Spotify CEO Daniel Ek

1. BGBen Gilbert0:00

   It is impossible to flawlessly execute a podcast of this style.

2. DRDavid Rosenthal0:04

   Yeah.

3. BGBen Gilbert0:05

   And that's the beauty of it. You come up with a bunch of stuff you wanna talk about-

4. DRDavid Rosenthal0:08

   Yeah.

5. BGBen Gilbert0:08

   -and then you end up having a real organic conversation, and then it turns into a product, and that product is totally different than what you envisioned in your head, but can still be great.

6. DEDaniel Ek0:17

   But I think the amazing thing is, unlike you talking to a journalist, et cetera, is it's truly a conversation, one, and the second part is, there's enough time to actually elaborate on the thought and the idea. Whereas you have to be so succinct in how you express your idea and truly get it across in thirty seconds, or, like, you lose the moment, and the journalists wanna move on. Brian Chesky is an example. He's, like, the master on it, and he just switches [snaps] it on, and he's, like, so good. For some reason, he and I always ends up getting on the same panels, and I'm like-

7. BGBen Gilbert0:50

   [chuckles]

8. DEDaniel Ek0:50

   -it's game over even before it started.

9. DRDavid Rosenthal0:52

   Yeah. [chuckles]

10. DEDaniel Ek0:52

    You're gonna have all the great stuff.

11. SPSpeaker0:53

    "Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?"

12. BGBen Gilbert1:10

    Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

13. DRDavid Rosenthal1:17

    I'm David Rosenthal.

14. BGBen Gilbert1:18

    And we are your hosts. This episode, we sit down with Daniel Ek, the man who saved the music industry after Napster and the piracy era killed the CD business. Some of the stats are mind-boggling. Spotify has paid forty billion dollars to artists over their lifetime. They're now the single largest source of revenue for the entire music industry.

15. DRDavid Rosenthal1:40

    That's crazy. Spotify also has over five hundred million monthly active listeners, over two hundred million of which are paid subscribers. Both of those numbers are bonkers.

16. BGBen Gilbert1:52

    And in today's conversation, we're talking about, one, how Spotify managed to get to this five hundred million number by stacking all these different expansion strategies on top of each other over the years, and two, we're gonna dive into the current moment that Spotify is in. They've entered podcasting in a huge way that has not only changed the experience for consumers, but Spotify's business and their future as a company, which is, of course, very interesting to David and I, as Acquired's growth has really exploded on Spotify.

17. DRDavid Rosenthal2:22

    Totally. As I think we referenced early on in our conversation with Daniel, over sixty percent of Acquired's audience is now on Spotify, which is up from basically zero four years ago.

18. BGBen Gilbert2:32

    It's wild. In fact, we were so interested in having this conversation that when Spotify asked if we wanted to fly to Stockholm and record in person with Daniel in the Spotify studio, we jumped at the chance. Daniel also foreshadowed some of what's to come with the cousin of podcasting, audiobooks.

19. DRDavid Rosenthal2:48

    Ooh.

20. BGBen Gilbert2:49

    We can't wait to hear what you think. Come discuss it after you listen to this episode in the Acquired Slack, acquired.fm/slack. You should subscribe to our interview show, our second show, ACQ2. You can find it in any podcast player, and we've had some killer back-to-back discussions with the CEOs of Retool and AngelList, both about AI. Now, without further ado, this show is not investment advice. David, myself, and our guest may have investments or many shares in the companies that we discuss, and this show is for informational and entertainment purposes only. Now on to our conversation with Daniel Ek.

21. DRDavid Rosenthal3:24

    We wanted to start with, like, something kinda incredible has happened in podcasting.

22. BGBen Gilbert3:28

    If you look at January first, twenty nineteen, we had less than a thousand listeners on Spotify.

23. DRDavid Rosenthal3:32

    Yeah, crazy. And now it's by far the majority-

24. BGBen Gilbert3:35

    Over a hundred thousand

25. DRDavid Rosenthal3:35

    -of our listeners. [chuckles]

26. BGBen Gilbert3:37

    And unless you're us, and you're looking at the data all the time, or other podcasters, I think it's easy to underestimate how seismic of a shift has happened in the podcasting ecosystem since you guys dove in. And I just wanted to, sort of Acquired style, go to a moment in time and say: How did that happen, and how did you guys decide to become an audio company instead of a music company?

27. DEDaniel Ek4:00

    I like to say that there was probably this genius insight at some point in moment, but that's, [chuckles] certainly not in the case of Spotify, true. Uh, it is often quite serendipitous. And for a long time, you know, I was kind of fighting the urge on this, but we were oftentimes trying to not think of ourselves as the users and customers, because once you got through kind of a hundred million users, you're kind of like: Well, obviously, I shouldn't be the target demo. I need to kind of listen to what the actual users are telling me. And there, there's some part that's true with that, but then, uh, more and more, what I've, I've realized, uh, is also that, actually, internally, we probably have the best sounding board of a quite representative Spotify user and what they might like. And so, uh, one of my favorite topics is how often people game our platform. For instance, in Germany, unbeknownst to us, but one of the, the sort of crazy things that ended up happening was just people started uploading audiobooks because it turns out that, um, these music labels actually own a bunch of audiobook rights.

28. BGBen Gilbert5:05

    Mm.

29. DEDaniel Ek5:05

    And so, as the platform was taking off, they realized: What else can we put on this platform that gives us a leg up and creates more revenue for us? And they realized that they had this catalog of audiobooks sitting on there. So I think that was kind of one realization where we kind of realized, hey, this platform, it doesn't seem to matter all that much what we're putting on it. People just like consuming content. And then I and others at Spotify, we were big podcast listeners ourselves, and we love that, uh, but we hate the fact that we had to switch app, uh, from our, our normal one. We hate the fact that we couldn't get the recommendations working. We hate the fact that we couldn't get this to work on my car speaker or my home speaker, and all these things that we've spent literally a decade, um, building for the music industry. So it kind of dawned upon us that podcasters have sort of the same problems that the music creators have, and we should be able to play a pretty big role. And all the primitives that we built for music, uh, should work really well in terms of discoverability, in terms of, uh, ubiquity, that we call, which is sort of our ability to play on, on any device. And, of course, our freemium model, where the ad-supported and eventually paid models as well, should be able to, uh-... all work together. And so the craziest thing in, in the beginning was probably when, when, uh, we started talking about it as building it in the same app. That was what the biggest resistance was, because the common wisdom at the time was obviously, well, podcasting has to be a distinct own thing.

30. DRDavid Rosenthal6:38

    I mean, this was like the-- you've talked about this before, the constellation of apps was the-

Episode duration: 1:38:06