The Spotify Play

by Sven Carlsson

  Apple and Amazon also intensified their work in podcasting, setting aside budgets to spend on original programming.

  During its first two years as a public company, Spotify reported four profitable quarters. Daniel was eager to point out that the margins were now high enough that the company did not need further support from outside investors.

  “We can now state that the business model works,” he told the Wall Street Journal after one such profitable quarter.

  Yet for the full year 2020, Spotify expected to post losses of around $200 million, largely due to money being spent on acquisitions in the podcast space. Daniel had returned to his strategy of putting growth over short-term profits.

  DOGGFATHER

  Daniel Ek was now gradually warming up to his public role.

  As the COVID-19 pandemic spread through Sweden in the spring of 2020, he and Martin Lorentzon spent over a million dollars of their own money on providing testing to healthcare workers. Early on, Ek had asked Spotify’s employees to work from home, an option they would retain until the end of the year.

  “We all have an obligation to delay the spread of the virus and thus ease the expected burden on our healthcare system,” Daniel wrote in a rare Swedish language tweet.

  “I hope other companies in Sweden will follow suit,” he added.

  They soon did.

  Daniel Ek was carefully looking after his own health. He had been known to limit his eating to between noon and 4 p.m. every day. Intermittent fasting was perhaps something he had picked up from his friend Moha Bensofia, whose regimen of “bio-hacking” also included weightlifting and personal therapy.

  By 2020 Daniel was also mentoring up-and-coming entrepreneurs, particularly in the healthcare field, offering advice ranging from how to make it as a CEO to how to deal with burnout. The Spotify founder was also making private investments in the sector, such as paying around 18 million dollars for a small stake in Kry, Sweden’s foremost digital healthcare provider, and bankrolling a secretive startup dedicated to preventative, AI-driven healthcare.

  In late September of 2020, as this book was being typeset, Daniel raised the bar again by declaring that he was committing one billion euros ($1.2 billion), or around a third of his wealth, to invest in European start-ups or, as he put it, “European moonshots.” The announcement was followed by a tweet indicating the involvement of Shakil Khan. It was picked up by Shak, who added: “I guess it’s time to come out of retirement then.”

  A few days later, Daniel and Spotify board member Cristina Stenbeck invested in Northvolt as part of a $600 million equity raise to fund the construction of its gigafactories. The Swedish battery company had been started by Peter Carlsson, a Swede who had previously worked with Elon Musk at Tesla.

  “Glad to be a small part of the journey and excited for Europe!” Daniel declared on Twitter.

  THE FUTURE

  Although music still engaged Daniel, the expansion into podcasting and long-form audio was perhaps the strategic matter at the forefront of his mind. Another was Spotify’s responsibilities as a content platform.

  In mid-2020, Daniel was thinking about how audio such as educational podcasts could make the world a better place. In an interview, he mentioned that Spotify was working to index and catalogue episodes to help people deepen their knowledge on a variety of subjects. Daniel called it a “knowledge graph” for audio-based learning. He was also readying an expansion into the market for audio books. Furthermore, recent patents indicated that Spotify was developing some sort of TikTok challenger, a karaoke function and technology for voice recognition and interaction.

  Few questioned Daniel’s ability as a technologist. But when it came to editorial decision making, he still appeared to be struggling. In September of 2020 he seemed confounded by an internal row at Spotify, with employees reacting to what they described as transphobic content in some episodes of the Joe Rogan Experience. Despite media reports of the debate, Spotify’s press department was slow to address the issue, including the fact that episodes featuring controversial guests, such as the conspiracy theorist Alex Jones, were conspicuously absent from the platform.

  The Spotify CEO was largely leaving daily operations to his executive team, of which he demanded more than ever before. He frequently asked why Spotify wasn’t growing faster. Some executives felt that Daniel didn’t credit them enough for their achievements. He was only thinking about the future.

  How Daniel managed his team would define him going forward. His youth and unique experience suggested that he would remain in the chair for a long time to come.

  Fourteen years after its founding, Spotify was still wrestling with a business built on low margins, and investors were still asking how Daniel might bring them up further.

  Yet for him, the Spotify journey had barely begun. Streaming remained in its infancy, or in the second inning, as he liked to put it. As Daniel saw it, the battle over global audio consumption had already been decided. It was like a settled fact of future history. The rest of the world just needed to catch up.

