ii) any part of a radio type non on demand streaming service that is not directly licensed by Label or Orchard, but through collective agreements or statutory licenses.

"Registered Payment Method" means a valid credit card, debit card, PayPal account, electronic checking account, so-called "e-wallet" account or other payment method on file with Company, or a third party billing infrastructure service provider (e.g. integrated billing by mobile carriers or app stores).

"Record Label" means a bona fide arm's-length Person meaningfully engaged in the business of developing, producing, distributing, and/or otherwise exploiting recorded music.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

20


"**** Recordings" means recordings owned or controlled by, and delivered (whether directly or via an aggregator) by, **** (including but not limited to Label) in which Company or its Affiliates ****), but for the avoidance of doubt excluding **** and any other type of recordings.

"Release Date Information" shall mean, collectively, General Release Date and Ad Supported Release Date information.

"Royalty Bearing Play" means any Stream, or playback of a Cached Stream or Cached Download, of an item of audio or audiovisual content (excluding Streams or playbacks of Local Files, preview clips, Preview Clips and advertising) via the relevant Service (or part thereof), whether initiated actively by End Users or potential End Users, or occurring automatically by virtue of being part of a sequence of tracks within a playlist, set of search results or otherwise, provided that such Stream or playback (i) has a minimum duration of **** seconds; (ii) is ****; and (iii) represents a master recording in respect of which exploitation is not free to Company or in respect of which Company pays royalties during the applicable accounting period.

"Second Tier Executives" means the **** (as of the Effective Date, ****) on behalf of Company, and **** (as of the Effective Date, ****) on behalf of Label.

"Services" means the Ad Supported Service and Subscription Services that are produced, programmed, managed and operated (as applicable in each case) solely by Company, are marketed solely under the Company Branding (provided that Company may undertake co-marketing campaigns with third parties, subject to its compliance with the rest of this Agreement), are available in the Territory and which conform to the Technical and Security Specifications.

"Service Provider" means a Person appointed by Company to fulfill any of its obligations under this Agreement in connection with the Services, provided that (a) solely in connection with Service Providers that provide Fulfillment Services, Company **** on a case by case basis both as to **** and the ****; and (b) Company's authorization of each Person to undertake Fulfillment Services on Company's behalf shall not in itself relieve Company of any of its obligations set forth in this Agreement or give any such Person any direct right, claim or cause of action against Label or any of its Affiliates, whether as a third party beneficiary or otherwise. The Service Providers utilized by Company at the date hereof for Fulfillment Services, and the service performed by each, are set forth in Exhibit F hereto, and are hereby ****.

"Similar Authorized Services" shall mean any one (1) or more **** and/or **** and/or **** all or substantially all of **** or a **** within the relevant part of the Territory, ****; and (iii) ****, provided that in the case of any subscription service combining access to label-licensed master recordings and ****, such service shall be deemed to offer Label-licensed master recordings only.

"SME Materials" means any and all Authorized Recordings delivered directly to Company via a content feed managed by or on behalf of Label independently of the content feed managed by Orchard.

"SME's Usage Percentage" means a fraction, the numerator of which is the **** of **** of SME Materials and Authorized Ancillary Materials supplied by Label or its Affiliates to Company, and the denominator of which is the **** of **** (including SME Materials and Authorized Ancillary Materials supplied by Label or its Affiliates to Company), subject to, in the **** concerned (i) the number of **** of **** being **** of all **** of ****, and (ii) the number of **** of **** in the **** of all **** of ****. Company shall use a **** of this fraction, including but not restricted to the manner of ****. This fraction shall be calculated separately for the **** and each of the ****.

"Spotify Client" means a stand alone, Company Branded software application downloaded to an End User's Approved Device or pre-installed on such device and developed solely for the making available of the Services through domains owned and controlled by Company, and downloaded from Company's website or an application store.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

21


"Spotify Connect" means a feature of the Services that allows an End User to play back music from one device to another as described in the White Paper attached hereto as Exhibit D.

"Spotify Web Player" means a Company Branded, Company owned and controlled audio player situated on Company's website and used solely for the making available of the Services from Company's website.

"Static Device" means laptop, ultraportable or desktop personal computer, non-portable video games consoles (including without limitation Xbox One, Wii U and Sony PlayStation 4 consoles), set top box, media streamer ****, but excluding ****, that (a) ****, is primarily intended for use in a fixed location, (b) ****, (c) is capable of connecting to Distribution Servers via the Internet using a fixed line, Wi-Fi and/or cellular data connection, and (d) complies with the terms, conditions and limitations prescribed in this Agreement, including the applicable Technical and Security Specifications.

"Stream" (as a noun) means each instance in which any portion of a recording is delivered by means a digital transmission which is substantially contemporaneous with the performance of the audio or audiovisual recording embodied therein and delivered in an approved format that is designed so that such recording cannot be digitally copied, duplicated or stored in a renderable form in any manner or medium in whole or in part, directly or indirectly (other than any temporary copies used solely for so-called "caching" or "buffering"). "Streaming" shall be construed accordingly.

"Subscriber" means an End User who subscribes to one of the Subscription Services.

"Subscription Service" means one of the following services, each offering Subscribers within the Territory unlimited on-demand and pre-programmed advertising-free access to audio and audiovisual recordings (together with corresponding cover artwork), including but not limited to Authorized Recordings in the relevant Approved Format (together with Authorized Artwork), in compliance with the terms, conditions and limitations prescribed in this Agreement, including the Technical and Security Specifications and the Content Usage Rules:


  (i) "Online Subscription", meaning a subscription providing access via Approved Interfaces to audio and/or audiovisual recordings via Streams though a single User Profile solely on Static Devices, in return for a periodic subscription fee (other than in connection with free trials (including Free Trials) and bundled access, in which cases, for the avoidance of doubt, there is no periodic subscription fee);

  (ii) "Premium Subscription", meaning a subscription providing access via Approved Interfaces to audio and/or audiovisual recordings via Streams and Cached Downloads through a single User Profile on Static Devices, and Mobile Devices in return for a periodic subscription fee (other than in connection with free trials (including Free Trials) and bundled access, in which cases, for the avoidance of doubt, there is no periodic subscription fee); and

  (iii) "Family Premium Subscription", meaning a single subscription providing access via Approved Interfaces to audio and/or audiovisual recordings via Streams and Cached Downloads for one Master Subscriber and **** separate Family Members, each through their own separate User Profiles, on Static Devices, and Mobile Devices, in return for a single periodic subscription fee (other than in connection with free trials (including Free Trials) and bundled access, in which cases, for the avoidance of doubt, there is no periodic subscription fee).

For the avoidance of doubt, subscription fees payable by Subscribers may be billed by Company or an Authorized Distributor, and such fee may be charged in respect of access to the service on a stand-alone basis or access as bundled with the products and services of such Authorized Distributor. Subscriptions may also be sold whereby a Subscriber pays for multiple subscription periods (for example, 12 months) up-front or by redeeming Company Branded gift cards, gift codes or vouchers issued directly by Company or via third party retailers.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

22


"Technical and Security Specifications" means those technical and security specifications, operational features and mock-ups of the Services, attached hereto as Exhibit C.

"****" means **** that allow Label, at its expense, to **** on either or all of the Subscription Service, the Ad Supported On-Demand Service and/or the Mobile Shuffle Service, and also users of **** agreed by the Parties from time to time, with **** on such online/mobile properties.

"Termination Event" means a termination of the Term by Company based on an SME Default Event (but not pursuant to the second to last sentence of section 5(a)(3)).

"Third Party Solicited" means brought to the attention of the applicable End User through either a friend, connection or other third party source including in the form of a ****, but not otherwise brought to the attention of the applicable End Used by Company, and not ****.

"****" means the sum of (A) the value of column I for the month immediately preceding the ****, and (B) the fraction equal to {[the ratio between (i) the number of days elapsed in the particular month of the Contract Period during which a ****, and (ii) the total number of days in the particular month of the Contract Period during which the ****], multiplied by the value in column II below}, for the month during which the ****:


Month

  

Column I

  

Column II

Apr

   ****    ****

May

   ****    ****

Jun

   ****    ****

Jul

   ****    ****

Aug

   ****    ****

Sep

   ****    ****

Oct

   ****    ****

Nov

   ****    ****

Dec

   ****    ****

Jan

   ****    ****

Feb

   ****    ****

Mar

   ****    ****

"Trade Marks" means trade marks and service marks, trade names, brand names, corporate names, logos, trade dress, and other words, designations, symbols, designs, colors, color combinations or product configurations, whether registered or unregistered.

"Trial Days" means each such day in which an End User is offered free access to the Premium Subscriptions, Family Premium Subscriptions and/or student subscriptions, ****.

"Unlaunched Country" means any country in which none of the Services have launched as of the Effective Date.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

23


"User Profile" means the unique profile on the Services associated with a particular End User which contains such End User's personal preferences, playlists, followers and other information corresponding to such End User, including but not limited to information used by Company to enforce the Content Usage Rules such as details of the End User's currently registered Approved Devices and, in the case of a Subscriber to a Subscription Service, such Subscriber's Registered Payment Method (except in the case of a Family Premium Subscription, in which case the Registered Payment Method details of the Master Subscriber will not necessarily be visible within the User Profiles of the Family Members).

"User Solicited" means selected by the relevant End User via search results or a self-curated or third party curated playlist added to his/her User Profile.

"Voice-Controlled Device" means an electronic speaker or other device which is designed and marketed with the intention of being controlled primarily by voice-control (including but not limited to Amazon Echo and Google Home devices).

"Wearable" means a wearable electronic watch, clip-on music player, wristband, or headphone which incorporates the Spotify Client.

"Wi-Fi" means wireless local area networks providing general Internet access such as the Institute of Electrical and Electronics Engineers' family of so-called "8.02.11x" standards, whether configured for private use (e.g., in a home or office environment) or public use (e.g., at a so-called public "hot spot", whether or not a fee is charged or permission is required for connectivity).

"Wholesale Fees" shall have the meaning set out in Paragraph 10.

2. Term:

(a) General. The "Term" shall begin on the Effective Date, and, unless earlier terminated in accordance with the terms herein, shall subsist during the following consecutive periods of time:

**** meaning the period of ****

**** meaning the period of ****

**** meaning the period of ****, provided that Label and Company ****, in accordance with **** of the ****in the event that Label and Company **** as of the ****

**** meaning the period of **** provided that ****.

Each **** of the Term is sometimes referred to herein as a "Contract Period".

Notwithstanding any extension amendments that extended the Term (as defined in the Prior Agreement) of the Prior Agreement prior to the Effective Date, the Parties hereby agree that the Term (as defined in the Prior Agreement) of the Prior Agreement shall only be deemed extended through the commencement of the Effective Date.

(b) Framework Amendment. Reference is hereby made to (x) that certain Third Party Distribution Approval Framework Amendment by and between Label and Company dated as of 20 October, 2014, as amended or otherwise supplemented (the "Framework Amendment"); and the agreements entered into by and between Label and Company relating to Label's authorization of third party distribution of certain Services, as set out in the table immediately below this paragraph (collectively, "Bundle Deals"). Notwithstanding the termination of the Term (as defined in the Prior Agreement) of the Prior Agreement, the Parties hereby agree that (i) except as expressly set forth elsewhere in this Agreement (including, for the avoidance of doubt, pursuant to Paragraph 10(l) below), the Framework Amendment and Bundle Deals shall continue to apply with full force and effect, including with respect to any and all Partner Schedules entered into pursuant to the Framework Amendment


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

24


prior to the Effective Date, for the full duration of the applicable Offer Period, and (ii) from and after the Effective Date, the term of the Framework Amendment, Partner Schedules and Bundle Deals shall be measured by the termination or earlier expiration of the Term of this Agreement, instead of the termination or earlier expiration of the Term (as defined in the Prior Agreement) of the Prior Agreement.

List of Bundle Deals as at Effective Date


Partner

  

Territory

  

Launch Date

****

   AR    10-Oct-2014

****

   GR    25-Oct-2013

****

   AT    1-Jun-2014

****

   DE    29-Aug-2012

****

   HU    20-Jun-2014

****

   CO    6-Oct-2014

****

   PH    1-Apr-2014

****

   NL    1-Nov-2011

****

   BE    1-Nov-2012

****

   MY    16-Oct-2013

****

   CH    25-Feb-2014

****

   AR    10-Oct-2014

****

   ES    1-Mar-2013

****

   MX    2-Dec-2013

****

   NZ    28-Feb-2014

****

   DK    22-May-2014

****

   EE    1-Jul-2014

****

   FI    1-Sep-2010

****

   LT    12-Jun-2014

****

   LV    7-Jul-2014

****

   NO    31-Jul-2014

****

   SE    18-Sep-2009

****

   GB    1-Nov-2011

****

   IE    17-Nov-2013

****

   IT    10-Mar-2014

****

   PT    1-Jul-2014

****

   GB    1-Aug-2013

****

   US    2-May-2014

****

   UK    9-Feb-2014

****

   IS    21-Aug-2013

(c) B2B Amendment. Reference is hereby made to the Digital Content Distribution Agreement entered into by and between Label and Company in connection with Label's grant of rights to Company in relation to commercial premises, dated as of 15 October 2015 and as subsequently amended or otherwise supplemented (the "B2B Amendment"), Notwithstanding the termination of the Term (as defined in the Prior Agreement) of the Prior Agreement, the Parties hereby agree that the B2B Amendment shall continue to apply with full force and effect during the subsistence of the Term of this Agreement, subject to either Party having the right to terminate its term upon 30 days' written notice to the other Party.

(d) Family Premium Subscription. Notwithstanding the foregoing or anything elsewhere in this Agreement or the Prior Agreement, the Parties hereby agree that (A) the following provisions of this Agreement will have retroactive effect to May 23, 2016 in each country of the Territory under the Prior Agreement (in lieu of any corresponding provisions set forth in the Prior Agreement): (i) the Grant of Rights set forth in this Agreement for Family Premium Subscriptions, (ii) the Content Usage Rules set forth in this Agreement for Family Premium


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

25


Subscriptions, and (iii) the eligibility criteria set forth in this Agreement for Family Premium Subscriptions; and (B) the determination and calculation of wholesale fees for Premium Subscriptions with multiple User Profiles (as defined in the Prior Agreement) associated with the same subscription in each country of the Territory for any periods prior to the Effective Date shall be determined and calculated by giving effect to (x) the provisions of paragraph 10(a)(1)(A)(iv)(b)(II) of this Term Sheet (in respect of SME Materials, as defined in the Prior Agreement), in lieu of any otherwise applicable minima for the determination and calculation of Wholesale Fees (as defined in the Prior Agreement) prescribed in paragraph 10(1)(A)(iii)(b) of the Prior Agreement in respect of SME Materials (as defined in the Prior Agreement) in connection with such offerings, and (y) the provisions of paragraph 10(a)(2)(A)(iv)(b)(II) of this Term Sheet (in respect of Orchard Materials, as defined in the Prior Agreement), in lieu of any otherwise applicable minima for the determination and calculation of Wholesale Fees (as defined in the Prior Agreement) prescribed in paragraph 10(2)(A)(iii)(b) of the Prior Agreement in respect of Orchard Materials (as defined in the Prior Agreement) in connection with such offerings.

3. Territory:

(a) In respect of all Services licensed under this Agreement, the authorized territory shall be the world, excluding Japan (the "Territory"). Notwithstanding the foregoing and at all times subject to Paragraph 6, Company acknowledges that certain Authorized Materials may only be eligible for exploitation via the Services in one or more parts of the Territory and the territorial eligibility for each such title will be determined by Label (in relation to SME Materials) or Orchard (in relation to Orchard Materials) on a title-by-title basis (via metadata) for each item of Authorized Materials. Label (in relation to SME Materials) or Orchard (in relation to Orchard Materials) shall communicate to Company territorial eligibility for each item of Authorized Materials in a machine-readable form as part of the corresponding Content File.

(b) Label acknowledges that Company intends to utilize one of the following geographic filtering technologies (such applicable technology, the "Geographic Filtering Measures"), as determined by Company at its sole election, to assist Company in determining as far as possible in which country any given End User (or potential End User) is located for the purposes of this Agreement:

(i) With respect to any End User (or potential End User) who is attempting to access a Stream or log into/register for a Service, and in any case prior to such End User's actual Streaming or downloading of Authorized Materials, Company may utilize state-of-the-art IP geo-location and geo-filtering technology that is designed to determine whether such End User's IP address is within any particular country of the Territory; or

(ii) With respect to any End User (or potential End User) who has a Registered Payment Method on file with Company, and prior to such end user's actual Streaming or downloading of Authorized Materials, Company may (x) utilize credit card issuing bank location look-up technology that is designed to determine whether such issuing bank is on a listing of financial institutions located within any particular country of the Territory; or (y) utilize any other reliable technical means available to ascertain whether such End User's Registered Payment Method is associated with a physical address within any particular country.

Label acknowledges that Company shall be deemed to be fulfilling its obligations relating to the territorial-specific grants herein contained, provided it implements one or more Geographic Filtering Measures.

4. Company Commitments:

(a) ****:


  (1) In accordance with the terms hereof, ****, Company shall pay Label the **** payable connection with the use and exploitation of Authorized Materials under this Agreement **** (subject only to the exceptions set forth in Paragraph 4(a)(6) below) and ****) (the "****").

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

26


  (2) In accordance with the terms hereof, ****, Company shall pay Label the **** payable connection with the use and exploitation of Authorized Materials under this Agreement **** (subject only to the exceptions set forth in Paragraph 4(a)(6) below) and ****) (the "****").

  (3) Additionally, Company shall pay Label **** (i) **** paid in respect of the Term, and (ii) **** plus **** plus the amount of the **** (if any) and **** (if any), within thirty (30) days of the expiry of ****.

  (4) In accordance with the terms hereof, ****, Company shall pay Label **** payable in connection with the use and exploitation of Authorized Materials under this Agreement **** (subject only to **** set forth in ****) and the **** (if any)) ****.

  (5) In accordance with the terms hereof, ****, Company shall pay Label **** Fees payable in connection with the use and exploitation of Authorized Materials under this Agreement ****subject only to **** set forth in **** and the **** (if any)) ****.

  (6) For the avoidance of doubt, the ****, the ****, the **** and the ****, shall **** of the Term. Notwithstanding the foregoing or anything elsewhere in this Agreement, the determination and calculation of **** in the **** of the **** under Paragraph 4(a)(1) above, **** of the **** under Paragraph 4(a)(2) above, **** in the **** of the **** in the **** of the ****, respectively, shall be made without reference to the amount of any wholesale fees paid to Label or Orchard in connection with: (i) services offered via the ****; (ii) Services ‘**** with a **** pursuant to ****; (iii) any **** pursuant to any **** entered into pursuant to the **** prior to the **** that ****, but solely for the **** of the applicable **** in the applicable ****, unless expressly provided otherwise in the applicable ****; and (iv) any **** pursuant to any **** entered into pursuant to the **** during the Term for the applicable **** in the applicable ****, unless expressly provided otherwise in the applicable such ****.

  (7) To the extent any amounts payable hereunder are required to be converted from a currency other than United States Dollars, for purposes of converting such amounts to **** of the ****, such conversion shall be made based on the exchange rates set forth in ****. Company shall include applicable conversions into USD using such exchange rates in monthly Financial Statements.

  (8) In the event that there is an **** during Contract Period 1, and the **** with respect to Contract Period 1 is greater than the **** during Contract Period 1, then, at the earlier of the end of Contract Period 1 or a Termination Event during Contract Period 1, the **** shall **** by the {**** by the ****}.    

