Daniel Ek [Photo: Tim Richardson; Set designer: Lauren Bahr at Kate Ryan Inc,; groomer: Alex LaMarsh]
Spotify’s $30 billion playlists for global domination
For 70 days at the beginning of this year, Daniel Ek and a group of friends competed to see who could cut their body-fat percentage the most. Ek, the 35-year-old cofounder and CEO of the streaming service Spotify, went on a special regimen, which included twice-a-day workouts and a single meal—specially configured for him—eaten at a set time each afternoon. “You look great,” teased music impresario Scooter Braun, a participant in the contest, who texted his friend after noting Ek’s slimmed-down physique during Spotify’s web-broadcast Investor Day presentation in late March. “Too bad you lost.”
When I see Ek a few days later, on the eve of Spotify’s listing as a public company on the New York Stock Exchange, he acknowledges that he’d been bested in the body-fat battle by several competitors. “I made a strategic error,” he says. In an analytical fashion that is typical of Ek, he then deconstructs both the limitations of the contest (“some folks were heavier to begin with,” he says) and the missteps that he made (“I lost too much muscle mass too early”). Somehow, he doesn’t sound like he’s making excuses; he’s focused on learning, on improving—a trait that has defined him, and Spotify, from the very beginning.
As for the next day’s stock market debut, Ek willfully downplays its importance. “I keep forgetting it’s tomorrow,” he says at one point.
Spotify’s IPO in early April, like Ek’s body-fat obsession, was unconventional. The company didn’t offer any new shares to raise money, instead listing ones already available. There was no bell ringing at the exchange, no public media blitz. Despite the lack of fanfare, though, it was a breakthrough success: Spotify ended its first day with a $26 billion valuation, making it one of the biggest tech IPOs in history. It quickly inspired speculation that other mega-unicorns, like Airbnb and Uber, might come to market via Spotify’s nontraditional method.
Ek is Swedish, and like the Swedish word lagom—which means “in moderation” and is often used to describe that country’s character—he has a proclivity for understatement. He deflects attention (“It’s never one person,” he told me at the outset of our first interview. “It’s the team”) and describes himself as an introvert (“I don’t really do social calls. I tell my friends that I like to be invited, but I probably won’t come”). But Ek isn’t shy about his ambitions: “What motivates me is impacting culture.”
Since its 2008 launch, Spotify has realigned the global music industry toward streaming, popularizing the idea of music as a service rather than goods that consumers own. As the company has grown—it now has 170 million users in more than 60 countries and 75 million of them are paying subscribers—it’s turned around the fortunes of what had been a declining industry. After global music revenues slumped from 2001 to 2014, streaming has put the recording business on an upward trajectory again, growing more than $3 billion in the past three years. Spotify reported $1.3 billion in revenue for the first quarter of 2018, and analysts expect it to generate more than $6 billion this year, 90% of it from subscriptions and 10% from advertising.
What emerged over my many hours of discussion with Ek in New York and Stockholm over five months, and was reinforced by interviews with more than three dozen key Spotify leaders, partners, artists, and competitors, is how unlikely Spotify’s rise has been and how central Ek’s character has been to the company’s evolution. The CEO is patient yet fueled by an internal intensity that can border on ruthlessness. He is a staunch believer in transparency (that Investor Day presentation went on a mind-numbing four-plus hours) yet personally reserved. Prior to this article, Ek had not participated in a major media profile in more than three years.
THE HEADBANGER: ALLISON HAGENDORF
Title: Curator, Rock Music
Employee since: 2016
First album: Steve Miller Band’s Greatest Hits
First concert: Green Day, Dookie Tour
First music business job: Recruited bands and made records for Sony, coordinated album production for David Bowie and Cypress Hill
Pre-Spotify brush with fame: “I hosted the CW’s music competition show, The Next, alongside celebrity judges Gloria Estefan, Joe Jonas, Nelly, and John Rich.”
