Guest Post: “Spotify Untold (“Spotify Inifrån”) the Corporate Bio Book is a View Into Daniel Ek’s State of Mind

By Chris Castle

Ever heard the expression, “you’re making my argument?”

You may have seen the book reviews of “Spotify Untold” (or in Swedish “Spotify Inifrån”). The book is currently only available in Swedish and has not been released in the US, but in a new marketing twist the authors are on a book tour in the US promoting their book in Swedish to an English language audience.  Must be nice.

The writers not only seemed to have missed the streaming gentrification part, which is of great consequence to artists, songwriters, and especially MP/TV composers–but those groups are pretty clearly not the authors’ audience.  They are also peddling a ghoulish yarn about Steve Jobs that gives far more insight into Daniel Ek’s midnight of the soul than anything else.  A simple fact check should have made one inquire further in my view.

If their interview with Variety is any indicator, the story line of “Spotify Untold” revolves around (1) music is a commodity (with no discussion of Spotify’s role in the commoditization of what is now openly called “streaming friendly music” not unlike “radio friendly” music–both equally loathed by artists whose name does not begin with “Justin”; and (2) Daniel Ek is a heroic genius (despite the resemblance to Damian in his teen pictures they are also handing out–he thankfully shaves his head).

But most importantly (3) Ek was pursued by Steve Jobs, the evil giant whose company he just happens to have filed a competition complaint against who was aided by the equally evil Sony and Universal as they were all in on it to keep our hero from entering the fabled land of Wall Street.  Yes, a yarn straight out of Norse mythology as retold by Freud; perhaps a little too much so.

But the book may also be a corporatized version of Joseph Campbell’s hero’s journey from The Hero With A Thousand Faces aka Star Wars).  You can plug Daniel Ek into the hero’s role pretty easily:
campbell heros journey

As reported in Variety:

Barely a page into the book “Spotify Untold,” Swedish authors Jonas Leijonhufvud…and Sven Carlsson paint an odd scene. The year is 2010 and Spotify co-founder and CEO Daniel Ek [the hero] is facing a succession of obstacles [the Threshold Guardians] gaining entry into the U.S. market [the region of supernatural wonder] — or, more specifically, infiltrating the tightly-networked and often nepotistic to a fault music industry. [Unwelcoming of the stranger from Asgard, so unlike Silicon Valley.]  As stress sets in [Challenges and Temptations], Ek becomes convinced that Apple’s Steve Jobs is calling his phone just to breathe deeply on the other end of the line, he purportedly confesses to a colleague[a Helper].

There’s a saying, “don’t speak ill of the dead.”  That’s probably a bit superstitious for the authors, but is good advice.  It’s unbecoming and Spotify should denounce it, although it’s highly unlikely that they will given their fatal attraction to PR disasters.

There’s also a saying, “don’t mock the afflicted,” so before you laugh hysterically at the story, realize that Steve Jobs caring enough about Daniel Ek to do such a thing (which assumes Steve knew Daniel Ek existed) was something that was very important to Daniel Ek.  Or in a word–is Daniel Ek more Loki than Thor?

What is really objectively and factually odd about the authors’ 2010 Steve Jobs story about heavy breathing voicemails is that Steve got a liver transplant in 2009 and was very, very sick throughout 2010–the year they say these voicemails occurred.

Steve left Apple for good in August 2011 and passed in October 2011. It is implausible to me that he was even paying attention to Daniel Ek in 2010, assuming that Steve even knew or cared who Daniel Ek was. Aside from the fact that at that time Spotify was small potatoes, Steve had many more important things on his mind like staying alive. Plus, in my experience if Steve was going to leave you a testy voicemail, you knew exactly who it was. Exactly.

I for one think that the entire anecdote simply does not scan and is unsubstantiated by the authors’ own admission. Bizarre. Freudian. Not to mention a crass and thoughtless smear against a man who really did change the world. Who can’t defend himself because he is dead.

Variety reports that the authors were not able to confirm this rather insulting and perverse allegation.  But don’t let that stop anyone from publishing gossip.

