Spotify Approaches An Actively Drowning Industry

Daniel Ek has just been named by Forbes as the most important man in the music industry, and will be on the cover of Forbes' 30 under 30 issue going out on January 16th. It's not hard to see why he's receiving the hype, considering Spotify's disruption to the music industry and the explosion of growth the company has seen since it has expanded geographically. But one thing that struck me in the article was when Lorentzon had just quit his day job and put up 2 million in seed money, and Ek had already made his money but shed his riches. Steven Bertoni writes, "Lorentzon and Ek were in a unique place: The former no longer needed the money, and the latter no longer cared about it. So they decided to ignore the dollars and aim for disruption."

This seems to fall well in line with the GigaOm article, Why Spotify will never be profitable: The secret demands of record labels, which describes (by a competitor) the unsustainable terms imposed by labels on Spotify. If the details in the GigaOm piece are true, they're backed up by the Forbes article which details Ek and Lorentzon's desire to only work with real agreements by labels. By ignoring the money and focusing on the disruption, I'm getting the picture that Spotify runs the real risk of being gutted by labels.

When I was in lifeguard training classes years ago we learned that when approaching people close to drowning, victims will often panic and cling onto your arms or head, which could impede your ability to swim and take you underwater with them. To prevent this, the instructor taught us that in this situation you should punch the drowning person in the face and knock them out, so you can safely bring the person to the shore. It was an exciting proposition for 17 year old me.

Right now the record labels have the same desperation as a drowning person. They're trying to cling onto any small pieces of driftwood or seaweed that passes by, like suing torrent downloaders and writing the legislation behind SOPA, as if either of those actions are a solution. Spotify has correctly solved so much of the music distribution problem that it's disheartening to watch it be gutted by short-term greed.

Forbes is right: Ek is the most important person in music. And he needs to start using his new position as a bully pulpit to start throwing punches to the face of an industry that needs it. This could come in the form of a more standard negotiation with all labels, or for Spotify to front its own label to sign musicians (like Netflix producing its own original content). Otherwise, Spotify could disappear as suddenly as Napster, or worse, could become a product crippled by time limitations and region restrictions imposed by record companies. I want to keep using the Spotify service I've grown to love for a long time. So go and punch record labels in the face.

Share to help us grow the ArcticStartup community!

blog comments powered by Disqus
Bdf192ca88044887c26f6c03d17fe555?s=48
mediamaster January 10, 2012

I've just been reading "Selling the Circus" by ex music and movie marketing wizzard Sam Hamilton, and althought it is essentially aimed at marketing/publicity students and bosses, it has a lovely chapter about some of the silly mistakes the accountants made in readyness for the download era - and how they actually contributed more to (major)label downfall that the e-curse they were attempting to forestall.... disruption is honourable by comparrison to paying your own executives for your downfall!!