Spotify
Spotify is a Swedish audio streaming and media service provider founded in April 2006 by Daniel Ek and Martin Lorentzon., it is one of the largest providers of music streaming services, with over 713 million monthly active users comprising 281 million paying subscribers. Spotify is listed on the New York Stock Exchange in the form of American depositary receipts.
Spotify offers DRM-protected audio content, including over 100 million songs and over 7 million podcast titles, from record labels and media companies. Operating as a freemium service, the basic features are free with advertisements and limited control, while additional features, such as offline listening and commercial-free listening, are offered via paid subscriptions. Users can search for music based on artist, album, or genre, and can create, edit, and share playlists. It offers some social media features such as messaging, creating profiles, following friends, shared playlists, and creating listening parties called "Jams".
As of December 2022, Spotify is available in most of Europe, as well as Africa, the Americas, Asia, and Oceania, with availability in a total of 184 markets. Its users and subscribers are based largely in the US and Europe, jointly accounting for around 53% of users and 67% of revenue. It has no presence in mainland China, where the market is dominated by QQ Music. The service is available on most devices, including Windows, macOS, and Linux computers, iOS and Android smartphones and tablets, Smart Home devices such as the Amazon Echo and Google Nest lines of products, and digital media players like Roku. As of December 2023, Spotify was the 47th most-visited website in the world with 24.78% of its traffic coming from the United States followed by Brazil with 6.51% according to data provided by Semrush. As of 2022, Spotify is the current sponsor of Spanish football club FC Barcelona, with music artists like Drake, Travis Scott, and Ed Sheeran collaborating with the club by changing their shirts into their artist logo, sometimes used for album promotions.
Unlike physical or download sales, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the number of artist streams as a proportion of total songs streamed. It distributes approximately 70% of its total revenue to rights holders, who then pay artists based on individual agreements. While certain musicians laud the service for offering a lawful option to combat piracy and for remunerating artists each time their music is played, others have voiced objections to Spotify's royalty structure and its effect on record sales.
History
Spotify was founded in 2006 in Stockholm, Sweden, by Daniel Ek, former chief technology officer of Stardoll, and Martin Lorentzon, co-founder of Tradedoubler. Ek first had the idea for Spotify around 2002 when peer-to-peer music service Napster shut down and another illegal site Kazaa became popular. Ek said he "realized that you can never legislate away from piracy. Laws can definitely help, but it doesn't take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry – that gave us Spotify." According to Ek, the company's title was initially misheard from a name shouted by Lorentzon. Later they conceived a portmanteau of "spot" and "identify". Ek's initial pitch to Lorentzon was not initially related to music, but rather a way for streaming content such as video, digital films, images or music to drive advertising revenue.Early international launches
In February 2009, Spotify opened public registration for the free service tier in the United Kingdom. Registrations surged following the release of the mobile service, leading Spotify to halt registration for the free service in September, returning the UK to an invitation-only policy.Spotify launched in the United States in July 2011, and offered a six-month, ad-supported trial period, during which new users could listen to an unlimited amount of music for free. In January 2012, the free trial periods began to expire, limiting users to ten hours of streaming each month and five plays per song. Using PC streaming, a similar structure to the one used today allowed the listener to play songs freely, but with ads every 4–7 songs depending on listening duration. Later that same year, in March, Spotify removed all limits on the free service tier indefinitely, including mobile devices.
In April 2016, Ek and Lorentzon wrote an open letter to Swedish politicians, demanding action in three areas that they claimed hindered the company's ability to recruit top talent as Spotify grew, including access to flexible housing, better education in the programming and development fields, and stock options. Ek and Lorentzon wrote that to continue competing in a global economy, politicians needed to respond with new policies, or thousands of Spotify jobs would be moved from Sweden to the United States.
In February 2017, Spotify announced the expansion of its United States operations in Lower Manhattan, New York City, at 4 World Trade Center, adding approximately 1,000 new jobs and retaining 832 existing positions. The company's US headquarters are in New York City's Flatiron District.
On 14 November 2018, the company announced 13 new markets in the MENA region, including the creation of a new Arabic hub and several playlists.
Other developments
Streaming records
In October 2015, "Thinking Out Loud" by Ed Sheeran became the first song to pass 500 million streams. A month later, Spotify announced that "Lean On" by Major Lazer and DJ Snake featuring MØ was its most-streamed song of all time with over 525 million streams worldwide. In April 2016, Rihanna overtook Justin Bieber to become the biggest artist on Spotify, with 31.3 million monthly active listeners. In May 2016, Rihanna was overtaken by Drake with 31.85 million monthly listeners. In December 2016, Drake's just-under 36 million monthly listeners were overtaken by the Weeknd's 36.068 million. Later that same month, Drake's song "One Dance" became the first song to hit one billion streams on Spotify. Upon its release in August 2017, the single "Look What You Made Me Do" by Taylor Swift earned over eight million streams within 24 hours, breaking the record for the most single-day streams for a track. On 19 June 2018, XXXTentacion's hit single "Sad!" broke Swift's single-day streaming record, amassing 10.4 million streams the day after he was fatally shot in Florida.User growth
In March 2011, Spotify announced a customer base of 1 million paying subscribers across Europe, and by September 2011, the number of paying subscribers had doubled to two million. In August 2012, Time reported 15 million active users, four million being paying Spotify subscribers. User growth continued, reaching 20 million total active users, including five million paying customers globally and one million paying customers in the United States, in December 2012. By March 2013, the service had 24 million active users, six million being paying subscribers, which grew to 40 million users in May 2014, 60 million users in December 2014, 75 million users in June 2015, 30 million paying subscribers in March 2016, 40 million paying subscribers in September 2016, and 100 million total users in June 2016. In April 2020, Spotify reached 133 million premium users. In countries affected by the COVID-19 pandemic, Spotify registered a fall in users in late February, but it has seen a recovery. In March 2022, Spotify had 182 million premium subscribers. At the end of Q2 2022, Spotify reported 188 million paying subscribers and 433 million total users. At the end of Q3 2024, Spotify reported 252 million subscribers and 640 million monthly active users.Premium-exclusive albums
The Financial Times reported in March 2017 that, as part of its efforts to renegotiate new licensing deals with music labels, Spotify and major record labels had agreed that Spotify would restrict some newly released albums to its Premium tier, with Spotify receiving a reduction in royalty fees to do so. Select albums would be available only on the Premium tier for a period of time, before general release. The deal "may be months away from being finalized, but Spotify is said to have cleared this particular clause with major record labels". New reports in April confirmed that Spotify and Universal Music Group had reached an agreement to allow artists part of Universal to limit their new album releases to the Premium service tier for a maximum of two weeks. Ek commented that "We know that not every album by every artist should be released the same way, and we've worked hard with UMG to develop a new, flexible release policy. Starting today, Universal artists can choose to release new albums on premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy". It was announced later in April that this type of agreement would be extended to indie artists signed to the Merlin Network agency.Direct public offering
Spotify went public on the stock market in April 2018 using a direct public offering rather than an initial public offering. This approach is not intended to raise fresh capital, but to let investors get their returns. Morgan Stanley is the company's slated advisor on the matter.After making its debut on the New York Stock Exchange on 3 April 2018, CNBC reported that Spotify opened at $165.90, more than 25% above its reference price of $132.