"FREEMIUM WORKS," TROY CARTER ASSERTS

Atom Factory founder and A-list manager Troy Carter (John Legend, Meghan Trainor) is widely viewed as one of the smartest people in the music biz—which renders his pro-Spotify/pro-freemium stance that much more provocative. Carter made his argument earlier this week during a Bloomberg video interview, and DMN’s Paul Resnikoff has transcribed the pertinent section so that we don’t have to.

Talking about the devastating effects of Napster and first-gen P2P on the business, Carter says, “The difficult part is, the music industry has been through a lot. We know we hear the horror stories about ‘these guys are litigious’ and you know, ‘they’re dinosaurs’… a lot of the guys who run music labels really get a bad rap. What the technology industry and some of the press isn’t sensitive to is what Napster did to not just to the industry, but to the families. I’m watching people lose their jobs, their kids having to be taken out of the schools that they go to…

“So when Spotify came along, Daniel Ek did a really good job at, ‘OK, you know what? Let me show you guys that I’m a friend, and that I’m gonna add value, and my job is gonna be—show people that it’s easier to pay for and stream music than it is to steal it. And from there, I became a really big supporter. Because one, he’s a guitar player, he’s a musician, and he wasn’t a guy that was trying to steal from artists or anything like that.

“There have been times where I had to get on the phone with really big managers who have really big clients, and tell them what the downside was for them leaving their product off of Spotify. All of the music is still available on YouTube for free. It’s still available on the piracy services for free, so you’re missing out on a big audience and you’re missing out on a revenue stream.”

When asked how Spotify gets over its “Taylor Swift problem,” Carter replies, “I don’t know if Spotify needs to get over the Taylor Swift problem, as much as it is [that] people have to see the future. Because free already exists; it’s a flawed argument when you say ‘I don’t want my music on any service that offers free,’ when free already exists.

“[Swift] is an incredible businesswoman, one of the best marketers that I’ve ever seen, and on top of that, incredibly talented. So, I think she does a lot of things right, but when it comes to this specific argument, it is proven that freemium works. That if you give people a free option, there’s a huge case study that they become paid users. But you gotta offer them an entry point.”