Spotify

Spotify (/ˈspɒtɪfaɪ/; Swedish: [ˈspɔ̂tːɪfaj]) is a Swedish audio streaming and media services provider founded on 23 April 2006 by Daniel Ek and Martin Lorentzon. It is one of the largest music streaming service providers, with over 574 million monthly active users, including 226 million paying subscribers, as of September 2023. Spotify is listed (through a Luxembourg City-domiciled holding company, Spotify Technology S.A.) on the New York Stock Exchange in the form of American depositary receipts.

Spotify offers digital copyright restricted recorded audio content, including more than 100 million songs and five million podcasts, from record labels and media companies. As a freemium service, 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.

Spotify is available in most of Europe, as well as Africa, the Americas, Asia, and Oceania, with a total availability in 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.

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 (often record labels), who then pay artists based on individual agreements.

History
Spotify was founded in 2006 in Stockholm, Sweden, by Daniel Ek, former CTO of Stardoll, and Martin Lorentzon, co-founder of Tradedoubler. 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".

Early international launches
In February 2010, 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 grows, 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 else 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 located in New York City's Flatiron District.

On 14 November 2018, the company announced a total of 13 new markets in the MENA region, including the creation of a new Arabic hub and several playlists.

Streaming records
Main article: List of most-streamed artists on Spotify

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 total streams. 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 (including ten million paying) in May 2014, 60 million users (including 15 million paying) in December 2014, 75 million users (20 million paying) 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.

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. Spotify CEO Daniel 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 Networkagency.

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.

2020 hacking incident
On 3 July 2020, cybersecurity firm VPNMentor discovered a database containing 380 million individual records, including the logins and passwords of Spotify users. The database was thought to be evidence of an impending credential stuffing cyberattack targeting Spotify as it contained the credentials of up to 350,000 compromised user accounts. In response to the attack, Spotify issued a rolling reset of passwords for affected accounts in November 2020.

Acquisitions, podcasting and exclusivity deals
In May 2013, Spotify acquired music discovery app Tunigo. In March 2014, they acquired The Echo Nest, a music intelligence company. In June 2015, Spotify announced they had acquired Seed Scientific, a data science consulting firm and analytics company. In a comment to TechCrunch, Spotify said that Seed Scientific's team would lead an advanced analytics unit within the company, focused on developing data services. In January 2016, they acquired social and messaging startups Cord Project and Soundwave, followed in April 2016 by CrowdAlbum, a "startup that collects photos and videos of performances shared on social networks," and would "enhance the development of products that help artists understand, activate, and monetize their audiences". In November 2016, Spotify acquired Preact, a "cloud-based platform and service developed for companies that operate on subscription models which helps reduce churn and build up their subscriber numbers".

In March 2017, Spotify acquired Sonalytic, an audio detection startup, for an undisclosed amount of money. Spotify stated that Sonalytic would be used to improve the company's personalized playlists, better match songs with compositions, and improve the company's publishing data system. Later that month, Spotify also acquired MightyTV, an app connected to television streaming services, including Netflix and HBO Go, that recommends content to users. Spotify intended to use MightyTV to improve its advertising efforts on the free tier of service. In April 2017, they acquired Mediachain, a blockchain startup that had been developing a decentralized database system for managing attribution, and other metadata for media. This was followed in May 2017 with the acquisition of artificial intelligence startup Niland, which uses technology to improve personalisation and recommendation features for users. In November 2017, Spotify acquired Soundtrap, an online music studio startup.

On 12 April 2018, Spotify acquired the music licensing platform Loudr. In August 2018, Spotify bought the exclusive rights to The Joe Budden Podcast and expanded the show to a twice-weekly schedule. On 6 February 2019, Spotify acquired the podcast networks Gimlet Media and Anchor FM Inc., with the goal of establishing themselves as a leading figure in podcasting. On 26 March 2019, Spotify announced they would acquire another podcast network, Parcast. On 12 September 2019, Spotify acquired SoundBetter, a music production marketplace for people in the music industry to collaborate on projects, and distribute music tracks for licensing. On 19 November 2019, Spotify announced the acquisition of the exclusive rights to The Last Podcast on the Left.

