Spotify head doesn't sweat the competition
The latest twists in the rapidly changing online music streaming business come courtesy of Twitter and, separately, Spotify.
Twitter has taken over We Are Hunted, a service for finding new music online, and plans to use that technology to build a mobile app, according to CNET, which cites an unnamed person familiar with the matter. The source said Twitter Music, as the app will be called, might be available for Apple-compatible devices as soon as this month.
The gist is that Twitter Music is a personalized music-recommendation program that uses SoundCloud to stream songs. The app reportedly incorporates four logical-sounding tabs: "Suggested," which suggests music based on users' Twitter following activity; "#NowPlaying," which features songs tweeted with that hashtag by people a user follows; "Popular," which shows trending songs; and "Emerging," which shows rising acts. Neither Twitter nor We Are Hunted would comment to CNET.
It isn't entirely clear whether Twitter Music will be able to bring in music from Spotify. CNET reports that the app doesn't work with Spotify or similar streaming services. However, We Are Hunted co-founder Stephen Phillips' recent tweets under the #NowPlaying hashtag include a Spotify link to a song by Swedish singer El Perro Del Mar.
Spotify, for its part, faces potential competition from Apple, Google, and Beats Electronics' Trent Reznor-affiliated "Daisy" streaming service. According to CNET, Spotify CEO Daniel Ek said at the SXSW Interactive conference that because of his company's single-minded emphasis on music, he's not worried about threats from bigger companies.
"We're obviously watching what everybody is doing," Ek is quoted as saying in an interview at the conference. "But we're focused only on music. Unlike everybody else, like Google and Apple — they have tons of other businesses. For them, music is not a core priority."
He went on: "What we do is wake up every morning and think about how we get more music out to people, how do we get better music? We breathe, eat, and sleep music. These bigger companies don't."
Ek also addressed the growing debate over the royalties streaming services pay artists, which are much less than people who make music would receive from sales of a download or CD.
Pandora, for one, has been lobbying Washington to lower the not-yet-profitable company's expenses by cutting the rates it's required to pay artists. Spotify, as a privately held company, doesn't have to disclose its financial statements like Pandora, but SPIN reported last December that Ek's company hasn't turned a profit, either. Still, Spotify's royalty rates are seen as more generous than those of other streaming services.
To Ek, the issues of profitability and royalties might be related. According to CNET, he repeated that Spotify has paid out $500 million to various stakeholders and is set to foot a similar royalty bill this year. But he reportedly said not to compare streaming royalties to download payouts because streaming services are, to borrow a phrase from the world of politics, essentially broadening the base. That is, so many people will be listening to music through streaming that even if royalty rates are lower, the overall payments to artists should be higher.
Spotify presumably expects the same trends to make its business profitable eventually, too. Then again, Damon Krukowski of the bands Galaxie 500 and Damon & Naomi has argued that the goal of streaming companies is, first and foremost, convincing investors to speculate on them. Indeed, while Ek's company might not be profitable, the Hollywood Reporter notes that Ek himself has a net worth of $300 million.
Anyway, Ek said the music industry as a whole stands to grow a whole lot larger. He reportedly explained, "We're focused on growing the pie so the artists can go back to making a meaningful amount of money." Whether and how that happens should continue to be a riveting saga — particularly so for the musicians and small label owners who actually need their bills and their paychecks to balance out each month.