Artist she hipped listeners to early: Greta Van Fleet
Artists she’s listening to on repeat: Grandson and the Fever 333
Spotify is as contradiction-laden as its leader. Despite its influence and growing fan base, the company’s future is hardly secure. It has yet to earn a penny, racking up a lifetime operating loss of $1.7 billion, and its deficits have only accelerated as revenue has grown. Meanwhile, it is being stalked by the world’s most voracious competitors. Although Apple launched its music subscription service just three years ago, some analysts predict it could pass Spotify in U.S. subscribers this year, thanks to the power of the iPhone user base. Amazon, which has a hit in its Echo smart speakers, now claims “tens of millions” of Amazon Prime Music Unlimited customers. Google already has the globe’s most popular digital music-listening destination in YouTube, and in an effort to make more money from it, the company recently introduced a Spotify-like YouTube Music subscription service.
To vanquish these rivals and make good on the promise of its high market cap, all Spotify has to do is continuously improve its best-in-class product, mollify music artists and labels who are still skeptical about the shift to streaming (despite the fact that the company has distributed almost $10 billion in licensing fees across the industry), and attract enough new customers to turn around its negative economics. Bulls, such as NYU professor Scott Galloway, argue that Spotify will do this and be the next tech giant. Bears believe the company is simply “not a good business,” as venture capitalist and former digital music entrepreneur David Pakman described Spotify to the Guardian.
As for Ek, he feels the precarious nature of Spotify’s success. He’s happy being underestimated—and just as unhappy losing.
When Ek came to save the music industry, he did so with a premise that evokes the charlatan Harold Hill in The Music Man. Hill contended that anyone could learn to play an instrument if they just believed enough. Ek was convinced that if you give music away for free and make it easy and pleasant for people to listen, then they will become regular listeners. As a habit formed, these users would—almost magically—be willing to pay for what they had been getting for free. (As Ek puts it: “The more you play, the more you’ll pay.”) This counterintuitive idea continues to form the basis of Spotify’s business model, even as it has confounded music labels and artists.
I ask Ek about this, wondering if he could build a playlist for me of Spotify’s history. “The first song would have to be something from ABBA,” he says, because “the roots of Sweden have influenced a lot of the decisions that we make.” In fact, the only reason Ek got a chance to prove out his original theory was that in his home country, record companies basically had nothing to lose in licensing their libraries for streaming. Piracy had obliterated CD sales and decimated revenues. File-sharing services like Pirate Bay were so popular in the country that citizens formed an actual Pirate Party, which won 7% of the vote in one parliamentary election.
Ek, however, stood out as the true renegade: He believed that artists were being taken advantage of. “I had a friend, a bassist, who complained to me at a party about how he had to take a second day job to make ends meet,” he recalls. Ek—a guitarist himself who at 18 had dedicated a year to becoming a professional rocker, unsuccessfully—recruited a class of engineers from Stockholm’s Royal Institute of Technology in 2006 to help him build a free desktop application that could offer a better experience than file sharing, with revenue generated via ads. As Spotify’s chief R&D officer, Gustav Soderstrom, recalls, the group figured out how to cut the delay time between pushing play and hearing a song from 3 or 4 seconds to 400 milliseconds.
From the beginning, Ek’s plan was to compete with Apple, which in the mid- to late-2000s dominated the digital-download business through iTunes. In essence, he wanted to replace the iPod by offering on-demand music via mobile phones. “Daniel was pretty adamant that he wanted to be the music solution,” says Soderstrom. Ek was so convinced, in fact, that he was willing to brazenly disregard the company’s own internal data. He knew that he’d never get the music labels to license their catalogs for a free mobile service, so he decided to offer mobile access only via subscription. “We did user research, and everyone said, ‘I’m never going to pay for this,’ ” recalls Soderstrom. Ek went ahead anyway.
He was right. When Spotify debuted in October 2008, people loved the experience, and the company signed up millions of users in its first year and 250,000 paying subscribers. Even before it launched in the United States in 2011, it developed a cult of American fans, including Napster cofounder Sean Parker and Facebook CEO Mark Zuckerberg. “It turned out that people weren’t paying for access to music,” Soderstrom explains. “They were paying for convenience.” The free, ad-supported desktop version effectively became a feeder for the $9.99-a-month mobile subscription.
