The Spotify Play Page 14

  “This is actually very similar to what I dreamt of ten years ago,” as he would describe it. “We never wanted to create a service to destroy the record business or hurt artists in any way. The goal was always to create a more open and frictionless system.”

  In August 2011, the Napster veteran flew to Stockholm to monitor the team working on “The Hulk.” A photograph shows him perched over a desk at Spotify’s headquarters, pointing at a screen and offering detailed instructions. Many of Spotify’s top designers and engineers saw him as a jet-setting, independently wealthy entrepreneur who was frequently out of his depth. He seemed bent on moving pixels around on the screen, as one employee would later quip. The product team found Sean overbearing, at times pedantic, but there wasn’t much they could do. After all, he had Daniel’s ear. Even when his input directly contradicted the core principles of what they were doing, they would comply. One example was the download store that Sean had instructed the product team to build during the spring of 2011. The feature let Spotify users download music files, just like on iTunes, and sync them with their iPod. Suddenly, the very business model that Daniel had spent years fighting against had become a part of his own service. Spotify employees would dub this rebuild “The Beauty and the Beast.”

  Not all of Sean’s ideas came to fruition. His attempt to create a tab in Spotify where listeners could burn mp3-files onto CDs—another concept copied directly from iTunes—fell on deaf ears, especially when it reached Gustav Söderström. However, the Spotify download shop was pushed out as part of a Spotify update in May 2011. Within a few months, it became clear that the store hardly attracted any users, rendering the project short lived.

  Sean would remain active on Spotify’s board and serve as one of its most prominent advocates in Silicon Valley. His loyalty to the Swedish startup would eventually grow so strong that Mark Zuckerberg began to consider it a problem.

  Who Am I?

  On September 22, 2011, a few months after Spotify’s US launch, a nervous group of employees gathered at Spotify’s headquarters on Birger Jarlsgatan 6 around eight p.m. The product team was fully focused on what was about to happen at the San Francisco Design Center, where the audience was still finishing its morning coffee. During this edition of F8, Facebook’s recurring conference for developers and the epicenter of its product roll-outs, Mark Zuckerberg was due to introduce collaborations with video companies such as Netflix and Hulu, news sites like the Washington Post, and music apps such as Spotify. The Facebook CEO walked on stage in his signature gray t-shirt, proclaiming that half a billion users recently visited Facebook on the same day. What truly excited him, he said, was what his company could do with all those new users.

  “The next era is going to be defined by the apps and the depth of engagement that is now possible,” he said.

  About halfway through the keynote presentation, it was time for him to demo a purpose-built version of Spotify. The product team in Stockholm was on the edge of their seats. The plan was for Mark to click once on a song and have it start streaming instantly, without installing Spotify or even opening the player in a new window. The underlying technology had been carefully constructed, but the Spotify team wasn’t certain that it would work during the live presentation.

  On the right side of Mark’s real-time Facebook feed, beamed onto a massive screen behind him on stage, the company’s CTO Mike Schroepfer appeared. He was listening to “Welcome to the Jungle,” a new and energetic rap song by Jay-Z and Kanye West.

  “I like Jay-Z”, Mark said, clicking on the song. “Here we go!”

  As the room in San Francisco fell silent, the Spotify team in Stockholm held their breath. The player seemed to be buffering. An interval of four seconds passed before the kick drums started thumping through the speakers. The audience in San Francisco cheered, and the Spotify staff breathed a sigh of relief. Facebook finally had a soundtrack, with Spotify as its favored provider.

  Over the next few years, Mark Zuckerberg would go on to acquire companies such as Instagram and WhatsApp for billions of dollars. Whenever he failed to buy a competitor, such as Snapchat, he would typically offer them fierce competition. Yet he didn’t appear to view Spotify as a rival. For the better part of a year, Facebook granted the streaming service free access to its feed, resulting in the kind of global exposure advertisers would ordinarily pay a fortune for.

  Toward the latter stages of the F8 presentation, Daniel Ek walked on stage to the tune of his favorite song by the French dance music duo Daft Punk.

