HOW SPOTIFY’S D.A. WALLACH KEEPS THE PEACE IN A DIVIDED INDUSTRY
THE EVENTS WERE BILLED as closed-door, no-media-allowed conversations between artists and Spotify. It was a delicate pairing, the industry equivalent of the Iran nuclear talks or emergency couples therapy, and so it began with the creation of a safe space: In three cities—new York, Nashville, and Los Angeles—the artists would gather in a room by themselves and talk for 30 minutes about streaming. Then the doors would open, and Spotify execs would be allowed in.
And that’s roughly when the shouting started, much of it at D.A. Wallach, the guy tasked with playing peacemaker between corporate and creative.
“There are certainly conversations I have that begin with people hating me,” Wallach says today. Those events were in October, in collaboration with the British artists advocacy group Featured Artists Coalition. But he’s been hated elsewhere. And he’s developed a Lebron James–level ability to wave away his detractors.
After all, he knows exactly where they’re coming from. Wallach is a musician himself. He fronted a band called Chester French and is now a solo act. His job title at Spotify is artist in residence. And his actual job is to meet with artists and say, essentially, “I am one of you. And I want to help you love Spotify the way I love Spotify.”
Imagine it: You are a full-time musician, fearing for your livelihood. Napster convinced a generation of music fans that your recordings had
AS THE SUBSCRIPTION MUSIC SERVICE SPOTIFY DEFENDS ITS BUSINESS MODEL TO INDUSTRY NAYSAYERS, THE COMPANY’S ARTIST IN RESIDENCE, D.A. WALLACH, IS THE MAN IN THE MIDDLE.
no monetary value, and by the time it was functionally sued out of existence, CD sales were tanking. Then itunes demolished the very concept of the album, turning songs into individual commodities. Then Spotify came along and made it easy for anyone to hear your music for free. People lost interest in these $1.29 files, and, on the high end, Spotify now offers to pay $0.0084 cents for each time someone plays your song. And if you think that’s a raw deal, some guy named D.A. Wallach, with a corporate day job and a gleaming Tesla, calls you up and says he’s just like you and everyone’s going to be OK. You think to yourself: Who does this guy think he is? And then, an even more disorienting question: What if he’s right?
“I HAVE A TOTAL REVULSION for corporate life,” Wallach says when we meet. Does he have an office at Spotify HQ? No, he mostly comes in for meetings. Does he wear suits to work? Hell, no—he’s currently wearing lime-green sneakers and a pink T-shirt, looking like Shaun White’s nerdy, art-teacher brother. That said, he turned 30 in March. And he is waving his flag of rock ’n’ roll independence in a very corporate-looking Spotify conference room, with a publicist sitting nearby.
Twelve years ago, Wallach was a Harvard freshman desperate to join a band. Some guys were assembling one, so he auditioned to be the drummer. He lost out to Damien Chazelle, who went on to write and direct Whiplash. But the band anointed him their singer, and they called themselves Chester French. They recorded an EP, then took to the streets of Cambridge, selling it for $5.
This was fun, but it was no way to make a living. So Wallach began worming his way through the layers of the industry, seeking a way in. He reached out to a Web designer for Kanye West and managed to get some MP3S into West’s hands. He contacted a Mix magazine writer who had recently interviewed Pharrell Williams’ engineer. He made his way through to Jermaine Dupri. It was a ludicrous effort, the work of a kid with blind ambition and lots of hustle. But, funny thing: Within weeks, all three of these men offered Chester French a deal. A bidding war ensued. The band picked Pharrell’s label, Star Trak, an imprint of Interscope. By 2007, their music was playing in an episode of Entourage.
Around that same time, Wallach spotted another opportunity: Jimmy Iovine, Interscope’s then-ceo, was looking to get more involved in the digital sphere, and Wallach happened to know Facebook founder Mark Zuckerberg from their days at Harvard. “We weren’t super close,” Wallach says, “but we had lunch a couple of times.” Good enough. He arranged a meeting between the two executives, with him as facilitator, at Facebook’s headquarters.
It was a “really weird meeting,” he says, without elaborating. No matter: While there, he got chatting with Dave Morin, who at the time managed some of Facebook’s biggest projects. (He has since gone on to found the social network Path.) They stayed in touch, and two years later, Morin gave Wallach his first look at Spotify. At the time, the service was a curiosity out of Sweden, and the only Americans who had access to it were industry insiders like Morin. Wallach was intrigued, and a year of eager networking followed, until he finagled a sushi dinner in Los Angeles with Spotify’s cofounders, Daniel Ek and Martin Lorentzon.
“My skepticism was, how are you guys going to make money off this?” Wallach says.
Spotify is eager to discuss this. The service has two main revenue streams: ads heard by its currently 45 million nonpaying users, and monthly fees paid by its 15 million members. Nearly 70 percent of this revenue goes to the owners of the music, typically labels. Spotify pays based on a complex equation and doesn’t like describing it as a per-stream fee, but it works out to between $0.006 and $0.0084 for each play. Spotify says that can net about $76,000 a month for a “breakthrough indie album” and $425,000 for a global hit.
Moreover, unlike CDS, streams continue to generate income as long as fans keep on hitting play. So why all the fuss? Why do musicians like Taylor Swift and Thom Yorke openly bash Spotify? Why did Jimmy Buffett stand up at a Vanity Fair conference last fall and ask Ek when he’d be giving musicians a raise? The crowd laughed, but Buffett didn’t. He wants a raise.
Streaming is killing off music sales and replacing it with smaller payments, these artists say. Spotify deflects blame for this onto the labels, which set artists’ individual royalty rates. That indie album may have earned $76,000 on Spotify, but the artist received just a piece of the total. Critics say that’s because Spotify earned a piece too.
During that sushi dinner, though, Wallach saw Spotify’s angle: The larger Spotify gets, the more money it funnels to artists and, perhaps more important, by making music more widely available, it’s helping create more music fans with more eclectic tastes. “I felt an almost missionary zeal,” he says. So Ek connected him with Sean Parker, the guy who created Napster, and who is now a Spotify investor and serves on its board. Before long, the kid from Chester French had a job. He would keep doing what he does best—hustling, connecting, and being persuasive.
And he would do it for Spotify.
TODAY WALLACH RUNS a 10-member artist-services team, scattered throughout New York, London, L.A., and Berlin. The job has its ups and downs. Some artists are very receptive. He said he was particularly happy after meeting with the producer Dave Stewart, formerly of the Eurythmics, who used to bash Spotify in the press but has now turned into an ally. Other meetings are tense. Some social situations are, too. He doesn’t let it get to him because he feels certain he’s on the right side. “They’re not yelling at me because Spotify’s business model doesn’t make sense. What they’re screaming about is that it’s really hard for them to make money right now.”
Later this year, Wallach will add to his credentials as an artist in residence: He will release his first solo album. Not that he’s giving up his day job. “My music is not supremely popular on Spotify,” he admits with a grin. But it will be there, available for all. ■
KANYE WEST, PHARRELL WILLIAMS, AND JERMAINE DUPRI EACH OFFERED CHESTER FRENCH A RECORD DEAL. SOON, THE BAND’S MUSIC WAS IN AN EPISODE OF ENTOURAGE.