Sean Parker and the Chosen Two

This week US tech billionaire Sean Parker – the man best known as the founder of file-sharing business Napster and former Facebook investor – did something he swore he would never do.

He joined Twitter.

And his first tweet was aimed at his old friend, Facebook chief Mark Zuckerberg.

“Sorry Zuck, I had to do it eventually,” Parker said, adding that talent agent Scooter Braun (who manages the career of one Justin Bieber) made him do it.

Parker’s real motive, as he explained later, is that he is starting a blog to promote his new online video site called Airtime.

But that’s a business that is only just getting off the ground, having just completed an $US8.3 million initial funding round. Parker’s current focus is European online music service Spotify, which some have hailed as the future of online music. It allows users to stream music online for free and/or pay for extra services, such as being able to download songs to a device like an iPhone. It is seen as a way to reduce music privacy while growing digital music sales.

Parker poured $30 million in Spotify in 2010 and has seen the company’s valuation rise from $300 million to at least $US1 billion.

But now he’s helping to take the business to the next level – using Facebook and a bevy of its billionaire investors.

Parker’s star on the rise

Sean Parker’s Twitter page is pretty spartan, but it does contain a link to a cover story in this month’s edition of Forbes magazine titled Sean Parker: Agent of Disruption.

Featuring on the cover of Forbes is a big deal. Featuring on the front of the magazine’s much-read Forbes 400 edition, which lists the 400 richest people in America, underlines just how far Parker’s star has risen.

The article is a fascinating look at Parker’s business life. While it’s hard not to smile at the description of Parker preparing for the Forbes photo shoot with “a clothes stylist, hairstylist, make-up artist, assistant, publicist, tailor… his fiancée, Alexandra Lenas” and a series of costume changes, what shines through it what writer Steven Bertoni calls Parker’s “astounding personal network”.

“Starting as a teenager, when he interned for current Zynga Chief Mark Pincus, Parker has teamed, in one way or another, with the men who now control the modern internet: Mark Zuckerberg, Mike Moritz, Peter Thiel, Reid Hoffman, Yuri Milner, Dustin Moskovitz, Adam D’Angelo, Daniel Ek, Ron Conway, Ram Shriram and Jim Breyer.”

Many if these men – and yes, they are all men – are now billionaires thanks to their shareholdings in Facebook, which is valued at somewhere around $100 billion, depending on current market conditions.

Parker’s own stake in Facebook is the rock on which his own $US2.1 billion fortune is based; he was ranked as the 200^th richest person in America last week and came in at position 782 in the list of the world’s billionaires.

And while Parker was forced to resign as Facebook president in 2005 after being arrested on suspicion of cocaine possession (the charges would be later dropped) he still retains close ties to the business and a close friendship with Zuckerberg.

It is these links that are proving crucial to helping take Spotify to the next level.

The billionaire connection

The connections between Facebook and Spotify start with the share registry.

Aside from Parker, the companies share a number of very high-profiled billionaires, notably:

• Peter Theil: venture capital veteran Thiel was the first person to invest in Facebook and now runs a venture capital firm called Founders Fund, which Sean Parker is also a partner in.

• Li Ka-Shing: the Hong Kong billionaire was one of the first major players to invest in Spotify, taking a 0.8% stake in 2009 at a valuation of $US250 million. He was also one of the earlier investors in Facebook, buying a 0.8% stake in 2007.

• Yuri Milner: the Russian investor is best known as the man behind Digital Sky Technologies, which invested in Facebook in 2009. Milner invested in Spotify earlier this year, buying $100 million at a valuation of $US1 billion.

It was Milner’s money that helped fund Spotify’s push into the US in July, a move which Parker was instrumental in making.

Closer ties

Parker had written to Spotify co-founder David Elk two years earlier (you can read his full email to Elk here) to suggest ways to improve and build the service. The pair met and eventually Parker invested.

But getting Spotify to the US was step one. Where Parker and his magical connections really came to the fore was getting Spotify to build a closer relationship with Facebook.

In a move trumpeted with a lavish party Parker threw a few weeks ago – featuring performances from Snoop Dogg, Jane’s Addiction and The Killers – Spotify announced a relationship with Facebook  whereby new users looking to establish a Spotify account would need to sign up for a Facebook account.

While the move caused some controversy among users, it has had clear commercial benefits – reports suggest that user numbers climbed by two million about a week after the Facebook deal. The company also has more than two million paid subscribers.

The links between Spotify and Facebook run deeper than just a shared login system and shared investors.

Parker and Spotify co-founder David Elk see music as a key part of the “social graph” around which Mark Zuckerberg has built Facebook.

“Music discovery has always been social… so much music discovery has happened by word-of-mouth in a dorm room, people going to clubs or hearing music in a restaurant. That social process has always been the real fuel,” Parker said in September.

Facebook, Parker says, can help Spotify now “supercharge that discovery”.

“More people will experience music than ever before. As long as that is coupled with a monetisation platform that actually works, we have a solution.”

And Parker may just have his next big fortune.