What Variety does report is this statement from the authors:

To us, Ek’s claim is as a reflection of how paranoid and anxious he must have felt in 2010, when Spotify was being denied access to the U.S. market, in large part due to pressure from Apple. The major record companies seem to have been quite loyal to the iTunes Music Store, and to Jobs personally….Because Spotify was hindered by Steve Jobs [it’s called competition], it forced the company to sweeten its deals with the record companies [also called competition]….Spotify is challenging Apple on a legal level right now.We address Spotify’s constant struggle with Apple in our book. If Ek were to talk about such sensitive topics in book form, [Spotify would] do it in their own way with full control.

The first thing I thought of when reading the story of “Spotify Untold” was that very competition claim that Spotify is pursuing in Europe right now.  That claim appears to have been scripted–Spotify pursued it with the Obama competition authorities a few years ago.  And then of course there was the New York and Connecticut state competition claim that curiously came out the same time as Apple Music launched in the US, apparently manipulated by Spotify’s very own Clintonista lobbying operative who was a political ally of Eric Schneiderman the former (ahem) New York Attorney General.  (Spotify tried to drag Universal into that one, too–so this is a movie script that Spotify pulls down every so often for a polish and sometimes changes the supporting characters.)

While the authors claim that they spoke to many Spotify executives but not Ek, the book still has curious timing–as does the authors’ disclaimer that the book is not connected to Spotify directly, the plausible deniability that is the hallmark of black bag operations.

And if you believe as I do that Daniel Ek actually hates the major labels (read the Spotify DPO filing an you’ll get the idea), it’s only natural that he would try to twist Sony and Universal into the story.  He just didn’t know that his major label negotiation experience was garden variety stuff and not unusual in any way.  They didn’t get stock in iTunes so they damn well would in everything that came after iTunes.  Daniel Ek was not singled out–rather, he opted in.

I would be very curious to know why the authors of “Spotify Inifrån” came away from their research thinking that the major labels were “quite loyal” to iTunes and to Steve Jobs.  While that may have been true of certain executives, the reason that the labels required licensees to sell in Windows Media DRM (i.e., the format nobody wanted) was because they wanted to encourage competition with iTunes.

The labels eventually ended that failed policy after Steve called them out and suggested that they drop the DRM part (about which I strongly agreed in one of the first posts on MusicTechPolicy in 2006).  Even after the labels dropped that failed idea, record companies large and small did not want a single digital retailer dominating the online market.  So the idea that they colluded with Steve Jobs and Apple to make life difficult for a poor little hacker boy from Sweden is so inconsistent with reality to be laughable.

In fact, one could argue that were it not for Steve asking for more competition with iTunes Music Store (and in fairness, sell more iPods and later iPhones), there may never have been a Spotify at all.  What that does not include is the accelerating failing belief in one of Spotify’s major selling point–the free service converts users from piracy to a paid service.  That didn’t happen at anything like the rates that Spotify sold,  nobody believes it anymore and it was unbelievable in the first place. But exactly what you’d expect a hacker to say.

And here’s some other research that got left out:  Spotify’s psychographic data profiling is largely based on the work of Dr. Michael Kosinski, whose work also inspired the techniques of Cambridge Analytica and the Internet Research Agency.  See Kosinski et al, The Song Is You: Preferences for Musical Attribute Dimensions Reflect Personality (2016).  More on this influence another time.

So why would these authors be slinging this unlikely brew?  It’s possible that the book is an answer to “Spotify Teardown,” funded by a grant and published (in English) earlier in 2019 with a much less mythological and much more recognizable approach to a Spotify reality according to an NPR review:

[“Spotify Teardown”] argues that Spotify isn’t a media company per se – and…asserts that it’s structurally much closer to a Facebook or Google, particularly in its digital business model.  Indeed, Spotify was never really so much a music company as an Internet brand. “Spotify’s business model never benefited all musicians in the same manner but rather appeared — and still appears — highly skewed toward major stars and record labels, establishing a winner-takes-all market familiar from the traditional media industries.”

