Swedish Daniel Ek Competing Against Apple

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Last week Apple launched its streaming service in over 100 countries around the world. Daniel Ek, Swedish co-founder of Spotify, remains calm.

In 1999 Daniel Ek wanted to create a universal jukebox, which would revolutionize the music industry. At that time he was a 16 years old boy working from a cabin in the Swedish woods.  Today Spotify is the world’s dominant streaming service for music with more than 75 million listeners. In an interview with Financial Times Ek admits it has been a demanding process.

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In 2014 Apple called his company a “grand experiment that doesn’t fairly compensate creators of music”.

However, to build his company, the Swede negotiated with reluctant record companies and skeptical investors. Today the users love Spotify even if some attack the company’s influence on the music industry.

How to use Spotify

Spotify functions like a jukebox in the cloud that provides legal, on-demand access to millions of songs, supported by paying subscribers and radio-style ads played only to nonsubscribers. The service debuted in the United States last year after three years of operation in Europe. In USA there are 15 million users, of which four million are paying subscribers. An estimated value of $4 billion, makes Spotify one of the hottest Internet companies in the world.

070715-Daniel_Ek-wiredEk admits he was disappointed when Thom Yorke from Radioheads in 2013 described Spotify as the “last, desperate fart from a dying body.”

According to Billboard, former U2 manager Paul McGuinnes claims that the record companies are moving against ‘free’ streaming in general, and Spotify in particular. “Artists worldwinde are aware that Apple’s iTunes store is honest and pays them real money, unlike Spotify, where the sums are trivial.”

Spotify continues, however, to extend its offers, and launched last month both videos and podcasts.

“We try to grow as fast as we can,” says Daniel Ek. The faster we grow, the faster the music industry grows, and more money comes Spotify’s way. We take losses today, since growth is expected to happen.”

Spotify lets users seamlessly share playlists and swap music on social networks like Facebook and Twitter. And Spotify makes it easy for others to build apps that work with its platform in order to give users yet more ways to discover and share music. “The trick was to think through the social aspect of the service from the very beginning,” says Ek. “We didn’t want it to be an afterthought.”
070715-Ek_Forbes-CoverEk claims that complaints are due to a system where it takes too long before the artists receive their royalties. Sometimes it takes several years before money is transferred.

Spotify’s users can access some 16 million songs. The service offers all those terabytes of music without revealing any of the licensing complexities involved in the process. Ironing out the needed deals with record companies while refining the service ate up two years of Ek’s time before he launched in Europe in 2008.

It took a team of software engineers—the company now has 250 of them—to make the service easy to use in spite of all the programming code that works in the background to prevent music from being illegally copied and distributed.

“The best thing about Spotify is that it works at all,” says Ek. “If you’re in Spain and you want to share your music with someone in the U.K., you don’t want to see how we take care of paying licensing fees in both places.”

Now Ek is trying to find ways to make it as easy to find and play music as it is to find and play videos on YouTube. This year the company introduced a radio service for computers and mobile devices, launched its first iPad app, and made it possible to embed a Spotify play button into any website. The Huffington Post, the blogging site Tumblr, and Rolling Stone’s website are among the many that now offer music that way.

Apple’s target is 100 million subscribers, and the giant has tried to squeeze both prices and royalty to artists and songwriters, without success. When the world’s independent record companies, and not least Taylor Swift, refused Apple’s offer, the company had to throw in the towel and pay like its main competitor Spotify.

Spotify
– Streaming service for music
– Launched 7 October, 2008
– Launched on mobile 2009
– Reached one million users in 2011
– Launched in USA 2011
– Today 75 million users, 20 million paying subscribers

Swedish Daniel Ek Competing against Apple, written by Tor Kjolberg