‘The Playlist’ explained: How did Spotify acquire the rights to everyone’s music?
Like Netflix, Spotify has become ubiquitous in the world of entertainment thanks to its innovative model of streaming media. While Netflix leads the way among video streaming platforms, Spotify has come close to monopolising the field for mass music streaming.
It’s interesting, then, that Netflix should produce a series which examines the kind of practices it’s been criticised for itself. The platform had a major hand in provoking last year’s Screen Actors’ Guild and Writers’ Guild of America strikes, due to the effect its compensation models have had on motion picture artists such as actors and writers. But Netflix’s show about Spotify casts a critical eye on the platform’s compensation model for music artists.
The Playlist seeks to provide an authentic portrayal of Spotify’s beginnings in Sweden, by following its story from the various perspectives of those who played a leading role in the company getting off the ground. The series is almost entirely in the Swedish language, with Swedish actors and characters based directly on real-life people. Daniel Ek, usually credited with founding Spotify, is the focus of the show’s first episode, for example.
We first see Ek as a young programmer alienated from his work on an e-commerce site and dissatisfied with the time, effort, and risks involved in torrenting music illegally from Pirate Bay. This confluence of circumstances leads him to approach a marketing executive with the idea of a legal music streaming service.
With the help of the best programmers in town, an ambitious young copyright lawyer, and a connection in Sony Music’s Swedish division, Ek and his team transformed Spotify from an idea to the fastest music streamer in the world. And a perfectly legal cash cow for major music publishers and distributors, with the help of a subscription model and a rotten deal for the artists on the platform.
The final episode of the series features a fictional congressional hearing in the US, three years into the future. There, a small-time musician who happened to go to high school with Ek exposes Spotify’s role in oppressing and super-exploiting the majority of artists on its platform. This plotline seems particularly prescient, given Spotify’s increasingly profit-driven approach to music streaming and its rollout of features that will further compromise the position of artists on the platform and the integrity of their work.
But how did Spotify get the music industry onside?
Even after developing a state-of-the-art streaming platform and making offers to various major labels around Sweden, Ek and his colleagues were running into a dead end. The record companies weren’t interested in doing a deal with Spotify, as it appeared to be the ultimate threat to their business models, with the potential to undercut the profits they were making from individual music sales.
With nowhere else to turn, Spotify’s music licensing lawyer Petra Hansson visited her legal contact in Sony Music’s American division, Ken Parks. “The problem is,” Parks explained to her, “your guy made Spotify so good that they want a piece of it, a big one.”
The more forward-thinking players in the music industry recognised the proliferation of streaming as an inevitability. They were already loading billions from the illegal streaming and torrenting of music as a way forward. They knew that a legal streaming service was the way forward. However, they were also aware that they needed some form of control within this business model and a stake in its profit share to maintain their profits.
Hansson called Ek to suggest to him that he offer part-ownership of Spotify to the major record companies. He refused initially, but Parks then managed to convince him that it was a smart move from a business perspective. “They’re making you a part of the system, Daniel,” he told him. “And once you do that you can’t fail, they won’t let you. It’s against their interests.”
Spotify ended up giving 15% of its shares to the major labels, in return for the licensing of their music to the platform. This deal with the devil led the platform to become an even bigger drain on artist compensation than physical and digital music sales had become for the majority of artists. It changed the way artists make their money, and has fundamentally transformed the landscape of music as a result.