Spotify CEO Daniel Ek: ‘We’ve proved our business model’

Streaming service boss says company losses don't mean failure

Spotify boss Daniel Ek says the company’s recent financial reports have proved their business model is sustainable.

Despite growing losses, which have drawn negative criticism from industry experts, Ek says Spotify’s increasing revenue, which doubled last year, outweighs the bad points.

He said: “I think a lot of people just look at the financials and say: ‘Oh wow, losses, that’s really, really bad.’ That’s not at all how we see it, we see that we’ve actually now proved our business model. The difference between what we pay out in royalties and what we actually take in in revenue is increasing, which is positive.”

In an interview the Wall Street Journal, Ek, who founded Spotify in 2006 and launched its first service in 2008, also had a few words for his rivals: “iTunes is really to give you apps,” he said. “It’s not to give you music, that’s a side benefit. With Google, it’s like ‘oh, we need something with music because Apple has something with music,’ and with Microsoft, I’m not even sure what their rationale is for doing it.”

Responding to Thom Yorke’s recent comments regarding withdrawing his music from the service, Ek said he was “not surprised, but saddened” by any artist unrest. “All they see is millions of streams, and they see, you know, not millions of dollars in the end, but thousands of dollars, and they think that a million streams is comparable to a million downloads, which it obviously isn’t.” Ek added: “We’re now the second-largest revenue generator for them in the world after iTunes. So of course we have a lot more to say.”

Last week Billboard reported Spotify increased its revenue last year to over $573 million (£376 million), up from $246.7 million (£162 million) in 2011. However, its net loss also increased to $77.4 million (£51 million) from $58.8 million (£39 million).

Meanwhile, mobile phone service provider Vodafone have confirmed plans to launch their new 4G service by offering users the chance to have Spotify Premium as part of their contract. The communications giant will offer users the choice between Spotify or Sky Sports Mobile TV as part of their plan. The subscription to the music streaming service will last two years and is available from August.