  (9) In the event that there is an **** during Contract Period 1 or Contract Period 2, and the **** with respect to Contract Period 2 is greater than the **** during Contract Period 2, then, at the earlier of the end of Contract Period 2 or a Termination Event during Contract Period 2, the **** shall **** by the {**** by the ****}.    

As used in this Paragraph 4(a), the following definitions shall apply:


  (i) "Acquired Catalogue Streams" means the total of all Royalty Bearing Plays of Authorized Recordings acquired pursuant to an Acquisition during Contract Period 1 or Contract Period 2, as applicable.

  (ii) "Acquisition" means an event during Contract Period 1 or Contract Period 2, as applicable, by which Label or Orchard or an Affiliate thereof acquires or otherwise obtains rights to make available a catalog of Authorized Recordings to which it did not have rights immediately prior to such event.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

27


  (iii) "Catalogue Difference Contract Period 1 Fraction" means {{**** during Contract Period 1} less the {**** during Contract Period 1 }} divided by {total Royalty Bearing Plays of Authorized Recordings during Contract Period 1 }.

  (iv) "Catalogue Difference Contract Period 2 Fraction" means {{**** during Contract Period 2, including **** that happened in Contract Period 1} less the {**** during Contract Period 2, including **** that happened during Contract Period 1}} divided by {total Royalty Bearing Plays of Authorized Recordings during Contract Period 2}.

  (v) "Catalogue Market Share" means the average market share of a catalogue of Authorized Recordings that is the subject of a ****, as a percentage of the Label Digital Market Share on the Services, measured in the prior twelve (12) months.    

  (vi) "**** Catalogue Streams" means in respect of a **** {the Catalogue Market Share in respect of Authorized Recordings covered by the ****} multiplied by the {Royalty Bearing Plays of Label Non Acquired Catalogue during the period from the date of the applicable **** until the end of Contract Period 1 or Contract Period 2, as applicable)}.

  (vii) "Divestment" means an event during Contract Period 1 or Contract Period 2 pursuant to which Label or Orchard (or an Affiliate thereof) loses rights to a multi-artist catalog of Authorized Recordings that it had rights to for a period of at least twelve (12) months immediately prior to such event, pursuant to the sale, closure, bankruptcy, or expiration of distribution agreement of any catalog or label owning or controlling such rights, provided that in the case of Orchard such event will only count for the purposes of this definition if it relates to the sale, closure, bankruptcy, or expiration of a distribution agreement with one of the ten largest Orchard sub-labels (measured by payables over the preceding 12 months). For the avoidance of doubt, a catalog, or label's loss of a catalog, belonging to a single Label Artist shall not be deemed a Divestment for purposes hereof.

  (viii) "Extraordinary Label Change" means a **** since the Effective Date as a result of Divestments by Label or Orchard during Contract Period 1 or Contract Period 2;

  (ix) "Label Digital Market Share" means the average of Label's and Orchard's collective market share (being the number of Royalty Bearing Plays of audio recordings and audiovisual recordings owned, controlled and/or distributed by Label and Orchard (including Authorized Recordings) as a percentage of Royalty Bearing Plays of all Eligible Recordings, subject to ****, as set out in the definitions of SME's Usage Percentage and Orchard's Usage Percentage) on the Services, measured in the prior twelve (12) months.

  (x) "Label Non Acquired Catalogue" means Authorized Recordings that have not been the subject of a **** or an ****.

  (xi) "Total Divested Catalogue Streams" means for all **** during Contract Period 1 or Contract Period 2, the sum in respect of each and every **** of the applicable **** Catalogue Streams.

  (8) The Parties hereby agree to work diligently and in good faith to share the information required to calculate the Catalogue Difference Fraction on a quarterly basis.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

28


5. Escalation Process:


  (a) Escalation Process: In the event that, at any time during the Term, the Parties' day-to-day business and/or licensing personnel are unable to resolve any particular Dispute, then either Party shall be free to escalate such Dispute to the First Tier Executives by providing written notice to the other Party (a "First Dispute Notice"). Solely in the event that the First Tier Executives are together unable to resolve the Dispute in good faith within thirty (30) days of such First Dispute Notice, the Parties shall be entitled to escalate such Dispute to the Second Tier Executives by providing written notice to the other Party (a "Second Dispute Notice").

  (b) ****:

  (1) On a date which is no later than the **** of the ****, each Party will exchange with the other Party **** which they desire to be addressed prior to **** (other than the ****), which **** and/or **** of this Agreement in connection with (i) aspects of **** and/or its **** to the extent such aspects and/or **** are reasonably considered by a Party **** bearing in mind the **** of such Party; or **** in the **** (either generally or with respect to particular parts of the Territory) or to the **** that have resulted, or are likely to result in, **** in the **** in the **** (either generally or with respect to particular parts of the Territory) as set at the Effective Date but solely to the extent that it does not implicate the **** (such exchanged lists, ****).

  (2) Within three (3) weeks of the **** will work in good faith to come to an agreement in connection with items on the ****. If the **** are unable to come to an agreement on any number of items on the ****such date, the **** any and all items on the **** upon which the Parties have ****. If the **** are unable to resolve the **** within three (3) weeks following the ****, will in good faith discuss the ****, with an eye towards resolution.

  (3) Immediately prior to commencement of ****, the Parties shall **** an **** to **** to reflect all agreed items on the **** with effect from the commencement of **** through the end of ****. However, solely in the event that any items on the Deal Point Lists are not resolved prior to the commencement of **** in accordance with the process set out above, all such items will be deemed ****, and either Party shall be entitled to initiate **** in respect of some or all of such **** in accordance with paragraph 5(c); provided, however, if the mediation terminates in accordance with clause 5(c)(4)(i) or 5(c)(4)(ii) below, or no written agreement is concluded in connection with the applicable **** as of the end of ****.

  (c) ****:

  (1) Scope. Any Dispute which the Parties have failed to resolve via Paragraph 5(b) above shall, ****, be subject to **** administered by **** pursuant to the ****, as amended by this Agreement. **** by providing to **** and the other Party a ****, setting forth the subject of the dispute and the relief requested.

  (2) Selection of ****/Process. Unless otherwise mutually agreed by the Parties with a view to the complexity and nature of the Dispute(s), there shall be **** based on the substantive expertise that may be required or helpful in connection with the applicable Dispute(s) (solely by way of example, ****). If the Parties are unable to agree on an appropriate **** will be **** in accordance with selected in accordance with the ****, and the **** and with one another **** from the **** and in ****. The Parties agree that they will participate in the **** in good faith and that they will share equally ****. For the avoidance of doubt, the Parties agree that the **** and shall only **** terms.

  (3) Procedure. All documents, offers, promises, conduct, recommendations and statements, whether oral or written, made in the course **** by either of the Parties, their agents, employees, experts and attorneys, and by ****, are confidential, privileged and inadmissible for any purpose, including impeachment, in any lawsuit, arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of ****. Neither Party shall be required to provide any discovery or disclosures as part of the ****.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

29


  (4) Termination of ****. Either of the Parties may **** at any time and shall immediately **** and the other Party in writing. The **** will terminate when (i) a party ****; (ii) the ****; or (iii) a written agreement is concluded in connection with the applicable Dispute which amends the terms of this Agreement. For the avoidance of doubt, any agreement **** unless and until it has been reduced to writing and signed by both Parties.

  (5) ****. The place of **** shall be New York, NY, United States. The **** shall be conducted in the English language.

  (6) Governing Law; Jurisdiction. The **** shall be governed by, construed and take effect in accordance with the laws of New York. For the avoidance of doubt, the federal and state courts in the city of New York in the state of New York have exclusive jurisdiction to settle any claim, dispute or matter of difference that may arise out of or in connection with the ****.

  (7) Confidentiality. Except as may be required by law, **** shall be held in private and neither a Party **** may disclose the existence, content or results **** (including any documents or information provided by any Party ****) without the prior written consent of both parties.

6. Content:


  (a) Subject always to Paragraphs 7(e) to (k) below, the Authorized Materials will include:

  (1) the complete catalogue of sound recordings in respect of which Label and Orchard and all of their affiliates (including Affiliates) and licensees in the Territory possess sufficient rights to authorize the activities contemplated in this Agreement in each part of the Territory, and the associated preview clips, metadata and front cover artwork, and Label or Orchard, as applicable, shall make such content available for use on each of the Services in no less than the same quantities and in no event later than the same times as Label or Orchard, as applicable, makes such content available to any Similar Authorized Services; and

  (2) audiovisual recordings, ****, in respect of which Label and Orchard and all of their affiliates (including Affiliates) and licensees in the Territory possess sufficient rights to authorize the activities contemplated in this Agreement in each part of the Territory, and Label or Orchard, as applicable, shall make such content available for use on each of the Services ****.

Notwithstanding the foregoing, Label will have the absolute unfettered right, in its sole discretion (i) to withhold any item of Authorized Materials for any of the reasons set forth in sub-paragraph 7(e) below, provided that such right to withhold will expire if and when the reason for withholding the content is no longer applicable in the country of the Territory concerned; or (ii) to delay Company's use relative to Similar Authorized Services (and set Release Date Information accordingly) of a limited number of Authorized Materials on a case-by-case basis only for the purposes of allowing a third party to conduct specific, time-limited exclusive artist and/or label promotions, marketing campaigns or merchandising opportunities in the applicable country of the Territory, in each case, for periods of limited duration, provided that such delay shall only apply during the limited duration of such specific promotion, marketing campaign or merchandising opportunity. Subject to the foregoing limitations, Label's exercise of the right described in the preceding sentence with respect to particular Authorized Materials shall not be a material breach of this Agreement; provided, however, that Label shall exercise this right, if ever, in good faith and not so as to frustrate or undermine the general content commitment being made to Company pursuant to the foregoing provisions of this Paragraph 6(a).


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

30


(b) Label shall additionally have the right to withhold from distribution on any of the Services (i) any content in respect of which it lacks the right to authorize distribution via the relevant Service in the applicable country of the Territory; (ii) any content in respect of which distribution via the relevant Services in the applicable country of the Territory would ****; (iii) so-called "live" audio tracks that are created and/or funded by the service where they appear, but solely during the period of exclusivity for the other service; (iv) for any audio track provided to Company, ****, but solely during the **** for the ****. Subject to the foregoing limitations, Label's exercise of the right described in the preceding sentence with respect to particular content shall not be a material breach of this Agreement; provided, however, that Label shall exercise this right, if ever, in good faith and not so as to frustrate or undermine the general content commitment being made to Company pursuant to the provisions of Paragraph 6(a) above.

(c) Company shall make available on the Services all Authorized Materials from the corresponding release dates communicated via metadata, except that Company may withhold or take down from the Services any Authorized Materials (i) that would expose Company or its Affiliates, in Company's reasonable opinion, to any regulatory or legal risk, or (ii) in respect of which Company has received a take-down request from a third party asserting that making such Authorized Materials available infringes on their rights (a "Take-Down Request"); or (iii) in respect of which Company has not ****; or (iv) in the event that Company is **** in amounts in excess of **** and Company does not believe the terms offered by ****; (v) Company is not offering the applicable Service in the Territory concerned at the applicable time. In the event that Company wishes to avail itself of either exception (i) or (ii) in the previous sentence, Company shall notify Label or Orchard (as applicable) of the relevant circumstances promptly following the withholding or take-down of the relevant Authorized Materials, including in the case of any Take-Down Request the contact details of the third party claimant. With respect to any Take-Down Request, Label will work in good faith (and where applicable shall procure that Orchard will work in good faith) to resolve the claim, provided that Company shall provide all reasonable assistance, but in the event that (aa) in Company's reasonable opinion (acting in good faith), the applicable claimant is unable to substantiate its claim and/or such claim is otherwise deemed non-credible, and/or (bb) the claimant fails to respond to Company's, Label's or Orchard's (as applicable) communications within ten (10) business days, then following the request of Label or Orchard (as applicable), Company shall promptly reinstate the relevant Authorized Materials on the Services (in which case, Label will indemnify and hold harmless the Company Indemnified Parties in respect of the distribution of Authorized Materials concerned pursuant to section 6(d)(2) of the letter agreement portion of this Agreement). In the event that ****: (x) are found by Company to be subject to **** or (y) are found to ****, then, Company shall have no further obligation to make available on the Services any Authorized Materials associated with ****. Company shall employ good faith efforts to notify Label of the circumstances surrounding the relevant fraudulent behavior under sub-paragraph 8(a)(13)(i); provided, however, that an inadvertent, non-repetitive failure to do so shall not constitute a breach hereof. In the event that Company wishes to avail itself of exception (iv) in the first sentence of this paragraph 6(c), Company shall notify Label, and the Parties shall discuss in good faith before Company withholds or takes down any Authorized Materials. Company shall not **** with respect to the decision to withhold or take down any particular recordings in the circumstances detailed in exception (iv) in the first sentence of this paragraph 6(c).

(d) Company shall build and maintain systems that are intended to be effective to address the **** who may not have the **** (for example, **** of the **** as previously **** for one or more of the same parts of the Territory) and shall use commercially reasonable efforts to implement an expeditious process for resolving any apparent conflicts arising from **** Label's notification of any ****.

(e) In particular, Company shall provide access for Label during the Term to Company personnel, including via email or voice calls, but also via web forms, who will be responsible for receiving notifications from Label related to take-down notices in connection with the availability or infringement of any recording, artwork and/or other content or intellectual property owned, controlled or distributed by Label or Orchard and delivered by third parties (including for the avoidance of doubt End Users of the Services) in one or more parts of the Territory in which the relevant materials have been made available by Company. Following receipt of any such notification, Company shall promptly review such notification and, if deemed to be valid remove from the Services any such materials, unless Label's ownership or control within the relevant parts of the Territory is


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

31


subject to an objectively reasonable dispute by the third party which delivered such materials to Company (in which case, Label will indemnify and hold harmless the Company Indemnified Parties for Company's removal of the materials concerned on a prospective basis pursuant to section 6(d)(2) of the letter agreement portion of this Agreement).

(f) During the Term, Label shall work in good faith (and shall procure that Orchard works in good faith) to implement processes and/or systems that are intended to ensure that the Authorized Materials delivered to Company under this Agreement do not include any content that (i) infringes the intellectual property rights of any third party; or (ii) breaches Company's Infringement Guidelines, to the extent the same are objectively reasonable and do not conflict with the terms of this Agreement, as provided from time to time. Label shall also work in good faith to ensure that it does not deliver content listed on the ‘BPjM' list maintained by the German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (the "German Banned Content"), cleared for exploitation in Germany; provided, for the avoidance of doubt, if such German Banned Content is delivered by Label to exploit anywhere in the Territory, Company shall have the right to take-down such German Banned Content throughout the Territory, notwithstanding anything contained herein.

7. Rights:

(a) Label grants Company the non-exclusive, non-transferable (other than for permitted assignments and any permitted Changes of Control), non-delegable (except to Service Providers and as otherwise specifically set forth herein) power and authority to exploit the Authorized Materials, in the applicable countries of the Territory during the Term in connection with the Services, and subject to the terms, conditions and limitations prescribed elsewhere in this Agreement, as follows (the "Grant of Rights"):


  (1) To ingest and store a **** of copies of each Content File on Company Servers in accordance with the Technical and Security Specifications. and to encode, transcode and package Content Files so as to create **** of Approved Server Copies to be stored on Distribution Servers;

  (2) To integrate the Authorized Materials, excluding Preview Clips, in the form of Approved Server Copies, into the Services and to use and exploit such Authorized Materials (including communicating Authorized Materials (excluding the musical compositions embodied therein) to the public via Distribution Servers and on a **** basis, and displaying items of Authorized Artwork to End Users along with the applicable metadata (e.g., Label Artist names, album names, etc.)) solely to the extent necessary to operate the Services in accordance with the Technical and Security Specifications, and the applicable Content Usage Rules; and

  (3) To make available and communicate to the public Preview Clips as part of (i) **** as permitted hereunder, and (ii) the **** for individual End Users, or potential end users of the Services who have not logged into the Services (for example, on interstitial web pages when such users click links to Label recordings shared on social networks). ****.

(b) Company is not authorized under this Agreement to promote, market, distribute, fulfill, host, transmit or otherwise exploit any Authorized Materials, or to otherwise use any such Authorized Materials in any manner or form not expressly authorized herein. Except as otherwise provided herein, Label hereby reserves all rights in and to the Authorized Materials and all other materials owned or controlled by Label. All rights not expressly granted to Company hereunder are reserved by Label.

(c) Authorized Materials included on the applicable Service shall be derived solely from the Content Files or other digital files delivered by Label or Orchard (except in the case of Local Files), Orchard or such other person or entity as Label designates in its sole discretion, and Company shall not authorize any person or entity to add, delete or otherwise alter such Authorized Materials in any way, except for transcoding down to Approved Formats from any high quality delivery format. For the avoidance of doubt, no copyright notices or metadata (e.g., artist name and title) shall be removed.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

32


(d) Unless otherwise legitimately authorized, Company shall not, without Label's prior written consent in each instance, make any use of (directly or indirectly), or authorize any other person or entity deriving rights from Company (directly or indirectly) to make use of, any Authorized Materials or the names, likenesses or biographical materials of any Label Artists and/or any other person or entity contributing to the recording or creation of any Authorized Materials, in advertisements, promotions, press releases or marketing materials used in connection with the applicable Services or otherwise in a manner that would lead a reasonable person to believe that the Label or the Label Artist or other person or entity concerned had endorsed the product or service concerned. For the avoidance of doubt, and notwithstanding anything to the contrary herein, where Label or Orchard has delivered to Company the name and likeness of a person or entity in Authorized Artwork, the use by the Company of the name and approved likeness of that person or entity in connection with the promotion, offer, and fulfillment of the Services shall be deemed legitimately authorized by Label, provided that (A) the name and likeness concerned shall only be used in a manner that is accurately descriptive and representative or the artists whose featured performances are embodied in Authorized Audio Recordings available via the Services, and only in a manner that appropriately and proportionately reflects such availability, such as by listing all such artists (including Label Artists) in alphabetical order at all times, or alternatively, by rotating such names and likenesses in a rotation consisting of no less than an aggregate of **** names of different artists such that ****, (B) such names and such likenesses of Label Artists (to the extent displayed in connection with the applicable Services or on the Company's website) **** made available via the applicable Services by ****, and (C) Company shall not use any such name or likeness in a manner that can be construed by a reasonable Person as an endorsement of any product or service, including the Services, unless Company is legitimately authorized to do so.

(e) Notwithstanding the foregoing or anything elsewhere herein, Label may, at its sole election, require Company to cease using any Authorized Recordings, Authorized Artwork or other Label-provided materials upon **** notice to Company (whilst such notice shall ordinarily be communicated in a machine-readable form, in time-critical or other exceptional or important scenarios, it may be delivered via electronic mail, the receipt of which by a natural Person at Company is confirmed) (each, a "Take-Down Notice") for ****, loss of rights and/or any third party claim regarding such content. In addition, Label reserves the right to issue Take-Down Notices at any time during the Term in respect of Authorized Video Recordings for ****. Within **** following Company's receipt of such Take-Down Notice, Company shall restrict access to the applicable items on or in connection with the Service in the applicable country or countries of the Territory such that the applicable item(s) are not available for streaming or download on the Service ("Take Down Materials"). Notwithstanding the foregoing, Label shall exercise its take-down rights under this section in good faith and shall not exercise such rights in a manner that frustrates the intent of this Agreement ****.

(f) Company shall not be authorized to make available any particular item of Authorized Materials via any of the Services in any particular part of the Territory until the initial release date provided to Company by Label or Orchard for the particular item and part of the Territory, which, subject to Paragraph 7(i) and Paragraph 6(b) above, shall be a date no later than the initial release date for the particular item and part of the Territory designated for Similar Authorized Services (the "General Release Date"). Label and Orchard shall provide Release Date Information in a form that is reasonably practicable to enable Company to be in compliance with its relevant obligations hereunder (e.g., via XML, data feeds or other reasonable notification methods).

