Taylor Swift is right about music, wrong about Spotify, says CEO Ek

Spotify's Daniel Ek says the world's top subscription streaming-music service added 2.5 million paying members in fewer than six months and has returned a total of $2 billion to the music industry.

Contrary to the sermon of Taylor Swift, Spotify doesn't devalue music, founder and Chief Executive Daniel Ek said Tuesday.

The streaming-music service has grown by 2.5 million paying members and 10 million ad-supported listeners in fewer than six months (it now has 50 million users), and it has paid $2 billion to rights holders in the music industry so far, Ek said in a blog post that also sought to dispel "myths" about the service that have been promoted by high-profile artists like Swift.

Taylor Swift pulled her music off Spotify last week, calling it an experiment that fails to fairly compensate musicians. Getty Images

"Taylor Swift is absolutely right: music is art, art has real value, and artists deserve to be paid for it," Ek said in an 1,800-word commentary that aims to counter concerns that free music means artists don't get paid, that Spotify pays so little per play that no artist could ever earn a living from it and that the service hurts physical and online music sales.

"Piracy doesn't pay artists a penny - nothing, zilch, zero," Ek wrote. "Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists...that's two billion dollars' worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify."

The post by the low-key Ek highlights the friction in the music industry as distribution and sales fundamentally morph from selling ownership of music -- be it a record, a CD or a digital download -- to selling access to music. Streaming music is one of the top sources of music sales and is growing briskly, while sales from physical music (CDs) and digital downloads are in decline, according to the Recording Industry Association of America. In the first six months of 2014, streaming services accounted for 27 percent of industry sales -- up from 20 percent in the same period the year before -- and helped offset declines in music download sales.

But the rapid ascent of streaming music has come too quickly for payment models to stay apace for all people in the sound-recording food chain. That speed of change and the uncertainty about the format has caused high-profile artists such as Swift, Pink Floyd and Radiohead's Thom Yorke to criticize the burgeoning model.

Last week, Swift pulled her entire catalog of music off Spotify just as her latest album, "1989," had the largest sales week for any record since 2002. Spotify complied with Swift's request to remove her songs, and she later explained that she's unwilling to contribute her life's work to an experiment that doesn't fairly compensate writers, producers, artists and other music creators. "I just don't agree with perpetuating the perception that music has no value and should be free," she said in an interview with Yahoo. She let some of her music remain on other free services such as YouTube and Soundcloud.

On Tuesday, Ek said he agreed with Swift that music is valuable art and that artists deserved to be paid for it. That's exactly what Spotify does, he said. "Our whole reason for existence is to help fans find music and help artists connect with fans through a platform that protects them from piracy and pays them for their amazing work," Ek wrote.

Spotify has paid more than $2 billion to rights holders -- $1 billion from 2008 through 2013 and another $1 billion in 2014 alone. Ek previously disclosed the 2014 payments at a conference in October. In May, the company said it had 10 million paid and 40 million ad-supported listeners; it now has 12.5 million and 50 million, respectively.

Ek said stories from artists and songwriters about receiving little or no money from streaming frustrate him as well. If Spotify's $2 billion in payments aren't "flowing to the creative community in a timely and transparent way, that's a big problem," he said, adding that the company will work with the industry to solve it.

But, he continued, the days of multiple artists selling many millions of albums every year are over. "People's listening habits have changed -- and they're not going to change back," he wrote. He noted that Swift's songs remain on YouTube and Soundcloud, where they're free to hear, as well as pirate platforms like The Pirate Bay.

Ek also included a veiled dig at Apple, which this year bought streaming-music rival Beats Music in a $2 billion deal for the company best-known for its headphones. "We don't use music to drive sales of hardware or software," he said. "We use music to get people to pay for music."

Streaming services like Spotify charge paying members about $10 a month for ad-free, unlimited access to a catalog of millions of tunes, while nonpaying listeners generate revenue from ads. Both streams contribute to royalty payments that Spotify has negotiated with rights holders including labels, publishers and songwriters.

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