You won’t find that in a corporate bio.  That sounds like the streaming gentrification reality and definitely wasn’t written by anyone named Justin.  So while I don’t know what motivated the “Spotify Inifrån” authors, I do think that there’s a definite whiff of Astroturf in a book that tells a story that fits almost perfectly with the hero’s journey that Spotify would like to be telling competition authorities.  I think the authors are aware of this, hence their disclaimers.

And I’m still waiting for the last leg of Daniel Ek’s hero’s arc, the transformation and atonement.  Which is the part that makes the hero a hero.  As the authors tell us, “[Spotify] would probably rather tell their story themselves than have us do it for them, but I think they understand our role as journalists.”

I just bet they do.

But look–credit where credit’s due.  Ek used the music to make himself rich and he changed the economics of the music industry to keep making himself even richer.  He gets million dollar performance bonuses when he doesn’t meet his performance targets.  There are a growing number of niche and cultural artists who hate him. He’s also changed the way that fans interact with music online through the use of personality traits and data profiling instead of genre or artist based selection.  And he invented “streaming friendly music” to the great joy of elevator operators everywhere.

For all his idiosyncrasies, Steve is largely revered and recognized as someone who really did change the world. Or as Daniel Ek tweeted when Jobs passed in 2011–after supposedly being harassed by Steve:

“Thank you Steve. You were a true inspiration in so many parts of my life, both personal and professional. My hat off to our time’s Da Vinci.”

Exactly.  That Danny is a complex little man.

Remember those Mac/PC ads?  You could just as easily run the same ad campaign for Spotify/Apple Music with only a few tweaks.   And when it comes to marketing, what should be keeping Ek up at night is not devising sick stories he can tell about Steve Jobs but rather very justified fear of what will happen when Apple turns its marketing team loose on Spotify.  He ain’t seen nothing yet.

If you think this is paranoid, watch this video from the distinguished journalist Sharyl Attkisson.  Let’s just say I don’t put anything past these guys.

 

If Streaming Is The Solution To Piracy, Why Is Piracy Still Increasing?

Music Business Worldwide is reporting that “GLOBAL MUSIC PIRACY DOWNLOADS GREW BY ALMOST A FIFTH IN 2015″.

The amount of music downloaded on illegal piracy sites grew by 16.5% in the second half of 2015 compared to the year’s opening six months.

That’s according to leading content protection and market analytics company MUSO, which tracked web activity on 576 sites which were ‘wholly dedicated to music piracy or contained significant music content’.

Across these sites, MUSO analysed over 2 billion visitor traffic hits globally.

READ THE FULL STORY AT MUSIC BUSINESS WORLDWIDE:
http://www.musicbusinessworldwide.com/global-music-piracy-downloads-grew-by-almost-a-fifth-in-2015/

Spotify Hit With $150 Million Class Action Over Unpaid Royalties | Billboard

Vocal artist rights advocate David Lowery brings a massive action against the largest streaming service.

Camper Van Beethoven and Cracker frontman David Lowery, retaining the law firm of Michelman & Robinson, LLP, has filed a class action lawsuit seeking at least $150 million in damages against Spotify, alleging it knowingly, willingly, and unlawfully reproduces and distributes copyrighted compositions without obtaining mechanical licenses.

READ THE FULL STORY AT BILLBOARD:
http://www.billboard.com/articles/business/6828092/spotify-class-action-royalties-david-lowery-cracker-150-million

#irespectmusic

Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows…

windows

This time last year we correctly predicted the restructuring of at least one major label group when we asked the question, “Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?“. It didn’t take long for us to find out, “It’s Just Math : Digital Music Execs Exit, But will the Pivot to Paid Subs Be Enough To Save The Record Biz?” We’re still not sure that even paid subscription streaming actually works in the long term, but we know for sure that unlimited free streaming does not!

What a difference a year makes. What a difference Taylor Swift makes. What a difference Adele makes.

Going into the next year our prediction is that the power of windows can not be overstated as the leading solution to the problems faced by the record industry. Effective windowing has always been a part of the economic life cycle of every album release. The physical singles sales business (ya’ll remember 45 prm records, right?) – well, that was largely a loss leader to boost singles chart positioning that combined retail and radio reports.

