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Top Swedish Music Exec Shares What To Expect As Spotify Launches In U.S.

image from www.google.com With the U.S. launch of Sweden based Spotify imminent, we asked one of that country's top music executives to share how the popular music service has changed music consumption and the industry there, and what we should expect. Johan Lagerlöf is the CEO, Co-Founder of X5 Music Group. The company recently expanded its U.S. operation adding a NYC office headed by former AmazonMP3 executive Scott Ambrose Reilly.

What effect has Spotify had on the Scandinavian music market?


Lagerlöf: Spotify has had the biggest impact on the Scandinavian music market since the launch of the CD.  Spotify is currently the biggest single revenue source for the music industry and is estimated to be over 3 times bigger than iTunes in Scandinavia. Despite that, digital downloads grew 17% in Sweden last year compared to 3% in the US.  Piracy for music has almost stopped.

Should the US music industry welcome Spotify?
 
Lagerlöf: If someone is willing to pay the music companies and is able to convert people into paying music subscribers, the music business should embrace it, whether it's Spotify, Apple, Google or Amazon.

Has Spotify, as some have said, helped eradicate music piracy in Sweden?

Lagerlöf: Yes it has. Or to clarify, it has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare "Off course the youth shall be able to download music for free".

Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone – including the old Pirate bay fans.

This did not happen because some new radical law or brutal police force were implemented. Neither because a confused prime minister changed his mind again and embraced the music industry. It all happened simply because the users found a new legal service that they actually thought was much better than the old Piracy one. Now, some time later, when they have invested their time and effort in making playlists etc. and would like permanent and unlimited access to it – they are starting to pay for music. For the first time in their lives – music is worth paying for.

MORE: Spotify Launches U.S. Site

Bruce Houghton on 07/07/2011 in Streaming | Permalink | Comments (13)
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13 Comments

  1. “Or to clarify, it has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare “Off course the youth shall be able to download music for free”.
    Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone – including the old Pirate bay fans.”
    YES! Innovation in business, not tougher laws and harsh enforcement, should be the driving factor to solve this problem!

  2. “Spotify is currently the biggest single revenue source for the music industry and is estimated to be over 3 times bigger than iTunes in Scandinavia”
    Maybe he should have also mentionned that the music industry is only making revenue out of Spotify because Major labels brought SHARES directly in the company. Whether that revenue is passed on to their artists is yet to be seen.
    And if you are an indie artist and have your music on Spotify , well , tough luck. You might make a couple of cents after a million spin or so.
    ( Of course , hordes of people will tell that you should just be grateful that you music is played on Spotify , and you might even sell a few t-shirts.)

  3. I get your point about labels not passing on Spotify revenue to artists. I have no doubt majors, and possibly some indies, in the US won’t be upfront about what money streams have earned and will withhold as much as they can.
    On the other hand, your statement “You might make a couple of cents after a million spin or so” isn’t backed up by the facts.
    I manage a completely independent artist with music on Spotify through Zimbalam. Since June 2010, her songs have been streamed 13,000+ times and she’s earned around 28 Euros. Yes, it’s a low payout–about .0002 cents per stream–but it’s much higher than you state.
    I have no evidence that it’s increased or decreased sales for my client. But for her, even this limited exposure to new listeners will help increase awareness about her.

  5. Since June 2010, her songs have been streamed 13,000+ times and she’s earned around 28 Euros. Yes, it’s a low payout–about .0002 cents per stream
    ARE YOU FREAKING KIDDING ME. SO THIS IS SUPPOSED TO RESCUE THE MUSIC INDUSTRY. WHAT A JOKE!!! 28 EUROS! She would make much more money, singing on the streets, and putting a had down for donations in 1 day!

  6. What do you mean “only making revenue out of Spotify because Major labels brought SHARES”?
    How do you make money out of shares in a private company without selling the shares? The company is not public so no dividends.
    It’s true that it’s hard for indie artists but what model will make it better? CDs? iTunes downloads? The indie artists will also earn money as Spotify grows and becomes bigger.

  8. “It’s not that bad!”
    -So says a website whose existence depends on Spotify. No conflict of interest there…

  9. I don’t think it’ll rescue the industry and it’s certainly not a money maker, Chris. I uploaded her album as an experiment, really, to see what the number of streams and payouts would be. Again, if it leads to more awareness, which lead to selling music, tickets or merch, that cool. In its current form, streaming isn’t a big money maker for most artists.

  10. on the other hand, if you are an indie-artist you don’t make that much money on itunes for example. spotify has, at least in sweden, become a good marketplace to spread their music to people who would never discovered them before.
    and that is good for getting people to gigs.

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