Spotify is embroiled in a highly public war of words with pop star Taylor Swift, who recently pulled her music catalog from the site, calling Spotify a “grand experiment” that devalues music. And that’s just fine with Founder and CEO Daniel Ek.
In a recent interview with Billboard, the charismatic young leader of one of the world’s biggest streaming services claims the rift with Swift put Spotify in the spotlight, helping to differentiate the service from the other big player in the streaming game, Pandora. Far from a source of all that’s wrong with music today, Ek sees his service as the key to bringing the industry back to its former glory.
“What it has highlighted for us is we need to do a better job explaining to artists how streaming benefits them,” Ek said about the Swift debate. “The point that’s been lost is that Spotify’s the fastest-growing revenue source the industry has.”
Having launched in “almost 30 new countries” in just the last year, Ek sees a bright future for his rising company; one in which Spotify successfully courts a lion’s share of the massive audience of music listeners across the globe who are still up for grabs, moving them away from torrents and other illegal means of consuming music, and into Spotify’s subscription tier. And, he says, that will be a good thing not just for Spotify, but for the music industry as a whole.
“I’m certain that if we can get the billion-people-plus that are consuming music online and move them into a model like Spotify, the industry would be considerably bigger than it is today,” Ek said. “I think people discount piracy. We’ve grown accustomed to it, so [we’re] not really sure what we can do about it. But there’s a billion people doing it. If they contribute to a legal service of any kind, that’s a huge win.”
“I’m an impatient guy,” Ek said, “so while we’ve (added) almost 30 countries, we want to move faster and get the industry back to growth again.”
But how good would Spotify’s sought after world domination really be for the ailing music industry — especially the artists? Many have rallied to Swift’s side in her stance against Spotify, which like most streaming services pays a notoriously low amount per song play, somewhere between .6 and .84 cents. And that doesn’t count the label’s cut. Still, Ek holds firm to the claim that Spotify pays a fair wage to its most popular artists.
“There are many artists to whom, through the labels, we’re paying out millions a year already. Those check sizes will just keep increasing,” Ek claims. The numbers are important here, because they have been highly disputed. Ek has previously claimed that an artist like Taylor Swift can expect to be paid around $6 million per year. A Spotify spokesperson later told Time magazine that the company had paid Swift, who is one of the highest selling artists on the planet, $2 million last year.
The CEO of Swift’s record label, Scott Borchetta, disputes both of those claims, telling Time that Swift made $496,044 in that same time period. Either one of these two parties is really bad at math or someone’s cooking the books. In fact, Borchetta claims that Swift made more money from streaming videos on Vevo than from Spotify last year.
But Ek doesn’t seem very concerned about such discrepancies, and why should he be? By the service’s own account, Spotify has over 50 million listeners between its “freemium” ad-based service and its subscription service, which boasts 12.5 million users who pay Spotify’s $10 per month subscription fee. And though turning a profit has been a struggle for music streaming services as a whole, Ek seems confident Spotify will soon turn the tide to become a highly profitable enterprise.
“We’re by far the largest subscription service, we’re probably as large as all of the others combined,” Ek said. And he sees a future in which those “billion” or more listeners who are currently pirating music are ripe for the picking. He also sees Spotify’s subscription service making more moves in the future to make it even more enticing than the ad-free service, including the possibility of adding lossless resolution music. And that big push forward starts with the all-powerful music labels who own all of the content finally getting on board.
“The kind of debates that I’ve wanted to have for many, many years with the music industry, we’re finally seeing it happening,” Ek says. “How should we package subscriptions to consumers? That’s a very big topic right now on the label side.”
“The industry is realizing, ‘Hey, we need to embrace streaming, and we need to do it fast.’”