Sean Parker: Apple may have tried to block Spotify in U.S.

Spotify execs take stage at D10 and talk about how their model leverages musicians' back catalogs and how Apple may have tried to block the company in the U.S.

Rafe Needleman Former Editor at Large
Rafe Needleman reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business.
Rafe Needleman
2 min read
Walt Mossberg, Daniel Ek, and Sean Parker at D10. Rafe Needleman/CNET

PALOS VERDES, Calif.-- Responding here at D10 to the question, "Did Apple try to keep Spotify out of the U.S.?" Sean Parker said, "There was some indication that might have been happening."

Parker continued, "It's a very small industry. But one of our core competencies is our licensing framework. We are always in negotiation. We're in constant renegotiation. In that process, you hear things. There's a sense that Apple was threatened by what we were doing." But it would have been a small part of Apple's business, he adds.

On the other hand, he previously said in the interview that the capability to buy and download tracks, for playback when users are offline or in the car, is a growing part of Spotify's business.

On stage with Spotify CEO Daniel Ek, Spotify Director Parker said that the bar for a good music service was set by Napster, which he co-founded in 1999. It was easy to use and had a great library. "But when I saw Spotify, I saw that it met the bar and exceeded it."

Referring back to Napster and illegal file sharing, Parker said of Spotify, "We like to say that we're competing with piracy."

Ek reinforced this. "The music industry has declined from $45 billion to $15 billion," he said. "But consumption of music is at an all-time high. There are half a billion people illegally file-sharing music. That's a huge addressable market." Interviewer Walt Mossberg pointed out that Steve Jobs also said this.

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Ek also points out that Spotify is far better long-tail content play than even iTunes. "The vast majority of songs on iTunes are never bought by anyone," he said. "On Spotify, 80 percent of our songs get listened to."

Parker added proudly, "For artists, their back catalog is being monetized."

Spotify isn't a random-playback product like Pandora, yet Ek says that the service's core value is discovery. "We're really good at making it easier to find new music through playlists." He adds that Spotify is "more driven by discovery since the additional cost of listening to a song is zero."

Spotify reports 10 million active users, 3 million of which are paid.

Mossberg asked why Apple couldn't just turn around and launch a competing service. "They probably can," said Ek. "But the value of Spotify is that we have 700 million playlists."

Parker said, "We are able to combine social with music because we have a free tier of service."