Business

Who Owns Spotify? Why Is Spotify A Fastly Growing Music Platform?

Are you interested in music and want to know about modern music streaming platforms? Read this article to know about the best audio streaming service known as Spotify and all its attributes including who owns Spotify.

Spotify, the renowned music streaming service, has revolutionized how people consume music in the digital age. With its extensive library and user-friendly interface, Spotify has amassed a global user base, making it one of the industry’s leading players. It is a kind of music library where users can find most of the songs anytime.

This library has squeezed onto our phones and other devices, making it convenient for the listener to play their favorite song anytime and anywhere. Whether you want to listen to a specific song, no matter which region the artist belongs to or what timeline the song falls into, Spotify contains almost most of the songs. It is about music and provides several podcasts, thriller stories, interviews, etc.

Understanding the ownership landscape of this influential company is crucial for gaining insight into its strategic direction and decision-making process. Spotify currently operates as a publicly traded company, implying that ownership is dispersed among shareholders who hold stocks in the company. Notable institutional investors, including The Vanguard Group, BlackRock, and Morgan Stanley, have amassed substantial holdings, underscoring their influence. Additionally, co-founder Daniel Ek commands a significant ownership stake, reflecting his instrumental role in shaping Spotify’s success.

This article delves deep into the ownership structure of Spotify, unraveling the key stakeholders and entities that exert significant control over its operation. We’ll also go over the different functions and interesting features of this awesome music app, so let’s get into it.

What is Spotify?

Spotify is the most popular streaming service available. It gives you access to millions of songs from singers all around the globe. It came into existence to facilitate people so they can listen to music, as well as, be protected from piracy. On Spotify, one can make a personalized playlist. Every account can make its playlists, and different accounts can also share them. This way, you can listen to songs recommended by others. Spotify has been branched to all sorts of audio tracks. The playlists are not only restricted to songs; podcasts are also available on it.

Spotify has its operational headquarters in Stockholm, Sweden. It is convenient and appealing because you can access the content on Spotify for free by signing up using an email address, or connecting with Facebook. If you do not intend to subscribe for a premium right away, you can also try it for free. Spotify is actively being used in more than 180 countries around the world, with almost more than 400 million active monthly users.

Spotify can be obtained for free, but the free Spotify will show ads from time to time. The upgraded version of Spotify is called “Spotify Premium,” and it offers music without any interruption of ads. The music of premium Spotify is of high quality compared to free Spotify. It does not matter if the music that you search for is old or new; most of the songs are likely to be available on Spotify.

The songs on Spotify are saved in that specific account and not in the device. In this way, you can also listen to the same saved playlist from another device. You do not need to worry about the songs getting deleted or lost because you will have your songs saved as long as you can access the account.

How does Spotify work?

Spotify is a mobile application that can be used on a PC browser. It is an audio streaming service that, like any other app, has its way of functioning.

how does spotify work

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  • You must make an account to be on Spotify, which can be done by signing up on it after downloading the app on your device. This requires you to insert a valid email address and password.
  • After signing in, Spotify gives you two options: premium and free. The premium has more perks and offers a free trial period to check if it is worth subscribing to.
  • Spotify gives a free choice to opt for any of the emails. You can also sync your Facebook account to make a Spotify account so that you do not have to come up with a separate account or come up with a different account for Spotify.
  • Once your account is created, you do not need to rely only on the app. Spotify can be accessed through a browser.
  • Users are free to discover new music recommended by Spotify or search for their own choice of songs. Music can be searched through the artist’s name as well.
  • Spotify has music/songs recommended on the feed concerning different moods, trends, and genres. It also suggests more music depending on the music recently played or saved.
  • Spotify will also suggest music based on the name you give to your playlist created. You can keep adding more songs to your playlist by clicking “add to your playlist”.
  • The outlook of Spotify is different on different devices. When used on a laptop, Spotify broadens the Spotify feed compared to a phone or smartwatch.
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  • The sleep timer can also be set on Spotify, making it convenient for the user to fall asleep without worrying about the music being turned on the entire time.

What does Spotify offer?

Other streaming services are available, including Apple Music, Youtube Music, Amazon Music, etc. Still Spotify, due to some of its features, stands out. These features are as follows:

Download your favorite songs

Along with playing music on Spotify, it gives you access to download the song. This way, you can enjoy the song even without Wi-Fi. This costs less than buying an album because you will only be downloading the songs in the playlist you download, whereas an album possesses all an artist’s songs. However, this feature is only available for its premium users and not for free users.

To download the playlist on your app, you only need to click on that playlist and select the “download switch.” The whole playlist gets downloaded to your device. If someone wants only a single song to be downloaded, they can create an album consisting of only one song and then download that album. The main purpose of the download feature is to allow users to enjoy their favorite music even when there is no Wi-Fi or mobile data available.

