Executives
History
Spotify was developed in 2006 in Stockholm, Sweden. It was founded by the former CTO of Stardoll, Daniel Elk and the co-founder of TradeDoubler, Martin Lorentzon. They officially launched the music streaming service in October of 2008 for paid subscribers and in 2009 they made their service available for free subscriptions. The free subscriptions opened up the service to a bigger audience while slightly hindering their income. In 2011 Spotify crossed over into the United States market and also introduced the Spotify App for devices. (1)
More About Spotify
Since 2011, Spotify has solidified its spot as one of the top music streaming services along with Apple Music and Tidal. Today, Spotify features curated playlists that are made by their employees for paid subscribers. They have radio stations that allow the user to discover new music based on artists that are similar to the ones the user listens to. Along with that, they have a huge library of music consisting of 30 million songs. Their premium service allows users to access all of their songs and provides weekly curated playlists called Discover Weekly. Currently, they have over 75 million users with 30 million of those users being paid subscribers. (2)
Potential Change of Location
(Swedish Flag)
As of recent, Spotify has been hinting at a change of location for its headquarters. Since they started the company, they have been based in Stockholm, Sweden. However, recent circumstances have lead them to reconsider their choice to remain in their hometown. As Elk wrote in an open letter that he posted online, “We love Sweden and believe that this is basically the best environment for us. But at the same time we cannot magically remove the political obstacles. Thousands of Spotify jobs could go to the U.S instead of Sweden.” Spotify is frustrated with the Swedish governments inability to let businesses in their country grow. To start, Spotify believes the housing situation needs to be revisited. It’s extremely difficult to rent apartments in Stockholm because such a large amount are controlled by housing associations. It could take over 10 years to get a rental apartment which makes it extremely difficult for Spotify to bring in foreign talent. Another area Spotify argues needs change is their education system. They argue that the country doesn’t focus at their schools enough on technology. This leads to a lack of programmers for them to hire. The lack of knowledge causes them to have to train more workers, which could be avoided. Lastly, Spotify hopes to change Sweden’s stock options. The country’s rules don’t allow Spotify to grant their employees stock options which would attract brighter employees. (6) (7)
Competition
In the last month Spotify has had to deal with more competition than ever. Not only have they been going head to head with Apple’s streaming service Apple Music, they have also seen a few new players enter the streaming world. To start, Apple has signed exclusive contracts with big artists. These artists’ new albums debut on Apple Music and take a few weeks before they are available on Spotify. Artists like Drake have Spotify users growing impatient when he drops new content. He has 24 million monthly listeners and is the 7th most played artist on Spotify. This could hurt them eventually if it doesn’t change. Jay-Z music streaming service Tidal is another competitor with Spotify. In early February Rihanna took to Tidal to release her new album Anti. While it is now available on Spotify, for months it had users converting to Jay-z’s service to access it. Similarly, Kanye West exclusively released his new album The Life of Pablo on Tidal. However, The Life Of Pablo was recently made available on Spotify as well. Soundcloud, in the last month, has also entered the subscription space. They created Soundcloud Go which will also directly compete with Spotify. Even with all these competing services, Spotify has a loyal user base of over 75 million people that will be hard to take away from them. (8)
Spotify x Billboard
(Billboard)
On April 21 Billboard announced it’s partnership with Spotify for 2016. This is a huge win for Spotify over Apple Music. Billboard will bring all of its users to Spotify instead of Apple Music. Billboard’s charts are turning to Spotify to make it easier for its users to access today’s hits by streaming songs directly from their weekly charts. Now, when viewing the Hot 100 or Billboard 200 the user is able to listen to the songs they are analyzing. There are 30 second previews directly next to the song on the chart that also give the option to stream the full version on Spotify. Billboard will also be publishing 3 new spotify driven charts on billboard.com. One will be a 30 song Velocity Chart which will include the 30 most trending songs on Spotify. The next will have a Viral 50 chart which will consist of the 50 most shared songs across social media platforms like Twitter, Instagram, and Facebook. Lastly there will be a Velocity Chart with 30 songs with 5 songs for each decade (1960-2000). To take a look at the Billboard Hot 100 with Spotify streaming click here. (9)
Money
Spotify recently has raised over 1 billion dollars in debt financing. This is a substantial amount especially for a company that is financially stable. It is no doubt that Spotify now has money to spend but the question is: what will Spotify decide to do with all this extra money? forbes.com went into detail with ways that Spotify is planning on improving. Firstly, they are expected to get into the video space. Apple and Tidal already both have video content on their service. Spotify, being their number one competitor, will definitely start exploring music videos, behind the scenes, artist episodes, tour videos, and live footage. One major area they will have to work on is their payment rates. Their current rate per stream is .004. This rate tends to anger artists because they believe they are not being compensated for their art. This has lead artists like Taylor Swift and Adele to not allow their catalog of music to be included on their streaming service. With the extra money Spotify is planning to start working in these areas. (10)
Sources
(1) Streatfield, Brooke. Rise of a Tech Giant: The History of Spotify. The Telegraph. Retrieved: April 25, 2016
(2) Person, Adam Pasick. The Magic That Makes Spotify’s Discover Weekly Playlists so Damn Good. Quartz. Retrieved: April 25, 2016
(3) Bertoni, Steven. Spotify’s Daniel Elk: The Most Important Man In Music. Forbes. Retrieved: April 24, 2016
(4) Sloan, Paul. The Future of Music. CNET. Retrieved: April 24, 2016
(5) Spotify. Vulcan Post. Retrieved: April 25, 2015
(6) McIntrye, Hugh. Spotify May Soon Leave Sweden. Forbes. Retrieved: April 23, 2016
(7) Swedish Flag. Eduniversal. Retrieved: April 23, 2016
(8) Apple Music’s Biggest Swipe at Spotify Yet. Music Business Worldwide. Retrieved: April 24, 2016
(9) Billboard Staff. Billboard Announces Spotify as Exclusive Playback Partner of The Charts. Billboard. Retrieved: April 24, 2015
(10) McIntrye, Hugh. What Can Spotify Do With The $1 Billion It Just Raised? Forbes. Retrieved: April 24, 2015
Singleton, Micah. Spotify Hits 30 million Subscribers. The Verge. Retrieved: April 25, 2016