Spotify has its leadership on shuffle mode 🔀

0:02Good morning from the Financial Times. Today is Wednesday, October 1st and this is your FT news briefing. The U.S. government has been shut down, and U.K. Prime Minister Keir Starmer set out to unify his party yesterday. Plus, Spotify founder Daniel Ek is no longer the CEO. We'll talk about what's next for the audio streaming giant. I'm Mark Filippino, and here's the news you need to start your day.

0:35Democrats and Republicans could not agree on a deal to fund the U.S. government before last night's deadline. And at one minute past midnight on Wednesday, the U.S. had its first government shutdown in nearly seven years. Democrats refused to sign off on the deal proposed by Republican lawmakers. It would have kept federal funding at current levels until November 21st. Democrats said that any deal should include a permanent extension of health insurance subsidies that are set to expire at the end of the year. Now, with the government shut down, all, quote, non-essential functions will stop. That includes the Bureau of Labor Statistics.

1:13It's expected to delay the release of crucial economic data like the September jobs report. Now, past shutdowns forced the furloughing of hundreds of thousands of federal employees. The White House has suggested that this time could be different, though. It's indicated that federal departments and agencies should consider firing workers.

1:39Britain's Prime Minister Keir Starmer gave what was billed a make-or-break speech to the Labour Party conference yesterday. It is a great country. It will always be a great country. That's the Britain I'm Fighting For conference, a nation of resolve, a land of respect, a Britain built for all. Starmer's first year in office has been rough. The economic outlook is getting worse. There was, of course, the unplanned cabinet reshuffle from last month and Labour's falling popularity. So he really needed to unify the party. FT columnist Stephen Bush is in Liverpool and is covering the conference. Hey, Stephen.

2:16Hi, Mark. So, Stephen, we're talking to you shortly after Starmer's wrapped up on Tuesday. We should point out that you've listened to many political speeches over the years. How do you rate this one? So, I think, albeit with the very important caveat, that Keir Starmer is not a great orator, I would say it's far and away the best of the speeches that Keir Starmer has given as Labour leader. I think, actually, one of the reasons why this was his best speech is you could really tell, for good or for ill, he really believed essentially everything he was saying. So I was struck by his repudiation of quite so much of the economic approach of the last Labour government.

2:51The big reasonable criticism one could have of this speech is that he did a much better job of articulating what he was against. Against the return of racism, against nativist populism, against the sort of liberal globalism that defined the last Labour government. But it's like one of those things where you kind of listen to go, OK, well, you didn't like Tony Blair's economic model. Do you have one yourself? and I think it is not yet clear that the government actually has an alternative economic model and not just a critique of the last one. Do you think that was on purpose, especially given the fact that Labour dodged the question about raising taxes a day earlier?

3:29I do think a big part of why there was a sort of weird silence around solutions is they are going to do a quite politically difficult budget where they're going to have to raise taxes by an awful lot. And presumably a large part of the answer of how we're going to fix this will come through in the budget. And they obviously don't want to forestall that because they don't want to be making spending commitments without having to explain where they've come from. So that will be part of the reason for this kind of weird gap where the how should be. Now, one of the things that he was also critical of was Reform UK party leader Nigel Farage.

4:02When was the last time that you heard Nigel Farage say anything positive about Britain's future? He can't. He doesn't like Britain, doesn't believe in Britain, wants you to doubt it just as much as he does. What do you make that he took time out of his speech to go after Farage specifically? So I think there are a couple of reasons for that. One, that there has been incredible disquiet within the parliamentary Labour Party and the sort of left bloc more broadly at the government's silence on the return of street racism, in some cases, violent racism, to British streets in a way we haven't really seen for many, many decades.

4:44And there was a strong, in terms of the things he needed to do to keep the party on side, he really did have to do some display of a kind of values-based argument against Nigel Farage. One last question, Stephen. Obviously, the Conservative Party conference is next week. What are you looking out for there? I mean, I think, you know, we talk about the problems of the Labour Party. Their problems are that they might go down to heavy electoral defeat. The Conservatives' problems are that they might go extinct. And I think the thing I'm really looking for is to see how that party responds, if they do respond, if indeed they can respond.

