The launch of Apple Music has only helped Spotify grow, the streaming music company's chief executive officer says.
In a media appearance with Rogers Communications Inc. CEO Guy Laurence in Toronto Monday, Daniel Ek said signups to his Stockholm-based streaming music service accelerated since Apple Inc. launched a direct competitor in June.
"Apple has validated the thing that we said 10 years ago," Mr. Ek told an audience of reporters at the Rogers headquarters. "The world is moving to streaming."
This past year has seen Spotify's competition grow stronger than ever – on top of Apple's entry into streaming, rapper Jay-Z has launched Tidal, which promises more equitable compensation for artists plus exclusive content for its users – while a wave of artists led by the unshakeable Taylor Swift have assailed Spotify's free, ad-supported tier. Each development threatens to draw users away.
But Mr. Ek's faith in Spotify's freemium-centric business model, he said, is unshaken – even when there is no sign of profit ahead for the nine-year-old company.
"For us to stop investing at this point, this early juncture, doesn't make any sense at all when you look at this gigantic global opportunity, and with our mission of just growing the entire music industry," he said during the rare media availability. "Given the choice between possibility and growth, we will always pursue growth.
More than 75 million people use Spotify across 58 countries, but only 20 million of them pay roughly $10 a month for the premium service, which allows them to stream as much music they want from a catalogue of 30 million songs.
Streams from Spotify's free tier are generally acknowledged to pay less out to artists and labels than its premium tier. Asked by The Globe and Mail whether there might be a strategic shift away from that tier, Mr. Ek stood firm on the notion that it's a crucial platform to lure users away from illegal downloads and services that don't pay rights holders anything at all.
"There's piracy still rampant and available," he said. "That's what we're competing with, and that's why we have a free tier. ... Gradually, what we're trying to do is move people up the value stream to pay even more for music, which obviously will make Spotify more money but more importantly will make the music industry more money."
Spotify launched in Canada a year ago after many competitors, such as Rdio and Deezer, got a head start. Mr. Ek said growth in Canada has been "way faster than any country before it." Spotify has jumped to become the most-used mobile music app in Canada just a year after its launch here, and last week announced a partnership with Rogers that allows customers to bundle the streaming service's premium tier with their wireless plan.
In May, Spotify announced a move to incorporate video and more tailored listening experiences into its mobile app, although they have yet to fully roll out in Canada.
The Spotify chief played down any sense of rivalry between his company and the growing number of competitors, in particular Apple, which Mr. Ek said are simply "growing the category of streaming" by increasing awareness of the music-listening model.
"What both Apple and we are focused on are growing [the value of music] so we can pay out more to artists," he said. The global recording industry has shrunk to about $15-billion (U.S.) from heights of nearly $40-billion 15 years ago at the height of the margin-happy CD boom.
With streaming, the price per unit (say, a song or album) has shrunk dramatically, but the volume consumed has risen drastically. And with scale – perhaps into billions of users – Mr. Ek suggested the industry can return to its previous health.
While Apple has more lines of business and can take a loss in its music division without hurting its broader financial picture, streaming is Spotify's bread and butter. Mr. Ek said focusing on anything but investment, though, would waste the moment.
"We're in the fortunate position where we see the underlying business performing incredibly well," he said. "More people are signing up. The lifetime values are great. We see a lot of appetite in the sector – it's getting easier and easier to sign people up. Generally, people now accept the streaming future."