(g) To the extent that a General Release Date, for a particular title is provided to Company as set forth in the previous sub-paragraph, Company shall not make the corresponding Stream, Cached Stream or Cached Download (and, subject to any agreement to the contrary, any corresponding Authorized Artwork or Preview Clip) available for distribution in the relevant part or parts of the Territory earlier than the General Release Date. If Label or Orchard fails to provide a General Release Date for any particular title for any part or parts of the Territory, the corresponding recording shall not be deemed eligible for use in connection with any of the Services in such part or parts of the Territory.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

33


(h) Subject always to any Take Down Notice, if Label delivers the relevant territory clearances for such part of the Territory within Label's XML feed, then Company shall be deemed to have been granted the applicable rights to exploit the Authorized Materials concerned in that part of the Territory, subject to relevant Release Date Information provided to Company.

(i) At any time during the Term, Label and Orchard may exercise their full discretion, subject to the remaining provisions of this paragraph, to establish and communicate to Company an Ad Supported Release Date for one or more parts of the Territory in respect of any **** yet released within the respective part or parts of the Territory, **** than General Release Date set by Label or Orchard (as applicable) for the corresponding item (each such period of **** in the applicable part or parts of the Territory, a "Premium Window"). Nothing shall prevent Label from authorizing the making available of any such **** prior to its Ad Supported Release Date via Permitted Services. The Parties acknowledge and agree that Company shall promote **** on the Service and shall not promote **** on the Service, in its discretion, provided, however that Company agrees that it shall **** during or **** for such release (if any), in respect of **** (including, in particular, with respect to **** ordinarily received by **** on the Subscription Services, to the extent possible), which would otherwise be available to **** if the ****, it being agreed that End Users of the Ad Supported Service who attempt to interact with such Label or Orchard release (excluding Preview Clips) during the Premium Window shall receive messaging, as determined by Company indicating the availability of such release within the Subscription Services and inviting the End User to subscribe (or to initiate a free trial (including a Free Trial) where such End User is eligible). On a case-by-case basis, Label shall be permitted to **** to purchase inventory on the Ad Supported Service during the Premium Window for a particular **** which promotes the availability of such **** on the Subscription Services, alongside a call-to-action to subscribe or register for a Free Trial or Growth Offer. From time to time during the Term, subject to reasonable approval by Company, Label and Orchard shall be entitled to conduct one-off tests whereby they set an Ad Supported Release Date for a particular release which is **** than the **** for such release, and the Parties shall review in good faith the results of such trials with a view to considering **** on a routine basis.

(j) (Intentionally omitted)

(k) From time to time, Label may at its sole discretion provide Company with the benefit of so-called ‘pre-listening' periods for certain Authorized Audio Recordings selected by Label or Orchard, whereby Company shall be entitled to make available those Authorized Audio Recordings as Streams, Cached Streams and Cached Downloads (as applicable) via the Services or a part thereof in designated parts of the Territory from a date (to be determined by Label or Orchard (as applicable) at their sole discretion) which is earlier than the date from which Label or Orchard (as applicable) has authorized other third party services to make available those same Authorized Audio Recordings, subject to Label's obligations pursuant to the second sentence of Paragraph 7(l) below in connection therewith.

(l) As between Label and Company, Company will be responsible for acquiring, administering and maintaining all Publishing Rights, including for the avoidance of doubt administering and paying for all Publishing Costs, subject to the next sentence. As between Label and Orchard, on the one hand, and Company, on the other, Label will be responsible for ****, including for the avoidance of doubt administering and paying for all Publishing Costs, in relation to Advertisements embodying musical compositions (and any dramatic, literary or other works, as the case may be) that are placed on the Services by or on behalf of Label or Orchard (A) **** under this Agreement pursuant to Exhibit K or otherwise, and/or (B) using Advertisement inventory that is purchased by Label or Orchard pursuant to Exhibit K or otherwise. For the avoidance of doubt, Label shall not have responsibility in connection with the preceding sentence to the extent any Advertisement merely includes links to corresponding Authorized Recordings made available as part of the Services in the ordinary course In connection with any scenario in which the Parties agree to conduct marketing and promotion of an Authorized Audio Recording in the United States in connection with which Company's use and exploitation of the musical compositions (and any dramatic, literary or other works, as the case may be) embodied therein would constitute a ****, then to the extent that Company is unable to secure ****, Label will work in good faith to facilitate clearance **** (provided that it is understood that Company shall remain responsible for all associated ****).


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

34


(m) The Grant of Rights hereunder is subject to and conditional upon Company obtaining Label's prior written consent in the case it wishes to launch any functionality as part of the Services which **** and/or ****; provided that, Label acknowledges that some third party applications using Company APIs include (i) **** generated by ****, and (ii) text based chat functionality, and such uses shall not be deemed **** for the purposes of this clause. This restriction will not prevent End Users' access and playback of Local Files through the Spotify Client, but only on the device where such User has stored the Local Files.

8. Requirements concerning operation of the Services:


  (a) All Services:

  (1) Other than as permitted under this Agreement, there shall be no licensing, sub-licensing, co-branding, syndication or private-labeling of the Services by Company to third parties.

  (2) All costs associated with hosting, streaming, billing, accounting and reporting in respect of distribution of the Authorized Materials shall be fully borne by Company, and Company shall be solely responsible for creating, maintaining and hosting, marketing and distributing the Services in accordance with the Technical and Security Specifications and Content Usage Rules at its sole cost and expense.

  (3) Except as expressly set forth herein, as between Label and Company, Company hereby assumes all liability which may arise from products and services, as the case may be, rendered to End Users and potential End Users and liability for injuries to and by servants, agents, employees or the general public in connection with the operation of the Services. Except as expressly set forth herein, all business risks related to the Services, including but not limited to the risk of non-payment by End Users shall be borne by Company.

  (4) Company shall cause copyright notices (or links thereto) relating to a Stream, Cached Stream or Cached Download to be displayed to End Users in connection with the display of the corresponding album information where practicable. Each copyright notice shall be displayed in the following format, as designated by Label or Orchard (as applicable) in each instance for the Stream, Cached Stream or Cached Download concerned: "(P) (C) [Year of first publication] [Label/Orchard designated name]."

  (5) Company agrees that it shall not, by way of any action or omission, **** in the context of any aspect of the design, operation and management of the Services. It is agreed that it shall not be deemed **** in this context merely because ****. It is further agreed that it shall not be **** as part of the Services (solely by way of examples, **** in response to **** (including but not limited ****) and/or **** and/or ****) in any manner which is intended to have the effect of **** will be ****. For the avoidance of doubt, Company shall not be in breach of this sub-paragraph 8(a)(5) merely as a result of (a) providing as part of the Services particular offerings (for example, algorithmically-generated playlists or stations) related to genres or categories in which **** are not **** and/or (b) the use of an automated recommendations system based on End User behavior or End User preferences.

  (6) For the avoidance of doubt, Approved Interfaces shall not include any functionality which facilitates the sharing by any End User of permanent audio downloads or permanent video downloads with any other End User.

  (7) Company shall provide Label with no fewer than **** written notice prior to including as part of the Services any functionality which has the ****. Company shall also notify Label of any other significant functionality before launching, including as part of any regularly scheduled business development meetings.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

35


  (8) Intentionally deleted.

  (9) No less frequently than on **** basis, at Label's request, Company and Label shall hold (x) local or regional business review meetings covering all active countries; and (y) an overall strategic update meeting to be attended by senior personnel from each party, including at a minimum a review of global performance, key opportunities and future plans.

  (10) Company shall provide Label with transparency as part of regular meetings/calls in relation to its internal priority levels for resolution of operational issues relating to ingestion, processing/indexing and integration of Authorized Materials with respect to the Services.

  (11) Company shall provide Label with as much advance notice as reasonably possible of new territory launches within the Territory (such notice to be given first to allocated Label contact).

  (12) Company shall in any case guarantee that Label shall be **** with respect to the provision of any information regarding new features (e.g. product functionality, new APIs etc.)

  (13) Fraudulent Behavior:

  (i) Company shall use its commercially reasonable efforts to actively monitor and take steps to prevent and police by technical means, including but not limited to machine learning, any behavior by End Users and/or third parties that distorts the number of plays (which, but for such activity, would be Royalty Bearing Plays) for particular recordings on the Services by fraudulent means, including but not limited to the use of manual (e.g. click farms) or automated (e.g. bots) means.

  (ii) Company shall, subject to its confidentiality obligations to content providers, present to Label on a quarterly basis, key performance indicators in connection with identified ****, where possible including country-by-country breakdowns, including number of ****, in the context of both ****, plus the number of **** has been **** due to fraudulent behavior. Company shall engage in good faith discussions with Label throughout the Term to consider improvements and developments to Company's fraudulent behavior detection and action to limit such behavior on the Services.

  (iii) Company shall reasonably investigate and take reasonable commercial steps to **** due to fraudulent behavior hereunder. Company agrees to use its commercially reasonable efforts to investigate any notice it receives from Label or Orchard in respect of suspected fraudulent behavior.

  (iv) Label shall work in good faith to educate all individual recording labels and their artists under either Label or Orchard, or any of Label's or Orchards' Affiliates, with a view to preventing them from, either directly or through third parties, engaging in any behavior that distorts the number of plays (which, but for such behaviour, would be Royalty Bearing Plays) for any Authorized Recordings on the Services by fraudulent means, including but not limited to the use of automated means. Label shall further engage in good faith discussions with Company throughout the Term to consider improvements to Labels', Orchards' and their Affiliates' compliance with this sub-paragraph where manifestly necessary based on Company's findings.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

36


  (14) Company shall use commercially reasonable efforts to (i) demote or remove within artist pages and search results, and (ii) remove from Company-curated (algorithmic or otherwise) playlists and/or recommendations on the Services all (y) so-called ‘sound-alike' recordings and other cover versions which are designed to attract or mislead End Users seeking versions performed by the original recording artist (including but not limited to versions denoted in track/album titles as "originally by", "originally performed by", "as made famous by" or "tribute to" the artist featuring on the original recording); and (z) karaoke versions. Label shall work in good faith to ensure that it minimizes the delivery to Company any Authorized Materials that would fall under the category in this sub-paragraph 14(ii)(y).

  (15) Personal use only. Company shall include within its end user terms of use for the Services a requirement for End Users to be natural Persons and a stipulation that the Services may be used for private, non-commercial uses only. For the avoidance of doubt, the Grant of Rights hereunder shall not authorize access to Authorized Materials by End Users in commercial premises or other non-private settings, and Company shall monitor for suspicious activity in respect of the same and enforce the terms of its end user terms of use.

  (16) ****. Company shall use commercially reasonable efforts to notify Label prior to, or at the same time that, Company becomes aware that **** in connection with any promotion, marketing opportunities, content creation, sponsorships or similar activities that involve the exploitation of Authorized Materials and/or that Company knows upon reasonable investigation (i.e., **** with respect to ****. The Parties agree that a non-repetitive failure to comply with the foregoing shall not be deemed a breach hereof.

  (17) Label Branded Playlists. Company shall not charge Label or Orchard for the creation of playlists on the Services that contain a branded cover artist image and text (e.g. Filtr playlists, and such playlists, "Label Branded Playlists"). Without limiting the foregoing, Company agrees to continue to make available Label Branded Playlists throughout the Term and will not ****. Notwithstanding the previous sentence, in the event that Company takes any action (including but not limited to redesigning Approved Interfaces) **** within the Services, then Company shall provide SME and Orchard with ****. For the avoidance of doubt, Label shall not be permitted to monetize Label Branded Playlists with third-party sponsorships or other third-party revenue sources without the explicit approval of Company.

  (18) Track Linking. Company agrees to track link in accordance with the White Paper attached hereto as Exhibit D.

  (19)

****. **** each of the types of data that Company shares, as of the date of signature of this Agreement, with current and previous Label Artists and their management as part of the "****" portal, provided that in each case such data shall only relate to the performance of recordings of the applicable current or previous Label Artist. Company shall provide Label with **** in respect of all applicable artists/countries by no later than **** after the Effective Date, provided that Company shall not be required, without the consent of all relevant licensors, to disclose any confidential information relating to third party licensors of recordings (e.g., where the relevant artist's repertoire is licensed by more than one recorded music licensor (which for these purposes includes Label) (a "Split Rights Artist"), and any such access shall be subject to the approval of all such licensors. Without limiting the foregoing, Company shall however use commercially reasonable efforts to **** in connection with **** such that it can provide **** to **** by Label hereunder. In addition, Label and Company will work together in good faith to enable sharing of any additional Confidential Information Company wishes to share with Label Artists and their management as part of ****. Company agrees, that, as part of ****, Label shall be entitled to access **** made available during the Term in connection with customization of the applicable Label Artist's ‘Artist' page within the Services and any **** otherwise available to the Label Artist during the Term, as part of "add team member" functionality. Company shall use reasonable best efforts to ****; and (ii) to **** within the


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

37


  Services, without ****. Company warrants and represents that, to the extent that during the Term any ****. For purposes of this agreement, "****" means the version of the Spotify Fan Insights product available as of the date of signature of this Agreement.

  (b) Ad Supported Service:

  (1) Company shall not launch the Ad Supported Service in any part of the Territory unless it also makes available in that part of the Territory, as a minimum, the Premium Subscription.

  (2) Except where an End User is accessing Local Files, Streams and Cached Streams on the Ad Supported Service from Mobile Devices of Authorized Recordings shall be accessible solely in accordance with the specification set out in Exhibit J. Label may at Company's request approve any particular device or class of device to fall within the definition of a Static Device from time to time during the Term. In considering whether to grant such approval Label shall act reasonably and in good faith, taking into account all relevant factors, including but not restricted to which of the Services is intended to be offered via such devices.

  (3) ****:

  (i) Company may make available a maximum of ****, which may contain one or more Authorized Recordings, to any individual End User of the Mobile Shuffle Service via a Mobile Device at any time.

  (ii) Access to **** by End Users of the Mobile Shuffle Service on Mobile Devices shall be subject to the terms and conditions of Exhibit J.

  (iii) At Label's written request, Company shall **** that has been included in **** for more than ****.

  (iv) To the extent Company permits any third party to **** (excluding branding, sponsorships **** where Company ****), Company will ****. Any **** editorially controlled by Label or Orchard shall not count towards the foregoing **** offered to an individual End User of the Mobile Shuffle Service.

  (4) Company shall use its commercially reasonable efforts to maximize audio, graphical and audiovisual advertising revenues in respect of the Ad Supported Service. The following minimum levels of interruption by way of audio and/or audiovisual Advertisements per Listening Hour shall apply for each End User, **** for the Ad Supported Service **** and the part of the Territory in which such End User is deemed to be located pursuant to IP address at any given point in time (such requirement referred to herein as the "Minimum Ads Per Hour"):

End User ****

(months)

  

United States of America

(min per Listening Hour)

  

Rest of the Territory

(mins per Listening Hour)

****    ****    ****
****    ****    ****
****    ****    ****
****    ****    ****

For the avoidance of doubt, the Minimum Ads Per Hour shall be applied by Company on a per End User basis. As used herein, "Listening Hour" means, in connection with a particular End User, each 60 (sixty) minute period of Streams or Cached Streams of audio or audiovisual recordings (whether or not including Authorized Recordings, but excluding playback of Local Files and excluding playbacks of preview clips (including Preview Clips), and Advertisements) via Approved Interfaces.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

38


Furthermore, Company shall use commercially reasonable efforts to ensure that each End User of the Ad Supported Service in any part of the Territory and regardless of ****, shall be subjected to **** of audio and/or audiovisual Advertisements (which may comprise one or more individual advertisements) having an overall duration no shorter than **** during each **** period of Streams or Cached Streams of audio or audiovisual recordings (whether or not including Authorized Recordings, but excluding playback of Local Files) via Approved Interfaces (such requirement referred to herein as the "Minimum Ad Distribution").

In addition to the advertising load requirements set out above, each End User of the Ad Supported Service **** will be presented with (i) at least **** audio/video interruption (including but not limited to an upsell message or advertisement) of **** seconds or longer, before a **** in an ****, and (ii) at least **** audio/video interruption (including but not limited to an upsell message or advertisement) of **** seconds or longer, **** of an Authorized Recording in an **** during such End User's session. A session for these purposes commences on the first Active Play in an **** and ends when the End User moves to a different part of the service or another **** or the application/browser is closed. "Active Play" means a Royalty Bearing Play in an **** where the ****, an Authorized Recording.

The creative elements of each Advertisement may be a mix of commercial advertisements sold by Company to third parties, so-called "public service announcements" selected by Company, so-called "station IDs" for the Services or so-called "house ads" promoting Company's owned or controlled content or features. From time to time during the Term, the parties shall meet to discuss in good faith these matters (and any related issues), together with any course of action that may be followed to improve monetization of Authorized Materials, it being understood that Company shall have sole discretion to determine the frequency and placements of all Advertisements on the Services, subject only to complying with the Minimum Ads Per Hour, the Minimum Ad Distribution and the requirements above in respect of ****.


  (c) Subscription Services:

  (1) Except where an End User is accessing Local Files, Company shall use commercially reasonable efforts to prevent access to Streams and Cached Downloads via the Online Subscription from Mobile Devices other than in accordance with both the Content Usage Rules and the provisions of Exhibit J. Label may, at Company's request, approve any particular device or class of device to fall within the definition of a Static Device from time to time during the Term and as such be used to access the Online Subscription. In considering whether to grant such approval Label shall act reasonably and in good faith, taking into account all relevant factors, including but not restricted to which of the Services is intended to be offered via such devices.

  (2) Company shall use effective digital rights management solution (to be approved by Label) to ensure that Cached Downloads stored on devices as part of a Premium Subscription (including a Family Premium Subscription) remain tethered to such devices and are incapable of playback outside of the relevant device, or on the relevant device following expiry of a Subscriber's Premium Subscription (including a Family Premium Subscription), subject to any **** outlined in the Content Usage Rules. The digital rights management solutions outlined in the Technical and Security Specifications are hereby deemed approved by Label.

  (3) For the avoidance of doubt, Subscribers shall be permitted to access the Premium Subscription (including the Family Premium Subscription) from all types of Approved Devices, provided always that the Premium Subscription and Approved Devices comply with the Content Usage Rules.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

39


  (4) Family Premium Subscription:

  (i) Company acknowledges the Parties' intention that User Profiles available as part of each Family Premium Subscription shall be used only by members of the same family located at the same residential address.

  (ii) Each Family Premium Subscription shall have a designated Master Subscriber in connection with which the Registered Payment Method for such Family Premium Subscription is associated. For clarity, Family Members may also have Registered Payment Methods on file with Company, provided that such other forms of payment may not be used to pay for Family Premium Subscription.

  (iii) In connection with any particular Family Premium Subscription, the Master Subscriber alone shall be responsible for paying for all associated subscription fees and shall retain control of all associated Family Members, including inviting, removing, reviewing and editing other details connected with such Family Members' status within the Family Premium Subscription. Access by any Family Members forming part of a particular Family Premium Subscription shall be conditional on the Master Subscriber remaining in good standing with Company, including in respect of payment, and termination or expiration of a Master Subscriber's account shall lead to all associated Family Members, subject to an **** (provided that no **** shall be offered in connection with any Family Premium Subscription which has been terminated due to abuse) and/or any Family Member subscribing to a Subscription Service on an individual basis, becoming End Users of the Ad Supported Service.