In every record store there was the “hit wall” of discounted new releases to encourage higher volume sales. Every store stocked a robust variety of titles across different genres and price points comprised of front line titles, mid-line titles, budget line titles, and at the end there was the cut-out bin. Also, let us not forget the “11 records for a penny” record clubs advertised in magazines.

Those, my friends, are windows. Those who are advocating against windows are probably too young to know better or have been lead around by the nose by some digital snake oil salesman protecting their own interests.

This is not a philosophical discussion. This is financial reality. Respected stock analyst Robert Tullo who is the Director Of Research at Albert Fried & Company says this:

Longer term IP Radio and Spotify are good annuity revenue streams and great promotional tools. However, we believe the system works better for everyone when artists have the right to distribute their Intellectual property how they see fit.

Ultimately we think windows for content will form around titles that look much like the Movie Windows and that will be great for investors and the industry as soon as all these so called experts get out of the way and spot trading fashionable digital dimes for real growth and earnings.

Mr. Tullo is correct. Not only will artist (and rights holders) do better when they have the freedom of choice but so will the partner platforms. This is how it works in the film business. Every month the “virtual inventory” on Netflix is rotated. New titles come in, old titles go out. If you really, really, really want to see something right now, you have to rent it or buy it via a transactional stream or download. The record business will benefit from the same models and strategies. Windowing works. Period.

See here’s the thing… If these new digital platforms are so great for artists, why wouldn’t artists want to participate on them?  The benefits would be self evident? If the product that Spotify, Pandora, YouTube (and others) are offering is so good for artists, why are these companies so afraid of artists and rights holders opting out? Maybe, just maybe these platforms are not offering the type of value that their suppliers find meaningful?

It really speaks volumes when a business model is so bad that one of  the essential features for survival of the company is to deny its suppliers the option to fairly negotiate their participation or have the ability to opt out. In the old neighborhoods that was known as a protection racket, or extortion.

Silicon Valley didn’t invent the freemium, they’re just doing it wrong. Really wrong. Horribly wrong.

Let those who want to give away their work freely do so, but also allow those who would rather opt out the ability to do so. If artists find value in the freemium tier, and they may well as they always have, then let them chose how to best utilize that option. Musicians pioneered the freemium model often using street teams to canvas concerts by giving away cassettes to fans of similar music.

If digital platforms allowed artists to use their technologies creatively, everyone might be pleasantly surprised how much better (and more profitable) things would work out.

Watching Pandora lose $5 billion in value in a year becomes a punch line when they believe they are better suited to dictate to artists how to best communicate with their own fans. It is indeed interesting to see Pandora admit what we’ve been saying for years, unlimited, ad-supported free streaming unsustainable. No Kidding. Here it is from Brian Andrews, CEO of Pandora:

“This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one.”

Of course what makes this comment most interesting is that Pandora is entering the crowded field of on demand streaming with it’s purchase of the failed Rdio. Pandora now has to compete with Spotify’s very large free tier of unpaid and entrenched users. Migrating those users to a new on-demand streaming platform will be a challenge (ask Apple and Tidal), and even more so as artists and labels grow tired of subsidizing these horribly flawed business models.

Here’s three uses of freemium streaming most artists (and rights holders) would probably embrace if given the choice.

1: The Hit Single

– Using the freemium platform to launch a single to gain ubiquitous awareness of a new album release. This is what both Taylor Swift and Adele did and the results speak for themselves. More artists would probably embrace releasing one or two songs or singles from an album on freemium tiers. With the artists support this becomes far more valuable than extorting the them into releasing their entire album on a platform they feel devalues their work.

BONUS: What if Adele made an official playlist of her favorite songs, leading with her new single? How much added value does an artist of this caliber bring to a platform when they feel they are being respected and valued? Answer, ALOT.

2: The Focus Track

– Not everyone has a hit single, but most artists have a focus track from their album. Like the hit single, these artists would embrace the opportunity to be discoverable and to build an audience of new fans. Developing artists are the most eager to try new opportunities because the have the most to gain. If digital streaming platforms worked with artists in a meaningful and respectful way, the mutual benefits could be huge for everyone.

