At Soundiiz, we decipher the latest news on streaming platforms every week. But we also like to delve into the history of the platforms that set the pace. And if there’s one thing we don’t talk about, it’s the founders of these services. Today, we’re launching a series of articles that aim to understand the backgrounds of the creators behind the platforms we’re passionate about. And what better way to start than with the most widely used of them all, Spotify? Who are Daniel Ek and Martin Lorentzon, Spotify‘s founders? We’ll tell you all about them!
From jet-set to log cabin
Born in Stockholm in February 1983, Daniel Ek’s passion for music and computer science began at an early age. A guitar player and computer enthusiast, he set up his first business at the age of fourteen, creating websites from scratch for individuals and companies, and quickly earned a handsome salary. Daniel slashes prices, charging up to ten times less than his competitors.
Young Daniel was precocious. At a time when the Internet was beginning to take off but was still far from being the force it is today, he was evolving in a closed circuit where it was almost easy to stand out if you had a little gumption and business sense.
His rise was rapid. He applied for a job at Google at the age of sixteen, but without a diploma, his application was rejected. Attending a technology university in Stockholm, he refined his skills and, in his free time, developed computer programs. He then established a marketing company, which he later sold for a substantial sum, allowing him to alter his lifestyle significantly.
At the age of 23, he was already a millionaire and bought himself a Ferrari, the car of his dreams. But mental health problems plunged him into depression, and he returned to live near his parents in a shack. He questions everything about his life, including his goals and passions. Is this really what he wants? Everything happened so fast that he didn’t have time to understand what was happening to him. And here he is, back at square one, as if nothing had ever happened.
It is a story worthy of a Hollywood screenplay, marked by highs and lows and accompanied by a resurgence.
Daniel Ek and Martin Lorentzon: first ideas
Daniel’s thoughts turn to one of his passions: music. His dream would be, on the model of iTunes, which has changed the balance of power in the record industry, to make all the world’s music available online. As the Internet continues to expand, the market is ready for a new revolution. But the task is complex. While he has a good grasp of computers, Daniel is relatively unfamiliar with the record industry. He’s the grandson of a jazz pianist and an opera singer, plays guitar in his spare time but knows nothing about the business side of the music industry.
In fact, he doesn’t hesitate to circumvent it, as he is one of the executives behind µTorrent, a service that facilitates the illegal downloading of digital files, films, series, and music. The founder of µTorrent, a company acquired by BitTorrent, Ludvig ‘Ludde’ Strigeus, will become Spotify‘s Director of Programming. Before he began serving the music world, it’s safe to say that Daniel first started dynamiting it from within.
In 2006, he joined forces with Martin Lorentzon. Martin has a successful track record in Silicon Valley-based tech companies. He, too, was precocious and, since the 90s, has been moving from company to company, where his skills in engineering and economics landed him a job with an investment firm called Cell Ventures. In 1999, he co-founded Netstrategy, later Tradedoubler, a global affiliate marketing network. Success was exponential, and Martin became not only a millionaire but also a man recognized for his visionary leadership. Martin crossed paths with Daniel after Tradedoubler bought Advertigo, an advertising company founded by Daniel Ek. They become friends and talk about their past experiences.
Both men, Daniel and Martin, were at a crossroads in their lives. Unsure about their future, they turned to their shared passion for cinema and, above all, music to devise a plan. Their love for music not only drove their business decisions but also shaped the future of the music industry.
Launch ramp
In 2006, they took stock of their savings and invested their own money in a company they called Spotify. Daniel is the CEO, and Martin is the Chairman of the company. Ten years later, in 2016, Martin will step down.
With Spotify still in its early stages, Martin and Daniel faced numerous challenges. They paid for almost everything themselves, struggling to attract the attention of investors. The task was complicated. In an interview, he would later give, Daniel would explain that he didn’t even know he needed prior authorization from the record companies to make their catalogs available. Despite these hurdles, they persevered, demonstrating their unwavering commitment to their vision.
He spent months and months negotiating with them. Those who agreed to have their catalogs distributed by Spotify obtained 18% of the company’s shares. On October 7, 2008, Spotify officially launched in Sweden and a few other European countries before expanding into the US market in 2011. At launch, Daniel and Martin’s fortune was almost wiped out. They had invested and sacrificed everything to get their company off the ground. Fortunately for them, it doesn’t take long for the money to start flowing in.
Spotify stands on the border between iTunes, which made online music available for purchase for a few cents, and other services that offer free music. But also Napster, which made all the world’s music available illegally and free of charge. By playing on both fronts— legality, and accessibility—Spotify has opened up a gap that will never close again. The record companies, initially skeptical of the concept, soon took notice of Daniel and Martin. They realized that Spotify was not a threat but an opportunity to reach a wider audience and generate more revenue.
Daniel Ek and Martin Lorentzon: revolutions?
It marked the beginning of a shared domination but also a new way of distributing and promoting music. From that date onwards, Spotify would be the talk of the record industry and its artists, attracting its share of criticism and controversy but also enabling hundreds of millions of people to enjoy an almost infinite catalog of references.
If Daniel is the best-known figure in the Spotify adventure, Martin has been essential in the company’s strategic development, its installation as a thriving business, and the management of the tasks required to run a machine employing thousands of people. On April 3, 2018, Spotify officially listed on the New York Stock Exchange, twelve years after its launch—a new milestone for Daniel Ek and the consecration of years of work.
Twenty years after the launch of Spotify, Daniel Ek’s fortune is estimated to be around $ 7 billion. All the more reason to look to the future with confidence!
Daniel Ek and Martin Lorentzon: controversies
Spotify’s history has been punctuated by heated debate, harsh criticism, and open conflict with musicians. Taylor Swift and Neil Young were among the first superstars to question the hegemony of the Swedish company. And to boycott it in the hope of shedding light on its contradictions and bringing about change.
In recent months, Daniel Ek has created controversy following his comments on Artificial Intelligence. Rather than fight against it, as many artists are calling for, he preferred to emphasize that it would enable the democratization of musical creation.
The fact that a tech and streaming giant doesn’t stand up to these new technologies sends out a potentially harmful signal. We all know how powerful Spotify is, and if the Swedish firm invests massively in AI, it could profoundly upset the music industry. And undermine the status of artists. These statements come against a backdrop of growing criticism of Spotify following an investigation by a journalist who revealed that some of the ambient songs popular on Spotify were generated by Artificial Intelligence and not by real artists.
This saves on royalties but also potentially puts artists out of work. Since then, Spotify has come under increasing scrutiny from observers of the music streaming world, and the coming months and years will prove crucial.
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