  Acknowledgments

  This book could not have been written without the help of dozens of people who have supported us over the past two years.

  First and foremost we need to thank our many sources, speaking both on the record and anonymously. Many of you have gone against Spotify’s corporate culture of secrecy, and taken personal risks, in order to help us get closer to the true story.

  Thanks also to the many journalists—both Swedish and international—who have covered Spotify throughout the years. Many of you are included in the list of references and sources. We could not have put this together without your diligent work.

  Thanks to our first publisher, Albert “Abbe” Bonnier of Albert Bonniers Förlag in Stockholm, who took a chance on us when this book was only an idea. Thanks also to the team at Bonnier Rights for helping us along the way and selling the book successfully to more than a dozen countries, including the United States.

  The Spotify Play is the third edition of this book, and the first in English. It’s been updated and improved with the help of several new sources. Kudos to them. Although the translation is our own, we owe a great degree of gratitude to our editor Keith Wallman at Diversion Books, and to our copyeditor Elisabeth Evan.

  We need to thank our loved ones for putting up with us, and our bosses at Dagens industri and Swedish Public Radio for allowing us to pursue this project.

  Lastly, we’d like to thank Daniel Ek and Martin Lorentzon for starting the company and giving us such a great story to cover.

  References and Sources

  Prologue

  Three anonymous sources who heard Daniel Ek talk about Steve Jobs.

  1. A Secret Idea

  Interview with Mattias Miksche, former CEO of Stardoll. Stockholm, March 2018.

  Interview with Andreas Ehn, former CTO at Spotify. Stockholm, July 2018.

  Six anonymous sources who were close to Daniel Ek and Martin Lorentzon during this period.

  Interviews with five sources who worked at Tradedoubler in 2006, including the former CEO, Martin Henricson.

  Leijonhufvud, J. “Dockor ett riktigt klipp” Svenska Dagbladet. August 8, 2006.

  Gripenberg, P. and H. Rosén (2013) “Historien om Spotify—så erövrades musikvärlden” E-singel, Dagens Nyheter.

  “Sommar i P1. Daniel Ek.” Swedish Radio P1, July 12, 2012.

  Date for establishing Rosello Company Limited, Enzymix Systems Limited, and Instructus Limited. Open Corporates, 2018.

  “Sommar i P1. Martin Lorentzon.” Swedish Radio P1. August 1, 2020.

  2. The Engineers

  Friman, C. “Den osynlige.” Filter, June 8, 2011.

  Company documents from the spring of 2007. Luxembourg Business Registers.

  Interview with Andreas Ehn, former CTO at Spotify. Stockholm, July 2018.

  Interview with Fredrik Niemelä, former CPO at Spotify. Phone conversation,
August 2018.

  Interview with Per Sundin, manager of Universal Music’s Nordic division. Stockholm, April 2018.

  Interview with Pär-Jörgen Pärson, partner at Northzone. Stockholm, April 2018.

  Three anonymous sources about the period at Riddargatan.

  “Sommar i P1. Martin Lorentzon.” Swedish Radio P1. August 1, 2020.

  3. Rågsved

  Tv4 Morning News (2013). Spotifygrundaren Daniel Ek om musiken, pengarna och idéerna. YouTube, January 2014.

  “Daniel Ek från Spotify,” parts 1/4 and 2/4. YouTube, January 2010.

  The Swedish Tax Authority. Information about Daniel Ek’s home address.

  “Sommar i P1. Daniel Ek.” Swedish Radio P1, 12 July 2012.

  Interview with Gert Sävkranz, Daniel Ek’s computer science teacher in high school. Rågsved, September 2018.

  Interview with Micke Johansson, former recreation leader at the youth center in Rågsved. Bandhagen, October 2018.

  Five anonymous sources from the time at Rågsvedsskolan and IT-Gymnasiet.

  “Spotify’s Daniel Ek on the state of streaming, tenacity, transparency, competition, what’s next.” YouTube, September 2015.

  Gripenberg, P. and H. Rosén (2013) “Historien om Spotify—så erövrades musikvärlden.” E-singel, Dagens Nyheter.

  4. Party Like It’s 1999

  Interview with Pär-Jörgen Pärson, former CEO of Cell Ventures. Stockholm, April 2018.

