Spotify CEO: Advertising devalues music

Company earning "millions of euros" in ad revenues per month

9 October 2009 10:55 GMT / By Duncan Geere

Spotify is continuing celebrations of its 1-year anniversary and as part of the jamboree, the company's founder and CEO, Daniel Ek, has taken some time out to pen a blog post about the future of Spotify, and his thoughts on the state of the global Music industry. In it, he concedes that ads "devalue" music, but says that they're earning his company "millions of euros" in revenues each month.

He said: "I first considered writing about the state of ad-supported music, and given that I care more than most about figuring out a revenue model that doesn’t devalue music, it probably wouldn’t praise wholeheartedly (as some may have expected it to do) the ad-supported space. Especially since Spotify’s business model is, and has been since launch, more about the mix of subscription and ad supported".

He went on to answer critics of Spotify's business model by pointing out that iTunes missed its revenue targets by 30% in its first year, saying that he's in it for the "long haul" - "We aren’t interested in just trying to hype the company and then "flipping it", he said, then adding: "The product has been our core and our main marketing message, and perhaps now is the time to modify that message".

He says that the music industry has the potential of becoming a $40 to $50 billion industry, and reckons that he's the man for the job. Spotify has repeatedly pointed to a survey that says that 80% of Spotify users file share considerably less after getting the software. Ek says that by increasing the amount of people with access to the music streams, setting a target of "trillions", piracy can be cut by "big chunks".

Ek says that the focus for Spotify in the coming months will be better library handling, making Spotify socially capable and improving the portability of the software - i.e. releasing more editions of the mobile version of the client.

Finally, Ek said that his biggest mistake with Spotify was to make it so dependant on its partners - the labels, composers, artists, etc. He said: "If we’re asking the industry to change, we need to be transparent and honest about the end goal - especially since we’re asking everyone to make a huge leap of faith to an unknown place where you could potentially argue that the industry risks its most profitable customers. We haven’t been as open as we could have been up until now, and that’s been an oversight on my behalf".

Many have said that Spotify could do with a little more openness, so it's refreshing to see Ek agree. He now needs to turn those words into action, and we'll keep you posted of what happens on that front.

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