3: Rotating Inventory Management

– By adopting a Netflix like inventory management of monthly rotating titles on the freemium (or even paid subscription) tier more artists might feel compelled to be more engaged. Rotating inventory management is a smart way to keep users and fans engaged as old titles rotate out and new ones in. This simple trick restores a great deal of the consumer engagement that is a part of discovery, and promotion.

Of course, the goal of every freemium model is to lead to more paid revenues in higher value products. Working together with artists and rights holders the future of streaming distribution could be very bright. But to get there we need to let go of Stockholm Syndrome. the old neighborhood protection rackets, bullying extortion threats and just plain bad business models.

There is a lot that can be done in the world of streaming. Streaming is not bad, it’s just a technology. Free streaming and subscription streaming both have their place in the ecosystem. What is bad are the exploitative business models, lack of transparency and devaluation of the artists work. These are fixable issues that have nothing to do with technology, just a lack of common and business sense.

2010 A Brief History Of Spotify, “How Much Do Artists Make?” @SXSW #SXSW (Shill By Shill West)

SXSW Rewind… Back in 2010 during Daniel Ek’s Keynote Speech an audience member who identified themselves as an  independent musician asked how much activity it would take on Spotify to earn just one US Dollar. The 27 year old wunderkind and CEO of the company was stumped for an answer… Five years later we have a pretty good idea why.

2010… #SXSW Rewind…


Live Blog: Spotify CEO Daniel Ek Says Music Service Now Has 320,000 Paid Subscribers | TechCrunch

Q: How many plays equals one dollar?
A: Depends on the type on contract with the publisher/record labels. We share the rev we bring in. You can’t really equate to ‘per play’ we look at all our ad rev. Creates a bucket. For instance how do you account for a purchase of a song. There is no easy answer to your question. Over time our ad revs are growing, number of downloads growing. Amount of rev we bring in is growing.


Will Spotify Be Fair to Artists? | Technology Review

I couldn’t help noticing, however, Ek’s artful dodge to the question of how artists are paid by his service. The subject was broached by an audience member, who identified himself as an independent musician and thanked Ek profusely for the great application. He wanted to know how much he would be paid.

“It’s complicated,” was, in essence, Ek’s reply. But he did reveal that it’s a revenue sharing model; artists get paid a proportion of whatever Spotify gets paid, presumably based on the number of plays on the site they receive.

Ek’s reply was disappointing because this is the million dollar question for many music sites.


Dodgy from the start. What do you expect from one of the co-founders of U-Torrent… Economics only a pirate could understand?

 

A Tale of Two Pirates? Daniel Ek (uTorrent) and Kim Dotcom (Megaupload)

 

USA Spotify Streaming Rates Reveal 58% of Streams Are Free, Pays Only 16% Of Revenue

 

How to Fix Music Streaming in One Word, “Windows”… two more “Pay Gates”…

Artist Rights Leaders: Taylor Swift

0202

 

After the Charlie Hebdo tragedy, we thought we should start recognizing and praising those who stand up for artist rights.  We will also identify those who oppose artist rights and tell you why we think they are villains.  Not all of these people will be famous and you may not recognize some of their names, but that’s kind of the point.  We also want to emphasize that we’re not comparing anyone to anyone else, we’re just appreciating people for what they do and who they are–on both sides.

When we look back on the last year, there’s probably no one who did more for artist rights than Taylor Swift.  She really did not need to take on these issues, she could easily have sat back and let the money roll in.

And yet she did.  She put her career on the line and challenged the definitive “new boss” digital business–Spotify.  She challenged them in a very straightforward way by simply saying no.  Taylor had a lot to lose, and she went above and beyond to stand up to the “new boss.”

Spotify’s Daniel Ek revealed himself and did his best to play the “Lars card”–he talked down to her and attacked her.  Not as badly as the calculated and well-financed humiliation of Metallica by Napster’s litigation PR team, but a strain of it.  Can you imagine Steve Jobs doing that?  No way.  But that’s OK, we finally got the evidence on who this guy Ek really is and what his company really stands for.  Same old same old.

