Spotify Founder/CEO Daniel Ek: ‘We Need to Do a Better Job Explaining to Artists How Streaming Benefits Them’
For the 31-year-old Spotify founder/CEO, the company's momentous 2014 wasn't enough.
Billboard: What were the best and worst parts of 2014 for you?
Daniel Ek: We launched in almost 30 new countries. The growth in subscribers has been fantastic. And I became a father about a year ago, so watching my daughter grow up has been remarkable. Worst? On the one hand, the artist debates, because we want to do something that’s positive for artists. But [also] I’m an impatient guy, so while we’ve [added] almost 30 countries, we want to move faster and get the industry back to growth again.
What’s the takeaway from Taylor Swift’s decision to take her songs off Spotify? What did you learn and what did the public learn?
The public probably learned there’s something called Spotify, and that it’s not Pandora. What it has highlighted for us is we need to do a better job explaining to artists how streaming benefits them. The point that’s been lost is that Spotify’s the fastest-growing revenue source the industry has. There are many artists to whom, through the labels, we’re paying out millions a year already. Those check sizes will just keep increasing. I’m certain that if we can get the billion-people-plus that are consuming music online and move them into a model like Spotify, the industry would be considerably bigger than it is today.
A billion seems like a utopian number.
I think people discount piracy. We’ve grown accustomed to it, so [we’re] not really sure what we can do about it. But there’s a billion people doing it. If they contribute to a legal service of any kind, that’s a huge win. I’m not saying that we’re going to be the only ones, but we’re by far the largest subscription service, we’re probably as large as all of the others combined, so do I care about taking market share from [other subscription services] or taking market share from the billion people that are currently not contributing but still consuming music? We are in a growing industry, not really an industry where we’re fighting for market share. I think people discount piracy.
Going back to Taylor Swift’s decision, where does the discussion stand about allowing artists or labels to choose what material is available on what tier of service at Spotify?
Well, right now we don’t allow that. There’s a lot of other places where you can access that music for free, so our view is the only thing that happens by not being in the free service is that the consumer then has to go to another service to get the song, and they will. If they stay on the [Spotify] free service there’s a lot more likelihood that the consumer ends up becoming a paying subscriber, thereby generating more revenue. And then on top of that we’re paying a considerable amount every single time someone does play a song, whether it’s on the free tier or the paid tier. It’s something that we keep on discussing internally but right now our stance is the same as it has been before.
There are reports that there’s a push from the label side to lower the cost of the premium service.
I wouldn’t say that. Certainly I haven’t encountered that. What I have encountered is a whole lot more willingness from the label side to talk about what they can do to help drive this experience. How can we get artist participation, how can we build even more content and put in the subscription [tier]?
So there will be more exclusive content in the subscription tier?
Just like we’ve had deluxe edition of albums, everyone is thinking about how does that look like in a future world? Lossless music — is that a higher priced tier? Is that something that comes with deluxe editions? How should we package subscriptions to consumers? That’s a very big topic right now on the label side. The kind of debates that I’ve wanted to have for many, many years with the music industry, we’re finally seeing it happening. The industry is realizing, “Hey, we need to embrace streaming, and we need to do it fast.”
Every article about Spotify talks about a potential IPO.
The rumors keep persisting, and I keep saying the same thing, which is we still haven’t made any decisions whatsoever. We’re a private company and we have investors. We’ve got to figure out how we provide liquidity for our investors. Luckily, they keep supporting us. That’s not something that we spend a lot of time thinking about right now.
How does your in-house programming tool Truffle Pig work?
This year we bought a company called Echo Nest; during one of our hack weeks they put together Truffle Pig. If you have one or two items in a playlist it keeps suggesting interesting stuff you might want to add. But it allows you to customize the suggestions by saying, “I want something that’s more extreme,” or more acoustic, or has better danceability. It’s an amazing tool if you’re into making playlists, and we’re thinking about how we can bring it to all the people that care about music.
What’s the best new music you heard this year?
I’ve been listening to Banks a lot and I hope more people will discover her. I was recently in Singapore and ended up seeing Mongolian hip-hop. I don’t remember the band’s name, but it was pretty surreal.
When things get challenging, how do you unwind?
I do the same thing I’ve been doing since I was 6 years old: I pick up a guitar and I start playing. It’s the most relaxing thing I know. I mostly play acoustic these days. I have a Martin D12. And if it’s not that I’ll play with my daughter.
You mentioned your daughter. Are you going to take advantage of Sweden’s liberal paternity leave policy and spend some time at home?
I wish I could, but I’m going to postpone that for a few years and put my head down and grow Spotify. I have two babies.
A version of this article first appeared in the Dec. 20 issue of Billboard.