How Spotify Shake Rattle & Roll

The streaming giant's disruptive takeover of the music industry

Photo: Danielle Chloe Potts

Ever wondered what it would be like transform an entire industry?  And then, how to keep ahead of the pack when other players start to follow suit?

Cue Kate Vale, MD of Spotify Australia & New Zealand, who gave us a fast four after speaking at The Collective‘s annual Vivid Ideas in May.

What was the first step of big disruption to the music industry? 

In the late 90s, before the advent of the internet and more specifically online piracy on a major scale, the music industry was in rude health from a revenue perspective. Sales were at a record high, major artists were breaking through and no-one was begging for a tape or CD upgrade. No-one was thinking we needed to fundamentally change the way we listen to music. But Napster changed all that.

Streaming services are a point of contention for artists. How does Spotify pay royalties?

Obviously getting artists paid is fundamentally crucial: without artists there is no Spotify. It’s important to look at the years before Spotify where piracy had pretty much ravaged the industry – 95 per cent of music globally was stolen. Artists weren’t getting paid a cent for that and in seven years we’ve helped turn things around to the tune of USD$2bn paid back to the industry.

How does Spotify stay ahead of the pack?

Simple – by being the best and evolving in line with our users’ demands. The more we grow, the more we learn and the more we understand exactly what music fans want. In short: react to our users’ demands, work tirelessly, innovate relentlessly. That’s our recipe.

Last year you said Spotify’s biggest competitor is piracy. How do you fight illegal downloading?

Piracy isn’t going to go away overnight. People don’t talk about it as much as they did a few years ago but it’s still very much with us – you only have to look at the effect it’s having on the movie/TV industry. But in music at least, we’re beginning to see real progress – last year we saw a 20 per cent reduction in music piracy in Australia, with a lot of that down to the impact of streaming services. We believe that the best way to beat music piracy is to offer a service far simpler and far better – and it’s why our balance of free and subscription tiers is key to keeping piracy at bay. There’s a way to go but progress is very positive.

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