Spotify

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Spotify is a music, podcast, and video streaming service launched by Daniel Ek & Martin Lorentzon on 7 October 2008.

It provides digital rights management-protected content (DRM) from record labels and media companies with a freemium service, meaning that basic features are free with advertisements, while additional paid features provide improved streaming quality and offline music.

Spotify is available on devices using Windows, macOS, Linux, iOS, and Android. Music can be browsed or searched for via various parameters, such as artist, album, genre, playlist, or record label. Users can create, edit and share playlists, share tracks on social media, and make playlists with other users. Spotify provides access to over 30 million songs. As of June 2016, it has 100 million monthly active users, and as of March 2017, it has 50 million paying subscribers. [1]

Spotify pays royalties based on the number of artists' streams as a proportion of total songs streamed on the service. They distribute approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements; not a fixed per-play rate, instead accounting for user's home country and the individual artist's royalty rate. Rights holders received an average per-play payout between $.006 and $.0084. [2]

Spotify offers an unlimited subscription package similar to the Open Music Model (OMM) though the use of digital rights management (DRM) protection is distinct from iTunes Store and Amazon Music which do not.

In April 2017, Spotify announced that artists who are part of Universal Music Group or Merlin Network have the ability to make their new album releases exclusively available on the service's Premium service tier for up to two weeks.

Funding

  • February 2010, Spotify received a small investment from Founders Fund with board member Sean Parker
  • June 2011, Spotify secured $100 million of funding to support its U.S. launch
  • A Goldman Sachs-led round of funding closed in November 2012, raising around $100 million at a $3 billion
  • April 2015, Spotify raised $526 million at a value of $8.53 billion.
  • January 2016, Spotify raised another $500 million through convertible bonds.
  • March 2016, Spotify raised $1 billion in financing by debt plus a discount of 20% on shares once the initial public offering (IPO) of shares takes place.

The company is, according to TechCrunch, planning to IPO in 2018 [3]

References