Chief content officer, Spotify
General counsel/vp business and legal affairs, Spotify
Global head of music, Spotify
87 MILLION SUBSCRIBERS: Spotify began 2018 as the dominant streaming service that had helped save the recorded-music business, and yet aspects of its future were unclear. The company planned an unusual direct listing on the New York Stock Exchange, and copyright lawsuits and plans for profitability added uncertainty.
One year later, the murk has lifted: Spotify is a public company whose stock sales have benefited labels and their artists. The Music Modernization Act will protect it from many potential copyright lawsuits, and it has a path to profitability -- albeit one that raises a new set of industry concerns.
In June, Billboard reported that Spotify was offering independent artists deals, including advances and other enticements, to license their music to the service directly. The market cheered, since the initiative, led by CFO Barry McCarthy, could help Spotify cut expenses: Paying artists directly eliminates the markup that comes with going through the labels (and, despite the discount, put more dollars in the artists’ pockets).
Although Spotify’s deals with the major labels forbid it from competing with them in certain ways, such as by purchasing recording catalogs, the move sparked concern that the company was, essentially, beginning to compete for talent. Spotify founder/CEO Daniel Ek, 35, tried to address these concerns in a July earnings call, saying, “Licensing content does not make us a label, nor do we have any interest in becoming a label,” but the company has enough promotional power to put labels on guard.
The service has also started allowing independent artists to pitch their music directly to playlists. In the first three months of this new program, over 67,000 artists and labels submitted recordings, and “more than 10,000 acts were added to editorial playlists for the first time,” says Spotify global head of music Nick Holmstén. “These numbers are growing, and we’re excited to see how this develops.”
Spotify is generating goodwill within the business, as well. Chief content officer Dawn Ostroff points to the service’s EQL initiatives, which include a global database of women professionals in the industry, a weeklong boot camp for aspiring women podcasters of color and a paid, six-month studio residency program that gives participants “access to invaluable networking and mentoring opportunities,” she says.
Spotify stands in good stead with major rights-holders, having brokered long-term deals with all of them. Its general counsel, Horacio Gutierrez, also won some allies when he helped push the Music Modernization Act, which reduced Spotify’s potential liability but also helped labels and publishers.
The company also faces more direct threats to its streaming dominance: Apple and Amazon have resources, and advantages from their other businesses that Spotify can’t match. In November, Spotify announced that it has 87 million paid subscribers globally -- to Apple Music’s 50 million -- but the latter is just a hair behind in the United States, sources say.
Spotify’s stock has been volatile too, though most big technology companies, Apple included, have seen price swings. Spotify could close fiscal year 2018 with $2.2 billion in U.S. revenue, a 26 percent gain from 2017, and over 200 million monthly active users -- 55 million of whom are stateside alone. The question is: How will it end 2019?