Is streaming really the future of the music industry? Will it be the saviour of record labels? I doubt it very much myself, but is a dang good approach if you are Daniel Ek, boss of Spotify. Now less than seven months after launching his digital music service in the US, Ek found himself rubbing elbows with the “upper echelon” of record industry executives who have descended on Los Angeles for this Sunday’s Grammy Awards and the 28-year-old Swedish entrepreneur addressed a ballroom full of entertainment attorneys telling them all about the brave new world of digital music and boldly predicting that revenue from streaming services such as Spotify will in two years return as much revenue to the industry as iTunes does today. Since launching its service in 2008, the Stockholm-based company says it has has remunerated more than $200 million, roughly 70% of its revenue, to labels and publishers. It has also grown into a valuable company with a tie in to Facebook (and making Ek a darn sight more money than the music industry – and artistes!)
“The value of music is not $15 billion,” an estimate of annual music sales, Ek told his audience at the Grammy Foundation’s Entertainment Law Initiative luncheon adding “It’s worth much, much more than that.”
Spotify’s service has caught on worldwide with more than 10 million listeners who tune in at least once a month — 3 million of whom pay around $5 to $15 a month to access premium versions.
Though music labels have embraced Spotify’s unusual approach — of offering a generous free version that gives users online access to millions of tracks on demand — the company continues to face scepticism from some bands and musicians who fear that streaming music services eat into album sales. Bands such as Coldplay and the Black Keys, and performers like Mac Miller, have opted to withhold their new albums from streaming services such as Spotify — at least for the first few weeks after the albums’ releases. Ek emphatically disagreed with those decisions. Well he would wouldn’t he! “There is no cannibalization,” Ek said before a packed audience in the Crystal Ballroom of the Beverly Hills Hotel. “At the end of the day, I want the music industry to be larger than what it is today. And I believe that the two models [streaming and sales] can co-exist side by side.”
As if to punctuate a contrast with Ek’s youthful approach, John Branca, veteran lawyer to the stars, followed him on stage with the following remark that drew chuckles from the crowd: “It’s a popular belief that the music industry is over, that it’s seen better days. Some would say that we lawyers are the dinosaurs of the legal landscape, that paleontology is a better subject for us and that a better forum for this would be the La Brea Tar Pits.” As a prominent music attorney, Branca’s clients have included the Beach Boys, the Doors, the Rolling Stones and Carlos Santana. He is also the executor of the Michael Jackson estate. Having told guests that two years out of law school, Branca said, he found himself presiding over a meeting of the band’s “board of directors”—which just meant the band. The five members were deciding whether to fire Steve Love as their manager. Naturally, Mike Love was in favor of keeping his brother, as was Al Jardine. Brian’s brothers Dennis and Carl wanted to fire Steve Love. Holding the deciding vote in his hands, Brian Wilson was face-down on the conference table, possibly asleep. Branca shook the musician’s shoulder and told him to knock on the table one time if he supported Steve’s dismissal, and twice if he opposed it. “He knocked three times,” Branca recalled, chuckling. “So I did what any good lawyer would. I called for an adjournment and persuaded Steve to resign.” Branca summed up the challenge for the music industry, pointing out that many of music’s greatest stars created their music “before the digital age.” “How do we present these great artists to a new generation of fans?” Branca said. One could almost hear Ek replying, “Through Spotify.”
But the biggest cheers were for videotaped remarks by Ryanne E. Perio, a student at Columbia Law School, who was one of five winning students presenting papers at the luncheon who wrote about Android smartphone apps that facilitate piracy. During remarks describing her paper, Perio wondered aloud why offering those apps hadn’t generated lawsuits against Android parent Google, for “secondary copyright infringement” — i.e. facilitating piracy – and the crowd burst into spontaneous applause.