Free trial

If you plan to attain a Spotify premium, it offers you a free trial period of one month. In this one-month trial, you can learn about the premium option thoroughly and then decide for yourself if you consider Spotify worth paying. You can analyze the premium subscription for free and find out if you want to pay for this app in the future to get a high-quality streaming facility. However, there is no contract between the user and Spotify Premium. One can cancel their subscription anytime.

Spotify playlist

One of the most liked features of Spotify is its playlist option. You can create as many playlists as you want, depending on the genre of music or artist. People make separate playlists for parties, long drives, gym, or to share a few songs with someone special. Spotify’s unique blend feature also generates a curated playlist based on the user’s music taste. Depending on the user’s liked artists and genres, Spotify has more song options for its user to explore. Once you create a playlist, you can still add more songs you want to add to a particular playlist later. The playlists suggested by Spotify include many songs you play and two or three more songs of the same category.

Edit your playlist

Songs in your playlist can be added or removed depending on your choice of selection. One can also make any playlist public or private. You can make it public if you want to let other people reach out to your playlist. The private option will restrict others’ access to your playlist. You can also let other people add songs to your playlist with a collaborative feature in it. To use this collaborative feature, one has to send a collaborative link to the person they want to collaborate with. You can also share your playlist with your friends with the share option. Apart from removing selective songs from your playlist, you can also delete the whole playlist if you want.

Group session

spotify group session

Spotify, along with sharing collaborative features, also has a group session feature. The group session of Spotify allows a maximum of seven people to have their music party. In this session, everybody has access to play a song of their own choice that the group listens to. This is a great way for people because it connects people even when they are at distant locations. Your activity on Spotify can be shared on any other social media site, such as Facebook, Twitter, Instagram, etc. You also can follow your favorite artist to keep yourself connected to their music.

Multiple platforms

Spotify is available on all the existing platforms, unlike Apple Music which is only available on iOS. All Android, Microsoft Windows, iOS, and even Xbox users can easily use Spotify. Spotify has also extended its access to Apple and smartwatches so that users can conveniently hear their favorite music. Free users are more facilitated on desktops as they are less limited than mobile devices. You can listen and choose any artist or playlist that you like. It will only develop ads after every few songs, so Spotify doesn’t restrict content from its free users.

If someone is interested in social features, Spotify gives you access to song sharing and even checking out your friends’ activities on that same app. It can be easily accessed using the Spotify apps for iPhone, Android, Windows, and Mac, including the Spotify web app available across all platforms.

Good audio quality

While Spotify Free provides you with the highest audio quality of only 160 kbps, Spotify provides you with high-quality audio of up to 320 kbps. You can also adjust your audio quality settings under the option of settings. With 320 kbps, Spotify provides high-quality audio compared to other competitive streaming services.

Podcast

Spotify is not only restricted to music and has included several podcasts. Spotify provides licensed tracks from all record labels to expand its music library and is the second-largest platform for listening to podcasts. This has provided content creators with a platform to reach their audience. The variety of podcasts is not limited to Spotify. It provides its users with access to more than 4 million podcasts. It also provides the facility for the artists to go live and conduct podcasts via “Spotify Greenroom.”

Streams audio and video

Spotify is not only an audio streaming service; it also streams videos. The video range is not so massive as compared to their audio range. Spotify is still enhancing the video streaming service because, currently, it is limited to a few podcasts. Audio streaming is available to all the countries that Spotify has reached, but video streaming is still restricted to some regions.

Discover Music

The “Discover” music feature on Spotify is a powerful tool designed to help users explore and find new music that aligns with their tastes and preferences. It leverages advanced algorithms and user data to offer personalized recommendations and facilitate music discovery.

Spotify’s algorithms generate tailored recommendations by analyzing a user’s listening history, likes, songs, playlists, and even the listening habits of users with similar musical interests. These recommendations can include new releases from artists that the user already enjoys and tracks from related or similar artists that the user may not have discovered yet.

The Discover feature presents these recommendations through various means. Personalized playlists like “Discover Weekly” and “Release Radar” are continuously updated with fresh content that aligns with the user’s preferences. These playlists provide a mix of familiar tracks and exciting discoveries, allowing users to expand their music library.

In addition to personalized playlists, Spotify offers curated genre-based playlists, showcasing popular songs and emerging trends within specific music categories. These playlists act as gateways to new genres, enabling users to explore different musical styles and discover artists they may not have encountered before.

Spotify Connect

Spotify Connect is a feature that allows users to seamlessly switch playback between devices connected to the same Wi-Fi network. With Spotify Connect, you can start listening to music on one device and then effortlessly transfer the playback to another without interruption.

spotify connect

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Here’s how it works: When using the Spotify app on a mobile device, tablet, or computer, you can see a “Devices Available” option in the playback controls. By tapping on it, you’ll be presented with a list of compatible devices connected to the same Wi-Fi network. This includes devices like smart speakers, game consoles, and TVs. Once you select a device from the list, Spotify will establish a connection with that device, and the music playback will seamlessly transfer to it.