THE CURATOR: AUSTIN KRAMER
Title: Curator, electronic culture
Employee since: 2015
First album: Teenage Mutant Ninja Turtles II: The Secret of the Ooze (The Original Motion Picture Soundtrack)
First concert: Boston, at Rushmore Plaza Civic Center in Rapid City, South Dakota
First music business job: Local radio and club stuff in Denver, where he studied music in college, then XM satellite radio
Artists he hipped listeners to early: Keeno, Illenium, Michael Brun, Gryffin, Kasbo, Don Diablo
Artists he’s listening to on repeat: “Besides Mint and Housewerk? The David Guetta remix of ‘Flames’ with Sia is gorgeous.”
Ek’s two-tiered product strategy has continued to both define and haunt Spotify. Today, 60% of Spotify’s paying customers have been sourced from its free product, an unquestionable success. Every time the company expands what it offers for free, though, the red flags go back up as artists and labels fear that Spotify is devaluing their work. “They need to be careful,” warns one high-placed music industry insider, channeling the fears of traditionalists that profits will fall in the long run and cripple record companies. “Spotify has always engineered itself from the philosophy, ‘Oh, you don’t need record labels.’”
“It has been such an uphill battle,” says D.A. Wallach, the former lead singer for the indie-pop group Chester French who served as Spotify’s ambassador to the music industry as its artist-in-residence from 2011 to 2015. “Obviously, streaming is a better way to listen to music: How would you like to have all the music humans ever made in your pocket for $10?” But Wallach, who’s also a longtime Spotify investor, adds, “It’s been impossible to deal with the labels, the artists. For a streaming service to succeed, it almost certainly was going to be at the expense of existing sales channels.”
“My challenge is still the free tier,” says Scott Borchetta, CEO of country music label Big Machine, which distributes Taylor Swift’s music (among others). Swift famously pulled her songs from Spotify in 2014, in perhaps the highest-profile protest against Ek’s model.
Eventually Swift returned to the fold, and she even posted an original video on Spotify in late March, just days before the IPO. “It doesn’t matter what we felt two or three years ago,” Borchetta says. As consumers have committed to streaming, the music industry has had no choice but to go along. “What we have now is what we have to make work.”
This has been Ek’s plan all along: to get the music industry so dependent on Spotify that even the doubters can’t live without it. “We need this company to be robust,” Borchetta says of Spotify. “It’s important to the ecosystem of the whole business that they are successful.”
It’s a typically dark, cold, and snowy February evening in Stockholm, and Ek and I are strolling along a slushy path around Skeppsholmen, one of the city’s islands. He is wearing white sneakers, which he earlier told me were a gift from Nike executive Heidi O’Neill, who joined Spotify’s board a few months ago. (“She said they’re worth $3,000,” he’d mentioned, which I can’t help recalling as we slog through mud and ice.)
On the way, he acts as a tour guide to both the city and his own life. “That boat is like one I used to work on in the summer, helping my uncle as a ticket taker,” Ek says, pointing across the water at a ferry that transports seaside revelers in warmer months but now serves commuters. He explains that he grew up 30 minutes south of here, in a working-class housing project known back then for its vigorous illegal drug trade.
He’s the child of a single mother who married his stepfather when he was a toddler. (Ek only engages with his biological father once a year, when he receives a birthday greeting, he says.) He began playing guitar at age 4, as part of a free community instruction program. He got his first computer not long afterward, and his interests have vacillated between music and technology ever since. He also played on his neighborhood’s club soccer team, but as with music, he ultimately concluded that he had neither the passion nor the skill to distinguish himself on the field. “I wasn’t the best musician, or the best soccer player. For a time, I thought I could be the best programmer, but it turned out that wasn’t true either.”
What he had was a gift for entrepreneurship. In high school, Ek began designing websites for businesses, at a fraction of the cost other firms charged. He recruited friends and classmates to expand his services, ended up launching several other businesses, and eventually sold all of them when he was 22 for enough money to reach the financial goals he’d set for himself by 40. He still seems mystified by the heights he’s reached. “You’re not supposed to be a billionaire in your thirties,” he tells me. (“In Sweden, there’s an inherent tension for anyone who is ambitious,” explains Wallach, who calls Ek a good friend. “How do you do great things without sticking your head up too high?”)
THE WORLD SHAKER: ROCÎO GUERRERO
Title: Head of global cultures
Employee since: 2011
First album: “Not the first, but definitely one of the most important albums that marked who I am musically speaking is Sueños Líquidosfrom Maná.”
First concert: A classical music concert at the Conservatory of Music where she grew up in southern Spain.