  Three anonymous sources about the period at Tradedoubler.

  Lundell, S. “Miljonärer på internet-idé.” Dagens industri, November 9, 2005.

  “Daniel Ek from Spotify, part 3/4.” YouTube, Jan 2010.

  Elofsson, J. “It-branschens Greta Garbo.” Affärsvärlden, March 2, 2014.

  Interview with Edgar Bronfman Jr., former vice chairman of Universal Vivendi. Phone conversation, July 2020.

  Interview with Thomas Hesse, former President, Global Digital Business and US Sales/Distribution, Sony Music. Phone conversation, October 2018.

  “Apple Music Event 2003—iTunes Music Store Introduction.” YouTube, November 2007.

  “Apple Special Music Event 2003—Steve iChats With Artists.” YouTube, April 2006.

  5. Better Than Piracy

  Interview with Fred Davis, music industry lawyer. Phone conversation, June 2018.

  Interview with Rob Wells, former digital director at Universal Music Group International. Phone conversation, June 2018.

  Cassel, F. “Inside the dusty brains of the first backer of Spotify—looking at how we were right and wrong about Spotify in 2007.” Creandum’s company blog, March 15, 2018.

  Six anonymous sources about Daniel Ek’s negotiations with the record companies, the state of the record industry, Spotify’s financing, and the period in the Riddargatan office.

  One anonymous source about Shakil Khan’s past.

  “The Om Show. Ep. 1 — Shakil Khan.” SoundCloud, May 2017.

  Interview with Eric Wahlforss, one of SoundCloud’s founders. Stockholm, June 2018.

  Holmström, L. “Hej! 2007 Live Updates.” Citizen Media Watch, April 21, 2007.

  “Sommar i P1. Daniel Ek.” Swedish Radio P1, July 12, 2012.

  6. “Wealth-type Money”

  Interview with Joe Cohen, former CEO at Seatwave. Phone conversation, April 2018.

  Interview with Pär-Jörgen Pärson, partner at Northzone. Stockholm, April 2018.

  Three anonymous sources on Spotify’s financial situation.

  Four anonymous sources on Spotify’s negotiations with Warner and Universal.

  Carlsson, S. “Accel-toppen: ‘Folk trodde att Avito-grundarna var ett skämt.” Dagens industri, June 8, 2017.

  Interview with Per Sundin, former head of Sony BMG Sweden, later Nordic head of Universal Music. Stockholm, June 2018.

  Company documents filed in the spring 2008. Luxembourg Business Registers.

  “The Om Show. Ep. 1—Shakil Khan.” SoundCloud, May 2017.

  7. All Music for Free

  Leijonhufvud, J. “Svenskar Apples mardröm.” Dagens Nyheter, October 30, 2008.

  Interview with Ola Sars, co-founder of Pacemaker. Stockholm, June 2018.

  Interview with Jacob Key, former business developer at Warner Music. Stockholm, April 2018.

  Interview with Andreas Liffgarden, former business developer at Spotify. Stockholm, May 2018.

  Interview with Joe Cohen, former CEO of Seatwave. Phone conversation, April 2018.

  Interview with Per Sundin, former director of Sony BMG Sweden, later Nordic head of Universal Music. Stockholm, June 2018.

  Startuppodden. “#21 - Gustav Söderström, Spotify, Kenet Works.” October 29, 2014.

  Interview with Rory Cellan-Jones, technology correspondent at BBC. Phone conversation, April 2018.

  Scribd.com. Sean Parker’s Email to Spotify’s Daniel Ek. August 25, 2009.

  Unknown author. “Sveriges supertalang nr 1.” Veckans affärer, September 9, 2009.

  Interview with Samuel Arvidsson, previously with Sony BMG. Stockholm, May 2018.

  Greenburg, Z. “Dr. Dre’s $3 Billion Monster: The Secret History of Beats.” Forbes, March 8, 2018.

  Jerräng, M. “Så fick Spotify skivbolagen med sig.” Computer Sweden, August 7, 2009.

  Sundberg, M. “Magnus Uggla arg på Breitholtz—lämnar Spotify.” Expressen, August 13, 2009.

  Adegoke, Y. “Global Music Sales Down 8 Percent in 2008: IFPI.” Reuters, April 21, 2009.