Friend Activity

The “Friend Activity” feature on Spotify is a social feature that lets users stay connected with their friends and discover music together. It allows users to see what they usually listen to in real time, providing a glimpse into their music preferences and potentially introducing them to new songs, albums, or artists.

Image Source: Trevor Nace/YoutubeUsers can easily engage with their friends’ music choices by displaying friends’ profile pictures and usernames actively streaming music. They can listen to the same tracks, albums, or playlists, add them to their own collection, or even start a discussion about their shared musical interests. This feature enhances the social experience on Spotify, fostering a sense of community and enabling users to explore music collaboratively and interactively.

Behind the Lyrics

Spotify’s “Behind the Lyrics” feature provides users with synchronized annotations and background information about the songs they’re listening to. It offers insights into the creative process, inspiration, and meaning behind the lyrics, enhancing the listening experience and allowing users to connect with the music on a deeper level.

Daily Mixes

Spotify’s “Daily Mixes” feature creates personalized playlists based on a user’s listening habits. These mixes combine familiar tracks with new songs that align with the user’s musical tastes, providing a seamless and continuous listening experience. Each mix focuses on a specific genre or theme, allowing users to easily dive into a playlist that matches their mood or preference. Daily mixes are updated daily and offer a convenient way to discover new music while enjoying familiar favorites.

Private Sessions for Guilty Pleasure

Spotify’s “Private Session” feature allows users to hide their listening activity from their followers and friends temporarily. When a private session is activated, the user’s listening history and real-time activity are not displayed on their public profile or shared with their connected friends.

This feature can be useful for maintaining privacy when listening to content users may not want to share or have associated with their public profile. This feature provides a way to enjoy music without it being publicly visible.

Owner of Spotify

This audio-streaming service was co-founded by two Swedish businessmen, Daniel Ek, and Martin Lorentzon, in 2006. He approached several coders from his university, KTH, and asked them to create Spotify. The following table indicates the top beneficial owners of Spotify.

Top Beneficial Owners Ordinary Shares Number Percent
Daniel Ek 31,931,376 16.5%
Martin Lorentzon 21,514,864 11.1%
Billie Gifford & Co 27,937,554 14.5%
T.Rowe Price 16,102,881 8.3%
Tencent 16,631,969 8.6%

The majority of the shares of Spotify are owned by institutional investors, which accounts for approximately 55-57% of the total shares available. These investors include individuals and financial institutions holding significant amounts of the company’s stock. The term “institutional” doesn’t exclusively refer to financial institutions but is used here to describe investors with a substantial stake in the company and must submit specific documents to the Securities and Exchange Commission (SEC).

The founders of Spotify, Daniel Ek, and Martin Lorentzon, are the company’s main owners. As of 2023, Daniel Ek holds 16.5% of the ordinary shares and has 31.7% of the voting power. Martin Lorentzon, on the other hand, has 10.9% of the ordinary shares and 42.6% of the voting power.

Apart from the founders, there are other important shareholders in Spotify. One of them is Baillie Gifford & Co, a money management firm based in Scotland. Additionally, Morgan Stanley, T.Rowe Price, and Tencent are significant company shareholders.

Daniel Ek

Daniel Ek has 32.3 million shares in the corporation representing 16.5% of the Spotify shares, while Martin Lorentzon owns 24 million shares. It was Daniel Ek’s idea to create a digital music streaming service. He wanted to create an advanced platform where people could listen to the original music with little payment or ads. 2006, file-sharing was a widespread service, and music was being downloaded for free, which was illegal. He wanted to distribute the music legally so audiences and music industries benefit from it.

Martin Lorentzon

Martin Lorentzon was an active investor in the whole process and was the CEO of Spotify till 2013. For this reason, he has the highest voting rights at 43.3%, While Daniel Ek has voting rights at almost 31.9%. Daniel Ek became the CEO of Spotify in 2013 and is still the CEO. He is also a founding member of the company Prima Materia.

Daniel Ek and Martin Lorentzon were joined by further institutional stockholders, including Sony Music Entertainment, Tencent Music Entertainment, Baillie Gifford, and Morgan Stanley.

Baillie Gifford & Co

Baillie Gifford is an investment management firm and the third largest stakeholder of Spotify with 14.5%. Another stake-holder includes one of the biggest music companies, Sony Music Entertainment. Spotify is Sony Music Entertainment’s official streaming music provider, and Sony started a deal with Spotify in 2013. Tencent Music Entertainment is a music company and publisher of one of the biggest video games, Player Unknowns Battle Grounds, also known as PUBG. Morgan Stanley is a financial services company and multinational investment management.

