Spotify CEO Daniel Ek Says Streaming Allows More Artists to Make a Living From Music Than Ever Before
"I don’t believe that the music industry has to be disrupted. I believe it has to be evolved," he said in expansive interview with the 'Freakonomics Radio' podcast.
Spotify will potentially shift focus away from editorial playlists, in favor of providing more multi-faceted, democratic tools for record companies and artists to promote their music.
CEO Daniel Ek spoke to this -- and much more -- in an expansive new interview with the Freakonomics Radio podcast released Wednesday night (April 10).
"Today the primary tool that an artist has to get heard on Spotify besides putting the music on there is getting known by one of our editors," Ek told host Stephen Dubner. "While we want to democratize music, we’ve kind of become gatekeepers as well. So the question is: Can we develop tools that enable artists to promote their music more efficiently just by themselves on the platform?"
His comments come shortly after Spotify began personalizing some editorial playlists based on users' tastes, a move intended to both improve the listening experience for users and make it easier for artists to get their music to the right ears. As part of the update, Spotify will begin sending artists custom hyperlinks when their songs are added to those playlists that will place the artist's song at the top of the list, further incentivizing artists' sharing with fans. And while playlists like RapCaviar have positioned Spotify as a powerful arbiter of music taste, Ek says he never intended to be a "disrupter."
"We believe we can be the R&D arm for the music industry," he added, "that we can develop better tools and technology to allow them to be more efficient and thereby creating more, better solutions for them and for artists."
The interview comes amid a turbulent time for the streamer, which in the past two months has filed an antitrust complaint in Europe against Apple regarding App Store practices, launched in India despite a legal injunction from Warner Music Group and also waged battle with the Copyright Royalty Board over its February decree to boost songwriters and publishers' royalty payments.
On Freakonomics -- which prides itself on uncovering "the hidden side of everything" -- Ek also delved into guarding customers' data, why he's investing so heavily in podcasts and more. Brush up on other key takeaways below.
On making podcasts a priority
Spotify has scooped up three podcasting firms this year -- Gimlet Media, Anchor FM and Parcast. In the new interview, Ek explains he was inspired to buy into the podcast sphere after seeing record companies in Sweden purchase podcasts and upload them to Spotify as another source of revenue. (He noticed the same thing with audiobook services in Germany.) He also wants to apply Spotify's streaming metrics to its podcasts, as a way to monetize the shows and illustrate value for advertisers.
"We started seeing it resonating really well into people’s lives," he said. "It played really well into our strategy of ubiquity -- i.e., being on all of these different devices in your home, whether it’s the Alexas or TV screens or in your cars or whatever as just another source where you could play your audio."
As for how those plans will take shape, he said, "I think that the format of podcasts, we’re still very very early on into what it will be."
On why Spotify will never give away customer data
Compliant with the GDPR, a tight set of data protection regulations the E.U. implemented last May, the streamer does not sell or give away customer data to advertisers, record labels or anyone else. That pledge, Ek says, has to do fundamentally with trust.
"You can imagine even for the music industry, there’s tons of data about how their songs are performing or other people’s songs might be performing that could inform them about what they’re doing," Ek said. "We’ve taken the stance that we don’t monetize the data itself at all. We don’t sell the data.
"Users should be able to rely on us," he continued. "My fundamental view is, it’s their data. If we can use the data in order to make the Spotify experience better, then all good and great. And I think many users would say yeah, I agree with that."
On making money as an artist in the streaming era
"I think we are in the process of creating a more fair and equal music industry than it’s ever been in the past," Ek said, thanks to the ease of creating and distributing music online. He went as far as to claim that more recording artists can make a full-time living now than they could in the CD era.
"Back in 2000, 2001, at the very, very peak of the music industry, peak of CD... there were about 20- to maybe 30,000 artists that could live on being recorded music artists," he said. "Why? Well, because, again, the distribution costs so much, which ended up being that there’s very few artists that could even get distributed to begin with. And because the costs were fairly high for a person buying the music, you ended up going with what you knew and wouldn’t take that much risk on unknown artists.
"So in the world with streaming, what’s really interesting is the alternative cost for you to listen to something new is virtually zero. It’s just your time. And because of that, you do listen to a lot more music than you did before and you listen to a bigger diversity of artists than you did before which in turn then grows the music industry."
On Spotify's 10-year plan
Asked what he sees in the streamer's future, Ek pointed to working toward shared goals with record labels and the larger music industry, continuing to develop its podcast network and filling "regional holes" in the Spotify music library. (The entire Garth Brooks catalog, Ek noted, is still unavailable on Spotify.)
He also touched on Spotify's contentious recent launch in India, where most of the music market is a "byproduct to the film industry" otherwise known as Bollywood. "There’s so much development left to do," he said. "What would happen if the ecosystem there was healthy? Then people wouldn’t think about making music just for movies."
"I believed that the problem for the music industry with the past had been just that fact that it always felt like it was people who wanted to disrupt the existing music industry," Ek also explained. "I don’t believe that the music industry has to be disrupted. I believe it has to be evolved. So we like to work with them as partners."