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Did Spotify overestimate its revenue? No matter, its founder has ideas on how to make more

February 4, 2010 |  6:58 pm

Spotify
Swedish streaming music service Spotify may be gunning for iTunes, but its founder, Daniel Ek, acknowledged Tuesday that the start-up can't overtake Apple without some help -- or at least an ambitious business model.

During a one-day industry conference at the Henry Fonda Theater, the audience as well as the questioner -- New Music Seminar co-founder Tom Silverman -- sort of froze for a moment when Ek made an off-the-cuff comment about Spotify's financials.

"We're the fourth-biggest revenue provider to Universal," Ek said onstage.

"Uh, in Sweden -- or?" Silverman fumbled.

"Worldwide," Ek shot back.

Eh, not quite, according to at least one person in the know. A source at Universal who asked not to be named because of ongoing negotiations between Spotify and the record label called Ek's claim "totally inaccurate" and "completely untrue."

"Maybe in Sweden," the Universal source added.

While Ek may have been a bit ambitious about the current lucrativeness of the European music service, he has some interesting ideas on how to make subscription sign-ups as painless as possible. The hotly anticipated Spotify hasn't yet launched in the U.S., but on Tuesday he specified a few companies he may partner with in the States, as well as a broadly ambitious plan to ease the purchase of music.

"When we do a new country, we have to understand it's a new territory that we have to understand," Ek said.

Accessing and creating playlists of Spotify's 8 million songs from a computer is free, although users are subject to ads. A monthly fee is required to listen to songs on a cellphone or to download music for offline listening.

One obstacle between Spotify and retail giants like Amazon and Apple's iTunes is that they already have a ton of credit cards on file. Apple says iTunes, for instance, has more than 100 million. Reducing the friction to one click inevitably equals more sales.

Ek said Spotify hopes to work with the major U.S. telecom companies to allow subscribers to easily purchase tracks and sign up for subscriptions, a charge users would find on monthly cellphone bills. He didn't, however, provide specifics as to how to enact such a complex payment structure.

"It shouldn't matter if you're a subscriber to Verizon or AT&T," Ek said. "You should be able to pay with either."

Ek also shouted out Santa Monica's Topspin, a company that provides analytics and sales tools to artists, and Santa Barbara's Sonos, a synchronized home music system. Though, no deals are in place.

-- Mark Milian
twitter.com/markmilian

RELATED:

With momentum in Europe, Spotify has Apple's iTunes in its sights

Spotify plans to rock the U.S. digital music landscape early next year

Photo: Tom Silverman, left, questioning Spotify's Daniel Ek. Credit: Mark Milian / Los Angeles Times


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