  (iv) Other than to the extent set out in this Paragraph 8(c)(4), each Family Member shall be entitled to the same form of access to Authorized Materials as if they were a stand-alone subscriber to a Premium Subscription (e.g. maintaining their own User Profile and being entitled to store and play back Cached Downloads in accordance with the Content Usage Rules for a Premium Subscription).

  (v) Each Family Member and Master Subscriber may belong to only one (1) Family Premium Subscription at any given point in time.

  (vi) All marketing and promotion of Family Premium Subscription shall describe the offering as restricted to, and being intended for use solely by members of the same family located at the same residential address, and not as a general "group" or "friendship" offering. Company shall provide Label with exemplary copies of such marketing and promotional materials upon request.

  (vii) Company shall employ commercially reasonable efforts to prevent, detect and disable usage of Family Premium Subscriptions by End Users who are not part of the same family and/or the same residential address (by way of example only, by implementing algorithms for detecting suspicious behavior, patterns, etc. indicative of abuse or other any similar methods of detection which accomplish the same goal). The Parties acknowledge that a Master Subscriber and Family Members may: (a) prior to 30 August 2016, have registered without submitting a ZIP/postal code and/or postal address; and/or (b) prior to the Effective Date, have registered without submitting a last name (together the "Legacy Family Subscribers"). Company shall: (x) use commercially reasonable efforts to collect this information from those Legacy Family Subscribers, but shall not be required to monitor ZIP/postal code for Legacy Family Subscribers for whom such information is not available to Company; and (y) collect this information from all Master Subscribers and Family Members that are not Legacy Family Subscribers. As of the Effective Date and subject to the availability of such information to Company, Company shall implement the following particular measures to detect and/or prevent Abusive Accounts:

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

40


  A) Regular monitoring of the age, ZIP/postal code and the IP address(es) for Master Subscribers and associated Family Members (and requiring age and ZIP/postal code to be provided);

  B) Checking whether subscribers to a Family Premium Subscription have a ".edu" email address associated with their User Profile;

  C) Monitoring and detection of whether an individual has swapped to a different Family Premium Subscription and how often; and

  D) Collecting and reviewing the last names, email addresses and physical addresses of the End Users associated with and tied to the same Family Premium Subscription (excluding Legacy Family Users' subscriptions, save where applicable information has been collected).

(A, B, C and D, collectively, being the "Anti-Abuse Measures").


  (viii) Intentionally omitted.

  (ix) In the event that, based on Anti-Abuse Measures and/or other factors, Company determines the existence of any Abusive Account, Company shall have a period of no more than **** from the date of determination of such Abusive Account in order to review and verify whether all Family Members are from the same residence as the Master Subscriber and shall not be required to terminate such Abusive Account for which such verification is sufficiently obtained. Company shall be entitled to "whitelist" individual End Users in respect of a particular Family Premium Subscription where the relevant End User provides such verification (i.e., such that the End User shall not be required to provide verification again in respect of that particular Family Premium Subscription). Otherwise, Company shall terminate access to such Abusive Account for the applicable Family Members and shall not permit the relevant End Users to **** for a period of at least **** from the date of such termination.

  (x) As used hereunder, "Abusive Account" means an individual Family Premium Subscription that meets the following criteria (or such other criteria that may be mutually agreed between the Parties during the Term):

  (I) a Family Member has registered a ZIP/postal code that does not match the registered ZIP/postal code for the Master Subscriber;

  (II) any IP address for a Family Member does not match any IP address used by the Master Subscriber in the preceding 30 days; or

  (III) the Master Subscriber, together with associated Family Members, are part of a suspicious age constellation, which as at the Effective Date means the existence of 3 or more of the Master Subscriber and associated Family members that are either (i) aged 35 or more; or (ii) aged within 25-34; or (iii) aged below 30. Company shall agree with Label in writing any change to the definition of the suspicious age constellation.

The foregoing criteria (I), (II) and (III) shall be monitored a **** during the Term for each Family Premium Subscription.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

41


  (xi) In the case of manifest, persistent and widespread abuse of the Family Premium Subscription (as determined in Label's reasonable discretion), the Parties will escalate the issue at both companies with a view to agreeing measures to curtail such abuse.

  (xii) Company shall report any Family Premium Subscription abuse to Label on a **** mutually agreed by the Parties and subject to applicable data protection laws and regulations. At Label's request, on an ad-hoc basis, Company shall provide details of Family Premium Subscriptions generally, including but not limited to information regarding the number of Family Members (active and inactive) per Family Premium Subscription in each part of the Territory.

  (5) Online Subscription: For the avoidance of doubt, Company shall not be entitled to market or promote the Online Subscription or to allow individuals to subscribe to the same to the extent they are not existing Subscribers to the Online Subscription as of the Effective Date, and it is acknowledged that the Grant of Rights hereunder only covers the Online Subscription in order to permit Company to continue making such Service available to such existing Subscribers.

9. Authorized Distribution:


  (a) Authorized platform:

  (1) Company shall be authorized to facilitate access to and use of the Services by End Users solely with an Approved Device via an Approved Interface, and solely to the extent that access using a particular type of Approved Device is permitted in connection with each particular Service. For the avoidance of doubt nothing in this Agreement shall prohibit Company from allowing End Users access to Local Files on any type of device or through any Approved Interface via the Services or otherwise.

  (2) Any co-branding, sub-licensing or white-labeling of an Approved Interface that is permitted hereunder shall be subject to the provisions outlined in sub-paragraph 9(b) below.

  (3) Intentionally deleted.

  (4) Where Company permits third party developers and/or hardware manufacturers to create third party branded applications (including but not restricted to websites, web pages and software applications) or hardware integrations on different platforms which can access materials hosted by Company (including Authorized Materials and other materials) by making available to such developers relevant application programming interfaces (APIs) and software development kits (SDKs), which may include client libraries, the same shall be permitted by Label (and the grant of rights under this Agreement shall cover the making available of such Authorized Materials and their communication to the public) solely to the extent that Company complies with, the terms and conditions and available guidelines in connection with such APIs and SDKs, and the terms and conditions set out in Exhibit M attached hereto. The provisions of Paragraphs 11(b) and (c) relating to Server Security Breaches and Stream Security Breaches shall continue to apply in respect of access to and use of Authorized Materials via any API or SDK.

  (5)

Label shall have the right at **** to provide written notification to Company to request the disabling of access (i) to all Authorized Materials; or (ii) to particular Authorized Materials at a product (e.g., album or track) or Label Artist level, via specific Application Keys of one or more particular widgets/iframes or third party applications/websites which utilize a Company API/SDK. In the event that Company is unable to disable access at a product or Label Artist level, Company shall notify Label and Label shall have the option to request Company to disable access to all


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

42


  Authorized Materials for the Application Key of the relevant widget/iframe or third party application/website. Label shall provide reasons for requesting disabling of access as part of any written notification. For the avoidance of doubt, Label's takedown right under this sub-paragraph 9(a)(5) shall not apply in the case of any application branded solely with Company Branding that is created by a third party at the specific request of Company, provided always that access to and use of Authorized Materials via such application remains compliant with the terms and conditions of this Agreement.

  (6) ****, Label shall have the right to provide written notification to Company to request the disabling of access to all Authorized Materials via any particular Application Key for any specific hardware integrations which utilizes a Company API/SDK in the circumstances that such hardware integration results in any End User obtaining access to Authorized Materials via any type of device which is not an Approved Device for the Service of which he/she is an End User. Label shall provide reasons for requesting disabling of access as part of any written notification.

  (7) In the event Label provides a notification under sub-paragraph 9(a)(5) or 9(a)(6), Company shall comply within the following timeframes for disabling access to the relevant Application Key: (i) no later than **** in Sweden following the date of such notification, other than where Label **** to disable access; or (ii) where Label cites **** to disable access, no later than **** following the date of such notification. Except where the takedown is issued because of a breach of security due to Company's acts or omissions, in the event that Label exercises any take-down right pursuant to this clause, it shall require any other Similar Authorized Service that makes available any equivalent widgets/iframes, SDKs or APIs to the third party branded service [or device enabling access to Authorized Materials for the same class of end user to disable access to SME Materials(and, where licensed to such third party by Label, Orchard Materials) via such widgets, SDKs or APIs. Prior to disabling access to Authorized Materials pursuant to a notification under sub-paragraph 9(a)(5) or 9(a)(6) (as applicable), Company shall be entitled to request that Label provides, and Label shall thereafter provide, written confirmation that Label has also requested Similar Authorized Services to disable access to SME Materials (and, where licensed to such third party by Label, Orchard Materials) via equivalent widgets/iframes, SDKs or APIs, or the same device (as applicable). The Parties acknowledge that the intention of the foregoing is that Label shall not discriminate against Company versus other Similar Authorized Services when exercising such take-down rights.

  (b) Authorized Distributors:

  (1) Access to the Subscription Services may be (i) retailed to potential Subscribers by Company directly, or (ii) resold to potential Subscribers by third parties either on a stand-alone basis or bundled with the products/services of such third parties, subject always to Company obtaining Label's written approval, which approval shall not be unreasonably withheld or delayed, on a case-by-case basis prior to authorizing such third party to do so (each such authorized and approved third party being referred to herein as an "Authorized Distributor").

  (2) Notwithstanding sub-paragraph (1) above, but subject always to sub-paragraph (3) below, no approval shall be required from Label where:

  (i) Company maintains the billing relationship with Subscribers and the Services retailed carry **** Company Branding;

  (ii) a third party retailer or hardware manufacturer sells or distributes access to any Subscription Service on a stand-alone (i.e. non-bundled), ‘a la carte' basis (via gift cards, redeemable codes or otherwise) in the normal course of its business. In the event that any such retailer pre-purchases or guarantees to purchase from Company access to any Subscription Service in bulk, for the avoidance of doubt all such revenues will be shared with Label;

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

43


  (iii) a third party sells access to any Subscription Service where acting solely on behalf of Company in the normal course of its business as a payment/billing solutions provider to facilitate distribution of the Subscription Service by Company, provided always that such third party has not pre-purchased or guaranteed to purchase from Company access to any Subscription Service in bulk; and/or

  (iv) the following conditions are all fulfilled: (i) the third party is not a **** and is not engaged in or facilitating Objectionable Activities, (ii) the offer is a maximum of **** access to the Premium Subscription per customer, (iii) Label receives its full wholesale price for every month pre-purchased by a third party, or given away, whether or not those months are redeemed by a Subscriber or potential Subscriber, which for the avoidance of doubt means that ****, (iv) **** in terms of any **** from particular deals (e.g. promotional coverage in marketing materials); and (v) Company notifies Label in advance of any **** going live.

  (3) Except as set out in 9(b)(2)(iv) above, Label's prior written approval shall always be required (i) in cases where Company authorizes any **** to any of the Services with the sale of a ****, excluding for the avoidance of doubt any case in which such third party is solely pre-loading a version of an Approved Interface (which may or may not include access to a Free Trial); or (ii) in respect of ****; or (iii) in cases where Company authorizes any third party to distribute invitations to subscribe to a version of the **** in any country where such service is available on an **** basis, unless the number of **** which the third party is authorized to distribute is less than or equal to **** in each **** period; or (iv) in cases where Company wishes to modify the wholesale amounts otherwise payable to Label under this Agreement in connection with a Subscriber's use of the Services as distributed by a third party either on a bundled basis or non-bundled, a la carte basis. For the avoidance of doubt, in each case Label provides such prior written approval, the relevant third party distributor shall be an Authorized Distributor hereunder.

  (4) Distribution, bundling, co-branding and/or co-marketing of the Services with/via Prohibited Entities, or those engaged in Objectionable Activities shall be prohibited in the absence of prior written approval from Label.

  (5) For the avoidance of doubt, Company shall not be entitled to white-label the Services without prior written approval of Label.

  (6) In the event that Company is required to obtain Label's written approval in connection with this paragraph 9(b), Company shall provide full background information regarding the proposed opportunity and the third party concerned. Label shall use its commercially reasonable efforts to provide a response as soon as reasonably practicable following receipt of any request by Company. However, such approval shall in no circumstances be deemed granted in the absence of a written communication from Label to that effect, and it is acknowledged by Company that Label shall have the sole discretion whether or not to grant approval in any particular circumstances, provided always that Label acts reasonably and in good faith in reaching such decision.

  (7) Company shall provide to Label promptly on demand from time to time during the Term, a comprehensive list of third parties (including Authorized Distributors) reselling or otherwise enabling access to the Services.

  (8) During the Term, Company shall use its commercially reasonable efforts either:

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

44


  (i) to provide via email to Label in good faith on a monthly basis an up-to-date list of third parties wishing to resell or otherwise enable access to the Services with which Company is engaged in meaningful negotiation, including brief status information for each such negotiation; or

  (ii) to make relevant personnel available to meet with Label no less frequently than on a **** basis to discuss in detail any specific business development opportunities.

10. Wholesale Fees:

(a) In consideration of the rights granted to Company in respect of the use and exploitation of Authorized Materials in connection with the Services, Company shall pay to Label after each calendar month (and in accordance with the provisions of this paragraph 10, section 2 of the letter agreement portion of this Agreement and other provisions of this Agreement) the fees, calculated and reported on a territory-by-territory basis (the "Wholesale Fees") as follows:

(1) Wholesale Fees in connection with SME Materials:

Calculated on a country-by-country basis, Company shall pay in respect of each calendar month the **** (A) and (B):


  (A) The ****:

  (i) Ad Supported Service. **** attributable to the Ad Supported Service in the relevant calendar month;

  (ii) Online Subscription. The ****:

  (a) **** attributable to the Online Subscription in the relevant calendar month; and

  (b) **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether **** in such calendar month.

  (iii) Premium Subscription. The ****:

  (a) **** attributable to the Premium Subscription in the relevant calendar month; and

  (b) **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether **** in such calendar month.

  (iv) Family Premium Subscription. The ****:

  (a) **** attributable to the Family Premium Subscription in the relevant calendar month; and

  (b) The applicable amount set forth in clauses (i) or (ii) for the applicable period:

  i. With respect to any and all periods from and after the Effective Date: **** of: (a) where the **** or (b) where the **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether **** in such calendar month (and provided that only **** and not **** shall be counted for the purposes of this sub-paragraph); and

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

45


  ii. With respect to any and all periods prior to the Effective Date: **** (as defined in the Prior Agreement) for the applicable period of the Term (as defined in the Prior Agreement) of the Prior Agreement of **** (as defined in the Prior Agreement) ****, subject to any otherwise applicable adjustments set forth in the Prior Agreement for ****, respectively. (Reference is hereby made to paragraph 2(d) of this Exhibit A.)

  (B) All Services. In respect of all Services, **** for all **** in the relevant calendar month.

The values of **** shall be as set out in Exhibit H. For the avoidance of doubt, unless otherwise approved in writing, **** in connection with any Services retailed by Authorized Distributors **** shall **** under this Paragraph 10(a)(1) and shall be ****, based on the **** (i) **** of applicable ****; and (ii) **** subscriber to the relevant Service. The following additional retail offerings are hereby deemed approved for inclusion in the wholesale fee calculation under this Paragraph 10(a)(1): **** including a **** for ****; and any **** for the Subscription Service.

(2) Wholesale Fees in connection with Orchard Materials:

Calculated on a country-by-country basis, Company shall pay in respect of each calendar month the **** (A) and (B):


  (A) The ****:

  (i) Ad Supported Service. **** attributable to the Ad Supported Service in the relevant calendar month;

  (ii) Online Subscription. The ****:

  (a) **** attributable to the Online Subscription in the relevant calendar month; and

  (b) **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether such **** in such calendar month.

  (iii) Premium Subscription. The ****:

  (a) **** attributable to the Premium Subscription in the relevant calendar month; and

  (b) **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether such **** in such calendar month.

  (iv) Family Premium Subscription. The ****:
 
  (a) **** attributable to the Family Premium Subscription in the relevant calendar month; and

  (b) The applicable amount set forth in clauses (i) or (ii) for the applicable period:

  i. With respect to any and all periods from and after the Effective Date: **** of: (a) where the ****; or (b) where the **** in the relevant calendar month, subject always to Paragraph 10(b) below and regardless of whether **** in such calendar month (and provided that only **** and not **** shall be counted for the purposes of this sub-paragraph); and

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

46


  ii. With respect to any and all periods prior to the Effective Date: **** (as defined in the Prior Agreement) for the applicable period of the Term (as defined in the Prior Agreement) of the Prior Agreement of **** (as defined in the Prior Agreement) ****, subject to any otherwise applicable adjustments set forth in the Prior Agreement for ****, respectively. (Reference is hereby made to paragraph 2(d) of this Exhibit A.)
 
  (B) All Services. In respect of all Services, **** for all **** in the relevant calendar month.

The values of **** shall be as set out in Exhibit H. For the avoidance of doubt, unless otherwise approved in writing, **** in connection with any Services retailed by Authorized Distributors **** shall **** under this Paragraph 10(a)(2) and shall be ****, based on the **** (i) **** of applicable ****; and (ii) **** per subscriber to the relevant Service. The following additional retail offerings are hereby deemed approved for inclusion in the wholesale fee calculation under this Paragraph 10(a)(2): **** including a **** for ****.

(3) Revenue share percentage and discounts:

For the purposes of this Paragraph 10(a), and subject always to Paragraph 10(e), the **** in respect of the Services, provided always that such **** from time to time during the Term in accordance with the following:


  (i) At the start of each successive **** during the Term, commencing on the Effective Date (each, a "Determination Date"), the Parties will determine whether ****, the **** and the **** (the "****") in respect of the ****.

**** means the existence of at least the following **** of such **** reported for each calendar month for the applicable portion of the applicable Contract Period of the Term:


Determination Date

  

Portion of Contract Period being

examined

  

****

First day of ****   

****

   ****
First day of ****   

****

   ****
First day of ****   

****

   ****
First day of ****   

****

   ****

First day of ****

  

****

   ****

First day of ****

  

****

   ****

First day of ****

  

****

   ****

First day of ****

  

****

   ****

"****" means, collectively, the number of individual **** of the **** (including any offer of the **** with a retail discount for ****, any **** and any **** to the Premium Subscription **** by an ****, including ****, but excluding any **** and **** and/or individual **** in connection with the **** (excluding associated ****, but including **** in the case of **** to the **** by an ****).


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

47


"****" means the total number of **** in Launched Countries during the month concerned, **** throughout the Launched Countries during the month concerned and the number of **** throughout the Launched Countries of the Ad Supported Service during the month concerned}, **** of the result of such **** the Determination Date, being ****.

"Launched Countries" means those countries where any of the Services have launched as of the Effective Date.

"Bundled Offering" means (i) any Bundled Offering (as defined in the Framework Amendment) covered by a Partner Schedule pursuant to the Framework Amendment; or (ii) a bundled offering of the Premium Subscription by an Authorized Distributor pursuant to a Bundle Deal.    

"Standalone Offering" means (i) any Stand-Alone Offering (as defined in the Framework Amendment) covered by a Partner Schedule pursuant to the Framework Amendment; or (ii) a stand-alone offering of the Premium Subscription by an Authorized Distributor pursuant to a Bundle Deal.

"****" means {the **** of the **** throughout the Launched Countries (excluding **** and **** engaged in **** at the beginning of the **** of those specific **** at the end of the **** (for the avoidance of doubt excluding any individuals who **** during the **** {the number of **** of the **** throughout the Launched Countries (excluding **** and ****) at the beginning of the ****}.

"****" means **** equal to less than ****, taken as **** for the preceding **** on the relevant ****.


