Spotify is turning to the world of video for clues on getting its music business to grow. The Swedish on-demand streaming service has tapped Barry McCarthy, the former chief financial officer of Netflix, to be the fifth member of its board.
McCarthy’s appointment, first reported in Re/code, comes at a key time for Spotify’s CEO Daniel Ek as he strives to add enough paying customers in order to reach profitability. Though Ek’s service had 24 million active listeners as of March 2013, only a quarter of them at the time paid to use the ad-free premium tier. The ad revenue on the free tier hasn’t been sufficient to pay the bills for Spotify, which posted a $78 million loss in 2012, the latest available figures, on revenue of $578 million.
To turn that around, Spotify needs to convert more listeners from its free tier to its paid service. McCarthy, who became Netflix’s CFO in 1999, seems well suited to the task, having had a seat in the cockpit of Netflix’s rocketing subscription DVD growth. He also has experience in the ad-supported space. Prior to Netflix, McCarthy was CFO of Music Choice, a free on-demand music service available in 55 million U.S. homes today via cable television providers. And he served on the board of Pandora from 2011 to June last year, which has more than 70 million users.
McCarthy’s experience appears to be in high demand. In addition to being the COO of a digital payments start-up called Clinkle, he's also executive advisor to Technology Crossover Ventures and sits on the board of three other companies — Chegg Inc., Eventbrite and Wealthfront Inc.