On 5 February 2020, Spotify announced its intent to acquire Bill Simmons' sports and pop culture blog and podcast network The Ringer for an undisclosed amount.On 19 May 2020, Spotify acquired exclusive rights to stream the popular podcast The Joe Rogan Experience beginning in September of that year, under an agreement valued at around US$100 million (equivalent to $104,200,000 in 2021).

In November 2020, Spotify announced plans to acquire Megaphone from The Slate Group for US$235 million. In March 2021, Spotify acquired app developer Betty Labs and their live social audio app, Locker Room, On 12 May 2021. Armchair Expert announced on Instagram that the podcast would be available exclusively on Spotify beginning 1 July, saying they would continue to maintain the same creative control over the show after the move. Locker Room was rebranded in June 2021 as Spotify Greenroom, and turned into a Clubhouse competitor. The same month, Spotify acquired Podz, a podcast discovery startup. Also the same month, Spotify bought the exclusive rights to the Call Her Daddy podcast. In November 2021, Spotify acquired audiobook company Findaway, including its publishing imprint OrangeSky Audio. In December 2021, Spotify acquired Whooshkaa, a podcast tech company that develops specialized technology that allows radio broadcasters to easily turn their existing audio content into on-demand podcast programming.

In February 2022, Spotify acquired Chartable and Podsights. Both are podcast advertising companies. In 2022, Spotify Greenroom rebranded as Spotify Live, which was subsequently planned to be shut down in April 2023. In June 2022, Spotify acquired Sonantic, a synthetic voice and video developer. In July 2022, Spotify acquired Heardle, a Wordle-inspired music trivia game, for an undisclosed amount; Heardle was shut down in May 2023. In October 2022, Spotify acquired the Dublin-based content moderation startup, Kinzen. In 2023, Spotify merged Anchor into their Spotify for Podcasters tool, a rebranding move and to organize its tools for creating, managing, growing, and monetizing their content in one place.

Company partnerships
In January 2015, Sony announced PlayStation Music, a new music service with Spotify as its exclusive partner. PlayStation Music incorporates the Spotify service into Sony's PlayStation 3 and PlayStation 4 gaming consoles, and Sony Xperia mobile devices. The service launched on 30 March 2015. In March 2017, Spotify announced a partnership with the South by Southwest (SXSW) conference for 2017, presenting specific content in special playlists through an SXSW hub in Spotify's apps. The integration also enabled Spotify within the SXSW GO app to help users discover and explore artists performing at the conference. Two more partnerships were announced in March; one with WNYC Studios, and one with Waze. The WNYC Studios partnership brought various podcasts from WNYC to Spotify, including Note To Self, On the Media and Here's the Thing. Spotify also announced that the third season of WNYC Studios' 2 Dope Queens podcast would premiere with a two-week exclusivity period on the service on 21 March 2017. The Waze partnership allows Waze app users to view directions to destinations within the Spotify app and access their Spotify playlists through the Waze app.

In October 2017, Microsoft announced that it would be ending its Groove Music streaming service by December, with all music from users transferring to Spotify as part of a new partnership. In December, Spotify and Tencent's music arm, Tencent Music Entertainment (TME), agreed to swap stakes and make an investment in each other's music businesses. As a result of this transaction, Spotify gained a 9% stake in TME with TME gaining a 7.5% stake in Spotify.

In February 2018, Spotify integrated with the gaming-oriented voice chat service Discord on desktop clients, allowing users to display their currently playing song as a rich presence on their profile, and invite other users with Spotify Premium to group "listening parties". In April, Spotify announced a discounted entertainment bundle with video-on-demand provider Hulu, which included discounted rates for university students.

In May 2020, Spotify teamed up with ESPN and Netflix to curate podcasts around their Michael Jordan documentary The Last Dance, and in September, Spotify signed a deal with Chernin Entertainment to produce movies and TV shows.