  (ii) As at any given Determination Date, for each individual **** which Company has met in respect of the immediately preceding ****, the **** by **** until the next Determination Date (e.g., if at the start of Contract Period 1, Company has met all **** in respect of the immediately preceding ****, the **** shall be **** until the start of the **** of Contract Period 1(the amount of Wholesale Fees payable in excess of the Wholesale Fees that would be payable if the **** were equal to **** shall be referred to as the "****" for the **** concerned).

  (iii) Notwithstanding anything elsewhere in this Agreement, to the extent that any **** has **** in respect of the immediately preceding **** as of any given ****: (x) the otherwise applicable **** of the **** shall be **** as computed on a **** for each of the two **** in Contract Period 1 (such ****, the "****") and (y) the otherwise applicable **** of the **** shall be **** as computed on a **** for each of the **** (such ****, the "****"). In the event that **** for **** pursuant to subparagraph 2(a) hereof, to the extent that any individual **** for **** or **** has not been met in respect of the immediately preceding **** as of any given ****: (xx) the **** of the ****, if any, as computed on a **** for each of the **** in ****, shall be deemed the "****", and (yy) the **** of the ****, if any, as computed on a **** for each of the **** in ****, shall be deemed the "****".

  (iv) For the avoidance of doubt, in respect of each **** during each **** that immediately follows the **** concerned, for the purposes of this Paragraph 10(a), the Wholesale Fees credited to Label's and Orchard's Wholesale Fees account under this Agreement shall be determined and calculated on the basis of **** as the **** in respect of the Services.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

48


  (b) ****:

  (1) ****. In the event that access to the Online Subscription, Premium Subscription or Family Premium Subscription is retailed to certain Subscribers by Billing Providers or App Store Providers on behalf of Company, then for **** by each such Billing Provider or App Store Provider, the **** (as applicable) in respect of **** shall be **** equal to the **** in connection with transactions related to such Billing Provider or App Store Provider, subject always to **** of the **** attributable to all transactions related to such Billing Provider or App Store Provider, less any VAT or other sales tax. For the avoidance of doubt, the aforementioned **** shall be determined on a Billing Provider-by-Billing Provider and App Store Provider-by-App Store Provider basis, in each case calculated for all **** using that Billing Provider or App Store Provider in the relevant part of the Territory on an **** basis.

  (2) Potential Adjustment For **** and ****. Label acknowledges that **** relating to the **** received by Company may require Company to **** the allocation of **** and **** amounts across each **** of the **** for which such subscription fees were paid. Specifically, Company may need and shall be permitted to apply an **** rate for **** and **** amounts attributable to all Subscribers during each Monthly Subscription Period that is based on a ****, the **** of which is the average **** and **** amounts, as applicable, for **** during a particular **** and the **** of which is the number of **** in each such ****. As used in this paragraph, "****" shall mean the **** during which **** payable by **** on a particular day of ****. For example, the period of **** to **** shall be considered the **** for all **** for whom **** are payable on the **** of each ****, while the period of **** to **** shall be considered the **** for all **** for whom **** are payable **** of each ****.

  (3) ****. Notwithstanding the foregoing and subject to the final sentence of this sub-paragraph, if a **** does not **** prior to the end of a **** (but not for the avoidance of doubt where an End user does **** prior to the end of the ****) and Company does not **** of a **** from the **** for such ****, no **** shall **** in respect of such **** only. Company agrees to use reasonable commercial efforts (i) to avoid the situation where **** fail to **** (for example, by **** in the event ****) and (ii) to encourage **** prior to the end of an ****, including but not necessarily limited to by sending SMS messages and/or emails

  (4) Legacy Subscribers ****. Notwithstanding anything to the contrary contained herein, the **** set out in **** shall be adjusted as follows in the following countries for the period commencing on the Effective Date and continuing until ****, for Subscribers to the Premium Subscription who were already Subscribers as of the Effective Date:

• ****

• ****

• ****

• ****

(c) ****: To the extent that any particular **** are generated within any calendar month which cannot logically be associated with any one particular **** (for example, where particular **** have not been generated in connection with one or more **** of a ****), then for the purposes of calculating Wholesale Fees hereunder, the relevant **** shall be **** between all **** in the month concerned by reference to the number of **** of each **** in the month concerned.

(d) ****: Except as expressly prescribed in this Paragraph 10(d), Company may **** any amounts **** to **** and / or **** to **** to **** (e.g. **** in ****)) in respect of the exploitation of Authorized Materials ****. Except as expressly prescribed in this Paragraph 10(d), Company also hereby **** to make any **** in connection with **** under any **** or other provision in any and all preceding contractual arrangements between Company and Label. Notwithstanding the foregoing, in the event that any **** and/or **** of any kind (each, a "****"), should assess any **** and other **** in respect of the ****, however characterized, that is required to be ****, or that Company reasonably believes is required to be ****, under local law in any country of the Territory ****, Company shall be permitted to **** amount of **** attributable to the **** in the country of the Territory concerned from the **** that are otherwise to be **** under this **** provided, however, that (i) the aggregate amount of such ****


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

49


shall in no event **** of **** or **** (as applicable) of **** for the applicable country of the Territory for any monthly period during the Term, (ii) **** may only be **** (or scheduled for payment) to the applicable third party (and in the event the applicable third party is ever required to **** to Company or its Affiliates, Company shall **** at the earliest possible opportunity) (ii) Company shall use commercially reasonable efforts to **** concerned the lowest possible **** in the applicable country of the Territory, and (iii) on Company's request, Label and Orchard will meaningfully consult with Company on a regular basis throughout Company's **** with the **** for the purpose of advising Company with respect to **** to be **** in the applicable country of the Territory at the applicable time during the Term, taking into account industry standards.

(e) ****.

Notwithstanding anything elsewhere in this Agreement:

(1) If, within any given period of the Term, Company **** in the case of ****, then such **** shall apply to Label **** the applicable **** (as set, and potentially discounted, pursuant to Paragraph 10(a)(3)) for the period that the **** applies to the ****. Once the **** changes to **** to the **** that would otherwise apply to Label (subject to any discount pursuant to Paragraph 10(a)(3)), the **** shall return to the level **** (subject to any discount pursuant to Paragraph 10(a)(3)). For the purposes of this sub-paragraph, a "****" means a **** that is **** than the **** (subject to any **** pursuant to Paragraph 10(a)(3)) used to calculate Label's and Orchard's wholesale fees hereunder at the relevant time, **** to which such Other Party is **** (if any) made to Wholesale Fees hereunder, during the relevant part of the Term; and "****" means the **** in respect of any of the Services (prior to ****) which is **** as part of the **** agreed between Company and the ****.

(2) To the extent that Company agrees with an **** on the **** and **** or **** of **** of **** and/or **** in respect of which **** are counted within the **** of the **** used to **** in connection with any Service, and any such **** are more **** than the **** within the definition of **** and **** hereunder, then Company shall **** and **** in accordance with ****.

(f) ****: In the event that Company or an Authorized Distributor retails a **** Premium Subscription or Family Premium Subscription to a particular consumer, the relevant Wholesale Fees may, at Company's option, be calculated using the relevant formulae above, subject to ****. Notwithstanding anything in this Agreement, for any subscription fees that are paid by or on behalf of a Subscriber pursuant to a billing cycle that is longer than **** (e.g., **** payment plans), **** by or on behalf of such Subscribers will be **** under this Agreement **** over the applicable subscription billing period for the Subscriber concerned. It is agreed that such subscribers' usage of the Services shall continue to count towards the **** as part of the **** due in respect of other non-discounted subscribers. For the avoidance of doubt, the **** described in this sub-paragraph shall only apply where **** passes onto the **** in the **** which are at least equal to the relevant ****

(g) Free Trials; Retail Discounts; Growth Offers:


  (1) Free Trials. In the event that Company offers trial access to Premium Subscriptions and/or Family Premium Subscriptions and/or student subscriptions to any particular Subscriber on a free-of-charge basis (such access, a "Free Trial"), Label shall ****, provided always that:

  (i) In respect of Subscribers who have supplied valid credit card details or other Registered Payment Method prior to being granted access to the free trial, no single Subscriber may be offered more than **** in aggregate, provided that End Users who have previously accessed the Premium Subscriptions and/or Family Premium Subscriptions and/or student subscriptions as part of a **** shall be offered no more than **** in aggregate.

  (ii) In respect of Subscribers who have not supplied valid credit card details or other recurring Registered Payment Method, no single Subscriber may be offered more than **** in aggregate (provided that users who previously accessed the Service as part of a **** Free Trial shall be offered no more than **** in aggregate).

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

50


  (iii) Subscribers who are offered one (1) or more Trial Days and supply their credit card details or other Registered Payment Method shall auto-roll (subject to applicable local law) into a paid subscription to the Premium Subscriptions and/or Family Premium Subscriptions and/or student subscriptions at the end of the last Trial Day in the block offered unless they actively cancel the subscription prior to the end of such Trial Day. 

  (iv) In the event that a Subscriber subscribes to the Subscription Service prior to having been offered the **** set out in clauses (i) or (ii) above, and such user ****, Company shall have the right to use any **** such End User.

  (v) During Trial Days, Company shall give each Subscriber who has not previously registered a Registered Payment Method an opportunity to register their Registered Payment Method and in the event that such End User provides a Registered Payment Method before the end of the applicable Trial Day, such End User may be offered up to **** (less the number of Trial Days offered to such End User prior to such Registered Payment Method registration) in aggregate.

  (vi) Without limiting any other provision of the Agreement, Trial Days shall: (a) be solely Company branded; and (b) only be made available by the Company ****.

  (vii) In the case that Company tests ****, Label shall consider in good faith any and all **** indicating that such trials lead to **** to paid subscriptions and **** may agree to **** of this Agreement in order to **** on **** connected with such trials. Company shall include in its monthly reporting to Label the number of Free Trials offered in the previous month.

  (viii) Other than to the extent permitted in this sub-paragraph (1), no Subscriber shall be entitled to register for a Free Trial in the event that he/she has previously been a Subscriber to any of the Subscription Services, including by way of a Free Trial, in the previous ****, and Company shall use reasonable commercial efforts to **** to Free Trials outside of that interval by particular individuals, by reference to factors including but not necessarily limited to ****.

  (2) Intro Offers and Winback Offers.

  (i)

Intro Offers. Where Company launches a significant marketing campaign offering a **** subscription to the Premium Subscription for the price of **** (an "Intro Offer"), then provided that (i) the Intro Offer is available to users for a maximum of **** in such country, (ii) no more than **** Growth Offers are offered by Company in any country in any **** period, (iii) at least **** have passed since the end of the last Growth Offer in the applicable country, (iv) Intro Offers may not be taken up by a Subscriber or any user who has been a paying Subscriber to the Premium Subscription (including but not limited to by way of Growth Offer) in the last **** or has received the benefit of a Free Trial in the last ****, (v) Intro Offers must be offered by Company direct to consumers and may not be co-branded or co-marketed with any third party brand, (vi) Label has not elected to **** by providing **** prior written notice to Company, (vii) Intro Offers may not be offered ****, (vii) End Users must submit a Registered Payment Method prior to accessing the Growth Offer, and (viii) where permitted by applicable local law, unless he/she has opted out, the End User automatically becomes a Subscriber to the Premium Subscription at the end of the third month, then the Parties agree that: (a) for each


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

51


  Subscriber that registers for or accesses a Intro Offer, the **** for such Subscribers will be **** of the otherwise applicable **** for each and every month of the Intro Offer (up to a maximum of ****) and Company will pay the **** in respect of all months of the Intro Offer, and (b) in addition to the standard reporting obligations, Company shall provide Label with the reporting set out in sub-paragraph (iii) below.

  (ii) Winback Offers. Where Company launches an offer allowing End Users of the Ad Supported Service who were previously Subscribers, but who cancelled their subscription to the Subscription Services more than thirty **** prior to taking the Winback Offer (such **** not to include any days included within a ****), a **** subscription to the Premium Subscription for the price of **** or less (a "Winback Offer"), then, provided (i) the Subscriber cancelled his/her subscription to one of the Subscription Services more than **** prior to taking the Winback Offer (such **** not to include any days included within a ****); (ii) each Winback Offer is offered to eligible End Users for a maximum of **** in the country concerned, (iii) no more than **** Growth Offer campaigns have been offered by Company in any country in any **** period, (iv) at least **** have passed since the end of the last Growth Offer campaign in the applicable country, (v) Winback Offers may not be taken up by a Subscriber or any End User who has previously taken up an Growth Offer in the last **** or a Free Trial (unless such Free Trial preceded a period of paid subscription) in the last ****, (vi) Winback Offers may not be offered ****), (vii) End Users must submit a valid Registered Payment Method prior to accessing the Winback Offer, (viii) Winback Offers must be offered by Company direct to consumers and may not be co-branded or co-marketed with any third party brand, (ix) Label has not **** out of Winback Offers by providing **** prior written notice to Company, and (x) where permitted by applicable local law, unless he/she has opted out, the End User automatically becomes a Subscriber to the Premium Subscription at the end of the ****, then the Parties agree that: (a) for each Subscriber that registers for or accesses a Growth Offer, the **** will be **** of the otherwise applicable **** for such Subscribers for each and every month of the Winback Offer (up to a maximum of ****) and Company will pay the **** in respect of all months of the Winback Offer and (b) in addition to the standard reporting obligations, Company shall provide Label with detailed reporting regarding Subscribers who have enrolled in the Winback Offers and the reporting set out in sub-paragraph (iii) below. Notwithstanding the foregoing, in any country where the **** is raised pursuant to paragraph ****, Company shall have the right to offer **** additional Winback Offer during a **** period after any month in which Subscriber **** show a material increase.

  (iii) At Label's request, Company shall provide **** for each Growth Offer, as well as ****, within **** following its expiry. Each line of the cohort report shall indicate the ****, the **** of Growth Offer, the month the monthly cohort ****, the number of **** users from the **** to the Premium Subscription since conversion (normalized across present and past promotions with data at Day ****), the **** who are still **** to the Premium Subscription, the total number of **** from the ****. Company shall also report the **** i.e. in relation to the Intro Offer, users who were new to any of the Services, as compared with users already on the Ad Supported Service.

  (iv) For the avoidance of doubt, Company shall pay Label in respect of Subscribers to Growth Offers as part of the **** set out in paragraph 10(a) above.

  (3) Retail Promotions/Discounts. Unless otherwise specified in this Agreement or as part of any further written agreement between the Parties during the Term, in the event that Company offers discounted access to any Service in any part of the Territory for all or only certain eligible Persons, Company shall pay the applicable Wholesale Fees due in connection with any such access under this Agreement, without any discount.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

52


(h) Review of ****: In the **** of each of Contract Period 1, Contract Period 2 and where applicable **** and ****, to the extent necessary, the **** can be reviewed as follows: (a) Label may **** provided that (1) notice has been provided at least **** in advance of such date, and (2) Company will not be **** to ****; and (b) in the event that the **** in **** increases by more than **** compared to its equivalent at the date of execution of the Agreement, on no less than **** written notice to Company, Label may apply a **** not to ****, provided that (x) Company will not be **** to **** in respect of ****, and (y) in the event that Company presents evidence to Label that such **** in any of ****, Label and Company agree to have a good faith discussion regarding such ****.


  (i) ****:

  (1) Minimum sub months or revenue. In the event that a third party (i) **** access to a Subscription Service for the purpose of distributing such months to end users during a certain period of time, or (ii) **** in respect of distributing access to a Subscription Service to end users during a certain period of time, Company agrees the general principle that **** shall be **** for the purposes of this Agreement. Unless otherwise agreed with Label as part of the process of obtaining Label's approval (where required) in connection with arrangements for any particular Authorized Distributor, at the end of the relevant **** period and when such revenue becomes due, Company shall calculate **** and include details of such share as part of the immediately following Financial Statement and Monthly Report. For the purposes of calculating Label's share in such circumstances, Company shall calculate each of ‘SME's Usage Percentage' and ‘Orchard's Usage Percentage' as an **** of the applicable **** in each of the **** during the guarantee period.

  (2) Gift cards or codes. In the event that Company or a third party retails Company Branded gift cards or redeemable codes carrying monetary value (e.g. $20), then any portion of such value (less applicable VAT) which is redeemed to obtain access to a Subscription Service shall be deemed Gross Revenues in the month of such redemption. In the event that Company or a third party retails Company Branded gift cards or redeemable codes carrying a number of subscription months (e.g. 6 months' access to the Premium Subscription), then a fraction of the retail price of the card/code (less VAT) equal to **** shall be deemed Gross Revenues in each month of redeemed access to the applicable Subscription Service. In the event that any gift card or code carrying monetary value has an expiry date, **** shall be deemed to be **** in respect of the Premium Subscription, and shall be recognized over a period of time according to an **** based on historical projections. In the event that any gift card or code carrying a number of subscription months has **** shall be deemed to be **** in respect of the applicable Subscription Service, and up to 31 December 2017 shall be at the relevant expiry date, and thereafter shall be recognized over a period of time according to an **** based on historical projections.

(j) Company's Unilateral Establishment of Retail Prices. Company shall unilaterally establish its own retail price to Subscribers with respect to the Services. Label shall not have any authority to instruct Company as to what such prices must be, or interfere with their independent establishment of such retail prices. Company is free to advertise, promote and offer for sale products and access to the Services at any retail price it chooses.

(k) Comp Accounts.

(1) Company may offer complimentary accounts for the Premium Subscription to Company's full-time employees, for which Company shall not be required to pay Wholesale Fees otherwise due hereunder ("Comp Accounts"), provided always that each Other Party has agreed to waive wholesale fees for such Comp Accounts and that Company reports the number of Comp Accounts as part of each Financial Statement.

(2) Company shall, at Label's request, **** subscriptions to the Subscription Service at a **** to the retail price that would otherwise be payable by Subscribers in the applicable country ("Discounted Accounts").


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

53


Label shall discount the Wholesale Fees that would otherwise be payable pursuant to paragraph 10 solely in respect of such accounts by ****. Company is not obliged to provide Label with more than **** at any one time and Label will only offer **** and will terminate an End User's access to a Discounted Account within 30 days of their **** by Label.

(l) Approved Offerings Pursuant to the Framework Amendment and Bundle Deals. Solely insofar as the Framework Amendment and each Bundle Deal pertains to (i) the remaining duration of any Offer Periods for Stand-Alone Offerings pursuant to any Partner Schedules entered into pursuant to the Framework Amendment prior to the Effective Date, or Bundle Deals, that remain in effect as of the Effective Date, and (ii) any and all Partner Schedules entered into during the Term of this Agreement after the Effective Date for Stand-Alone Offerings, and notwithstanding anything to the contrary in any Bundle Deals or Partner Schedules entered into pursuant to the Framework Amendment prior to the Effective Date, the Framework Amendment and each Bundle Deal is hereby modified to provide that from and after the Effective Date, the **** to be **** shall be determined and calculated pursuant to **** for the Subscription Service (subject to the adjustment set forth in paragraph 10(b)(2) above for **** and the ****), in lieu of the royalty calculation methodology set forth in Paragraph (C) of the "LABEL FEES" section of the Framework Amendment or the relevant part of the applicable Bundle Deal.

(m) Good Faith Discussions Regarding Unlaunched Countries. Company will not launch the Services in Unlaunched Countries for which no rates are included in Exhibit H attached hereto. For the Unlaunched Countries, Company will not launch the Services without giving Label at least **** notice in advance and Label and Company agree to discuss in good faith rates in connection with such Unlaunched Countries; provided, however, that Company shall not be obligated or permitted to make available Authorized Recordings in any Unlaunched Country where Label and Company have not agreed to applicable rates. As used in this sub-paragraph, "Unlaunched Country" means any country in which the Service has not launched as at the Effective Date.