First music business job: Classical music teacher
Song she’s listening to on repeat: “Olha a Explosão” by Brazilian funk artist MC Kevinho featuring 2 Chainz, French Montana, and Venezuelan artist Nacho. As she says, “This remix always makes me smile and reminds me why I do what I do. Talk about global cultures!”
As the dark deepens and the snow swirls on Skeppsholmen, I ask Ek about his wedding, on Lake Como in northern Italy, two summers ago, which was officiated by the comedian Chris Rock. It seems incongruous that someone who has avoided the limelight would want a superstar at the center of his private celebration. “My wife and I were discussing what kind of wedding we wanted,” he explains, “and we said, ‘The whole ceremony part, it’s kinda boring.’” They’d heard about another wedding where the priest inadvertently misspoke a line, which got everyone laughing. “I was like, ‘That’s what a wedding should be,’” Ek goes on, “and we said, ‘Okay, what would our dream be?’ ” They were both fans of Rock, who happened to be friends with Spotify investor and talent manager Guy Oseary. (When I ask Rock about the experience, he says, “Well, I got to meet Mark Zuckerberg, so that was cool.”)
Ek pauses momentarily during our walk and looks out over the water. “You can hear a little bit of the city,” he says, the vague echo of Stockholm’s traffic in the distance. “But it’s a totally different atmosphere here”—only 20 minutes or so from the office—”and you can sit for hours and just think.” Ek walks this path often, and if he’s not alone, he says, he’s usually one-on-one with one of his lead reports. “Getting to the right decision is inversely correlated to how many people you have,” he says. “Anything bigger than eight people, you can’t really debate strategy.”
Ek thrives on tossing around ideas and theories, gaming out future strategic possibilities. He has one office in Stockholm and another in New York, where he spends an average of a week a month. Each of his work spaces is dominated by a large whiteboard, and he says he can lose himself in long sessions in front of one. “I’m weird about time,” he says. Each evening, he reviews a list of goals for the day, the week, and the month. “And then I just over-allocate time to [addressing] those goals.”
This past December, as the IPO approached, Ek got caught up in a multiday brainstorm about the future of what Spotify calls its content group, which includes label and artist relations, playlisting, and the company’s original content studio. As the conversations continued, Ek’s questions for the head of that group, chief strategy officer Stefan Blom, became more pointed. He kept asking whether Blom was still up for managing these tasks.
“He worked incredibly hard getting these label deals done,” Ek says of Blom, who had been with Spotify for four years, “and then you realize, Holy shit, it’s going to be more of this for another few years. I wasn’t forcing him to do one thing or the other, I’m just asking the questions.” Their dialogue concluded exactly as he’d expected it to, with Blom deciding to step aside. Ek ran the unit personally until he hired veteran media exec Dawn Ostroff in June. (Blom says he had been considering new challenges before his conversation with Ek; the two remain in close contact and have said they hope to work together again.)
THE FUNKY ONE: MJEEMA PICKETT
Title: Curator, R&B/soul music
Employee since: 2015
First concert: New Edition (with opening acts Force MD’s and Ray, Goodman and Brown) at the Washington Convention Center circa 1984.
First music business job: “While a student at Clark Atlanta University, I interned at two top-rated, major-market radio stations, V103 in Atlanta and WPGC95.5 in Washington, D.C.”
Song she hipped listeners to early: “‘Khalid’s ‘Location.’ We came across this track and featured him in various global R&B playlists, such as Are & Be, Alternative R&B, and Soul Lounge, while he was still an independent artist.”
Album she’s listening to on repeat: Innervisions by Stevie Wonder
The episode is representative of how Ek manages. To an outsider, his pressing of Blom may sound combative. Ek says he was just being transparent about expectations. He orients his leadership team around what he calls “missions”—discrete, goal-based assignments, rather than open-ended positions. Ek likens his approach to LinkedIn founder Reid Hoffman’s concept of a “tour of duty.” He explains: “You don’t have the same job for more than two years. The more honest we are about that, the better it is.” (That’s right, every two years, you have to re-up.) Ek goes on: “Very few people at Spotify last more than two or three rounds. It’s not about poor performance. At this level, it never is. It’s about future performance.”
