Daniel Ek first had the idea for Spotify around 2002 when peer-to-peer music service Napster shut down and another illegal site Kazaa took over. Ek said he "realized that you can never legislate away from piracy. Laws can definitely help, but it doesn't take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry
Spotify was founded in April 2006 in Stockholm, Sweden, by Daniel Ek and Martin Lorentzon.
The Spotiify Service launched service launched in several European countries in 2008 including France, United Kingdom, Sweden, and Spain.
To launch the service Ek needed to get all the large record companies to release their entire catalogs. How did he do this and why did they agree?
First he gave all the record companies shares in Spotify. Most of the companies sold these shares early on earning them in excess of $500 million each.
At the time Sweden was viewed as a lost market. The copyright laws in Sweden didn't make sharing copyrighted material a crime, so piracy was not frowned upon. It's no coincidence that Pirate Bay was founded in Sweden.
I would assume the UK, France, and Spain were almost as bad as Sweden regarding piracy, so they were viewed as lost markets.
Had piracy not weekend the record companies so badly, I don't believe they would have ever signed a deal like Spotify.
The Spotify service would launch in America in 2011. Similar services from Amazon, YouTube, and Apple have since launched as well with all off them offering the same catalogs Spotify offers.
The compensation Spotify pays to the record labels is notoriously low, around a third of a penny, with artist making even less.
Snoop Dog disclosed he had a song with a billion streams and was paid less than $45,000 for that.
So, the record labels are making more the ever the artist are struggling. Record companies are even getting a percentage from the artists on concerts.
What's your opinion of streaming?