11. Security:

(a) At all times during the Term, the Authorized Materials shall be (i) stored, hosted and secured on Company Servers, Distribution Servers; and Approved Devices of other End Users via Company's proprietary ****, and delivered directly to End Users from Distribution Servers, in all cases solely in accordance with the Technical and Security Specifications. Company represents and warrants that, at all times during the Term, Company Servers containing Authorized Materials that are controlled by Company shall be located solely at such locations as the Company has notified Label in writing with reasonable particularity as to its exact physical location (e.g. by providing the name of the facility, the street address of such facility and the main phone number for such facility). Company shall give Label thirty (30) days' prior notice before changing the location of any Company Server containing Authorized Materials that is controlled by Company. For the avoidance of doubt, it shall not be considered a material breach of this Agreement by Company in the event that it fails to notify Label in accordance with the previous sentence, as of the date hereof, the Company Servers are located at the facilities and locations disclosed in Exhibit F attached hereto.

(b) If Company becomes aware of any unauthorized access to or unauthorized reproduction of Authorized Materials in contravention of the terms, conditions or limitations prescribed in this Agreement as a result of a breach of security with respect to Company Servers, Distribution Servers or any other aspect of Company's server-side distribution platform, including network components used in connection with Company Servers or Distribution Servers (e.g., a server hack), or if Company becomes aware that any of the security features contained in the Technical and Security Specifications, solely insofar as they relate to server-side security, are capable of circumvention (a "Server Security Breach"), Company shall (i) immediately notify Label (in the event that Label was not the person or entity that made Company so aware), (ii) reasonably cooperate with Label, ****, to promptly cure the Server Security Breach concerned to Label's reasonable satisfaction and (iii) give Label such assurances and furnish to Label such plans as are reasonably satisfactory to Label detailing, with reasonable particularity, the steps that have been taken and the steps that Company proposes to take to


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

54


eliminate the Server Security Breach concerned. Without limiting Label's rights and remedies hereunder or otherwise, in the event that Company is unwilling or unable to cure such Server Security Breach to Label's reasonable satisfaction as soon as possible (taking into account all relevant circumstances including the severity of the Server Security Breach) after, but in any event within **** of, becoming aware of such Server Security Breach, Label shall have the right, in its sole discretion, as of the end of such **** period, exercisable by notice to Company (which notice, notwithstanding anything to the contrary herein, may be delivered via facsimile, electronic mail or any other effective method of written communication) to **** until such Server Security Breach is cured to Label's reasonable satisfaction. During the ****, and (y) all Authorized Materials otherwise made available via the Service shall **** (such Authorized Materials are sometimes referred to herein as "****"), as Label shall direct. Without limiting the generality of the foregoing, Label shall be permitted to **** of the Term under the foregoing provisions of this subparagraph lasts more than **** (or **** in any period of ****).

(c) Company shall employ a technology solution (including a secure streaming format in accordance with Paragraph 11(d)) that administers and effectively enforces the security of Streams, Cached Streams and Cached Downloads embodying Authorized Materials delivered via the Service. Without limiting any other provision of this Agreement in respect of Company's administration and enforcement of such security, in the event that such technology solution (including the approved secure streaming format) fails to effectively enforce the intended security for any particular items of Authorized Materials hereunder (a "Stream Security Breach"), Company shall (i) immediately notify Label (in the event that Label was not the person or entity that made Company so aware), (ii) reasonably cooperate with Label, ****, to promptly cure the Stream Security Breach concerned on a prospective basis to Label's reasonable satisfaction and (iii) give Label such assurances and furnish to Label such plans as are reasonably satisfactory to Label detailing, with reasonable particularity, the steps that have been taken and the steps that Company proposes to take to eliminate the Stream Security Breach concerned on a prospective basis. Without limiting Label's rights and remedies hereunder or otherwise, in the event that Company is unwilling or unable to cure such Stream Security Breach on a prospective basis to Label's reasonable satisfaction within **** from the date Company becomes aware of such Stream Security Breach, Label shall have the right, in its sole discretion, as of the end of **** period, exercisable by notice to Company (which notice, notwithstanding anything to the contrary herein, may be delivered via facsimile, electronic mail or any other effective method of written communication) to **** until such Stream Security Breach is cured to Label's reasonable satisfaction. During the ****, and (y) all Authorized Materials **** made available via the Service shall **** (such Authorized Materials are sometimes referred to herein as ****), as Label shall direct. Without limiting the generality of the foregoing, Label shall be permitted to **** under the foregoing provisions of this subparagraph lasts more than **** (or **** in any period of ****).

(d) Company warrants that the security features of the Services are designed to prevent the capture or extraction of Authorized Recordings (i) directly from Distribution Servers, and/or (ii) during Streaming or downloading of a Cached Download or Cached Stream (including through use of browser extensions and development tools), including but not necessarily limited to encrypting the content of Streams, Cached Streams and Cached Downloads between Distribution Servers and Approved Interfaces. Company and its Service Providers (if applicable) shall also use reasonable technical efforts to defeat any real-time capture attempts exploiting audio drivers of devices. For the avoidance of doubt, in connection with Streams, buffering may occur in the form of segments having a maximum individual duration of ****, provided always that such segments are ****. Company shall ensure that (x) all requests for Streams, Cached Streams and Cached Downloads are effectively authenticated so as to apply effective restrictions on access, including but not necessarily limited to authentication of session ID, user ****; and (y) each unique URL utilized to deliver a Stream, Cached Stream or Cached Download is obfuscated and expires immediately following the period of time required to complete delivery of the same to the device in connection with which it was generated.

(e) For the avoidance of doubt, Label acknowledges that Company shall only be responsible under the above provisions in respect of any method of capturing Streams, Cached Streams or Cached Downloads of Authorized Materials which specifically exploits any aspect of Company's streaming protocol or other software/technology under Company's control, and Company shall not be liable in connection with any generic stream-ripping tool that captures audio content at an operating system, hardware or driver level. However,


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

55


Company shall implement industry-standard technical solutions, to be approved by Company in writing, to secure Streams, Cached Streams and Cached Downloads in order to prevent unauthorized capture/extraction of Authorized Materials onto any device. The technical solutions set out in the Technical and Security Specifications are hereby approved for such purposes.

12. Delivery/Encoding:

(a) Label and Orchard will deliver encoded Content Files containing Authorized Materials in accordance with the mutually agreed Content Preparation and Delivery Specifications. Without limiting the foregoing, Label and Orchard agree to use commercially reasonable efforts to deliver Content Files, including without limitation the relevant metadata containing the Ad Supported Release Date (if any) and General Release Date, at least five (5) business days prior to the applicable General Release Date, provided that it is acknowledged that on an infrequent basis it may be necessary to deliver Content Files closer to the General Release Date, in which cases the Parties will work in good faith to ensure the applicable content is made available on the applicable Services from the General Release Date. Company shall be permitted to transcode Content Files into Approved Formats from any high quality delivery format. For the avoidance of doubt, Content Files containing each of the foregoing elements of Authorized Materials shall be delivered to Company on or before the date that the content concerned is delivered to or on behalf of any Similar Authorized Services.

(b) Where Label or Orchard deliver HD Quality content to a Similar Authorized Service, Label and Orchard shall provide Company with the equivalent audio and/or video content to be distributed by Company in a lower than HD Quality and in the Approved Format. For the sake of clarity, the Parties acknowledge that no rights are granted to Company pursuant to the forgoing sentence to make Authorized Materials available in a quality that is higher than that currently offered to End Users (including Subscribers) of the Services as permitted under this Agreement pursuant to the foregoing provisions of this definition and the Technical and Security Specifications.

(c) With respect to each Authorized Recording delivered under this Agreement (and each Authorized Recording delivered by Label and/or Orchard to Company under the Prior Agreement, as applicable), Label and Orchard, solely to the extent such information is available to Label and Orchard, as applicable, shall deliver **** relating to any and all **** therein, including the following: (a) **** of each **** (including all **** and ****); (b) one or more **** that the **** should be mapped to; (c) ****; and (d) ****. Following execution of this Agreement, the Parties' relevant personnel will discuss in good faith appropriate processes for **** concerning authorized recordings delivered by Label and/or Orchard under the Prior Agreement and under this Agreement. Company agrees that any such **** provided by Label and/or Orchard may not be ****. Notwithstanding the previous sentence, as soon as commercially reasonable to access **** relating to **** Authorized Recordings ****, Company shall **** and not from Label and/or Orchard.

13. ****:

(a) Company represents, warrants and covenants that, as of the Effective Date, to the extent it **** to the ****, containing or resulting **** of any **** having effect during, and to the extent of, **** with the **** which are **** than the **** in this Agreement, and/or in the event Company **** to **** the **** of any such ****, being referred to hereunder as a ****, it shall **** and **** to **** the **** of the **** in such **** in lieu of the **** contained **** subject to Paragraphs **** and **** below, respectively. For the avoidance of doubt, **** will also be deemed to result from **** in **** or other **** to such **** that are **** from this ****, subject to Paragraphs **** and **** below, respectively.

(b) Company represents, warrants and covenants that, **** the **** if Company **** during the Term, then Company **** to **** of such **** and **** the **** of the applicable **** contained in or implicated by such **** to the extent it relates to **** of the **** in lieu of the **** in this **** subject to Paragraphs **** and **** below.

(c) As used herein, **** provided that each shall be **** with respect to all **** without **** any **** or **** which may be ****:


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

56


  (i) The **** of, **** within and/or timing **** in connection with the **** in connection with the ****;

  (ii) The **** to **** (including but not limited to **** of ****), and to **** so that it is routinely accessible solely via **** of the **** for any **** than ****, and the **** of any **** by an ****;

  (iii) The **** of a ****, with reference to both **** (including but not restricted to **** of **** which do not originate from Company);

  (iv) The **** (or equivalent concept) with respect to the intended scope of **** to be **** with ****;

  (v) **** from **** and/or **** including but not limited to the **** allowed in respect of ****;

  (vi) The extent of any **** in connection with ****;

  (viii) **** rules pertaining to **** as accessible on the ****, including as part of ****;

  (ix) Any and all types of **** provided to **** in connection solely with the **** of that **** on any of the ****;

  (x) Any and all types of **** or **** to an **** with respect to the ****, the activity of **** on the **** and any activity in relation to that **** on the **** on the Services or any other **** in respect of maintenance and availability of such ****;

  (xi) Any and all types of ****whether or not **** or other **** types of **** corresponding to **** of the **** provided to an ****, and the ability of such **** to use such types **** the relevant **** of the Services;

  (xii) **** from **** in respect of ****.

(d) Label shall have the option to **** of the applicable **** contained in such **** in lieu of the **** terms contained in this Agreement, as Label may elect in each instance; provided, however, that (i) Label may accept or reject each of the **** described in the clauses of Paragraph 13(c) above separately; and (ii) each **** accepted by Label **** and as a **** of such **** that may be less favorable to Label than the corresponding elements or components of the corresponding individual **** contained in this Agreement, **** any individual elements or components thereof.

(e) To the extent that **** accept any **** in any instance, the parties shall **** the Agreement so that such **** (subject to the foregoing requirements and adjustments) **** became effective pursuant to the relevant ****, but in no event earlier than the Effective Date. Notwithstanding the foregoing or anything elsewhere in this Agreement: (i) Label shall only get the benefit of such ****, and (ii) the foregoing provisions of this Paragraph 13 shall be Label's sole and exclusive remedy in connection with any breach of the representations, warranties and covenants made in the first sentences of Paragraphs 13(a) and (b) above, respectively

(f) ****. As used in this paragraph 13(f) the following definitions shall apply:

"Anniversary" shall mean each anniversary of the Effective Date.

"Content Revenue Pool" shall mean, in connection with licensed rights equivalent to those under this Agreement, the aggregate amount of all label content royalties **** payable or credited to Label, Orchard and all **** in connection with the Services for the prior ****.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

57


"****" shall mean the product of {the ****, as determined on a country by country and monthly basis, in respect of each (without overlap) of **** at a **** offered as a **** with the service of a **** or other ****, in such country, and **** the combined **** multiplied by a **** of which will be the total number of **** of **** during the applicable month on the applicable **** in the applicable **** of which will be the aggregate of total number of all **** on the applicable **** during such month in the applicable country. Any portion of the **** which is not clearly associated with any particular **** shall be allocated using a fair and reasonable methodology.

"****" shall mean **** following the Effective Date, (ii) each subsequent **** during the Term since the **** in the case of an early termination of the Term, the period since the previous ****.

If the Wholesale Fees payable **** in respect of the **** and in respect of the **** are less than **** in the applicable country for the same month ****, the difference shall be known as a **** and if **** in the applicable **** in respect of the applicable **** and in respect of the applicable **** are more than the **** for the same **** on such **** the difference shall be known as a "****". Company shall **** and **** to Label the aggregate of all **** in respect of all **** of the **** the aggregate of all **** in respect of all **** in all **** of the **** (the "****"), within **** of each ****. The determination and calculation of whether there is a **** for any **** as the case may be, is sometimes referred to herein as a "****."

(g) Label shall have the right (i) not more than **** during the Term, upon not less than **** notice, to reasonably request that **** determine whether **** with any **** and/or whether **** is in compliance with its obligations under paragraphs **** and **** in respect of each of ****, to the extent applicable, **** upon not less than **** notice, to reasonably request that **** determines whether the relevant **** has been ****. For the avoidance of doubt, any such **** in such an **** shall constitute Confidential Information for all purposes under this Agreement.

(h) **** shall produce **** setting out **** as to whether **** but without disclosing detailed information about the **** of the **** and/or (y) whether each previous **** has been **** as applicable.

(i) At the request of the **** both Company and Label shall provide all **** and any reasonable assistance and cooperation necessary (including, without limitation, ****) to allow the **** determine whether **** into a **** and/or whether any previous **** has been performed **** shall be required to give **** undertakings **** under which the **** shall be required to keep **** including details of the **** and the **** of the relevant ****to the extent not already known by ****. In particular, the **** shall not: **** any confidential information (including Confidential Information) provided by **** any confidential information (including Confidential Information) provided by ****.

(j) If the **** reasonably **** that **** has **** then upon the **** to the date on which the **** to the extent necessary and for **** that there is no ****. Provided that the **** to any part of **** lead to an **** in total **** incurred **** in respect of ****.

(k) If the **** reasonably **** that **** has not **** previous **** correctly, then to the extent that a **** Company shall **** for such **** within **** of the ****. In the event that Company **** about a **** shall escalate the issue to their respective senior management in accordance with Paragraph 5(a), which shall engage in good faith in order to resolve the situation.

(l) In the event that Company agrees to any provision in any third-party agreement that would have the effect of permitting such third party (each, a "Third Party") to compare any of the terms of this Agreement with any terms in such third-party agreement, Company agrees that, in connection with such a comparison, Company (i) will only permit such Third Party to review the terms of this Agreement by means of an independent third-party auditor that agrees to maintain the confidentiality of all terms of this Agreement in a manner consistent with the confidentiality provisions of this Agreement, and (ii) will not disclose to such Third Party or to such third-party auditor the identity of Label as a party to this Agreement.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

58


14. Marketing and Promotional Support:

(a) During the Term, Company shall make available to Label marketing and promotional support, as outlined in Exhibit K hereto.

15. Additional reporting and data sharing:


  (a) Analytics API:

  (1) Throughout the Term, Company shall provide both Label and Orchard with access to reporting analytics APIs meeting the specification referenced in Part III of Exhibit B (as updated from time to time by the Parties), but for the avoidance of doubt including the minimum fields also set out in Part III of Exhibit B (the "Analytics APIs"), such that Label and Orchard will be able to use the same to generate report files including data for each day for any particular country in the Territory. Specifically, Company shall use its commercially reasonable efforts to ensure that, **** during the Term, Label is able to make a call to the Analytics APIs to obtain a file containing full data concerning access to Authorized Recordings via the Services during (i) the immediately preceding full calendar day in any country in the Territory; and/or (ii) any of the ****.

  (2) Company shall continue to provide Label throughout the Term with up to date technical instructions on ****, correct as at the time such query runs, on the specific parts of the **** (i) in which each of the Services is live; and (ii) for which full data is available concerning access to Authorized Recordings via the Services.

  (3) Company's reporting personnel shall keep Label's reporting personnel **** concerning (i) known issues with reliability of the Analytics APIs and the quality/comprehensiveness of the data available therefrom, including ****; (ii) ****; and (iii) expected new **** for which data will become available on particular dates

  (4) Company shall use its commercially reasonable efforts to ensure that such access to the **** will be provided with **** as measured over each separate calendar month but excluding scheduled downtime which has been notified to Label at least **** hours beforehand.

  (5) The provision of the data sets referenced in Part III of Exhibit B is subject to the following:

  (i) Company's obligation to provide postcode/ZIP code information is limited to the following and Company's obligation to provide such information is limited to the extent that Company has such information (from information supplied by the End User on registration or from the user's billing address and verified by geo IP information reviewed on a semi-annual basis):

    the first 3 digits in the United States of America;

    the first 2 digits in the countries in which the Service has been launched as at the Effective Date;

  (ii) On a **** (unless it is technically not possible using commercially reasonable efforts to match the **** to an **** Company shall provide either **** (county) or ****. The foregoing shall be subject to applicable data protection laws;

  (iii) Company's obligation to provide the zip code data is subject to Label undertaking not to use the hashed User IDs or any other data provided in the daily feed to attempt to identify an End User;

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

59


  (iv) If the **** in respect of the **** in any month then, on request of Label, Company will implement a solution in good faith within a reasonable period of time to bring the **** which may include providing additional categories of ****; an

  (v) Company shall have a right to temporarily **** by daily feeds to the extent and for such period that such sharing of data as set out is challenged or prohibited by a regulator or court.

  (b) ****:

  (1) Company shall provide access for Label and Orchard to an **** during the Term ****, including **** concerning the use of Authorized Materials on the Services.

  (c) Additional Reports/Metrics:

  (1) Company shall additionally provide to Label, on a **** basis, the reports and/or categories of information set out in part (IV) of Exhibit B. With respect to providing information regarding **** that embody sound recordings owned or controlled by Label or Orchard, Label acknowledges that the accuracy of such information is constrained by the ****and may not be accurate. In addition, the provision of the information set out in Exhibit B is always subject to Company's compliance with applicable privacy laws and Company's confidentiality obligations, and Label acknowledges therefore that certain information may be provided on an anonymized, aggregate basis.

  (2) On an ad-hoc basis at Label's request, Company shall provide a snapshot report with **** by **** and ****. Label acknowledges that any such report will be indicative only, is subject to change and may not be relied upon for financial purposes.

  (3) To the extent not covered by any of the reports set out in part (IV) of Exhibit B, Company shall also provide to Label regular non-financial metrics on **** (including but not limited to ****).

  (4) Each month, Company shall provide to Label (i) details of the **** (defined as ****) by country in the previous calendar month, with **** streamed; and (ii) on an ad hoc basis, **** data about consumption of tracks **** (including, by way of example, the data in report named ****).