Spotify’s current R&D chief, Soderstrom, a chisel-jawed, blue-eyed Swede who’s been at the company for nine years and is among Ek’s closest advisers, almost departed several years ago after an Ek-driven performance discussion. Soderstrom had been running the product team, and Ek was hesitant to give him more responsibility. “He didn’t seem to have much interest in leading people,” Ek recalls. “From his own team, he was getting mediocre scores, not very inspirational as a manager.” He told Soderstrom as much. But Soderstrom pushed his boss to give him a chance. “He really wanted it badly,” Ek says, so the CEO acquiesced. “And he completely outdid my expectations.” Soderstrom’s portfolio now encompasses 40% of Spotify’s workforce.
“Had we not had that conversation, he probably would have left,” Ek says. “That honesty is an important part of our culture,” which is one topic that particularly animates Ek. “One thing that I hate,” he says, is “when people worry, ‘How do we keep our culture?’ It’s horseshit. The culture will change. With every person who leaves, every person who joins, there’s change. The question is, what change do we like and what change do we not? What are the things we will embrace?”
Constant change is among Spotify’s most defining characteristics. In the fall of 2013, for instance, Spotify secretly faced an existential moment. Its user growth mysteriously stalled, putting the company’s future in peril. For each of the previous summers, Spotify had noticed a pattern among its users, who at that time were still predominantly desktop-based: As summer vacation set in and people spent time away from their computers, monthly active use would fall off, only to roar back in August when people returned. But in 2013, the annual late-summer bounce didn’t materialize. “It’s like people put their computers away, and never took them back out,” Soderstrom recalls.
The Spotify team realized that they needed a mobile product that could be accessed by everyone, not just paying subscribers. And they needed it quickly. They had already been negotiating with labels about licensing rights for a free mobile version, but the deals weren’t done. Nor were engineers ready with a product. The sudden crisis sparked company-wide urgency. When the licensing deals were finally signed, in December 2013, “we literally just pushed the button on the same day to get it out there,” says Soderstrom of the new app. There was no time for rigorous testing. “If it had taken another six months, it might have been too late to recover.” The strategy worked: At the end of 2013, Spotify had 36 million users and 8 million paying subscribers; by January 2015, it announced 60 million and 15 million, respectively. Forty-two percent of time spent on Spotify was now via phones and 10% on tablets, the first time mobile listening surpassed desktop.
That fearlessness (some might say recklessness) is why Spotify is the industry leader, and it continues to drive its culture and actions. Just three weeks after the company went public, Spotify announced that it was again dramatically altering its free mobile product, adding a slew of features that listeners used to have to pay for—plus some new ones that had never before been available, including a mode to consume less data while streaming. The move risked shaking investor confidence in Spotify’s stock, but Ek says, “Success for us will be determined by our ability to move faster than everyone else in this space.” Indeed, his reimagining of Spotify’s free service came a few weeks before Google, which has had countless opportunities to lead the industry shift to streaming music, debuted a revamped YouTube Music.
Each quarter, Ek creates what’s internally called “the bets board”: a list of seven to 10 priorities, selected from among proposals made by the operating teams. Resources are allocated to the top bet first, then the second, and so on. “If you fail, fail from the bottom up,” Soderstrom says, describing Ek’s strategy. “So number one should never fail, and eight should fail before seven. It’s surprisingly effective.”
The new free tier has been a top priority for more than a year. It reflects how important it is for the company to keep acquiring new customers (and turn them into paying ones), but it also has its own commercial element. “Billions of people listen to radio, and most of that today isn’t monetized very efficiently,” Ek says as we chat on the couch in his Stockholm office. “Commercial radio, that’s conservatively a $50 billion industry globally. The U.S. radio industry is $17 billion, close to the size of the whole global recorded music industry, which is $23 billion. And what do people listen to? Primarily music.” Ninety percent of Spotify’s current revenues come from subscriptions, but if the free product expands, so can Spotify’s radiolike advertising business. As Ek notes, with typical understatement, “We still have a lot of room to grow.”
Apple CEO Tim Cook is seated in his personal conference room inside the company’s spaceshiplike headquarters in Cupertino, talking to me about his love of music. “I couldn’t make it through a workout without music,” Cook says, when he and I meet in January to discuss Apple as an innovative company. “Music inspires, it motivates. It’s also the thing at night that helps quiet me. I think it’s better than any medicine.”
