Spotify CEO Daniel Ek is getting tired of the narrative that his company is screwing over musicians and songwriters. This morning, he took to Spotify's blog with a lengthy defense of its business and the streaming model at large, and he didn't ignore the elephant in the room: Taylor Swift's recent divorce from Spotify. "Taylor Swift is absolutely right: music is art, art has real value, and artists deserve to be paid for it," Ek wrote. "So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time." According to the CEO, royalties paid to Swift — prior to her disappearance — and other top mainstream artists "are on track to exceed $6 million a year."
Ek revealed some broader numbers on just how much Spotify has paid out to the music industry. Thus far, the company has compensated artists, songwriters, labels, and publishers to the tune of $2 billion. $1 billion of that figure has gone out in the last year alone, pointing to the service's strong continued growth. Indeed, Spotify is getting bigger: it's now got 50 million active users, with 12.5M of those paying for ad-free streaming. "That’s three times more than the average paying music consumer spent in the past," wrote Ek.
"Piracy doesn’t pay artists a penny."
He went on, saying "We’re paying an enormous amount of money to labels and publishers for distribution to artists and songwriters, and significantly more than any other streaming service." That's a not-subtle way of saying that record labels are partly to blame and may be too stubborn or slow to adapt to our evolving listening habits. "If that money is not flowing to the creative community in a timely and transparent way, that’s a big problem."
"Most of our competition comes from the tons of free music available just about everywhere."
He then went on to address his company's free, ad-supported tier, which has been a source of frustration for performers and songwriters alike. 80 percent of paying customers started out as free listeners, according to Ek, who says the "freemium" model is a critical piece in convincing users to start paying. "If you take away only one thing, it should be this: No free, no paid, no two billion dollars," he said. "Here’s the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid. If we want to drive people to pay for music, we have to compete with free to get their attention in the first place." In a world where so many people turn to YouTube for their music fix, Ek insists "freemium" is a necessary piece of the puzzle for anyone to get paid.
And finally, Spotify is doing its best to remind the world that Taylor Swift's recent blockbuster 1989 sales week is a rare exception to the rule. Across the music world, album sales are still falling off a cliff. Ek claims it's not fair to point the finger of blame at Spotify, since this trend holds true even in regions where the company isn't doing business. "People’s listening habits have changed – and they’re not going to change back." But Ek underlines that Spotify and the music community have shared interests. "We don’t use music to drive sales of hardware or software. We use music to get people to pay for music," the CEO wrote. "The more we grow, the more we’ll pay you. We’re going to be transparent about it all the way through." With strong opinions on both sides, this debate seems destined to march on for months to come — even after Ek's impassioned defense of Spotify.