One week after Taylor Swift withdrew her entire catalog from Spotify, dismissing the music-streaming service and calling it "a bit like a grand experiment," the company's founder is fighting back. "We're getting fans to pay for music again," Daniel Ek argues in a new blog post, adding that Spotify's 50 million users, including 12.5 million paid subscribers, have paid $2 billion in overall royalties to the music industry.
Although Radiohead's Thom Yorke, Talking Heads' David Byrne, Cracker's David Lowery and others have ripped Spotify for paying minuscule per-stream royalties to artists, Ek blames record labels and others who own the music: "If that money is not flowing to the creative community in a timely and transparent way, that's a big problem," wrote Ek.
Ek quotes Thriller producer Quincy Jones: "Spotify is not the enemy; piracy is the enemy." File-sharers downloaded Swift's "Shake It Off" nearly 1.1 million times over the past two weeks, according to BigChampagne, which monitors activity on illegal peer-to-peer services. Spotify's free service may be "completely disrespectful to that superfan who wants to invest," as Scott Borchetta, president of Swift's record label Big Machine Music, said in an interview last week, but its relatively small revenue stream from advertising is better for artists and labels than illegal file-sharing.
"Piracy doesn’t pay artists a penny – nothing, zilch, zero," Ek wrote, noting Swift's album 1989 was available via free, legitimate services such as YouTube and SoundCloud as well as unauthorized services such as Grooveshark and Pirate Bay. "We're working day and night to recover money for artists and the music business that piracy was stealing away," added the tech mogul. Ek added Spotify had been on track to pay Swift and her label more than $6 million per year, and estimated the revenues would have doubled within a year. (UPDATE: Borchetta disputed this number to Time, claiming that Swift was "paid less than $500,000 in the past 12 months for domestic streaming of her songs.")
In his 1,800-word post, Ek also responded to Borchetta's implication that Spotify should be flexible enough to post certain artists' songs exclusively on the $10-a-month "premium" service — thus avoiding giving away music for free.
"Until we launched Spotify, there were two economic models for streaming services: all free or all paid, never together, and both models had a fatal flaw," wrote Ek. "The paid-only services never took off (despite spending hundreds of millions of dollars on marketing), because users were being asked to pay for something that they were already getting for free on piracy sites. The free services, which scaled massively, paid next to nothing back to artists and labels. We believed that a blended option—or 'freemium' model—would build scale and monetization together, ultimately creating a new music economy."
"Our interests are totally aligned with yours," Ek added, addressing artists. "The more we grow, the more we’ll pay you."