5:21That what I think we all assume will be quite a bleak party conference. Stephen Bush is an FT columnist, writer of the daily newsletter Inside Politics, and a regular panelist on the FT's Political Fix podcast. Their latest episode is an excellent deep dive into this week's Labour Party conference live from Liverpool. And that's out now. We'll have a link to that in the show notes. Thanks, Stephen. Thanks for having me.

5:49The Trump administration announced yesterday it's launching a direct-to-consumer drug program. It'll allow people to buy certain medicines at discounted prices. This is part of a deal with Pfizer. The company has agreed to lower prices for a handful of drugs. They'll be offered at between 50 % and 85 % less than current rates. And in return, the group will get a three-year grace period from pharmaceutical tariffs. President Donald Trump said he'll impose 100 % tariffs on imports of patented or branded pharmaceuticals starting today. More specifics on the deal are unknown, but investors are pretty happy about what they do know.

6:26Pfizer's stock jumped nearly 7 % yesterday.

6:36A new era for Spotify is on the horizon. Daniel Ek, the streaming giant's founder, is stepping down as CEO after 19 years. He'll become executive chair and split the chief executive position between his top two lieutenants. Here to tell us what this means for the company is the FT's global media editor, Dan Thomas. Hi, Dan. Hi, how are you doing? I'm doing well. So tell me a little bit about this leadership change. Who are the new co-CEOs? Yeah, well, this is a massive move for the global music streaming industry. Daniel X has been at the forefront of transforming how people consume music and pay for music for the last 20 years.

7:13So we sort of developed two individuals underneath him who have been at Spotify for a long time. You have Alex Nordstrom, who's the co-president and chief business officer. He effectively is the business brains. He sits above the revenue side of things, advertising, podcasts, products. And then on the other side, you have Gustav Soderstrom, who's the co-president. But he's more on the product and technology side. So effectively, if you've got the sort of Daniel Ek, who's got this kind of dream of revolutionizing the music industry. At the same time, he's got this great technology brain. They effectively are him combined, if you like.

7:45You mentioned the impact that Ek has made on the music industry. This feels like a really big moment for Spotify. A founder stepping down after two decades running the company. What kind of legacy does Ek leave at Spotify? Yeah, absolutely. I mean, it's very unusual, I think, for a founder to almost stay that long, particularly a company which has been so successful as Spotify has been. Music streaming now accounts for 80 % of recorded music revenues in the US alone. It's difficult to remember 20 years ago, this was a fledgling startup. You had the end of the Napster era, music labels were on their knees, they weren't making money.

8:21They couldn't quite get their heads around the next stage of monetization of music. The physical stuff was dying down. Piracy was rampant. And here comes Daniel Ek, and he gave them a solution. It has to be said, though, we're talking about him moving up. So he still is an executive chairman of the company. He's still a big shareholder as well, about 14 % of the company. Still will clearly work with the two new chaps who are coming through and leading the group on a day-to-day basis. But this is a moment still. So then what is the company trying to accomplish by splitting the CEO position, especially if ECK is going to have some oversight, a good influence on the company?

8:59I think it's a recognition that the company has to do two things. And I think the two characters are very clearly demarcated in this. On one side, they've got to make money, right? And they've only started really to put prices up through different markets around the world. I actually met Alex Nordstrom in the summertime in Cannes, and he was very clear that price rises would be a big part of the toolkit going forward. And this is crucial for investors because it means that they can make money, they can make profits on the back of their huge market reach at the moment. At the same time, he was very clear that he wanted to drive audiences, right?

9:30He's talking about, can you get to a billion people all using Spotify? And to do that, he'll need his friend Gustav, who is going to be really driving the product side of things. And that's things like podcasts, the AIDJ they brought in, books. They call it the stickiness principle. You know, they want people to not just go onto Spotify once or twice a day. They want them to stay on Spotify all day long. So they need the product to be excellent in order to drive those numbers. Dan Thomas is the FT's global media editor. Thanks, Dan. Thank you. You can read more on all these stories for free when you click the links in our show notes.

10:05This has been your daily FT News Briefing. Check back tomorrow for the latest business news. Thank you.