Daniel Ek Is Worth $308 Million Because The Market Values Spotify So Highly
It may surprise some people that Spotify CEO and co-founder Daniel Ek is worth $308 million (£190 million), according to a list of richest British people in music at the Sunday Times. Ek tied for tenth with Sir Mick Jagger and David and Victoria Beckham. The Sunday Times' estimate could be low, could eventually be much higher and is in danger of being much lower if Ek isn't able to cash out on a high note.
That Daniel Ek could be worth $308 million is a statement on how the market perceives Spotify. No other privately held digital music service - and none not owned by Apple - has such high expectations and defines its category so well. Spotify is synonymous with streaming music. Streaming is the future of music. Therefore Spotify is the future. If an investor had to bet on a single company to transform the recorded music business, that company would have to be Spotify.
The Sunday Times estimates Ek's value based on a valuation of $1.94 billion, a large figure that's about half the $4 billion valuation that has been floating around the press lately. If one assumes Ek has all his value tied up in Spotify, and if Spotify is worth $4 billion, then Ek is worth $616 million. But that's his value on paper, and it's subject to change with changes in Spotify's value. If Spotify value drops to $1 billion, Ek's value drops to about $150 million. If you take into account any wealth Ek netted from his previous businesses, he's worth more than $308 million.
Exactly how Ek turns his paper wealth into more substantial wealth gets to the very core of Spotify's mission. Ek is on a list with people who have generated and continue to generate significant income. For example, an initial public stock offering would allow Ek to cash out some of his shares, but that's an unlikely scenario at this point. Spotify would need to present a better financial story to potential investors in order to go public. It has about $1 billion of revenue and strong growth, but it pays out 65% to 70% of revenue to rights owners. Considering investors are concerned about the 54% of revenue Pandora pays out to rights owners, they could be downright fearful of Spotify's content acquisition costs.
Ek himself has said publicly that an IPO "is not an option," the company is focused on growth and it has enough capital to maintain its current business plan. If Spotify won't tap the public stock markets, it can be acquired or merge with another company.
Wondering how Ek and Spotify's investors will cash out is hardly an academic exercise. The story of Ek's wealth is really the story of Spotify's future. If the company continues to grow at its current pace, lure a greater percentage of paying customers and become a standard music platform around the world, Ek will be worth far more than $308 million. If the company stumbles on its way to greatness, Ek and his investors will be looking at far less wealth. And if Spotify doesn't succeed, streaming music may not succeed. ( Sunday Times)
Sonora to Debut in Spain, But is it a 'Dead Market' for Music?
Terra, a unit of Telefonica SA, will debut its Sonora music service in Spain by the end of May, according to a report at Bloomberg.com. A movie streaming site called SundayTV will follow in the fourth quarter.
Sonora is currently available in Argentina, Brazil, Colombia and Mexico. Launched in 2007, the music streaming service was getting 6 million daily listeners and 500,000 customers using the Sonora Prime premium service by April 2011, Fernando Madeira, CEO of Terra Latam, said at last year's investor conference.
Spain has gained a reputation as a backwater for digital music. A high prevalence of piracy and unfavorable laws have helped recorded music fall precipitously in recent years (although the market dropped just 3.3% in 2011, according to the IFPI). Rob Wells, president, global digital business for Universal Music Group, has said Spain "is effectively a dead market" because of its lack of anti-piracy laws. Nielsen and the IFPI estimate 42% of Internet users in Spain access unauthorized services every month.
But Spain could become a much better music market. It has many carrots to offer consumers: subscription services such as Spotify, Rara.com, Music Unlimited, Rockola.fm and Deezer in addition to download stores like iTunes, eMusic and Beatport. And the country now employs a bigger stick: the government implemented the Sinde Law in January that will block file-sharing sites at the Internet service provider level. The law was part of the Sustainable Economy Law passed by the new Partido Popular government that came into power in December. ( Bloomberg)
ReDigi Fights On With New Lawyers
ReDigi, the web site that buys and sells used MP3 files, has new legal representation and is going ahead with its defense. The company hired Meister Seelig & Fein LLP as its lead counsel in its litigation with Capitol Records. Ray Beckerman had previously represented ReDigi. Meister Seelig & Fein and its team should be able to provide more resources than Beckerman's two-person team as the lawsuit moves toward trial. ReDigi would not comment on the change in legal representation. Beckerman did not respond to Billboard.biz's request for comment.
The trial has not started and according to Beckerman's April 23 court filing no depositions have taken place. The trial is expected to end by the end of September, ReDigi spokesperson Jaclyn Inglis tells Billboard.biz.
Sirius Boosts Android App
Sirius XM Satellite Radio has beefed up the features on its app for Android smartphones and tablets. Subscribers can now replay up to 5 hours of programming for "most" stations. Listeners can hear a song or broadcast from the beginning when starting a particular station. And previously broadcast content can be paused, skipped, forwarded and rewinded. Improvements have also been made in audio quality and how the app displays album art. ( Sirius XM press release)