Napster co-founder Sean Parker is infamous for revolutionizing the music industry in the late 1990s with the P2P file sharing service. Since then, the American businessman has helped build Causes and The Founders Fund, worked as Facebook's president (he owns 4 percent of the company) as well as Plaxo's president, and is now a major investor ($30 million) in Spotify. The fact that both Napster and Spotify are music services is no coincidence: Forbes has excellent article summarizing Parker's hope to push Spotify into becoming the next Napster.
In August 2009, Parker sent a letter (embedded below) to Spotify co-founder Daniel Ek. It's worth reading in full, but here are 10 quotes to pique your interest:
For the uninitiated, Spotify currently offers three account types. Spotify Open is free, but includes advertisements and limits your listening time: 20 hours per month for the first six months, followed by five plays per track and 10 hours per month afterwards. Spotify Unlimited does not include advertisements, but will set you back either £5.00 or €5.00 per month. Spotify Premium also does not include advertisements, includes features like offline mode, mobile device support, enhanced sound quality, and exclusive content, but will set you back £10.00 or €10.00 per month.
Once you're hooked and want to take your music with you, Spotify Premium is the way to go. Furthermore, to burn songs onto a CD, you have to buy every individual song. That being said, it was the free legal music sharing aspect of Spotify Open that got Parker excited enough to reach out. At that point, he had never even met Ek.
"He wrote a really long e-mail about everything that was wrong with the service," Ek told Forbes. "I thought it was very thoughtful and I crafted a response. Before I knew it we were having this email dialog about things I've been thinking about for years. But this is the first time someone had spent more time thinking about this than I had myself."
Ek co-founded Spotify with Martin Lorentzon in 2006. They invested $5.6 million, built the software, and got the European music rights from US labels like Sony, Universal, Warner, and EMI. Eventually, in July 2011, the company expanded to the US. By last count (before the Facebook push), the service had 10 million members and 2 million paying customers.
A few months after the first e-mail, Ek met with Parker and Founder Fund's Peter Thiel for a 45-minute meeting that ended up lasting five hours. Parker wanted to invest in Spotify, but Ek had just received an investment from Hong Kong billionaire Li Ka-shing.
Parker needed to prove himself, so he spent the next six months meeting music industry executives and convincing Facebook co-founder and CEO Mark Zuckerberg about Spotify. "I'd been talking to Mark about what music sharing on Facebook would look like for four years," Parker told Forbes. "I not only introduced Spotify and Daniel to Mark, but conceived, with Ek, the notion of a Facebook music platform, what the Facebook music platform would look like and then supervised the implantation of that platform."
Parker and Ek believe they can challenge Apple's iTunes since it doesn't have access to Facebook's social graph. After almost a year of rumors and speculation about a service called Facebook Music, the social networking giant announced a new Timeline feature and new social apps using its Open Graph at its 2011 f8 developer conference last month.
Unfortunately for Spotify, Facebook made sure its music launch was not an exclusive one: although Spotify was highlighted the most at the event, it was just one of the official 17 launch partners, and just a handful are related to music. Hundreds more will flock to build their own more social apps.
Following f8, many users complained about Spotify's new Facebook requirement. Although the company initially defended its decision, it eventually backed down and offered a private listening option.
Facebook can definitely help Spotify grow, but nobody knows by just how much. Parker, Ek, and even Zuckerberg likely want to see it take off like Zynga did for games, but its competitors, including Apple, will be doing everything they can to stop it.