“I don’t think I’ve ever been this tired,” Sean Parker said Tuesday afternoon. It was nearly three hours after he and Napster co-founder Shawn Fanning officially unveiled new social video-chat service Airtime at a technical-difficulty-plagued press conference, and six days after he spoke about Apple’s attempts to thwart another one of his companies, Spotify, at the All Things Digital D10 Conference in Rancho Palos Verdes, Calif. “You may have to peel me off this chair after we do this interview.”
Caveats aside, Parker was quite forthcoming alongside his old business partner Fanning, who is quite literally more soft-spoken by comparison — just talking to him face-to-face can require a volume button. But both men were quite verbose on several topics, particularly the impact of Facebook (where Parker was famously an early investor) and Spotify, as well as having Clear Channel CEO Bob Pittman — who had his own big announcement on Tuesday morning as well, about Clear Channel’s groundbreaking licensing deal with Big Machine Records — on hand as an Airtime board member. Below are excerpts from Billboard.biz’s conversation with Fanning, 31, and Parker, 32.
Billboard.biz: Let’s talk about the music implications of Airtime. Bob Pittman is on your board, for example. What can he bring to the table?
Sean Parker: Bob is awesome. He’s one of the few legendary business leaders who I really looked up to when I was growing up. He’s one of the few people that’s been able to succeed in the media world. He was the CEO of AOL Time Warner, a co-founder of MTV. And outside the media world it just goes to show he’s a good executive — most don’t have a career outside of media. He’s worked with Century 21, Six Flags and is just really amazing in branding. It’s not even so much his relationships, because a lot of people can broker relationships. He’s just such a clear thinker and he brings such a clear thoughtful approach to the company. There aren’t many people I’ve met with a media background who have those characteristics. He’s done big companies but also started from scratch.
Shawn Fanning: He’s able to grasp things so quickly. He just understands what your short-term objectives are, and longer-term. He’s the whole picture. We like being around and working with him — you want to be part of that and make something successful.
What’s your take on what he’s done with Clear Channel and things like iHeartRadio?
Parker: Clear Channel’s an interesting business… But we don’t talk that much about Clear Channel, we mostly talk about starting companies and innovation. We do talk a lot about Spotify. It’s a rare media executive who actually has a background in the Internet.
What’s the potential for music applications or services within Airtime?
Parker: Airtime is great for any app that’s fundamentally about shared experience — basically experiencing some kind of content together with other people, that’s critical. You can imagine all sorts of apps could plug in there. Most of the platforms now that basically make content available have some sort of open API anyway.
Is there any concern that Airtime could be used to pirate video content?
Parker: We’re not hosting any video. At the end of the day, YouTube has to respond under the DMCA [Digital Millennium Copyright Act] to take down any video that’s infringing. It’s something we want to be mindful of, but not something we think is a real danger.
What is it about Facebook that has essentially made it your platform to launch services like Spotify and now Airtime?
Parker: The fact that people have spent so much time wiring up a network of friends there is quite valuable. Even though all the nuances of your relationships with people aren’t fully represented, it is a pretty good representation of your overall set of friends and acquaintances and relationships. And the Facebook platform allows you to build on that. Facebook is like a necessary building block upon which apps like Airtime are built.
The market was slow to acknowledge that Facebook’s platform was a genuine platform — it shifted from the web to the social web and Facebook’s platform was that medium. And the companies that bet on that early like Zynga and Spotify have done really well.
What about the ad model for Airsteam — sorry, Airtime…
Fanning: [laughs] We get that all the time.
Have you given much thought to what the ad model might look like?
Parker: In the sense that it’s social media, where you’re basically performing for each other and creating experiences for each other, an obvious monetization path would be how to build an ad sales media model around that. With any new platform, you don’t want to introduce it too early, but you want to get a sense of how the product’s being used before you even go there. There’s a lot of obvious ideas for how you would monetize something like that. When you look at a company like Instagram that had 13 employees, and I don’t think they had any revenue. It’s kind of amazing.
Sean, you recently said that Apple tried to block Spotify from launching in the U.S.
As we approach the one-year anniversary of Spotify’s integration with Facebook, what’s your take on its adoption thus far?
Parker: The Facebook integration has been incredibly valuable. Launching in the U.S. was a huge milestone — after two and a half years of negotiations we finally got it done. The product has been one of the fastest-growing products ever. I think that there’s still a lot of work to be done to get these Facebook integrations right to make it more inherently social within the Facebook/Spotify experience. There’s an amazing engineering team that’s been able to execute really hard stuff. I’ve seen them launch a lot of pretty significant platform changes.
How is Spotify’s mission similar to Napster’s in terms of solving problems about music access for consumers?
Parker: The mission hasn’t changed a lot. The idea of portability and paying for subscribers is still there.
Fanning: It’s changed in the sense that you can see what other people are listening to, which is awesome but not an integral part. Napster — no one has quite ever recaptured the kind of depth and breadth of selection of content because we represented the entire universe of recorded music. A lot of that stuff is unidentified when it comes to tracking down licensing. The experience we had at Napster, which Sean did a lot of work to figure out, was how that part of the business would be possible. We had always hoped that part of delivering the experience would be somehow preserved even if it were gone, the company itself. Unfortunately it requires some infrastructure.
I actually worked on a company called Snocap where we tried to solve the problem and had equally frustrating negotiations that were less lucrative. The reality is Spotify has captured the essence of what Napster was about. But unfortunately they’re dealing with the fact they have to provide something that is also affecting the creators in such a way that it’s kind of a collaborative development. So that will slow things down to a degree. When I moved into the gaming world I was shocked by all the complications.
Parker: It’s amazing how little tolerance technology people have for the licensing conversations. We actually decided we were always negotiating because licensing is always an ongoing part of the company. No tech company would ever choose that path without really knowing what to expect.
Fanning: I forgot how you said that, because having gone through Snocap you know you’re going to have difficulty to start the company. You want to make sure you like the people you’re working with by the end of the process. We definitely do not have that attitude. Accepting the reality you’re always going to be negotiating or renegotiating, where it’s always something “We’re almost there, we’re almost there” — that’s how you get burned out. That attitude — I don’t know when you established that but it was a very smart move to kind of know that that’s going to naturally be the cost of doing business.
Daniel Ek has been championing this theory of access vs. ownership of music. But would you like to see features like a click-to-buy option for songs in the U.S.?
Parker: I’m a big proponent of that. Dan talks about access over ownership, but I usually talk about ownership — I just redefine ownership. Ownership still matters to people, it just means something different. Is it yours everywhere always, versus is it yours when it sort of feels like it when you’re watching ads?
In the sense the two kind of converge, the lines between a service model and a product. The service business and a product-based business have come together in weird ways. In an ownership scenario, the subscription-service scenario, in theory you’d be buying something that grants you a bunch of privileges above and beyond. What’s available in the free product is portability, access anywhere and portability on devices. One of the remaining problems is there’s all these devices like the iPod which are not connected and they’re still super important for those burning a CD. For instance, you need a download model or some sort of bundled download model where you get so many downloads a month.
Sean, you’ve also recently invested in a new startup called The Audience. What can we expect from that?
Parker: I think there’s been an opening in the market for someone to come along and figure out how do celebs and brands manage an online audience and how do you monetize that. The Audience is one of the best answers to that question. It’s a great time and I’m reaching people I’ve worked with for a long time. Oliver Luckett, the CEO, sold a company to Disney [DigiSynd], and Ari Emanuel and William Morris are closely involved investors and founders. It’s a really high priority team of people and so far they’ve scaled it pretty well.