  “Work it harder, make it better, do it faster, makes us stronger,” a voice blared out over the sound system, filtered through a thick layer of autotune.

  Sporting a gray suit jacket over a black t-shirt with a neon-green Spotify print, Daniel got four minutes of coveted stage time. At this point, Facebook was closing in on 800 million global users.

  “Today is a big day for Facebook, and it’s a big day for Spotify. But most importantly, it is a big day for everyone who loves music,” Daniel told the crowd as Mark waited on the side of the stage.

  Facebook users would now be able to digitally browse their friends’ record collections, the Swede explained, adding that Mark had a soft spot for Taylor Swift while he himself enjoyed “really bad one-hit wonders from the 80s.”

  “Thanks, Daniel,” the Facebook co-founder said as his partner exited the stage. “I really love the app that they’ve made and I think that millions of more people will enjoy using it.”

  But their partnership hadn’t gone down as smoothly as it appeared. With only one day to go until the keynote, Daniel and Sean Parker had received word that Spotify was not Facebook’s exclusive music partner at the launch. Another fifteen apps, among them Soundcloud, Deezer, the San Francisco-based MOG, and the streaming pioneer Rhapsody, would be along for the ride. However, Spotify was alone in offering a free service, complete with a full catalogue. And Daniel was the only music executive that would appear on stage during the presentation.

  Sean figured out a way to ensure that Spotify stole the show. With 48 hours to go until the conference, he set out to throw an after-party that San Francisco would remember. He picked a venue in nearby Potrero Hill, a warehouse that was covered in graffiti tags in a rapid makeover. The maverick tech investor chartered jets to fly in musical guests such as The Killers, Jane’s Addiction, DJ Kaskade, and Snoop Dogg. A large Spotify logo greeted attendees inside the building. Refreshments included spit-roasted pig, truffles imported from France, and a large bottle of dark tequila next to each of the roughly fifty seats reserved for members of the press.

  “Thank you for being willing to put up with this completely manic and totally insane schedule,” Sean told the crowd that had gathered as the event kicked off. “How we managed to convince four of the biggest artists in the world to participate in such a short time frame is a mystery to me,” he added.

  Next to him was Daniel, making his second stage appearance of the day. He had changed into a bright red t-shirt with “Suits Suck” printed on it, the same kind Shak had once brought back from the Entourage set in Los Angeles.

  “This is so awesome. Thanks, Sean, and everyone else organizing this,” the Swedish entrepreneur said. “Napster, for me, was probably the biggest event in my life when it comes to the internet. It really changed how I consumed music, my favorite artists, and how I shared music with my friends.”

  Among the crowd was music industry veteran Paul Rosenberg, longtime manager of the rapper Eminem; Napster co-founder Shawn Fanning; Daniel Ek’s partner Martin Lorentzon; and Rasmus Andersson, who led Spotify’s design team during the early years before he departed for a role at Facebook in Silicon Valley. For Sean, the party offered a shot at redemption.

  “People say he destroyed the music business. He didn’t want to destroy the music business. He loves the music business,” one of his friends, the entrepreneur Sebastien de Halleux, told the San Francisco Business Times during the party.

  Th
e evening reached its crescendo when Snoop Dogg, dressed in a gray Adidas tracksuit, took the stage backed by a live band and three sidekicks ad libbing him.

  “With so much drama in the LBC, it’s kinda hard bein’ Snoop D-O-double-G”, he rapped as the party erupted. Later, he jumped off the stage to finish a verse in the middle of the cheering crowd.

  After the show, Sean posed for a photo backstage alongside Snoop, who appears to have stuck a thin, unlit blunt between his lips. Mark and Daniel also made sure to be photographed next to the rap star, for a picture that would soon be published all over the internet.

  “Sean Parker stole some of Facebook’s thunder last night,” Business Insider reported the day after the party.

  Spotify’s launch with Facebook in San Francisco in September 2011.