Taylor also showed that you don’t need YouTube, either–and she turned her team loose to present herself on YouTube the way she wanted, not the way YouTube wanted to force her to be presented.

She challenged The Man 2.0 by simply being who she was and exercising her rights as an artist–the very rights that the “new boss” constantly tries to take away from us.  It’s really simple:  The new boss needs hits, and hits don’t need the new boss.

And Taylor Swift showed us that artists can be strong and classy and successful, all at the same time.  She reminded us that it’s OK to take care of our business the way each of us want.  And she said it in the Wall Street Journal!

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.

 

Spotify Top 10 Territories : Global Revenue Marketshare & Streaming Percentages

The Top 10 territories account for 87.10% of all streams and 91.48% of all revenue. So all revenue outside of the Top 10 is less than 9% of global revenues. So if you’re streaming your music outside of the Top 10 territories, you are more or less giving your music away.

SpotifyGLOBALMarketshareRevStreams

Here’s the summed, net averaged per play rate for the top ten territories.

SpotifyT10CountriesStreamingRates

Below the top ten territories are isolated (and the market share recalculated).

The data would seem to suggest that savvy artists and labels avoid the territories where the number of streams far exceeds the percentage of revenue (the red boxes).

SpotifyNOFLYTerritories

Data set provided by US based indie label with 800 songs. Data is summed from sales and reports dated Sept 2011 – Aug 2014. This is what Spotify really looks like to most artists and indie labels.

Kim Dotcom declares he is ‘broke’ because of legal fight | BBC

Kim Dotcom, the founder of the seized file-sharing site Megaupload, has declared himself “broke”.

The entrepreneur said he had spent $10m (£6.4m) on legal costs since being arrested in New Zealand in 2012 and accused of internet piracy.

Mr Dotcom had employed a local law firm to fight the US’s attempt to extradite him, but his defence team stepped down a fortnight ago without explaining why.

READ THE FULL STORY AT THE BBC:
http://www.bbc.com/news/technology-30209067

RELATED:

A Tale of Two Pirates? Daniel Ek (uTorrent) and Kim Dotcom (Megaupload)

A Tale of Two Pirates? Daniel Ek (uTorrent) and Kim Dotcom (Megaupload)

Perhaps it is ironic that Kim Dotcom is the arch nemesis of the record industry while Spotify CEO Daniel Ek is celebrated as the former Co-Founder and CEO of uTorrent. uTorrent is described as “the world’s most popular BitTorrent client with more than 100 million downloads” on Mr. Ek’s Wikipedia page.

This week the embattled Dotcom is said to have given up his stake (and shares) in his much ballyhooed digital music company Baboom.

DotcomBaboomOVER

In the screen shot below from the TechCrunch, “CrunchBase” we see the BitTorrent cast of characters we’ve gotten to know so well sharing duties at uTorrent.  Here we have Bram Cohen, Matt Mason and of course former uTorrent Co-Founder and CEO Daniel Ek (still prominently displayed).

utorrent

In many ways both Ek and Dotcom represent the same devaluation and destruction of the arts by building personal fortunes as the result of monetizing the work of creators, without paying those creators for their work.

The cost of music is not in the distribution of music, the cost of music is in the creation of music.

Megaupload and uTorrent have monetized the mass scale distribution of infringing works for profit. In other words, infringement as a business model where the cost of goods goes unpaid and creators are uncompensated. uTorrent is self described as “a free-of-charge, ad-supported, closed source BitTorrent Client.” Megaupload and uTorrent have both relied heavily on advertising for revenue.

Mr. Ek like his previous cohorts Bram Cohen and Matt Mason would like to say that BitTorrent is not a piracy platform, however multiple independent studies have repeatedly concluded that 99% or more of the files being distributed via BitTorrent are in fact, infringing.

All of this of course points to the fact that Megaupload and BitTorrent have hidden behind  the DMCA, which has failed at it’s intent to protect artists. It could be argued that uTorrent and Megaupload have participated in business models enabling one of the largest transfers of wealth in history from individual creators to Silicon Valley companies and operatives.