Cook’s words embody Apple’s longstanding critique of Spotify, which is that its algorithms are eroding music’s spiritual role in our lives. Cook doesn’t mention Spotify by name but says, “We worry about the humanity being drained out of music, about it becoming a bits-and-bytes kind of world instead of the art and craft.”
Apple dominated the download era of digital music, and did not adopt streaming until almost two years after download revenues started to decline. The company purchased Beats by Dre for $3 billion in 2014, in part to get its nascent streaming service, and a year later, Apple Music debuted. Although the service has been maligned as difficult to use, Apple has been able to leverage its active installed base of 1.3 billion devices to attract 50 million Apple Music subscribers and trial customers. All those iPhones are a formidable advantage over a stand-alone operation like Spotify, and Apple has something else that Spotify doesn’t: profit, almost $14 billion in its second quarter of 2018. Apple can approach music as a loss leader, or as Cook says directly, “We’re not in it for the money.”
Yet Spotify still has more listeners, more paid subscribers, and a more central cultural position in the music world, because its software is more elegant and its playlists (created by both algorithms and humans) are wildly popular. Ek, who doesn’t like to mention Apple by name any more than Cook likes mentioning Spotify, points to his company’s focus as the reason: “Music is everything we do all day, all night, and that clarity is the difference between the average and the really, really good.”
Ever calm, Ek believes it’s this singularity of purpose that will help him defy all the skeptics, from those who believe he can’t beat Apple to those who think that there’s no difference between the streaming music services to those who can’t imagine Ek ever overcoming the high licensing fees he gives back to the record business. All these arguments are shortsighted, he says. Lower-margin businesses can turn the corner once they hit an inflection point (as Amazon has done, after two decades of deferring profitability for growth), and critics mistakenly believe that access to tens of millions of songs is the endgame rather than just the beginning of a much bigger opportunity to transform the music industry.
Take playlists, which have emerged as a key differentiator for Spotify. From the outset, Spotify users generated their own music playlists. The company itself, though, stayed out of that curation. But in 2013, not long after Spotify opened up its platform to outside developers, it noticed a small Swedish firm called Tunigo that was providing human-created playlists defined less by genre than by activity: music for studying, music for cooking, music for a sunny day or a rainy one. It was a different, more emotional way to engage listeners. Spotify quickly purchased Tunigo and moved its team and leader, Nick Holmstén, inside the company’s operations.
Ek didn’t see the value at first—”Oh, this is going to be a disaster,” he recalls thinking about one playlist innovation—but playlisting did more than increase Spotify’s consumer appeal. It turned Spotify into a user’s personal DJ. The company told investors in its prospectus, filed last February, that “we now program approximately 31% of all listening on Spotify” via playlists, which has created powerful new brands within Spotify such as Rap Caviar and ¡Viva Latino!. There are now Rap Caviar and ¡Viva Latino! concert series, pointing the way toward an even broader role for the company within the music business, where it’s generating live event and merchandising revenue without having to pay record labels.
In addition, Ek brokered a remarkable deal last December with Tencent that could buy Spotify enough time to prove its model financially. The Chinese tech giant invested in Spotify, and Spotify, in turn, invested in Tencent Music, which has 700 million monthly active users. The deal is both a savvy bet on the Chinese market without having to learn an expensive lesson first (see: Uber) and a potential windfall. Tencent Music is rumored to IPO later this year, and Spotify’s stake in the company would be worth several billion dollars.
“There’s never a moment in a meeting with Daniel [Ek] when he says some genius shit and your brain explodes,” D.A. Wallach says, comparing Ek with his other tech-titan friends. “Sean Parker [the Napster founder] is a crazy big-picture intellectual. Elon Musk is essentially an engineer; he views everything from finance to marketing as an engineering problem. Daniel has a similarity to [Mark] Zuckerberg, disposition-wise, but he doesn’t have the same world-historical aspirations. He’s succeeded in the [music] business because he’s extremely patient and not high on his own supply, meaning he has not been susceptible to the vices that ruin people in entertainment.”
