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#DigitalSkeptic: Human DJs Find Their Place Deep in Age of iTunes

Stocks in this article: AAPLP

Almost immediately The 50 Greatest Pieces of Classical Music jumped to the upper ends of the iTunes classical download list. And it has stayed there essentially ever since.

"By using humans to create the best collection of music, we provided the best experience," he said. "That's the secret."

Spotify gets 'Classify'-ed
Lagerlof's next hot spot for humans turned out to be Spotify, which went large in his native Sweden several years ago. In 2012, as the subscription service began growing dramatically, he realized that the sheer size of the Spotify library made it hard for users to find the songs the loved. So when the platform opened up its development to third parties, Lagerlof created Classify, an app that enables his human playlist curators to comb through Spotify's archives and create top-quality lists that drive usage. He says his 50 Greatest Pieces of Classical Music list boasts 90,000 subscribers on the service.

"We have playlists for blues, for jazz, we have somebody in Sun Studios," he explained. "And just like in the vinyl and CD business, we take a percentage of the fees Spotify pays to labels and artists.

"It's the same business we've always been in, but updated for digital music."

Some new-media nonsense
All these years in the digital music industry have rubbed off on the otherwise sensible Lagerlof. Language issues aside, he utterly lost me when I tried to get him to explain how selling 50 songs for $10 was not a business disaster compared with selling 10 for the same amount.

"It's the same revenue we get for 10 or for 50 songs. The same money flows out to the labels and artists. So everybody is a winner in the deal," was the nonsensical quote I promised him I would write down and print. So there it is.

And there remains the deep question of whether X5's model has legs here in the United States, where 15 years of digital-age abuse has rendered music essentially worthless. Spotify's premium non-ad-supported product can fetch only $10 a month here, as opposed to the roughly $15 per month it can charge in Sweden, meaning there is 30% less revenue for X5 to split with artists and labels -- and probably just that much more risk in making money here.

But still, it is hard not to be impressed by this one man casually doing what thousands of Silicon Valley entrepreneurs promised us all was impossible: Finding a place for warm-blooded humans in an otherwise cold-blooded digital world.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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