The Spotify Play: How Daniel Ek Beat Apple, Google, and Amazon in the Race for Audio Dominance by Sven Carlsson & Jonas Leijonhufvud

Author:Sven Carlsson & Jonas Leijonhufvud [Carlsson, Sven & Leijonhufvud, Jonas]
Language: eng
Format: epub
Tags: General Fiction, Business
ISBN: 9781635767445
Goodreads: 54810079
Publisher: Diversion Books
Published: 2021-01-26T00:00:00+00:00

A sketch of a prototype for the hardware intended for the Spotify TV project. (Sebastian Ramn)

Torn

During 2013, Nordic TV executives were feeling the pressure. Younger viewers loved streaming TV series at their own convenience. Netflix had recently launched in Scandinavia. One appraisal showed that it had become the largest on-demand video service in Sweden within its first year. The local competitor Viaplay—which owned the rights to the national soccer league and to Spain’s La Liga—had slipped to second place. The undisputed king of Swedish tech had no trouble booking meetings with executives in the TV industry. Five years after launching its service, Spotify was a clear success in the Nordics. Nearly half of all adults in Sweden had registered a debit card with the service. Decision makers in television knew that Daniel Ek could dominate their field as well.

The Spotify CEO was ready to invest tens of millions of dollars to explore a market that was many times bigger than music. He realized that his service could not stop at Swedish cable channels: it needed a rich American offering as well. Daniel wanted CNN, Cartoon Network, Disney, and ESPN to all be available. The Magneto team held discussions with a number of the large providers in the US, from Time Warner to Fox to CBS.

Daniel was said to be eager to secure the rights to soccer matches between his two favorite teams: AIK in Stockholm and Arsenal of North London.

In 2013, he took a meeting at Jarla House with Jonas Sjögren, the CEO of Discovery Networks Sweden, owner of the local channels Kanal5 and Kanal9. He was a former colleague of Spotify’s new head of HR, Katarina Berg, who had made the introduction. Daniel began by asking a few basic questions about the TV business, and his counterpart delivered honest answers. His experience of startup companies, such as the Swedish online video venture Magine, was that they would usually try to weasel out of paying for content.

“So, we have two sources of income,” Sjögren explained, detailing how TV networks made money both from commercials and by charging their distributors. Not a single distributor could avoid paying for content simply because they were able to attract new viewers. Sjögren was trying to imply that the same went for tech companies, regardless of the strength of their platforms. If a company like Spotify was given a discount, he explained, everyone else would start to haggle on the price. TV networks would see their business models upended.

Daniel also took several meetings with the network TV4. He was spotted in their offices in the Stockholm port district of Värtahamnen and received delegations of TV4 executives at Jarla House. His counterparts were both curious and skeptical. Viasat, a major distributor owned by Cristina Stenbeck’s investment company Kinnevik, was openly resistant. Any new offering from Spotify would compete directly with their digital service, Viaplay. Skeptics in television circles saw Spotify potentially damaging the relationship between TV companies and their distributors, and worried that their brands would be diluted.

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