  Three anonymous sources about the launch party at Berns, Gustav Söderström’s military service, and the celebration of Spotify being accepted in the App Store.

  Two anonymous sources about negotiations with the record labels.

  8. Bridge to America

  Interview with Thomas Hesse, former President, Global Digital Business and US Sales/Distribution, Sony Music. Phone conversation, October 2018.

  Swisher, K. “Spotify’s Daniel Ek Talks About Music Start-Up.” AllThingsD, September 22, 2009.

  “Sommar i P1. Daniel Ek.” Swedish Radio P1, July 12, 2012.

  Company documents filed spring 2008. Luxembourg Business Registers.

  Interview with Andreas Liffgarden, former business developer at Spotify. Stockholm, May 2018.

  Interview with Jacob Key, former business developer at Warner Music. Stockholm, April 2018.

  Interview with Fredrik Niemelä, former CPO at Spotify. Phone conversation, August 2018.

  Bradshaw, T. “Spotify defends business model.” Financial Times. March 2, 2010.

  “Daniel Ek, Keynote Interview point 1.” YouTube, October 2010. Three anonymous sources on the rumor that Google was negotiating to buy Spotify in 2010.

  Seven anonymous sources about Andreas Ehn’s exit, Daniel Ek’s leadership style, things Daniel Ek would say about Steve Jobs, Spotify’s financing, and the negotiations with Microsoft.

  “Steve Ballmer & Daniel Ek @ KTH, Stockholm.” YouTube, October 2010.

  Dan Rose (drose_999). “In 2009, an unknown investor from Russia came out of nowhere to make one of the greatest late stage venture bets in the history of Silicon Valley. Why did FB choose an outsider to lead our Series D round? Here’s the inside story:,” May 26, 2020, 4:55 a.m. Retrieved from https://twitter.com/drose_999/status/1265114361900589056.

  9. “Schmuck Insurance”

  Interview with Thomas Hesse, former President, Global Digital Business and US Sales/Distribution, Sony Music. Phone conversation, October 2018.

  “Sean Parker on Apple’s Monopoly.” YouTube, October 22, 2010.

  Lauria, P. “Sean Parker and Steve Jobs Go to War Over Spotify, Apple.” The Daily Beast. October 28, 2010.

  Documents from Spotify that describe the settlement surrounding Sony’s stock options.

  Singleton, M. “This was Sony Music’s contract with Spotify.” The Verge, May 19, 2015.

  Three anonymous sources on the negotiations in Europe, Spotify�
�s financing, and negotiations with Universal in the USA.

  Three anonymous sources familiar with Steve Jobs’ conversations with senior executives at Universal.

  Kamps, G. “Jimmy Iovine and Doug Morris Reminisce About Their Wild Late-Night TV Show ‘Farmclub’: ‘We Didn’t Know How to Do Television, We Just Did It.’” Billboard. September 18, 2015.

  Sisario, B. “For U2 and Apple, a Shrewd Marketing Partnership.” The New York Times. September 9, 2014.

  “A Brief History of Spotify: Gustav Söderström.” YouTube, January 2019.

  Annual Report for Instructus Limited, 2013. Department of Registrar of Companies and Official Receiver, Cyprus.

  “CNET News: Steve Jobs introduces iCloud.” YouTube, June 2011.

  Three anonymous sources with insight into Spotify’s negotiations with Warner Music and Spotify’s launch party in the US.

  Sisario, B. “New Service Offers Music by Quantity, not by Song.” The New York Times. July 13, 2011.

  Bruno, A. “Rob Wells Named UMG President of Global Digital.” Billboard. October 28, 2010.

  Staff Writer. “Universal Music Group Takes Full Ownership Of GetMusic.” Cbronline.com. April 24, 2001.

  10. Sean & Zuck

  Three anonymous sources with insight into Spotify’s cooperation with Facebook.

  PBS Frontline. “The Facebook dilemma.” 2018.

  “F8 2011 Keynote.” YouTube, September 2011.

  Hoe, P. “Billionaire Sean Parker throws Monster Party for Spotify.” San Francisco Business Times, September 23, 2011.

  Interview with Ola Sars, former director at Beats Music. Stockholm, June 2018.

  An anonymous source about Beats’ visit to Stockholm.

  11. “Winter is Coming”

  Four anonymous sources speaking on Spotify’s growth strategy.