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Spotify: iPhone, US Market Next Big Thing
But it's a different market says Daniel Ek.
'The US is our next big thing', says Spotify cofounder Daniel Ek. 'If we released Spotify in all our markets at the same time we wouldn't be able to handle the traffic. It's extremely important for us that the quality of service doesn't slack.'
Not since Skype has a Swedish startup been hyped to this extent internationally. The success of Spotify has Google and Nokia frenetically looking for 'Spotify killers'.
One Day in Three
Spotify cofounder Daniel Ek is on an airplane every other day or at the very least every third day. 'I always take my passport to work', he says. 'I can get a call at any time and be on my way to Hong Kong or New York just like that.'
He's been doing this for years now.
Ek and Spotify cofounder Martin Lorentzon met for the first time in 2005 when Ek's ad company Advertigo entered into a partnership with Lorentzon's Tradedoubler.
'We got along straight away and started tossing a lot of ideas around. I told Martin where I thought music on the net was going. This matched Martin's own thoughts on where advertising on the net was going. Somewhere in there Spotify was born.'
What's in the Name
Ek sold his Advertigo to Tradedoubler in March 2006 and on 1 April that year - Martin's birthday - they together sent in the paperwork to register Spotify as a corporation. The name, a combination of 'spot' and 'identify', was dreamt up in Ek's old flat in Bandhagen south of Stockholm.
But how did they get the world's four biggest record companies - EMI, Universal, Warner, Sony BMG who'd earlier hunted down free services such as Napster and Kazaa - to sign agreements giving Spotify free access to all their music?
'No one's put more time and resources into this than we have. I almost literally lived in an airplane for two years', says Ek. 'I was at more meetings than I can remember and I have met people from all levels in the music industry. There were definitely moments when I thought we'd never get this baby going. I remember how I stood on a Manhattan sidewalk after having been chewed out by a record company exec, thinking to myself: that's it, I gotta find something else to do.'
Ready in 2007
That it finally worked was a combination of good timing ('they're losing 20% of their revenues each year and they finally realise they have to do something') and a good product ('we offer a good service and a believable revenue model') as well as being able to listen to what the record companies had to say and suggest.
'Originally we thought Spotify would be a completely free service financed by ads. But the record companies wanted a subscription service to get another source of revenue. So we added it.'
The first version of Spotify was ready for release already in May 2007 but it took until October 2008 before the service was launched in eight European markets. During the 15 months when only invited beta testers had access to the service the buzz about Spotify spread like wildfire on the net. At the time of the official release 300,000 people were in the queue for invites.
'We wanted to launch ASAP but we were forced to postpone the start time after time because we hadn't finished the copyright thing. We were in discussions with the record companies right up to the deadline. I don't remember our own launch party at all - I hadn't slept in 56 hours.'
Unleashed in the UK
By February 2009 Spotify became free and accessible to all in Great Britain. And the response wasn't long coming.
The first weeks 250,000 Brits downloaded the client software and Spotify is currently - together with Twitter - the most talked about Internet phenomenon in the country. The Financial Times, the Observer, all the major papers had huge article spreads on the Swedish music player.
'The UK's been crazy', says Ek. 'We get 20-40,000 new users each day. And last week they passed Sweden as the leading Spotify country in the world.'
Spotify currently has 1,400,000 users and climbing. Gradually the service will be released in other countries.
'The US is our next big thing. We're definitely going in there. At the end of this year or beginning of next. But that's a totally different market. Piracy isn't at all as widespread there and they don't have the same broadband infrastructure. In a lot of ways our current European market is more suitable for us but the big money's in the US.'
'It's no secret we're developing Spotify for cellphones. But this will take time. We want to make sure it's as good a service as our computer client already on Day One.'
As Big as iTunes
Spotify have signed further agreements with music providers since the launch. The overriding objective? Create the world's biggest music library. Today Spotify have 4 million tracks online as opposed to Apple's 10 million - but they have rights to at the very least 6 million more tracks and are integrating these into the system every day.
'We add about 10,000 new tracks each day. The combined song collections for the record companies we've already signed agreements with gave us about 10 million songs. So we still have more than half to add to the system.'