  From left: Mark Zuckerberg, Daniel Ek, Snoop Dogg and Sean Parker. (Kevin Mazur / Getty Images)

  Several weeks later, tensions appeared to flare up between Sean and Mark. After spending some time at a West Hollywood nightclub, the pair got into an argument over the terms of collaboration between Spotify and Facebook. Sean did not want new Spotify users to have to register through Facebook. Reports of the disagreement reached the New York Post, whose source described how the duo engaged in “a full on screaming match outside the club, but stopped short of coming to blows.” A spokesperson for Sean confirmed that the two had had a discussion but denied that it was an argument.

  Facebook had offered Spotify much-coveted visibility in the United States. For several months, users could barely log on to the site without being fed the name of the music service and what people were listening to. Between March and November of 2011, Spotify’s number of paying subscribers would leap from one million to 2.5 million.

  The Next Episode

  In the early fall of 2011, a private jet landed at Bromma Airport just outside of Stockholm. Out stepped the Universal Music executive Jimmy Iovine, co-founder of Beats Electronics, alongside a small entourage that included Beats’ Head of Operations, Luke Wood. The team had traveled to Stockholm to recruit digital music experts for a new streaming project that remained a secret to the outside world.

  The crew from Beats made their way to Stockholm’s financial district and Nobis Hotel, where they had booked the largest suite. It offered a view over Norrmalmstorg and was located just a block away from Spotify’s headquarters. Beats had become a pop culture sensation in the United States. The company was on track to sell headphones for a total of hundreds of millions of dollars that year. Jimmy Iovine’s stature in the music business was growing. Now he wanted to ride the streaming wave and challenge Spotify, which had only just arrived in the US.

  “We’re gonna win,” Iovine said repeatedly during his visit to Sweden.

  For more than ten years, he had watched as Universal Music and a host of other companies had failed to build popular streaming services. He refused to roll over and concede to a bunch of engineering types from Sweden. Moreover, he saw a gap in the market. The streaming world needed something rooted in the music business—a service that didn’t just offer sleek technology, but a whole lifestyle. Iovine envisioned a new cultural hub that could play the role that MTV had in the ’90s. A company with that type of cultural relevance could be sold to Apple, where Tim Cook had recently taken over as CEO, or perhaps to Google or Microsoft.

  The Beats team acquainted themselves with several key figures in Stockholm’s music world. Iovine—who, despite pushing sixty, still dressed in leather jackets, hoodies, and baseball caps—found a local guide in Ola Sars, the man who three years prior had tried to talk him into partnering with the Swedish music hardware company Pacemaker. They were joined by amicable music industry veteran Luke Wood, who started out in the 1990s working for bands like Nirvana and Sonic Youth.

  One of their business meetings was with the eternally boyish Andreas Ehn, Spotify’s first CTO, who was now a co-founder of Wrapp, a local fintech startup. Iovine and Wood were eyeing him for the role of CTO in their new project, but Andreas Ehn—who still owned a sizable amount of Spotify stock—was not interested in a permanent role in what might become be his former company’s main competitor.

  Ola Sars tried to set up a meeting with Fredric Vinnå, a brilliant former colleague from Pacemaker, whom he deemed had the capacity to build a new streaming service from the ground up. But Vinnå was happy to be working at Propellerhead, a Swedish music tech company specializing in software synths. He thought the new Beats project sounded too vague and loose around the edges. It wasn’t clear to him exactly what Iovine wanted to build. Sars himself, however, was keen to be involved, and joined the project as a consultant.

  Anarchy in the UK

  A few weeks later, Ola Sars was in a crowd outside the Mandarin Oriental, a high-end hotel in London’s Knightsbridge district. It was a cloudy afternoon, October 4th, 2011, and the Swede held his laptop in a tight grip under his arm. He was minutes away from pitching his ideas to the top brass at Beats. Yet hordes of reporters and paparazzi photographers stood in between him and the entrance to the five-star establishment, adorned with Roman columns. Someone must have tipped off the tabloids about the American pop stars currently staying there, he thought to himself.

