Music Business

Spotify’s Daniel Ek: Music Industry Savior Or Opportunist?

 image from musically.comThe seeds that grew into Spotify were planted 10 years ago, when the Swedish government all but announced that they weren't prosecuting file-sharers who had pulled the rug out from under music sales and decimated the local and later international music industry. Per Sundin, chairman and CEO of Universal Music Sweden, got a call from his mother advising him to find another line of work. "It was terrible," says Sundlin. All the newspapers were laughing at us".  Then Daniel Ek knocked on his door.

"This is Jesus coming to town!," Sundin told his colleagues at UMG of the then unlaunched Spotify. "If this fucks up we're going to be dead so let's go all in."  7 years later, Universal Music owns 20% of Spotify, arguably the world's most popular streaming music subscription service; and clearly the most imitated. 

These insights and more come in an extensive Guardian Observer piece that, while covering familiar ground, provides unigue insights into the birth and evolution of Spotify from the most intimately involved players. 

Inside Ek

image from musically.comAt the story's center is Spotify's Daniel Ek. The revealing portrait of what drives the the 30 year old founder shows a man who has different, motivations than the legions of creators and entrepreneurs scratching out a living in the new music industry. 

While Ek enjoys hanging with the stars of music and tech, he also sees himself as an outlier. "The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself," reads a quotation from George Bernard Shaw on the walls of Spotify HQ. "Therefore all progress depends on the unreasonable man."

Into the crumbling but still entrenched world of the major music companies, stepped Spotify. Ek looks back on his early negotiations with music execs with a viewpoint akin to David after he beat Goliath along with an added touch of disdain. "The music industry was in the shitter," said Ek. "What did they have to lose?"

Savior Or Opportunist?

The industry's demise provided Ek with an opening. "There was this paradox," he says. "People were listening to more music than ever in history and yet the music industry was doing worse and worse. So the demand for content was there but it was a different business model."

At this moment, Daniel Ek is the victor. A top Swedish newspaper estimated the value of the company at $5.2 billion. But whether he's created a business model that can sustain Spotify and the greater new music industry or  just delayed the demise of the old guard, remains a very open question.

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  1. In five years when everyone will be using a streaming service to listen to music (billions of people) money will be up for everyone in the industry. As it stands now too much of the product is split up between different types of consumption. Let’s face it, if the majority would stop torrenting, purchasing mp3s, CDs, and records and switched to streaming (never again relying on their own music files) streaming would be profitable. It’s just a matter of time.

  2. he’s made nearly $400 million, but can’t “afford” to pay the artists anything significant. that’s pretty much the definition of an opportunist. streaming leads to lower sales, but the difference isn’t made up thru the streaming because so much of the money goes up to elk.

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