Spotify CEO Responds to Taylor Swift: Free Music Leads to Big Money

Dorothy Hong
Daniel Ek

The music-streaming company defends its business model after losing the high-profile artist

In the wake of Big Machine Label Group pulling Taylor Swift's song catalog from Spotify, the CEO of the music-streaming company posted a blog entry on Tuesday asserting that a free business model contributed to $2 billion in payouts to music creators and distributors.

"There are at least three big misconceptions out there about how we work, how much we pay, and what we mean for the future of music and the artists who create it," wrote Spotify founder and CEO Daniel Ek in a blog post titled "$2 Billion and Counting."

The three "myths" are, as Ek outlined: "Free music for fans means artists don't get paid; Spotify pays, but it pays so little per play nobody could ever earn a living from it; and Spotify hurts sales, both download and physical."

Ek tackled each issue, calling Spotify a service similar to radio, where artists are paid competitively by the song, not the audience size.

Read more: Taylor Swift Launches Interactive Music Video App

Spotify's free service is meant to get listeners in the door with the expectation they eventually will upgrade to a paid premium option, Ek wrote. And that conversion has already amounted to Spotify paying out more than $2 billion to "labels, publishers and collecting societies for distribution to songwriters and recording artists."

As for the number of downloads trending downward, Ek pointed to the music market: "Downloads are dropping just as quickly in markets where Spotify doesn't exist."

Ek appealed for artists' understanding: "Our interests are totally aligned with yours. Even if you don't believe that's our goal, look at our business. Our whole business is to maximize the value of your music. We don't use music to drive sales of hardware or software. We use music to get people to pay for music. The more we grow, the more we'll pay you."

Read more: Big Machine's Scott Borchetta Explains Why Taylor Swift Was Removed From Spotify