Sean Parker: Spotify will finish the job that Napster started

Sean Parker is getting a lot of attention right now thanks to The Social Network, the movie about Facebook where he’s played by musician Justin Timberlake. But today at The Daily Beast’s Reboot America conference, Parker didn’t say much about Facebook or the movie, and he focused instead on his latest project — music startup Spotify.

Parker is a managing partner at the Founders Fund, which invested in Spotify. In a recent Vanity Fair profile, Parker said Spotify is his current passion, and he said today that it the company could “finish what I started” with Napster (which Parker co-founded). Napster’s goal, he said, was to build up a massive audience of illegal downloaders, then transition them to a legal service. He said record industry executives didn’t understand that, which is why they got Napster shut down, and why they have been playing “whack a mole” by attacking every other Napster-like service in the last 10 years.

So how is Spotify going to solve the problems that Napster faced, while also reversing the slide in music revenues that Napster precipitated?

“The ultimate answer, I believe, is that you have to accept the war on piracy is a failure,” Parker said.

In other words, instead of trying to stop illegal downloads, the music industry needs to find ways to charge users for “convenience and accessibility”. In Spotify’s case, the service offers a desktop application that provides free access to a massive library of music. Then, once users are addicted to the free service, “We’ve got you buy the balls,” Parker said. So Spotify can charge users if they want to access the content elsewhere, say on their mobile phone.

Spotify is already experimenting with this model with its premium service, which includes the ability to export your music to your mobile phone, as well as other features like higher sound quality. Parker hinted that there’s more to come, saying that there are parts of Spotify’s business model that he can’t talk about yet.

Of course, one obstacle to that plan is the fact that Spotify still isn’t available in the United States. Chief executive Daniel Eks has been vague about the US launch date, and today Parker would only say that he “hopes” Spotify launches here by the end of 2010.

Another obstacle, Parker said, is the iPod, which is still the dominant music player by a longshot. Until it’s possible to directly export music from a music application to the iPod, music startups are “screwed,” he said. Spotify is reportedly having other problems with Apple, with sources telling the New York Post that Apple’s negotiations with record labels over a music subscription service interfering with Spotify’s own negotiations.