Daniel Ek, co-founder and CEO of the music streaming service Spotify, was once hailed as the music industry’s destroyer. Now, many are calling him that industry’s saviour.
A Head for Business
With a real-time net worth of $2.8 Billion on the Forbes list, Ek was making shrewd business moves as young as 13, when he charged his first client $100 to create a website. He charged his next client twice that amount. Several successful sites later, Ek’s asking price had become $5,000 per site.
Eventually, his earnings were an astounding $50,000 per month. By the age of 18, Ek was managing a team of 25 people. Five years later, the young man from Stockholm was a self-made millionaire.
But all that money did not make him happy. “I started thinking about what truly mattered to me,” he said in a 2013 interview, “and I realised that there were two things in my life that had always been really impressive, which were music and technology.”
Thinking Outside the Music Box
The idea for Spotify came to Ek in 2002, when he was 19, after the peer-to-peer music service Napster shut down and Kazaa (another illegal site) took over as the most popular place to pirate music.
“You can never legislate away from piracy,” he says. “Laws can definitely help, but it doesn’t take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry – that gave us Spotify.”
In April of 2006, Ek incorporated Spotify AB with long-time business associate Martin Lorentzon. On October 7, 2008, the partners launched Spotify Technology SA in Stockholm, Sweden. However, due to difficulty obtaining international licenses for music, it would be another three years before Spotify was able to launch in the United States.
Today, the music streaming service is available in much of North and South America, most of Europe, parts of Asia, as well as in Australia and New Zealand.
According to the Recording Industry Association of America, streaming music services such as Spotify make up almost two-thirds of industry revenue and nearly all its growth. In 2017, Billboard magazine named Daniel Ek the most powerful person in the music business.
Spotify currently provides access to more than 30 million songs, has nearly 160 million monthly users, and more than 70 million paying subscribers. There are some analysts who feel Spotify could double its number of premium subscribers by 2020.
Spotify Goes Public
April of 2018 began with a flourish for the music streaming service. On April 2, 2018, the day before Spotify went public on the New York Stock Exchange, Ek posted a letter on the Spotify website. (Click here to read that letter in full.) In it, he spoke of Spotify’s mission, “To unlock the potential of human creativity – by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.”
The following day, on April 3, Spotify began public trading on the NYSE. On April 4, Spotify’s value was pegged at $25 billion. Ek, who owns roughly 9% of Spotify, has about $2.3 billion worth of Spotify stock; Lorentzon, approximately $3.1 billion. The stock market debut was undoubtedly music to the ears of Ek and Lorentzon. However, many in the music business are still holding their breath as labels, artists, and executives all wait to see what the outcome will be for Spotify, and how the broader industry be affected by this growing wrinkle.
What’s in a Name?
Destroyer? Saviour? Whatever.
Though Daniel Ek’s music streaming service may have changed the way people access, create, and listen to an art form that has been around for thousands of years, Spotify’s forward-thinking CEO simply says: “I’m not an inventor. I just want to make things better.”
Peter Campbell | Contributing Writer