Spotify: we will not become "a digital music graveyard"

 

Gallery

By Stuart Turton

Posted on 9 Oct 2009 at 08:51

Spotify chief executive Daniel Ek has defended the viability of the streaming-music service's business model, claiming his principal concern is to avoid the business becoming "a digital music graveyard".

The service, now a year old, offers users the ability to stream music for free from all the major record labels, at the cost of being interrupted by adverts in between tracks.

Alternatively, you can upgrade to the premium version of the service for £10 per month, which strips out the ads, as well as offline playback and the ability to use the Spotify iPhone and Android app.

However, despite attracting five million users, questions have been raised over how Spotify can make money, with so many people seemingly content to stick with the free version.

iTunes missed its revenue targets in its first year by 30%, and label executives were far from convinced that this was the future

Ek drew comparisons with iTunes, though he admitted the company "has a long way to go."

"The notion of overnight success is very misleading and actually rather harmful to any hope for long term and sustainable growth in this industry. Yet this is unfortunately something the music industry as a whole is particularly good at, expecting business models to be proven within months of inception," Ek notes on the Spotify blog.

"The truth is that even the most successful digital business to date, iTunes, missed its revenue targets in its first year by 30%, and label executives were far from convinced that this was the future.

"It would obviously be wrong for me to compare Apple's success with iTunes to Spotify... yet whatever the business, big success takes years to build and there are very few counter examples. We are in this for the long haul. We aren't interested in just trying to hype the company and then 'flipping it'."