  (5) Additional monthly reporting:

Company shall also provide to Label a monthly report containing the following data:


  (i) aggregate amount of **** and the aggregate amount of ****;

  (ii) Subscribers **** in accordance with Exhibit K;

  (iii) the number of registered **** and the number of **** on each **** in each country in the applicable month;

  (iv) upon request from Label, data, information and analysis with respect to each **** by Company in collaboration with Label with respect to Authorized Recordings including without limitation ****;

  (v) details of **** on a country by country and monthly basis;

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

60


  (vi) a report detailing **** for all **** offered by Company in the preceding ****;

  (vii) a report detailing **** of total streams or plays on the **** playlists and all ****; and

  (viii) a report detailing **** in the following "****" (i.e., ****):

   ****
1    ****
2    ****
3    ****
4    ****
5    ****
6    ****
7    ****
8    ****
9    ****
10    ****

  (ix) a report detailing the top **** in each country for the prior month; and

  (x) **** in mutually agreed format **** based on **** and the following consumption buckets:

    

End User type

  

Consumption bucket

1

   Ad Supported Service    **** ranked by ****

2

   Ad Supported Service    **** ranked by ****

3

   Ad Supported Service    **** ranked by ****

4

   Ad Supported Service    **** ranked by ****

5

   Ad Supported Service    **** ranked by ****

6

   Ad Supported Service    All other users

    

End User type

  

Consumption bucket

1

   Subscription Services    **** ranked by ****

2

   Subscription Services    **** ranked by ****

3

   Subscription Services    **** ranked by ****

4

   Subscription Services    **** ranked by ****

5

   Subscription Services    **** ranked by ****

6

   Subscription Services    All other users

  (6) Additional daily reporting:

  (i) Company shall provide daily reports to Label on a country by country basis that include on a **** in respect of Authorized Recordings, **** (on a country by country basis).

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

61


  (d) End User Opt-In:

  (1) To the extent compliant with local law and regulation, Company shall use commercially reasonable efforts to secure a data protection opt-in from end users, wherever appropriate within the Services but at a minimum during the user registration process, which opt-in shall be crafted by Company so as to constitute informed consent by those end users for Company to share their contact details paired with Service usage data ("Opt-In Data") with Label with a view to such end users receiving direct communications from Label.

  (2) Company shall regularly during the Term make available Opt-In Data to Label via an agreed method.

  (3) Company acknowledges and agrees that Opt-In Data shall be ****, and that Label shall be entitled to **** (acting always within the scope of the data usage consent provided by the relevant end users, the confines of this Agreement and applicable local laws and regulations), ****. Notwithstanding the foregoing, Label agrees to include an "unsubscribe" option with every email, SMS or other electronic communication sent to end users. Without limiting any other applicable provision of this Agreement, Label shall not use Company's name in connection with the exploitation of Opt-In Data in any manner that would imply an endorsement by company of such exploitation.

16. Operational improvements

(a) Company will use commercially reasonable efforts to develop, test, and implement support that will increase the **** and/or, more generally, to reduce the time for content and other changes to appear in the Services. The ability of Label to benefit from these changes will depend on Label's compliance with Company's delivery standards, as set forth herein.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

62


EXHIBIT B

PART I

****

****


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

63


PART II

Financial Statement format and minimum required fields

Country

Vendor Key

Vendor Name

Reporting Period

Reporting Currency

****

****

Total number ****

****

**** any additional ****

**** across all ****by all ****

****by all ****

****

**** for this product

****

****

****

****

****

Payment owed to Label ****

Payment owed to Label (EUR)

Exchange rate Payment owed to Label (USD)

Exchange rate

PART III

Analytics API specification and minimum required fields, with respect to all Royalty Bearing Plays of Authorized Recordings. Label acknowledges that Company will require a reasonable amount of time to begin to implement the reports set forth below.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

64


The following fields are given in the streams data:


Field

  

Description

  

Example

****    **** containing all additional fields in the data. See the next table for more details on the data field.   

The following data shall be provided in the data field:


Field

  

Description

  

Example

message    Message header to identify the message.    APIStreamData
Version    What version of the API this line corresponds to.    2
****    **** for the **** is kept constant over time but is ****.    6260e7e72958ac3faeae3f 84e9ab6b23
****    ****    b80b001793e9416888593 67a6b2c6876
****    Boolean indicator to show if **** from a ****. Shall report ‘Y' if ****; else ‘N'    Y

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

65


****    Indicator to show if **** was an **** of the ****    2
Country    The country stream originates from, given as a two-letter ISO country code.    US
****   

**** when the ****, given in ****.

For sake of clarity, the **** will no longer be rounded to the nearest ****, but instead to the nearest ****.

   20140109T12:15:00
Length    Length of stream rounded to the nearest ****.    198
****    Boolean indicator to show if ****. Shall report ‘Y' if ****; else ‘N'    Y
Cached    Boolean indicator to show if the play occurred offline and was later logged Shall report ‘Y' if cached; else ‘N'    Y

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

66


****   

Used to determine specifically **** within the ****. Current values include:

****

   ****
****    The URI of the ****, if it was a ****, and the ****. The URI of the ****    ****
device_type    Data indicating type of hardware device that stream was made from when available for a device type where possible, including but not limited to: desktop, tablet, mobile, TV, auto, playstation and home (speakers).    Tablet

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

67


OS    Field indicating which OS the stream was made from    Android / iOS / Windows / Mac OSX / etc.

Track Reporting

Track data shall be provided to Label for all Authorized Recordings that were streamed for each UTC day. Each of the following data fields shall be provided:


Field

  

Description

  

Example

message    Message header to identify the message.    APITrackData
Version    What version of the API this line corresponds to.    2
track_id    The Spotify ID of the track streamed.    b80b001793e941688859367a6b2c6876
Uri    The Spotify URI code (alternative track ID used in client)    spotify:track:1sEbWY6zZpmNouj0kPN4XS
Isrc    ISRC of the recording or ‘?' if no ISRC was provided in the metadata for the track.    GBAJE6600005
album_code    UPC (or EAN if no UPC is given) of the album containing this track or ‘?' if no UPC or EAN was provided in the metadata for the album.    05050749202420
album_artist    Artist name given for the album containing this track.    The Kinks

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

68


track_name    Name of the track.    Sunny Afternoon
album_name    Name of the album containing this track.    The Singles Collection

User Reporting


Field

  

Description

  

Example

message    Message header to identify the message.    APIUserData
Version    What version of the API this line corresponds to.    2
****    **** for the **** is kept constant over time but is ****.   

6260e7e72958ac

3faeae3f84e9ab6 b23

****    **** information of the ****, or an **** as set forth in the Agreement.    ****

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

69


****    ****    ****
Country    The country the user is registered in. Given as a 2 letter ISO country code.    SE
****    ****    ****
****    ****    ****
Partner    The name of the partner through which the user has a premium account    telia-se
Type    The type of product the user has including, but not limited to: trial, partner, standard, student, family, comp-account, family master, family member, intro offer, winback offer    Trial

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

70


PART IV

Additional Reports/Metrics

During the Term, Company shall provide to Label each of the reports set out in this part of Exhibit B at the frequencies indicated and containing the minimum fields/summaries contained in the sample reports incorporated by reference.


Report

  

Description

  

Frequency

  

Sample report(s) incorporated by

reference

****    Summaries of ****    Weekly   

****

****

****    ****    Weekly    ****
Monthly usage metrics report    End of month usage metrics by territory    Monthly    Monthly usage metrics_2013-5-31.xlsx
Additional metrics report   

Metrics covering A7/A30 users, registered users and stream volumes by territory, product/trial offering, telco/ISP offerings etc.


**** allow break-out of both ****, plus information on number of ****

   Monthly    2013_04 Spotify Additional Metrics Report.xlsx
****    Data/charts relating to ****    Monthly    ****
****    Analysis of ****    Monthly    ****
****   

Breakdown of number of **** country and service tier and by:


• ****

• ****

• ****

   Monthly   
Mapping table    Mapping table showing mapping of the entire universe of Spotify service tier IDs to Label's vendor keys    Monthly   

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

71


EXHIBIT C

Content Usage Rules


1. PREMIUM SUBSCRIPTION

  (a) Each Subscriber with a Premium Subscription shall be entitled to store and play back Cached Downloads in an online and offline environment on up to **** Approved Devices registered to his/her User Profile at any given time.

  (b) Such Subscribers shall be permitted to commission and de-commission different Approved Devices registered to their User Profile for use with Cached Downloads during the duration of their Premium Subscription, provided always that the aforementioned device limits per User Profile are enforced by Company via technical or other means.

2. FAMILY PREMIUM SUBSCRIPTION

  (a) The Master Subscriber and each Family Member added to the corresponding Family Premium Subscription shall be subject to the terms applicable to the Premium Subscription set out in clause 1 above.

  (b) No Subscriber shall be entitled to access Authorized Materials as a Family Member of more than **** Family Premium Subscription in any given **** period.

  (c) Each Master Subscriber and Family Member shall be permitted to commission and de-commission different Approved Devices registered to each User Profile for use with Cached Downloads during the duration of the Family Premium Subscription, provided always that the aforementioned device limits per User Profile are enforced by Company via technical or other means.

3. OFFLINE GRACE PERIODS

  (a) During each Subscriber's Premium Subscription, Free Trial, Growth Offer, student subscription or access to the Family Premium Subscription as a Master Subscriber or Family Member, Cached Downloads on any associated Approved Device shall remain playable **** for a maximum period of **** after the end of the then currently paid up subscription period (such **** period, an "****"), and thereafter shall only become playable again after the relevant Approved Device ****.

  (b) At the end of the term of each Subscriber's Premium Subscription, Free Trial, Growth Offer, student subscription or period of access to the Family Premium Subscription as a Master Subscriber or Family Member, Cached Downloads on any associated Approved Device shall remain playable ****, following which time they may only become playable again after such Subscriber renews his Premium Subscription or recommences access to the Family Premium Subscription as a Master Subscriber or Family Member, as verified by the Approved Device connecting ****.

4. AD-SUPPORTED SERVICE AND ONLINE SUBSCRIPTION

  (a) End Users of the Ad Supported Service and Online Subscription shall NOT be entitled to store and play back Cached Downloads on any device. ****. End Users of the **** shall be entitled to **** subject to and in accordance with paragraph 4(b) below and the terms and conditions set out in Exhibit J.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

72


  (b) ****

Users of the Mobile Shuffle Service may activate (and de-activate) **** as part of an Approved Interface on Mobile Devices from time to time, and during any time when such mode is activated:


  (i) The Approved Interface will be capable of playing back **** that were **** on the Mobile Device when not in ****, provided that:

  a. Company will verify that Mobile Devices remain online and connected to Distribution Servers in accordance with the Technical and Security Specifications upon commencement of the first Stream of a recording in any given session and then **** provided that if the first such **** fails, the End User will continue to have access to the Mobile Shuffle Service until the conclusion of the following **** (unless such **** is successful, in which case the End User will continue to have access to the Mobile Shuffle Service until such time as the **** set forth in this subparagraph fails);

  b. End Users have **** is engaged, or what content, including Content in **** when not in ****, such content being algorithmically pre-cached while the End User is connected to Distribution Servers when not in ****.

  c. **** content may include, by way of example, an End User's ****, and/or ****, and provided always that playback and interactivity of Cached Streams shall always comply with the terms and conditions set out in Exhibit J.

  (ii) All content that was not **** prior to entering the **** will be prevented from being Streamed and/or transferred to the device as a ****.

5. CONCURRENT STREAMS

  (a) Subject always to sub-clause 1(a) above in relation to playback of Cached Downloads in an offline environment, no more than **** per User Profile (whether in the context of the Ad-Supported Service or a Subscription Service) shall be capable of **** (including Cached Streams and other locally cached content not designated for offline playback) but excluding any Local Files, via the relevant Service at any single point in time.

  (b) Notwithstanding sub-clause 3(a) above, (i) Subscribers with a valid subsisting Premium Subscription or Family Premium Subscription (or Family Members thereof) shall be entitled to play back **** Streams via **** Static Devices (e.g. ****), provided always that all ****, and (ii) **** applications utilizing a Company API/SDK shall be entitled to ****.

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

73


EXHIBIT D

TECHNICAL AND SECURITY SPECIFICATIONS

See attached


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

74


CONFIDENTIAL

TECHNICAL WHITE PAPER


Spotify technical white paper

****

2017-05-18


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

1


CONFIDENTIAL

TECHNICAL WHITE PAPER


Contents


1

  

Introduction

     4  

2

  

Overview of user experience

     4  
   2.1   

Local files

     4  

3

  

Functional components

     5  
   3.1   

Identification of components

     5  
   3.2   

Description of components

     6  
   3.3   

Cloud computing

     8  
   3.4   

Third-party client applications

     8  
   3.5   

Other third-party integration

     9  

4

  

General system security

     9  
   4.1   

System location

     9  
   4.2   

Protection against unauthorized local access

     10  
   4.3   

Protection against unauthorized network access

     10  
   4.4   

Security breach plan

     12  

5

  

User accounts

     12  
   5.1   

Usage limitations

     12  
   5.2   

Account creation limitations

     12  
   5.3   

Limited user accounts

     13  

6

  

IT and development policies

     13  
   6.1   

Operating system and software policies

     13  
   6.2   

System logs

     13  
   6.3   

Employee accounts

     14  
   6.4   

Backup

     14  
   6.5   

Software change management

     15  

7

  

Content ingestion, storage and packaging

     15  
   7.1   

Format and codec

     15  
   7.2   

Content ingestion

     16  
   7.3   

Protection of raw media and metadata

     17  
   7.4   

Content protection

     17  
   7.5   

QA and testing

     22  
   7.6   

User authentication

     22  
   7.7   

Territorial filtering

     22  
   7.8   

Client authentication

     23  
   7.9   

URL generation and protection

     24  
   7.10   

Stream initiation

     24  
   7.11   

Stream protocol

     24  
   7.12   

Local caching

     25  
   7.13   

Auditing

     25  

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

2


CONFIDENTIAL

TECHNICAL WHITE PAPER


8

  

Partner integrations

     25  
   8.1   

Sonos

     25  
   8.2   

Spotify connect

     25  

**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

3


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1 Introduction

Spotify is an Internet-based service for on-demand streaming audio and video. We provide multi-platform client applications, a proprietary streaming protocol and a back-end consisting of streaming servers, storage system, advertising system etc.

2 Overview of user experience

Spotify offers an online on-demand streaming service. Accessing the service, requires users to register an account with Spotify, giving them a login to the system and download and install Spotify's official client application – available for Mac OS X, Windows, iOS and Android (as well as a for Linux but lacking support) –, third-party client applications based on the Spotify SDK – C and JavaScript libraries for accessing the service – or use the Spotify web client. A subset of the service can also be accessed from third party websites using the Spotify JavaScript APIs. Spotify is also able to manage local files and sync them to portable media players not connected to the Internet.

For reporting and play restrictions, we distinguish between the different platforms ****.

When choosing what to play, the user can browse metadata such as biographies, reviews, similar artists, albums and cover art. Content that the user selects to play is streamed to the client and played in real time. If the user wishes to access the same content again, the client has to request it again from the server, although some of the content may have been cached locally.

The client applications on some platforms also support offline playback, where media items are synchronized to the local machine for offline listening. This is crucial for a good mobile experience, since large areas are still not covered with third-generation or better mobile networks providing sufficient (and consistent) bandwidth for continuous high-quality streams. Also, offline playback is useful for example when traveling by airplane or when disconnected for other reasons.

Spotify also both integrates with existing social networks and allow users to follow artists as well as other Spotify users directly within the Spotify services.

2.1 Local files

The application is also able to play any local music the user may already have. Spotify will try to import the individual tracks as well as playlists created in popular media players. ****.


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While not forced on a user, he can choose to have music files open automatically with Spotify.

By ****, Spotify is able to match the local music to the Spotify version of a track with high confidence, allowing playlists of local music to be shared with users who do not have the same files locally. Such users will instead play the corresponding Spotify resources.

3 Functional components

3.1 Identification of components

A list of core system components for media playback can be found in Table 1. Involved third parties are listed in Table 2.

Table 1: List of components


Service name

  

Description

Access point    ****
Web gate    ****
Playlist    Central playlist storage and sharing services
Production storage    Proprietary content storage for streaming use
Content delivery network    HTTP based content storage for streaming use
Storage resolve    ****
Metadata    Listings for artists, albums and media items
Key    ****
Ad system    Handles in-client ads
Reporting    Data mining system that generates reports
Original storage    Storage system that stores content as delivered
Transcoding cluster    Reads original content and encodes it
Master storage    Master copy of processed content
Web site    Public web site

Table 2: Third parties


Company

  

Description

****    Content delivery network
****    Service provider

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Company    Description
****    Hosting provider
****    Content delivery network
****    Service provider
****    Provider of hosting, hardware and Internet services
****    Collocation provider for content delivery
****    Internet service provider
****    Provides IP-address to country mappings
****    Hosting provider
****    Content delivery network
****    Internet service provider

3.2 Description of components

Access point The access points is an application proxy and streaming server. Client connections on the Spotify proprietary protocol ****. They act as an ****, providing the flexibility to ****. They also ****, providing an additional layer of security. All communication with the access point ****. They also act as ****. The access point software is entirely developed in-house.

Web gateway The web gateway provides access to Spotify backend services using standard web technologies. ****.


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Playlist The playlist service stores playlists and handles updates and distribution of collaborative and shared playlists.

Production storage The storage service serves the content, ****. The production storage acts **** from the master storage.

Content delivery network A Content Delivery Network (CDN) is a geograph- ically distributed, ****. CDNs are either **** (see below) or ****.

Storage resolve Storage resolve decides on the best storage **** to use for each stream and ****.

Metadata The metadata service provides artist, album and track listings.

Key The key service is a **** to protect media files. ****.

Ad system The ad system handles the in-client advertisement. It consists of an **** what ads to show a user, an **** campaigns and an application and database ****.

Reporting The reporting systems purpose is to generate reports based on usage data. These reports are used within the company and is also the basis for ****.

Original storage The storage system for content received from content providers. Files here are **** and **** delivered.

Transcoding cluster A large number of computers processing the content ****; data is **** master storage.

Master storage This system stores the prepared content as it will be streamed. **** access data from this system.

Web site The Spotify web site consists of a public site showing product offerings and other information as well as a private section for handling user account information and payments.


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3.3 Cloud computing

Where suitable, Spotify is using cloud computing services to deliver the Spotify service to the end user. This is to enable rapid expansion and reliable operations of our systems. The cloud computing providers consolidate the functions of Internet service providers, hardware resellers and hosting providers and give us a single interface for operating hardware and network. Whenever cloud computing is considered, an evaluation of reliability and security is made.

A specialized form of cloud providers are **** provide Spotify with an efficient and secure distribution mechanism for content. Content access is **** provided by the Spotify backend.

3.4 Third-party client applications

For third-party client applications, Spotify offers software development kits (SDK), both for native and web based clients. For native clients, a C based library is provided and APIs are provided for different programming environments, for example for embedding into hardware devices or mobile clients. For web based clients, a JavaScript library is provided.

The SDKs should be viewed as a client without a user interface. Rather than a user interface, the SDKs exposes an application programming interface (API) to third-party developers who want to build their own applications on top of the Spotify platform.

The intention is to turn Spotify from simply a service to a platform, an ecosystem of developers, applications and services. Additionally this will remove some ****, a threat that faces any closed system.

Through the API, a third-party application can do most things Spotify proper can do, but adding its own touch to the user interface and new features. As a platform, Spotify enables developers to come up with new creative things to do with the service.

The SDKs uses the same **** as the Spotify first-party clients. The speed at which a **** is limited in the library. The speed at which you can request ****.

Commercial implementations using the SDK must have a signed agreement with Spotify. As part of that agreement Spotify provides a **** that allows the Spotify backend to identify the partner and additional details about the device itself (model, etc). This identification is performed during user login over Spotify's proprietary streaming protocol. The partner and device model identification is further used by the analysis and reporting team to generate statistics of device usage. It can also be used to enable extra features available to specific partners. One such feature is the ability for ****. The SDK also allows a developer to ****.


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To handle rogue applications violating the terms of service we have ****: users that we determine use **** as can specific **** handed out by us.

