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December 11, 2011

Le Web: Spotify lets the music play

Daniel Ek

Daniel Ek, Co-Founder & CEO, Spotify

This was a liveblog I abandoned because it didn't seem "content rich" enough. I originally planned to mix it with the Sean Parker interview, as he's an investor in the service, but that proved big enough to stand entirely by itself.

I have a confession: I'm not a Spotify user. Oh, I have the app on my Mac and iPhone, but I've never got into the habit of using it. I still habitually play music from my own collection. I'm so middle-aged. However, I'm also aware that it's reached almost cult-like status amongst many of my more webby friends, so I was interested in hearing Ek talk more about it..

Spotify arose as a response to the growth of piracy in Sweden - they wanted to make it easier to consume and share music that it was to pirate it. What happens if you have iTunes with ALL the world's music in it? "We wanted it to work everywhere, like water." Loïc seems to be unaware that it was available for years in the UK before it headed to the US, which is odd. Cracking the US wasn't easy, says Ek - it took two years. They set targets for themselves, and proved repeatedly to the record labels that this works. What are people paying for? Portability.

What's new with the service? They've added 7m new users since they launched their Facebook app (! - frictionless sharing obviously works...). They think social sharing of music listening is vital to their growth - that was a core reason for the partnership with Facebook. And (inevitably) Spotify is becoming a platform - there's an SDK - you can use HTML5 apps using javascript to hook into the Spotify experience.

Big news: Spotify radio - a streaming experience. 

Spotify Radio

It's a "lean back" experience. Unlimited skips, unlimited stations. That's a direct play against things like Pandora, and actually makes it more appealing to me - rather than having to pick and choose songs, I can fire it up and let it run.

The business has £2.5m paying customers - the majority paying €10 per month

So, are they going to sell? Ek says not. They just want to build a great company - everything else is secondary. The objective is not to sell.

Music fans might also enjoy the video from the party for Le Web attendees, featuring the Ting Tings...

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December 9, 2011

Le Web: Parker and Pishevar report from the startup coalface

Parker and Pishevar

Sean Parker, General Partner, Founders Fund & Shervin Pishevar, Managing Director, Menlo Ventures

After an awkward and unrevealing bit of questioning about a meeting near the White House that Parker and Pishevar started talking about making new businesses. Parker denies being an investor - despite making investments - he seems himself as an entrepreneur with his own fund. Right now he thinks there's too much capital chasing too few good businesses with good ideas, so we need more entrepreneurial startups. If there's too many startups getting founded at early stage, you end up with a serious talent crunch.

Pishevar is looking for businesses with really ambitious goals. It takes as much effort to run a local coffee shop as it does the whole of Starbucks. Which would you rather do? You can build a multi-million business in a contracted period of time, because of the web. We're in a transitional period of time, so the entire world is a start-up right now. Our generation is ready to lead, but we don't want to accept the institutions; we want to disrupt them. Things set up for the 20th century don't compute for us. Shaker and Airtime are allowing us to bring a bit more randomness into our world, as we've already met (remet) all the people we know through existing social tools.

So many companies come to us without a complete team, says Parker. For example, they need a really good engineering leader, who can code and can hire and grow a team rapidly. Without that, they'll struggle until they become successful enough to recruit someone. Parker doesn't like sack management teams, but to take an operational role in the companies that he manages.

Alexia Tsotsis

Alexia asks about Gowalla, which both were an investor in. They both seem happy with the deal to sell it to Facebook, as Parker described it as a "good exit for Josh". Parker suggests that the company wasn't innovative enough in combatting Foursquare, remaining too similar to the leading product. Everyone has their failures, says Pishevar, and if you don't fail, you don't have a place at the table. He suggests that people need success amnesia - instead of resting on their laurels, they push forwards with new things after a success. The same should be true for failures. That's the inspiring part of entrepreneurship.

And we're getting quite philosophical now. Pishevar is talking about people losing their fear - "fear becomes finite, hope become infinite" "We are not afraid of death..."

Parker thinks Spotify was his chance for redemption after Napster. He's helping fix problems he created. At one point he couldn't get meetings with guys in the record labels, and now he considers some of them good friends. Media business tend to be insular, run by a small elite. But it's a shrinking industry, so it's harder and harder from everyone from artists to publisher to make money. Parker's (self-proclaimed personal) view is that the best music in the world is NOT being made today. The mechanism by which the music gets to your ears is unable to take risks with the artists that come to them. They let bands get a long way into their career before they fund them.

For music to go viral, we needed to establish a free tier of service, says Parker. By creating that with Facebook, we've allowed anyone to experience any music for free. Apple's licensing model doesn't support social distribution of music. Spotify is starting to answer the question of how we'll find our new music in future...

Parker puts his biggest failure as the hiring at Napster - he got the wrong people, a certain breed of "parasitic leech". You have to recognise that, and eradicate them as you would any insect. He was too you and naive to tell the difference between a competent executive. Pishevar learned from a period when he had custody of his kids, and was trying to write business plans while looking after his children. He also learnt that you shouldn't build business 10 years ahead of its time.

And some guy is claiming to be Sean Parker's son from 10 years into the future... One way to get a meeting.

Parker feels that the social media elements of politics haven't been figured out yet. the 2008 campaigns made a lot of claims, but it was more about making the candidates seem relevance than any actual effects. He thinks next year's election will be the one where social media comes of age. Social media can deliver a relationship between people more cost effectively than traditional methods - and that's how it could change things, by letting a less well funded candidate win.

Someone from the audience asked why Spotify now requires Facebook. If you build a music  product that's designed to be isolated, then social doesn't matter, says Parker. If you want a network, then you really want everyone sharing, and so enforcing the Facebook login enables that. They made a bet that Facebook is so deeply penetrated that there's enough people that it won't adversely affect their growth.

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