MP3 Money

The Spotify Solution

With Spotify music service, Swedish businessman Daniel Ek—named this month by the World Economic Forum as a “Technology Pioneer”—created a way for musicians and music executives to reap revenue as listeners access personal, streaming music libraries. It’s a potential boon and an invaluable innovation to the music industry, which has been shrinking for years, burdened by declining profit margins, increased piracy and a digital sales model where singles are sold more than albums. But while Ek’s company, which is supported equally by ads and by subscriptions to Spotify’s premium subscription service, has thrived abroad in Sweden, Norway, Finland, the U.K., France, Spain and the Netherlands, it has yet to launch in the U.S. The reason? Domestic record labels and publishing groups are against it as a long-term business model. Edgar Bronfman, Jr., head of Warner Music, griped in February, “Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.” But Ek is confident that the future of the music industry lies in accommodating reluctant consumers and adapting the business model to fit the new consumer mentality. “It’s moved from being about ownership to being about access,” he told The Wall Street Journal. “Spotify’s model is monetizing access. Just having free music won’t save the industry.”