As Google and others gear up to enter the streaming-music business, the Spotify founder says he’s staying focused on bringing music to as many people as possible.
AUSTIN, Texas — Google is aiming to roll out two subscription music services this summer, and Apple is reportedly trying again to tackle the streaming business. But Spotify founder and CEO Daniel Ek says he’s not concerned, because his company is laser-focused on music and music only.
“We’re obviously watching what everybody is doing,” said Ek, who wore a Gibson guitar T-shirt and was interviewed by Forbes Associate Editor Steve Bertoni at the SXSW Interactive conference. “Music is something that is so inherently important to people that it makes sense for gigantic companies to have music strategies…. But we’re focused only on music. Unlike everyone else, like Google and Apple — they have tons of other businesses. For them, music is not a core priority.”
“What we do,” he continued, “is wake up every morning and think about how we get more music out to people, how do we get better music? We breathe, eat, and sleep music. These bigger companies don’t.”
That might be true, but that doesn’t mean Google — particularly with its YouTube, which has become the dominant place where younger people go to listen to music — won’t try hard and, potentially, make life difficult for Spotify. Apple, too, is reportedly again trying to create a streaming service, after last year’s talks with the labels failed.
Spotify has its work cut out for it. The company just chalked up 6 million paid subscribers and 24 million active users, a milestone first reported by CNET this morning. That’s a lot of progress for a company that launched only in 2008 and just came to the U.S. in August of 2011.
And after years of disappointment, subscription music services are growing faster than any other segment of the music industry. The number of people paying for a music service soared 44 percent in 2012, to 20 million. Last year was also the first since 1999 that the industry saw year-over-year growth.
But to hear Ek talk, those numbers are tiny. His goal: Not just to get 24 million active users to decide to become paying subscribers — where the music labels and Spotify make more money — but to reach a half a billion people through Spotify. Yes, he said half a billion. What’s going to make that possible, he said, is the rise of smartphones and all sorts of connected devices, such as cars, where people will want to access their music.
This is the kind of big vision that lead Ek and Spotify backer Sean Parker to say that they think paid services can not just help turn around the music industry but also help it thrive. Parker, of course, was co-founder of Napster, the illegal service that the labels fought like mad and crushed and that Ek today said was, “The biggest thing in my life.” Napster, he said, was so popular because it was so much better than the legal options that were out there at the time.
“We just figured out a way to make it legal and easier,” Ek said. “Our main obstacle is giving everyone on the face of this planet more music.” The path to that, he said, is by continually making the product easier to use and making music easier to share. (Napster, by the way, morphed into a legal, streaming service itself, and was eventually bought by Rhapsody.)
Not surprisingly, Ek was asked about the paltry rates that artists make from Spotify. He reiterated that Spotify has already paid $500 million to the rights holders, labels, and publishers, and that the company expects to pay that same amount this year alone. Importantly, the labels pay the artists, not Spotify. But Ek urged people not to think about streaming versus, say, iTunes, because ultimately the huge reach that he’s going after could lead to payouts that dwarf what artists are making via downloads.
“We’re focused on growing the pie so the artists can go back to making a meaningful amount of money,” he said. “The overall music industry should be substantially bigger than it is today and bigger than it’s ever been.”
In other words, we’re still in the early days.