  Sars was able to convince the doormen to let him inside and find the conference room where Jimmy Iovine had gathered his inner circle. Luke Wood was there, as well as the streaming project’s intended chief executive Jonas Tempel, co-founder of the DJ portal Beatport. Sars greeted the pop icon Gwen Stefani, one of the many stars that Iovine held close. Iovine’s co-founder Andre Young, better known as Dr. Dre, was somewhere nearby, as was the star producer Will.i.am, another Beats shareholder.

  Sars connected his laptop to the big screen and presented the “Beats Audio Network.” The pitch was tailored to appeal to Jimmy Iovine. Sars said Beats would think like a media company when they built their service, offering channels, programs, star presenters, and a constant focus on “human curation.” Iovine nodded, seemingly taking in those last two words. His face lit up when the Swede suggested collaborations with brands like Pitchfork, Wired, Rolling Stone, and Chrysler. The founder of Interscope Records was a master of cross promotion. Iovine offered Sars a few encouraging words about the presentation. The goal was to quickly establish themselves as the main competitor to Spotify, he said.

  The following evening, Iovine’s son played records at one of London’s exclusive night clubs. Security guards protected the entrance to the private room where Dr. Dre and a few others from the Beats crew had gathered. The drinks abounded and Sars was elated by his star-studded company. But later that evening, the news broke that Steve Jobs had passed away at the age of fifty-six. The cause of death would later be reported as complications from pancreatic cancer. Suddenly, everyone in the club began to hurry. Iovine and his crew had to fly home to California and pay their respects. They also had to establish how this tragic turn of events would affect their project. Sars’s trip to London ended abruptly. The following day, Daniel Ek tweeted out a dedication to the man who had served both as his idol and his chief opponent.

  “Thank you Steve. You were a true inspiration in so many parts of my life, both personal and professional. My hat off to our time’s Da Vinci,” he wrote.

  “Winter is Coming”

  DANIEL EK’S PARTNERSHIP WITH FACEBOOK brought seven million new listeners to Spotify within a few months. But, knowing that only explosive growth could ensure his company’s survival, the CEO was not content. The expression “Winter is coming,” the signature line from HBO’s Game of Thrones, began to spread among Spotify employees. The series constantly foretells the impending arrival of a long winter. The Stark family’s ultimate fear is that hordes of “white walkers” will break through their wall of ice and unleash an epic war. Spotify didn’t fear a humanoid invasion, but rather relentless attacks from the world’s largest technology companies. A number of them were already encroaching on music streaming. Apple was shifting iTunes to the
cloud, and Jeff Bezos continued to develop the Amazon Cloud Player. Google appeared to be planning to revamp their own store, Google Play Music.

  While he assured everyone that his service remained technically superior, Daniel did worry about the sheer size of his rivals. In mid-2011, Apple’s balance sheet carried funds of nearly $80 billion, a figure that was growing steadily. With that money, new CEO Tim Cook could buy Spotify forty or fifty times over. The nimble Swedish upstart opted to counter the threat by growing really fast. At scale, they might even be able to free themselves from the grip of the record labels. Artists might begin to come directly to Spotify to release their music. “Everything changes at scale,” as Daniel would often remind his C-level executives.

  Push It

  During the fall of 2011, many of Spotify’s new users dropped off, while others began to criticize the partnership with Facebook. Swarms of listeners had become upset that their choice of music was suddenly being shared widely on the social network. Shutting off the feature required several seemingly complicated steps. Daniel Ek began to fill in as customer support on Twitter.

  “We’ll try lots of things, and probably screw up from time to time, but we value feedback and will make changes based on it,” he wrote.

  A new version of Spotify was on its way, where users would be offered a private listening mode that did not broadcast their taste to the world. Yet the feedback also noted that Spotify was so visible on Facebook that it appeared to have taken over the social network.

  “Our intention is not to spam you,” Daniel wrote in response to one of the complainants.

  Another point of contention was that registering for Spotify now required a Facebook account. Many months would pass before Daniel budged on this point. His priority was to attract as many users as possible. Through Facebook, he saw an opportunity to make a dent in the US, and he felt it wasn’t happening fast enough.