Daniel Ek is reported to have a net personal wealth valued at $400 Million Dollars. Kim Dotcom’s fortune has been recently estimated to be $200 Million Dollars.

“The main reason music streaming services are winning over millions of consumers is the fact that they require no payment unless the user desires to pay.” – Music Streaming vs. Music Piracy | Medium.Com

Right now there is little functional difference to most musicians between music streaming and music piracy. This realization should not come as a surprise to musicians when they learn that the CEO of the largest and most used on demand streaming company was both the Co-Founder and CEO of uTorrent, “the world’s most popular BitTorrent client with more than 100 million downloads.”

RosanneCashStreaming

If Spotify wants musicians to take it seriously, perhaps it’s time for a CEO musicians can respect. The record industry might also want to reconsider who it chooses as friend and foe as well. More on that later…

EkuTorrentSpotify

 

 

 

 

 

 

 

Spotify’s Daniel Ek is Really Bad At Simple Math, “Artists Will Make a Decent Living Off Streaming In Just a Few Years”

The future of music for artist revenue streams seems more uncertain than ever. Digital Music News is reporting a quote from Spotify’s Daniel Ek on CNN Money which appears to show the failure of the companies CEO to perform simple math.

It should be noted that Daniel Ek was also the CEO of uTorrent, “the world’s most popular Bit-Torrent client” which is advertising funded.

Spotify CEO: “Artists Will Make a Decent Living Off Streaming In Just a Few Years” | Digital Music News

CNN: At what point can an artist survive on a Spotify income?

Ek: Well, I mean, the interesting thing here is that we’re just in its infancy when it comes to streaming. And we just last week had an artist announcement where we basically said if there would be 40 million subscribers paying for a service like Spotify, it would be more than anything else in the entire music industry, including iTunes.

We don’t want to say Mr.Ek is lying, but he does appear to be very bad at simple math and to be misinformed about the actual size of the record business and the revenue being generated by Apple’s Itunes.

Is anyone actually capable of doing simple math in a spreadsheet? Here goes. 40m Spotify Subs at $10 a month is only $3.3b in annual revenue to artists and rights holders at paying out 70% of gross. How is $3.3b “more than” the current $15b total annual global revenue or the $7b in domestic revenue in the US?

Here’s the simple math…

40,000,000 * $84 = $3,360,000,000

$84 dollars per subscriber annually is calculated at $10 per month per subscriber paying out 70% to Artists & Rights Holders or, $7 per month. $7 per month, multiplied by 12 months equals $84 per year, per subscriber payable to Artists and Rights Holders.

40m Subscribers x’s $84 per year = $3.3b in annual global revenue to artists and rights holders (assuming they really are paying out 70% of gross).

Simple math.

If you are an artist you might also read these links below:

Music Streaming Math, Can It All Add Up?

Venture Capitalist Admits Artists Can Not Make A Living On Streaming Royalties…

The Internet Empowered Artist? What 1 Million Streams Means To You!

Streaming Price Index : Now with YouTube pay rates!

It appears to us that music streaming can only truly be profitable to those with participating equity in the streaming company itself. Those with equity are leveraging their catalogs of assets against the potential revenue of an IPO (in which the catalog of assets is being leveraged for that equity). Thus far however, it appears that the artists and songwriters who have created those assets as the basis for that equity leverage do not participate in any profit sharing that the equity shares may earn.

So it’s not that music streaming can not be profitable, it’s just that it can not be profitable (or equitable) to artists.

Please tell us which artists are being compensated from the $3b sale of Beats music to Apple? Let’s see a show of hands… Bueller… Bueller… Bueller…

Remember when we were told that in countries where music streaming was the most successful that transactional sales also increased? We’ve got a bridge in Brooklyn to sell you too, and cheap. More food for thought below.

Streaming Isn’t Saving the Music Industry After All, Data Shows… | Digital Music News

Album Sales Hit A New Low | Billboard

No Surprise Here: Spotify Streams Soar While Track Sales Fall | Billboard