Sean Parker: Spotify Will Overtake iTunes Within Two Years

AUSTIN - Sean Parker is thinking big when it comes to Spotify, the company he backed in 2010 to the tune of US$15 million. In a Q&A session at SXSW 2012, Mr. Parker said that Spotify is going to be more important to the music labels than iTunes is today, and that it will do so within the next two years.

Sean Parker

Sean Parker
Source: Creative Commons

“If Spotify continues growing at its current rate in terms of subscribers and users, we will overtake iTunes in terms of the amount of revenue we contribute to the music labels in under two years” Mr. Parker said.

Sean Parker’s first venture was Napster, the file sharing service that was shut down by court order due to way it was used to trade pirated materials. In 2002, he founded Paxo, an early social networking service based around address book access, though he was forced out by the company’s venture capitalists backers.

He then went on to become the founding president of Facebook, though he was again forced out by the company’s backers after a cocaine bust in 2005 (no charges were filed). He is credited by many, however, as negotiating a structure that left Mark Zuckerburg in control of the social networking firm, and for helping to set the company’s early direction.

In 2010, Mr. Parker invested $15 million in Spotify, an online streaming music service that was then operating only in Europe. He helped negotiate deals with U.S. major labels that allowed Spotify to expand to the U.S.

Which brings us to this year’s SXSW, the annual music, film, and interactive festival that takes place in Austin, TX. Sean Parker and his Napster cofounder, Shawn Fanning, participated in an interview labeled Downloaded, and afterwards did a Q&A session.

During this Q&A session, Mr. Parker chided iTunes for being slow, saying, “It’s this Web interface inside their client app, and you click buy, and then…”

At this point he made a swirling motion with his index finger to signify the spinning gear we all wait for while it authenticates the purchase and begins downloading the file.

There was a common theme throughout the session—something Mr. Parker has said many times—about how he sees Spotify solving many of the problems that he and Mr. Fanning were trying to solve with Napster: no cost per song, a free option available, instant discovery of music, etc.

iTunes has grown to be the biggest music retailer in the world, eclipsing even retail giant Wal-mart. Apple currently only sells music, while Spotify is a subscription-based service that has more in common with Pandora’s streaming service than any of the more traditional music retailers.