3.5 Other third-party integration

Using the Spotify JavaScript APIs directly or using widgets supplied by Spotify built on top of it, such as the Spotify Playbutton, a subset of the Spotify service can be accessed by third parties, outside of the Spotify clients. This way, third parties can create rich web integrations on top of the Spotify ecosystem including, but not limited to, artist-follow buttons, playlists and personalised recommendations. Playback is provided by the JavaScript APIs or by ****.

Spotify also offers a feature called App Remote which allows third party applica- tions on-device to control the Spotify audio playback without switching from the third party application. Audio playback security is enforced by the Spotify application ****.

4 General system security

4.1 System location

The Spotify system is split into two main parts. ****. Included in **** for generating search indexes and **** databases.

The production system is the set of services required to operate the system that the Spotify client directly depends on. The production system are operated out of a number of different data centers and computing platforms. There are several reasons for this, the two primary being that multiple locations give redundancy to the system and that in order to get the best possible performance, ****. All data centers are **** (see table Third parties). The reason for this is that we require a high level of security and availability. This is most easily achieved by using ****. Monitoring of the system is handled ****. Service functionality and availability is automatically checked


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on regular intervals. If a failure is detected, ****. The **** are also equipped with ****. In the situation where more specialized computing platforms such as cloud computing and cloud storage are used the same high level of security standards are applied. In addition extra focus is given to how software security and content protection is done.

4.2 Protection against unauthorized local access

Access control is **** the data centre. Only authorized personnel are ****. Spotify controls the access list and only staff from the **** to the equipment. All visitors to the data centre are required ****. The data centres are all equipped with ****.

Any disk used in production systems is either ****.

4.3 Protection against unauthorized network access

The network architecture of the production system has been designed with security as the number one priority. The methods used to secure the network include: **** (as described in the figure above), **** to an absolute minimum.

The production system is split into ****. The **** holds servers running publicly accessible services such as web sites, access points and web gates. All servers in this network run ****. The service network holds ****. Access to this network has to be done ****. The Spotify ****; they communicate with the client and relays requests to the service network. That way the backend services ****.

The management network is only used by system administrators ****; it gives access to **** and ****. This network is additionally **** and access requires ****.

Configuration of the network, including **** to increase quality and ****.


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LOGO

Figure 1: Physical structure of the ****.


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4.4 Security breach plan

All systems in the Spotify production system are ****. Process lists are controlled on a regular basis. If malicious user behavior is detected there are mechanisms in place to **** and if necessary ****. If a Spotify client application is **** or is believed to have ****. Content revocation can be done on a file-by-file basis by ****. This will in effect **** and require that it is **** from the central Spotify servers.

In the unlikely event of a security breach in any of the Spotify systems the following checklist is followed:


    ****

    ****

    ****

    ****

    ****

    ****

    ****

    ****

5 User accounts

5.1 Usage limitations

Spotify user accounts are personal and may not be shared by several individuals. We prevent sharing of accounts by ****. There are also limitations on the **** for offline playback for an account at any given time. A user's **** may not be connected to more than one Spotify account at a time and at no time can a Spotify account be connected to more than one ****.

Policies can be set on a ****. We recognize ****.

5.2 Account creation limitations

We require all newly created accounts to have unique email addresses. We will detect attempts at creating multiple free accounts on the same computer by ****


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determined by the running Spotify application. The **** and the definitions sometimes change.

In addition to this, the value stored in playlists (whose ownership can not be transferred between accounts), the Spotify social graph (that can not be transferred between accounts) and the connection to Facebook (where we don't allow a ****) will be an extra deterrent.

5.3 Limited user accounts

To widen the funnel, limited user accounts, in which an account with limited user information is automatically created when the new user starts using the service, is also supported.

Limited user accounts respect the same capping and other restrictions as other accounts and once the complete user information is added, the accounts seamlessly transform into normal Spotify accounts.

For the limited user accounts, the available users information – country, language, acquisition funnel etc. is stored ****.

Features requiring writes in the system; starring tracks, creating playlists, follow other users or artists and personalized recommendations, remain unavailable until the limited user chooses to add the complete account information.

6 IT and development policies

6.1 Operating system and software policies

Spotify's production environment is built on the **** operating system. All software included in **** has passed extensive stability and security testing before being approved for inclusion. The **** community maintains **** included in the operating system. Spotify servers are updated on regular intervals and **** the Spotify infrastructure allows for **** with very short notice. The security team also **** for software used in the production system, in order to ensure that **** in a timely fashion.

6.2 System logs

Logs in the Spotify system can be divided into **** categories; **** and administration and ****


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services, listener behavior, requested content and so on. Logs are stored on the **** that generates them. The logs are also transmitted to ****. From here, **** the reporting system for analysis and report creation. Data pertinent to financial and label reporting is retained ****.

6.3 Employee accounts

Access to the most critical systems **** is only granted to specific employees within the technology department. Protection of the accounts in these systems is handled in two ways. ****. Password databases are ****, so a **** automatically grant access to any other system. When accessing the system remotely **** authentication is used ****. The employee is required to generate a ****. The **** to an **** (see Password policy). The employee is required to protect the **** in a responsible way.

6.3.1 Password policy

****. All accounts are suspended as part of an automated process when the employee is leaving.

6.4 Backup

Data from the production system is backed up continuously. Incremental backups are done of all logs. **** of the databases in the production environment, as well as of critical system files. Backups are copied ****. This way we achieve site redundancy by storing backups off site. All backups are stored on disk systems protected by ****. Monitoring is in place to ensure that all **** completed successfully. Data pertinent to financial and label reporting is retained ****.


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6.5 Software change management

Software changes that are made to the Spotify systems pass through a set of tests before being deployed to the production environment. These tests ensures the stability and functionality of the software. Commonly, only a small part of the servers in the production environment **** to allow for quick rollback in the case of an emergency. If the update requires **** all connected users are migrated to a different server to ensure that no users are negatively affected by the upgrade.

The client application is protected from tampering ****. The desktop and mobile versions of the client application will automatically download, verify and install updates when deployed by Spotify. Access to the **** within the company.

7 Content ingestion, storage and packaging

7.1 Format and codec

7.1.1 Audio

Currently we encode audio streams using Ogg Vorbis or Advanced Audio Coding (AAC) at **** kbit/s bitrates for use by the native clients. Non-premium accounts are limited to a maximum of **** kbit/s.

The web client currently uses AAC or MP3 encoded files at comparable bitrates.

Generally, being able to choose a suitable codec on a case-by-case basis is necessary for us to be able to create the best possible product.

We are using third-party metadata (including from ****), but it is ****. It is transmitted along with **** from the audio stream by our streaming protocol.

7.1.2 Video

Video uses MPEG-4, MPEG-TS or WebM containers with H.264 or V8/V9 codecs at **** kbps-4 Mbps bitrates. Video playback uses **** to the desired quality for the user.


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7.2 Content ingestion

The Spotify content ingestion process is separated into four steps: importing, transforming, merging and transcoding. The first two ****.

7.2.1 Importing

The goal of the importing process is to put all metadata into a **** and to scan through all media and image files to look for file information such as duration, bitrate and image size and corrupt data.

This step includes retrieving metadata, media files and images through the means agreed on with the content provider.

When new and updated data has been received, the actual importing begins. A relational database with a data model as close to the provider's metadata format as possible is filled with new or updated data.

Media and image information (filenames, bitrates, durations, image sizes) is also written to this database.

7.2.2 Transformation

After importing has been carried out, we transform the metadata ****. This common format has been carefully designed to be able to represent the various features of all our content providers.

The transformed data is **** per content provider.

7.2.3 Merging

The objective of the merging step is to pick all artists and albums from all the transformed content provider databases and merge them into one.

If we through heuristics find out that two artists from different content providers are, in fact, the same artist, we may merge these artists into one. This way, the artist view in the Spotify client will contain albums from both sources.

This could for example be the case when an artist has switched labels during his career, or is released on different labels in different countries.

7.2.4 Transcoding

Since different content providers provide their data in different formats, this step assures that all media and image data is available in the formats that the Spotify clients want. Files of different formats are transcoded into the desired ones, with the desired bitrates and image sizes.


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7.2.5 Metadata clean-up

Certain sources provide metadata that needs cleanup. The system can do this somewhat automatically. If an artist or an album is matched to, for example, an **** artist or album, ****.

7.2.6 QA procedure

If a metadata error is detected, either in-house or by a user of the Spotify client, we use our internal administration tools to investigate the error.

If an error in provided metadata is detected, we may correct it manually. If the content provider later updates the erroneous data, the administration system informs us that this has happened and suggests that we let the provided metadata override our manual edit.

7.2.7 Metadata update feeds

Our system is designed specifically to handle updates of media, images and associated metadata. As soon as updated data arrives, it is automatically imported, transformed, merged, transcoded and incorporated into Spotify.

7.3 Protection of raw media and metadata

Access to the raw media data is limited to **** and to servers doing computational work on either metadata or raw media. The storage system requires **** for any access to the media data. Raw media is **** to provide strong reliability.

The storage cluster is protected **** as described above. Further, media data can optionally **** to provide additional protection against ****.

7.4 Content protection

For audio playback in our native clients, we use ****. Every audio file is encrypted ****. Files can be ****, should the need arise. The client requests a ****.


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It will compute the appropriate **** in memory before decrypting to give some protection against ****.

For video playback, and audio playback in web clients, third party, **** systems, such as ****, are used for content protection. Similar to ****.

All network traffic between the Spotify servers and the clients as well as between the clients is ****. The proprietary protocol uses a **** in both cases to ensure ****. The **** to prevent ****. The protocol is proprietary to prevent ****. Web stack communication with the Spotify backend is handled over ****.

The native clients' **** is also ****, where an attacker would ****. Similarly, the client stores ****.

A schematic overview of the encryption used is given in the figure below.


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Figure 2: Overview of encryption used by the native clients


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7.4.1 Protection of network traffic

When the native clients connect to the access point (AP), the client and AP perform an authenticated ****. From this **** are derived, one for ****.

For line encryption, we use the ****. We use an ****. All network traffic is encrypted and **** (which also has ****). For each new protocol message, a new ****. **** are selected in ****. **** limiting the amount of **** exposed under a given ****. Every **** is also ****.

**** derived for network traffic protection are ****, and are never stored. New keys are **** connection.

Web stack communication with the Spotify backend is handled over ****.

7.4.2 Downloading media data

Clients can download media data from either the **** or from ****. The data is encrypted using ****. Legacy web clients uses ****. As all communication with the **** is encrypted, all media data which is streamed directly from the Spotify backend travels within an encrypted tunnel, even if it is already encrypted.

7.4.3 Playback of audio in native clients

To be able to play encrypted audio data, clients request a **** for the audio file from the Spotify backend. **** and, in native clients, is then **** before the client begins decrypting the audio file. This is done to make **** slightly more difficult.

Preview clips are ****.


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7.4.4 Preview clips

To securely provide limited previews and to lower latency on random playback, 30 second snippets of tracks are **** from the full length versions and served either by **** or over the proprietary Spotify protocol. For full-length playback in the web client, the snippets **** time-limited URL (or ****, see Legacy web client audio protection) for the full length tracks thus cutting away a roundtrip and connection setup time from the latency of playback.

**** preview snippets are ****.

7.4.5 Protection of the cache

The client caches data, e.g. the encrypted streams, to disk. For native clients, the entire disk cache is ****. The client never **** (except for ****). Again, **** and the **** begins.

The web client uses standard HTML caching, but will exclude any ****.

7.4.6 Protecting offline content

For offline content, we reuse all existing mechanisms from the online mode, with the addition of a ****. The ****, at which point the client will refuse to play offline content. The ****, and integrity-protected ****.

The entire **** in encrypted form in memory, and **** are decrypted as needed. **** are used to set up a **** before being used, to prevent ****.

Every time **** written to disk, a **** and the ****. By using ****, this **** can be done without ****.

The **** for the **** are derived from **** every time the storage is written. The use of a **** prevents **** from copying an **** between machines. **** are derived using the ****.

7.4.7 Offline reporting

For reporting plays that occurred while offline, the client logs all offline activity and reports back to the server as soon as it comes online. Activity logs are stored encrypted with **** (as to not tempt ****) and integrity protected **** (to ****), and ****.


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7.4.8 Offline-mode limitations

The number of tracks concurrently synchronized for offline listening can be limited. Likewise, the number of machines that are allowed to simultaneously use the offline mode for a given user account can be ****.

7.4.9 Offline-mode hack response

Of course, there is a risk of a **** of our offline data format, which would allow an attacker ****. Naturally, at that point, we cannot ****. However, given the existence of such a hack, we can deploy a **** protection format for offline mode, and which ****.

For clients which auto-update themselves, an attacker would then ****. For all clients, they would not be able to download any new content (or use the Spotify service) until they ****, so the **** would not be able to get access to any more content than what he already **** at the time the hack was discovered.

7.4.10 Legacy web client audio protection

A key property of our content protection approaches is that we **** (except for offlined tracks), allowing us to ****. This is done via ****.

For legacy web clients, to decrypt the encrypted part of the track, the client must **** channel to Spotify's web servers. Recognizing that **** is inherently easier than the native clients, the ****.

We anticipate that the **** may need to change from time to time. The initial approach in development entails ****.


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7.5 QA and testing

We perform volume equalization on all tracks to minimize volume differences between tracks. Normalization is calculated server side and applied in the native clients. We also provide a volume control.

All original (lossless) data is transcoded into formats suitable for the different delivery platforms. At the moment, the target format is Ogg Vorbis, Advanced Audio Coding and MP3. The transcoded material is then moved to physically separate servers when injected into the live system. The original, lossless data remains unchanged in our original storage facility.

The process of importing, transcoding and incorporating new data into the Spotify live system is on the order of **** depending on the amount of data in the batch.

7.6 User authentication

The authentication procedure uses a ****. We will not generally attempt to ****. However, we only allow one client (worldwide) per account to play media at any one time. Starting playback in one client will automatically pause all other clients a user may be running. An exception to this rule has been made for ****. For a group of individuals sharing an account, this will be frustrating enough for the users to register personal accounts.

7.7 Territorial filtering

In order to locate the listener, the Spotify servers use ****. The location is then resolved as an ****.

For each media item, the Spotify servers store a list of countries in which it may be played. Spotify then uses location-based content filtering in all client views, as well as when actually streaming.

Filtering in all these different contexts simply means to make sure that the listener's country is included in the list of allowed countries for all media items returned. All territorial filtering is **** so that when the listener starts playing, it is ensured that the media item is eligible before streaming starts.

A Spotify listener may create links to artists, albums and media items. These links can be sent over instant messaging or email, or be posted on a web site, but the user clicking a link may be in a totally different territory than the user creating the link, and may therefore not be eligible to play what it's pointing to.


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When a user follows an artist link, he sees only the eligible albums. If the user instead follows a link to an album that he is not eligible to play, he is taken to the track listing of the album, but is informed that he is not able to play the album due to territorial restrictions.

Finally, a link to a track is almost the same thing as a link to an album, except that, in the current implementation, the track starts playing immediately when the link is clicked. If the user is not eligible to play the track, however, he is taken to the album's track listing, but informed that he is not able to play the album due to territorial restrictions.

In a similar way, users following links to other views in the clients (e.g. a playlist) will have non-available media items filtered out.

7.7.1 Detecting country of residence

There are several features in place to protect against users trying to access the service by claiming to reside in a country other than they actually do. During the account registration phase Spotify utilizes a **** that detects the users country of residence. This information is then used ****.

In order to further ensure that the country of residence actually is correct a **** via the client. The access point will **** and match it against the information in the ****. If there is a **** be presented with a warning message and **** the users account will be disabled. The account will not be re-enabled until the user either changes his country of residence or returns and logs in from the "correct" country. The reason for the delay in disabling the account is the to accommodate a good user experience in the event of shorter travels abroad.

The result of the method described above is a system that has a good protection against users that try to misrepresent their country of residence during the account registration process, ****.

Another method used to validate country of residence is via ****. Whenever possible and once a user shares **** with Spotify the country of residence is validated through the ****. This is considered as a secure method and it overrides the method described above.

7.8 Client authentication

The authentication between client and backend is always complicated when handing out a program which handles all communication. As of today, there is **** the client program. If tools are commercially available at reasonable market prices, what we can do, though, with streams originating from the backend, is to ****, thus making it very hard and impractical to ****.


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7.9 URL generation and protection

For **** of media files, data is requested on the Spotify proprietary streaming protocol. For **** that is retrieved from the Spotify backend. Only when the request has been granted will the client be given the **** it needs to retrieve that file.

7.10 Stream initiation

The native clients do not employ any ****, in the common sense, for audio playback. Instead, we rely on **** to allow us to have control over the data. All traffic over the network (except for CDN, mentioned previously) is encrypted.

To download media (or specifically, ****) the user needs to open a network connection and authenticate using his username and password. Web based clients uses **** and **** standards. The **** is enforced by **** supplied by web browser vendors, for example ****. Legacy web based clients uses a proprietary, cryptography based system.

Video playback uses a strong, third party DRM module provided by, or available on, the device platform, such as ****. Video file encryption is optional, depending on the requirements from the content provider.

7.11 Stream protocol

The streaming protocol is a proprietary **** protocol with cryptograph- ically sound authentication and encryption. We use a **** for all transfers. All streams employ **** for integrity protection, and all **** and negotiated in a way which ensures ****.

Clients built on web technology use **** for communicating with the Spotify backend and CDNs.


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7.12 Local caching

To allow our service to scale to millions of users and for responsiveness, we cache media files on client disk. The cache employs the same ****, in that the music is stored encrypted and the entire cache uses another ****.

The spotify client never stores any **** except to support offlined content as covered above.

The web client also does not store unencrypted streams on disk but the browser cache is **** beyond that of the tracks'.

7.13 Auditing

Every time the Spotify client stops playback of a media item, a message is sent back over our encrypted channel to our backend. This message includes a **** that was played and **** it was played. The receiving backend service appends information about user and location to the messages and passes them to the ****.

**** are the main source when generating weekly and monthly reports. In this step the unique **** are used for counting the number of times each item has been streamed and for looking up more information about the item, such as artist and other identifiers specific to the content provider. If needed, the report can also include the number of times each item was played by each user as well as other aggregates that might be of interest.

8 Partner integrations

8.1 Sonos

The Sonos integration is based on the Spotify SDK. Sonos use (as that of any other SDK-based system) requires a Spotify premium account and supports up to **** simultaneous streams. It is not possible to stream **** at the same time.

8.2 Spotify connect

Spotify connect allows a user to share playback from one device to another, for example allowing a desktop client to share its playback with a phone or a hardware device such as a stereo. This allows for device to device remote control. Audio streaming is done via the Spotify backend, as opposed to peer-to-peer. The hardware implementation is based on the Spotify SDK.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

25


EXHIBIT E

Company's Ad Unit Types As Of The Effective Date

Found at https://spotifyforbrands.com/us/formats/ as Company may update from time to time, or at such other location as Company may direct.


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

75


EXHIBIT F

Service Providers

See Table 2 on pages 5 and 6 of Technical and Security Specifications


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

76


EXHIBIT G

Company's Advertising Guidelines

Available at:

https://www.spotify.com/us/brands/legal/advertiser-terms-and-conditions/#s3


**** Confidential portion omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

77


EXHIBIT H

Minimum Wholesale Pricing

Launched Countries


Country Name

  

Currency

  

****

  

****

Andorra    EUR    ****    ****
Argentina    ARS    ****    ****
Australia    AUD    ****    ****
Austria    EUR    ****    ****
Belgium    EUR    ****    ****
Bolivia    USD    ****    ****
Brazil    BRL    ****    ****
Bulgaria    EUR    ****    ****
Canada  &n