Ek’s personality has opened the door to a different kind of relationship with musical artists from what prevailed in the era of cocaine-snorting, thieving record execs. So far, Ek has been focused on changing how creators get paid; in streaming, an artist is compensated every time a song is played, creating lifetime revenue (albeit a fraction of a penny at a time), whereas in the old model they got paid (sometimes) after selling a CD or download. But that’s only the beginning. “Spotify’s first eight to 10 years were focused on consumers,” says R&D chief Soderstrom. “The next eight to 10 will be focused on artists.”
Spotify for Artists is the most visible example of this new directive. The service, which launched in its current form in 2016, allows musicians to access data on who is listening to their work on the platform and to personalize their presence to enhance engagement. Iconic rock band Metallica, which once helped sue Napster out of existence, used this data on tour to customize its setlists based on what local fans listen to most. Smaller artists have used it to identify where to tour, and to activate their superfans. “Whatever your genre is, you can find an audience,” says Spotify chief marketing officer Seth Farbman.
This goes deeper than it might seem. Troy Carter, the music manager who discovered Lady Gaga and helped turn her into a global phenom, gave up his talent-management business to join Spotify full-time two years ago, as an emissary to artists and industry insiders. “Daniel and I were at the Soho House in L.A. the week of Coachella, and we began talking philosophically about the idea of creator services,” Carter says. “I said my dream is for Spotify not to be a means to an end for artists but to be the end.”
Carter clarifies that he wasn’t talking about Spotify becoming a music label. “I have zero interest in that. I don’t necessarily think labels are even going to be labels in the future. All our roles are going to change.”
THE MOOD ELEVATOR: NICK HOLMSTÉN
Title: Global head of editorial programming
Employee since: 2013
First album: The Eagles’ Hotel California
First concert: Peter Gabriel
First music business jobs: “After a couple of bands, I ended up as a songwriter and producer for 10 years.”
Spotify claim to fame: Holmstén’s startup, Tunigo, introduced the idea of contextual playlists to the service, such as “intense studying” and “confidence boost.” Their popularity inspired Spotify to acquire his company.
Artist he’s listening to on repeat: Post Malone
Ek has been talking a lot this year about Spotify’s mission to get 1 million artists to make a living off the platform, but he doesn’t mean there will be 1 million Lady Gagas or Bruno Marses. Financial analysts often compare Spotify to Netflix—a comparison Ek pushes back against—but Ek’s vision of the future looks more like YouTube: a meeting spot for creators and fans, in groups both large and small, and Spotify benefits when transactions happen in this “marketplace.” Ek says: “In that model, it’s almost like you’re managing an economy.”
“The major-label system was built out for the 5,000 biggest artists in the world,” Carter notes. “If we’re going to [enable] a million artists to make a living, that’s going to require an entirely different ecosystem.” In this world, “an artist might be happy making $50,000 a year, supplementing income from other work to help pay their mortgage, raise their kids, by doing what they love. I’m just as committed to that kind of artist. How do we make it so there are a lot more winners,” Carter says, “to redefine what it means to be a winner?”
“We are only in the second inning,” Ek said repeatedly in the months leading up to and just after the IPO, an echo of Jeff Bezos’s notion that it’s “day one.” He’s right, but there’s also plenty of time to get crushed before the ninth rolls around.
Despite Ek’s achievement in popularizing streaming music, his company in many ways remains an underdog. Spotify ships out so much of its revenue in licensing fees to labels that it needs to be tightly cost conscious, to a degree that its competition does not. (Spotify’s new Stockholm offices are nicely designed, but have none of the jaw-dropping presence of Apple Park or the Googleplex.) Ek says this pushes his company to be more disciplined: “Did I ever believe that we were going to be alone? No.” Still, vanquishing the world’s most profitable businesses will not be as easy as steamrolling once-hyped startups such as Grooveshark and Deezer.
Ek relishes this uncertainty, in a way few CEOs do. When we talked in New York just before the IPO, shortly after he’d lost that body-fat contest with his friends, he began musing about what personal challenge he might tackle next. “I’d like to do some boxing,” he told me. “There’s that boxing expression: ‘Everyone has a plan until they get punched in the face.’ ”
I mention that his board of directors might not like him putting his brain at risk, that at the least he might consider wearing protective headgear. He brushes that idea aside. He wants to see what it’s like to be rattled that way, to be prepared for whatever may come next.
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned