12 Music Week 15.08.14 REPORT SPOTIFY IN NORDICS SWEDE LITTLE MYSTERY
Scandinavia has become a utopian snapshot of the future for labels: not only is streaming completely dominant, it’s fuelling a healthy, growing recorded music market. How has Spotify driven this success - and how can it keep improving in the years to come?
DIGITAL n BY TIM INGHAM
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I mean, who’s ever going to want to use a phone with no buttons?” Fear not, Spotify’s Jonathan Forster hasn’t
lost his marbles: the exec’s cheeky incredulity is all for show. The UK-born exec is acutely aware that his employer isn’t Scandinavia’s first ever dominant technology company - and that an esteemed predecessor, Nokia, lost its paramount position in the world of mobile phones with foreboding haste. The story of Nokia’s precipitous slide from
imperious market leader to smartphone also-ran must be a well-thumbed manual within Spotify, a company determined to avoid a similar tumble from grace. It’s not merely the locality of Nokia which provides parallels with Spotify’s future challenges, either: Apple vanquished the seemingly irreplaceable Finnish mobile company, its bobble- free iPhone sweeping aside Nokia’s once ubiquitous handset. And now it’s Apple again, alongside fellow behemoths Amazon and Google, looking to do bloody battle with Spotify - all within a lucrative streaming music coliseum which the Swedish company pretty much built by itself. A trusted lieutenant of Spotify founder Daniel
Ek, Forster is the MD of the company’s Nordic region - currently the most important bellwether on the planet for the future of the music business. Scandinavia has been irreversibly transformed by Ek’s innovation in the past half-decade, ascending from what one senior record exec recalls as a mid-noughties “commercial wasteland” to today’s money-making industry Eden. For Forster, who joined Spotify in 2006 when
it was little more than Ek’s unlicensed prototype, witnessing this turnaround first-hand has been a thrill. He remembers well the huge impact achieved by the honing of the service for Apple’s iPhone, and its subsequent reinvention for iPad, Facebook and Sonos integration. And he fondly recalls the ripe-for- revolution days before Spotify’s 2008 arrival, when Sweden’s most talked-about digital export was that scourge of labels everywhere, The Pirate Bay. “I was really lucky to sit in the same room as
Daniel Ek at the beginning of Spotify,” Forster tells Music Week at the first ever business conference to conjoin the Way Out West festival in Gothenburg. “It was always so obvious to him: he knew Swedes loved music and loved technology, and he felt they didn’t really love breaking the law or stealing from artists. Plus he understood the music industry had been caught unawares by The Pirate Bay. “We knew we had to make Spotify better than
piracy, and I think it was, even in its first iteration. We took it to the labels and said, ‘We think we can get people to pay for music with this wonderful thing - and we’re going to give it away for free.’ And they went: ‘What?!’ Eventually though, we got there.” And how. The most recent IFPI stats from Scandinavia will have left UK and US record label presidents salivating - as will data showing that
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ABOVE
Jonathan Forster: Spotify’s Nordics MD has watched the Swedish record industry’s value increase by 34% in just five years
streaming has helped to eradicate around 80% of music piracy activity in the market. (“Ask a 15-year- old in Sweden today if they pirate music and they’ll look at you like you’re an idiot - the concept simply doesn’t resonate,” says Forster.) Overall recorded music income has grown in
Sweden by a whopping 34% in the five years since 2008. In 2013, streaming income in the country bounced 30.3% to £66.5 million, claiming more than 71% of the total market, with downloads taking a paltry 4%. Over in Norway, recorded music
revenues shot up 11% in 2013 as streaming services claimed 65% of all income. Forster is determined not to lazily bask in these encouraging results, nor ever fall guilty of assuming his company’s long-term success is guaranteed without repeated innovation. “There are still huge amounts of growth to
be achieved in Sweden,” he says. “We’ve got very good penetration in terms of our core audience, but we know there are a lot of people over 40 or 50 outside of the big cities that love music just as much
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