Spotify founder Daniel Ek: "just selling stuff no longer works"

It came as something of a revelation to Smarta that Daniel Ek, co-founder of arguably the most successful web start-up to come out of Europe in the last five years, only discovered Twitter, aservice even Smarta’s mum has been subscribed to for the last six months, ‘a couple of months ago’.

“It’s great,” the Spotify entrepreneur enthused to an audience of slightly open-mouthed tech aficionados at a Glasshouse event last night, “because you can get feedback directly from your users. We used to look for problems but now they solve them for us. It gives you direct access to so many smart people.”

Clearly, while the rest of us have been Twittering away, Ek has been busy concentrating more important matters: while he was cagey about the precise number of users the music-streaming service has, he did confess the amount of work he had to put into building the service took him by surprise.

“We never anticipated that it would take two and a half years to get record labels to see the vision and come aboard,” he explained. “But we had to get the product right before we started licensing it, so there were times we had to push back the launch by six months to make sure it was perfect.”

There’s no doubt the amount of time the Spotify team put into perfecting the business model has paid off: Ek revealed while the percentage of users who pay a monthly subscription fee to use the service is ‘less than double figures’, since Spotify’s iPhone app launched last month, revenues have grown by 50% – and in Ek’s home country of Sweden, one in nine people are signed up to the service.

Ek made the point that if Spotify’s runaway success demonstrates one thing, it’s that the entertainment industry’s business model is dying on its feet. If the media industries are to survive, he explained, they are going to have to radically alter their models.

“The entertainment industry needs to do something soon,” he said. “People want to consume more content from a bigger variety of sources – but just selling stuff no longer works.”
 

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