DANIEL EK, 34
Last Year’s Rank: 1
RENAISSANCE MAN Almost a decade ago, with the music business in free fall, Swedish technology entrepreneur Daniel Ek talked the major labels into gambling on a streaming service that would charge for subscriptions and run ads for listeners who weren’t ready to pay. Since then, Spotify has transformed the music business in its own image — from sales to streaming, from albums to singles, and, most importantly, from decline to growth.
In the first half of 2017, recorded-music revenue was up 17 percent over the same period in 2016, according to the RIAA, with streaming accounting for 62 percent of the market. Much of that revenue came from Spotify, which recently announced it has over 70 million paid subscribers. Its closest competitor, Apple, has 30 million.
$2 BILLION PAYDAY In the next few months, Spotify is expected to cement its standing in the music business with a “direct listing” of its stock that could value the company at $19 billion, according to sources. Presumably, the major labels will be able to sell the equity they were granted. And Ek, who rarely speaks to the media now (he declined to be interviewed for this story), could be worth as much as $2 billion, if he hasn’t sold any of his equity.
In the past year, Spotify cleared the path to its public offering by reaching long-term licensing pacts with the major labels and a deal that allowed debt-holders TPG and Dragoneer Investment Group to convert some of their debt into equity. To calm investors, it still needs to settle the copyright-infringement lawsuits it faces from publishers over mechanical rights, including a $1.6 billion suit filed just before the end of the year by Wixen Music Publishing, which represents thousands of songs by Tom Petty, Neil Young and The Doors, to name a few.
PATH TO PROFITABILITY Within the next few years, Spotify also will need to turn a profit: In 2016, it took in $3.1 billion in revenue, up over 50 percent from 2015, but lost about $570 million.
Continued growth will help. Spotify’s subscription base keeps growing — to the point that it’s challenging music executives’ ideas about the potential market for paid streaming. “When you look at Amazon and Facebook, there was a very similar narrative — they were talked about in terms of their addressable markets,” says Troy Carter, Spotify’s global head of creator services. “But you can’t assume a company will look the same in 10 years — Amazon doesn’t just sell books today. Our playlist ecosystem is a more compelling value proposition than when Spotify launched, and it will become even more compelling still.”