Analysis

Spotify CEO: ‘We’ve actually now proved our business model’


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danielekSpotify’s 2012 financial results divided opinion: critics of the company noted its growing losses, while fans hailed its booming revenues. Now CEO Daniel Ek has been responding to the former group in an interview with the Wall Street Journal.

“I think a lot of people just look at the financials and say: ‘Oh wow, losses, that’s really, really bad.’ That’s not at all how we see it, we see that we’ve actually now proved our business model,” he says. “The difference between what we pay out in royalties and what we actually take in in revenue is increasing, which is positive.”

Ek also takes some entertaining potshots at some of Spotify’s rivals from the big-tech world: “iTunes is really to give you apps. It’s not to give you music, that’s a side benefit. With Google, it’s like ‘oh, we need something with music because Apple has something with music,’ and with Microsoft, I’m not even sure what their rationale is for doing it.”

Ek also claims to be “not surprised, but saddened” by artist unrest over streaming payouts. “All they see is millions of streams, and they see, you know, not millions of dollars in the end, but thousands of dollars, and they think that a million streams is comparable to a million downloads, which it obviously isn’t.”

However, his point that the advantage of Spotify’s model is that fans may investigate “David Bowie’s back catalogue” when they might not have bought it is unlikely to go down well with critics (Nigel Godrich and Thom Yorke being the obvious examples) who are more concerned about emerging artists than established stars.

But Ek may have one eye on upcoming licensing negotiations with major labels: “We’re now the second-largest revenue generator for them in the world after iTunes. So of course we have a lot more to say.”

Stuart Dredge

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