Daniel Ek Tells The Spotify Story In A Fireside Chat

No one knew then that Spotify was about to grab $100 million more in financing, but a little over a week after the devastating visit of Hurricane Sandy, CEO Daniel Ek joined a small group in New York for a livestreamed event, "PandoMonthly presents: A fireside chat with Spotify CEO Daniel Ek." Over the course of the evening, Ek covered a broad range of topics from his start as a teenage entrepreneur to why he prefers having a U.S. headquarters in New York rather than Silicon Valley.

The following video of Daniel Ek's chat is 2 hours long and includes the question and answer session with the audience.

PandoMonthly: Fireside Chat With Spotify CEO Daniel Ek

PandoMonthly is a monthly "fireside chat" with leading figures in the tech industry organized by tech blog PandoDaily. The following comments and quotes are from their series of liveblogged posts.

Daniel Ek Became an Entrepreneur at 13

Daniel Ek got into business by designing websites for local businesses gradually bringing in up to $50,000 a month:

"He bribed mathematically gifted kids in his class with video games, having them stay after school to train them to write code on the school’s computer. He was spending all of his time building websites, bribing other students to take his exams."

Apparently he ultimately created four companies which he later sold in the space of a month. Eventually he recognized that he needed to find a "project he was super passionate about" which led to the concept for Spotify.

"How Napster gave birth to Spotify"

As a teenager he was an avid user of Napster and says he did not initially realize that it was illegal. Yet, once he did, he said:

"I realized convenience quite often wins…It’s not that people don’t want to pay for music."

Noting that one could get higher quality, DRM-free audio files on Napster in contrast to iTunes, Ek stated:

“It was the only point in time when the stolen product has been much, much better than the one you legally acquired…For me it was a pretty big given why we ended up where we ended up in the music industry.”

The desire for a high quality product that was easy to use and provided access to almost any song that could be made available online inspired him to "'even out the odds' for legal music."

Spotify's U.S. Launch Took Almost 3 Years of Negotiation

Ek revealed that a key driver in Spotify's success has been their refusal to compromise on the product. That meant that, though they began negotiations with major labels in 2008 regarding launching in the U.S., they could not make the right deal until 2011. Comparing their approach to Apple, he said that both companies experienced deals falling apart at the last moment before a product was set to launch and stated:

"It’s super important to never compromise on what you think is a great user experience, because it will deteriorate…We said to everyone that this is a company that’s either going to fly, or it’s going to crash and burn. It’s not going to just be an okay one."

Spotify Made Major Label Deals by Showing Them That
Money Would Be Made

Ek says that Spotify's ability to make major label deals, both in Europe and the U.S., were based on executable plans for generating revenue. Though European branches of major labels were open to having free music supported by ads, U.S. strongholds were not impressed. Sean Parker, though a cofounder of Napster, was instrumental in helping Spotify prove its case to major labels in the States.

PandoDaily's account has no mention of the enormous payouts made to major labels nor does it include the issue of how labels do or do not pass along this revenue to artists as widely discussed in music industry press accounts. Both topics are a major part of the Spotify story but perhaps problematic for the cozy atmosphere of a fireside chat.

Daniel Ek on New York vs Silicon Valley/San Francisco

The evening's discussion including the topic of New York vs Silicon Valley, though participants apparently equate San Francisco with Silicon Valley despite the many miles and cities between the two.*

Though Ek felt New York was a better fit for numerous reasons he also explained that:

"He wouldn’t start the company in New York if he could do it over again, because his initial early hires in Sweden were so important to the company. “There aren’t that many interesting technology companies out of Europe, so we still have amazing potential to attract that talent."

Spotify Playlist Inspired by Daniel Ek's Fireside Chat

For an explanation of why the above tracks were chosen see "'Live-Songing' Tonight's PandoMonthly with Spotify’s Daniel Ek".

*Note: Apparently referring to San Francisco as part of Silicon Valley has become widespread enough in the tech community that it now bears mention in Wikipedia. Given the historical and geographic differences between the two areas, this notion strikes me as not only bizarre but indicative of the sometimes insular and even neo-colonialist perspective of many involved with leading tech companies.

MORE: Spotify To Grab $100 Million Additional Financing As Valuation Drops $1 Billion

[Thumbnail image of Daniel Ek via Wikipedia.]

Hypebot Senior Contributor Clyde Smith (Twitter/App.net) blogs about music crowdfunding at Crowdfunding For Musicians (@CrowdfundingM). To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.