Today's the transition day between SXSW Interactive and the start of the much larger and arguably more interesting SXSW Music festival, so it's only fitting that Spotify, Rdio, and turntable.fm all held events and keynotes this morning. But while Rdio launched a total redesign and turntable.fm announced a series of major label deals, Spotify's chief content officer Ken Parks instead held a thoughtful panel called "The Future of Music" with Billboard editorial director Bill Werde and Disturbed singer David Draiman. The contrast was stark: while Rdio is in the middle of a full-on competitive reinvention and turntable.fm is just signing the paperwork that enables its business, Spotify is talking about nothing less than saving the music industry from itself. "We've taken millions of people used to stealing music and gotten them to pay more than their fair share," Parks said in an interview after the panel. "By historical standards, someone spending $120 a year is spending a lot of money on music."
And make no mistake — the total amount of money is enormous. Parks told the room that Spotify now has some 10 million monthly active users, of which some three million pay for premium subscriptions, and that the company has already paid out some $250 million to rightsholders. "By the millions there were dedicated pirates who now don't see a reason to pirate," because of Spotify, he said. "Before Spotify there was no market in places like Sweden."
Of course, the biggest issue for streaming services right now is buy-in from artists unhappy with minuscule per-stream royalty rates estimated to be just a fiftieth of per-download rates, but Parks and Draiman repeatedly called such comparisons "asinine." "What should matter is how many people are being monetized and the rate of that monetization," said Parks, with Draiman saying artists obsessed with per-stream rates are "cutting off their nose to spite their face." Parks was even more blunt after the panel, saying that artists "trying to put the genie back in the bottle" by holding out on streaming services are "on the wrong side of history and technology and progress."
"This is exactly the population of users we need to give a big sloppy wet kiss to."
The challenge, of course, is convincing artists like The Black Keys and Coldplay that they have more to gain by embracing the streaming services, and fear of being left behind clearly isn't working so far. Parks encouraged bands and labels who withhold music to think about their fans, especially the ones paying for services like Spotify instead of pirating. "This is exactly the population of users we need to give a big sloppy wet kiss to... We have to embrace them, not withhold music. It's a bad message to send to someone who's spending that much money on music, who's buying the ticket, who's buying the $35 T-shirt."
But it's not all pontificating and sweeping statements — Spotify is also trying to improve its core products, introduce new family pricing plans, and expand its reach through apps. Central to that is the somewhat-clunky mobile app, which Parks said is becoming increasingly important as more people first use Spotify on phones. "Will that experience get better? It'll have to." Parks also said that Spotify apps would "eventually" come to mobile, although there's no timeline. As for the apps themselves, Parks said Spotify was cultivating developers and eventually hopes to see "thousands" of apps built on the platform. "We think it's an amazing opportunity to become the soundtrack to things that happen online."
In the end though, the message is clear: Spotify sees itself as leading a revolution in the music business, and Parks isn't shy about saying it. "What we're trying to do is vindicate the value of music and help artists vindicate the value of their work," Parks told the room. "What we want to do is cannibalize piracy in a big way."