STOCKHOLM – “We think the whole world will look like Sweden,” says Daniel Ek, the 31-year-old boss of Spotify, a streaming service based in Stockholm.
The world’s music executives hope Ek is correct. They have been sending delegations there to study how Sweden pulled off its musical makeover.
Between 2008 and 2013 sales of the country’s recorded-music market rose by around 27 percent, to $155 million. Streaming now makes up more than 70 percent of recording companies’ revenues.
Spotify’s launch in 2008 was vital in Sweden’s movement from diminuendo to crescendo. Sweden was early to have fast broadband. At first this facilitated piracy (The Pirate Bay, a site used for illegal file-sharing, started in Stockholm), but later ultrafast download speeds helped streaming gain momentum.
Bundling of services was instrumental, too. Spotify offered free trials with Telia, a local mobile operator, which encouraged a lot of consumers to give it a go.
Time to get legal
A 2009 anti-piracy law probably nudged some music lovers to switch from illegal downloading. Because Sweden is a rich country, monthly subscriptions are easier to peddle to the masses.
Today the question preoccupying Swedish music bosses is how much further streaming can grow. Already around 3 million Swedes are believed to have streaming accounts — about a third of the population — of whom two-thirds are paying subscribers.
If every market in the developed world could reach such critical mass, the record industry would look very different. So far the United States has 6 million paid subscriptions — only 2 percent of its population.
Sweden, though, is not a perfect template for other countries. Digital downloads never became popular there, so there was not a rival digital technology to cannibalize.
The switch to streaming may take a lot longer in countries where there is not such a high proportion of technophile consumers and where there is no successful homegrown streaming service to rally behind.
But the most realistic lesson from Sweden may be that although streaming can help the record industry grow again, it may never reach its previous heights.
Sweden’s recorded-music industry is only around 60 percent as big as it was at its peak, says Ludvig Werner of IFPI, a trade group. Even so, the business is energized by proof that streaming can bring in “money, money, money,” in the words of Sweden’s most successful band.
Copyright 2013 The Economist Newspaper Limited, London. All Rights Reserved. Reprinted with permission.