In 2020 and 2021, Spotify and DC, a brand at the time under Warner Bros. Entertainment signed deals to create audio shows on the platform around characters such as Catwoman, Wonder Woman, the Riddler, Batgirl, Superman and Lois Lane, among others.

In 2022, Spotify became the official streaming partner of FC Barcelona.

In May 2022, Spotify announced a partnership with the online game platform and game creation system the Roblox Corporation, the partnership saw Spotify as the first streaming brand to have a presence within the game with the launch of "Spotify Island".

In March 2023, Spotify announced a partnership with Patreon, which Spotify claimed would "enable creators to expand their creative business through direct payments from fans, and allow fans to listen to their Patreon content on Spotify".

Dispute with Apple
In July 2015, Spotify launched an email campaign to urge its App Store subscribers to cancel their subscriptions and start new ones through its website, bypassing the 30% transaction fee for in-app purchases required for iOS applications by technology company Apple Inc. A later update to the Spotify app on iOS was rejected by Apple, prompting Spotify's general counsel Horacio Gutierrez to write a letter to Apple's then-general counsel Bruce Sewell, stating: "This latest episode raises serious concerns under both U.S. and EU competition law. It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple's previous anticompetitive conduct aimed at Spotify ... we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors."

Sewell responded to the letter: "We find it troubling that you are asking for exemptions to the rules we apply to all developers and are publicly resorting to rumors and half-truths about our service." He also elaborated that "Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor". Furthermore, he stated that "There is nothing in Apple's conduct that 'amounts to a violation of applicable antitrust laws.' Far from it. ... I would be happy to facilitate an expeditious review and approval of your app as soon as you provide us with something that is compliant with the App Store's rules".

In the following months, Spotify joined several other companies in filing a letter with the European Union's antitrust body indirectly accusing Apple and Google of "abusing their 'privileged position' at the top of the market", by referring to "some" companies as having "transformed into 'gatekeepers' rather than 'gateways'". The complaint led to the European Union announcing that it would prepare an initiative by the end of 2017 for a possible law addressing unfair competition practices.

Spotify released the first version of its Apple Watch app in November 2018, allowing playback control of the iPhone via the watch. Users can also choose which devices to play music on via Bluetooth. In a further escalation of the dispute with Apple, on 13 March 2019, Spotify filed an antitrust complaint with the European Commission over unfair app store practices. Two days later, Apple responded, stating that the claim was misleading rhetoric and that Spotify wanted benefits of a free app without being a free app. Spotify responded with a statement calling Apple a monopolist and stated that they had only filed the complaint as Apple's actions hurt competition and consumers and clearly violated the law. It also said that Apple believed Spotify users on the app store were Apple's customers and not Spotify's.

Apple responded to Spotify's claims by counter-claiming that Spotify's market reach and user base would not have been possible without the Apple App Store platform. Additionally, Apple stated that they have attempted to work with Spotify to integrate the service better with Apple's products, such as Siri and Apple Watch. In 2019, under iOS 13, it became possible to play Spotify music using Siri commands.

Spotify was one of the first companies to support Epic Games in their lawsuit against Apple, which was filed after Epic also tried to bypass Apple's 30% fee for microtransactions in Fortnite. In September 2020, Spotify, Epic, and other companies founded The Coalition for App Fairness, which aims for better conditions for the inclusion of apps in app stores.

Dispute with Kakao Entertainment Corp.
On 1 March 2021, Spotify confirmed that its platform would no longer have access to music from artists represented by Kakao Entertainment. However, after talking it out and renewing the contracts between the two, Spotify later announced that they had reached an agreement with Kakao Entertainment, allowing their content to be available once again on the platform across the globe.

Functionality
In November 2021, Spotify hid the "shuffle" button for albums following a request by singer Adele, arguing that tracks in albums are supposed to be played back in the order specified by the artist in order to "tell a story".

NFTs
In May 2022, Spotify began testing a feature that would allow select artists to promote their NFTs via their profiles. Some artists included in this initial test phase were Steve Aoki and The Wombats. The testing was very limited in nature and was only available on Spotify's Android app in the US.