Tencent Holdings Ltd

According to Spotify’s latest annual report, Tencent Holdings possesses 16.6 million shares of Spotify, which accounts for approximately 8.6% of the total outstanding shares.

Tencent Holdings is a multinational technology holding company headquartered in China. It has various subsidiaries that offer a wide range of services, including social networking e-commerce, mobile games, internet services, payment systems, and entertainment. Additionally, Tencent also maintains a portfolio of equity securities.

T. Rowe Price Associates Inc.

Based on Spotify’s latest annual report, T. Rowe Price Associates possesses 16.1 million shares of Spotify, representing approximately 8.3% of the total outstanding shares.

  1. Rowe Price Associates is a subsidiary of T.Rowe Price Group Inc. (TROW), which is a globally recognized investment management firm with approximately $1.39 trillion in assets under management (AUM). The firm offers a variety of investment options, including exchange-traded funds (ETFs) and mutual funds.

Among its investment products, the T.Rowe Price Blue Chip Growth ETF (TCHP) is the largest. It has assets under management worth $265.93 million. Spotify constitutes approximately 0.3% of the total assets held by this ETF.

Spotify’s business partners

Spotify works closely with music rights holders and record labels, who are important partners for their business. To provide music on their platform, Spotify needs to obtain the necessary rights from these partners.

To reduce licensing costs, Spotify offered certain record labels the opportunity to release exclusive content on Spotify Premium. They made agreements with Universal Music Group and other labels allowing artists to release their new music exclusively on Spotify Premium for up to two weeks.

Image Source: Rolling Stone

Spotify has also formed significant partnerships in the podcast industry. Since 2020, they have collaborated with companies like ESPN, Netflix, and others to co-produce podcasts, films, and TV shows.

In the past, Spotify has faced criticism for not adequately compensating artists and performers. Their payment system is based on royalties, where artists receive payment based on the total number of streams their music generates on this application’s platform.

Spotify’s collaborations

Spotify’s management team actively seeks partnerships to expand the platform’s reach. They have formed exclusive partnerships to integrate Spotify with other popular services. For example, in 2015, Spotify became an exclusive partner for PlayStation Music, allowing users to access Spotify directly through their PlayStation consoles. Since 2017, a partnership with Waze has enabled Spotify users to get directions within the Spotify app and listen to their Playlists while using the Waze navigation app.

In 2018, Spotify integrated with the voice chat service Discord. This integration allows users to show what songs they are playing on their Discord profiles and invite others to listen to music together through collaborative “listening parties” using Spotify Premium.

Spotify has also established valuable promotional partnerships with global companies like Xiaomi, Peloton, Visa, and other tech companies. These partnerships aim to attract more customers to the platform. Typically these arguments involve offering free trial subscriptions to selected customers to promote Spotify’s services.

How does Spotify earn money?

Spotify provides its users with free and premium services. It is a legal service to free music from pirated or free use. Spotify can be used for free and via subscription; though the free service is a money-saving premium, it has its perks. Ads support the free service, and the premium service has different economics. The main revenue is generated from the subscription fee of the premium members. The free service, however, helps to generate revenue through ads. It is a widely growing platform as the number of members keeps increasing. One of the stats says that the revenue of this application has hiked from 1,975 million euros to 2,501 million euros, which is the graph of only one year.

The free service facilitates users to listen to many songs but with the interruption of ads in between. There is also an option for vertical video ads for mobiles, laptops, and tablets that shows ads at the beginning of any playlist. If the user watches the ad, they can listen without interrupting further ads for 30 minutes.

Spotify pays royalties to own the music it streams and is considered the main expense of the service. Spotify, in 2018, paid €3.5 billion in royalties for its premium users and around €0.5 billion for free users, making it almost 74% of the overall cost. In the past, Spotify also faced difficulty tracking the actual owner of the track; thus, it led Spotify to pay penalties. However, blockchain technology has been added to the algorithm of Spotify so that ownership tracking becomes easier.

Premium plans come with several options; users can select the one that suits them better. There are discounts; available for users to get subscriptions; at lower prices. There are four sorts of premium subscriptions, all of which offer a free one-month trial. After the trial month, the user should pay for the chosen subscription type.

  • Individual: This gives premium subscription access to one account for $9.99
  • Duo: This gives premium subscription access to two accounts for $12.99
  • Family: This gives premium subscription access to six accounts for $15.99
  • Student: This gives premium subscription access to one account for $4.99 This is for students only, and the user should prove that he is a student currently studying.

Mergers and acquisitions

Spotify has made several important business moves in recent years. They acquired a music streaming platform called The Echo Nest in 2014, which helped them improve their music recommendation system. In 2016, they also acquired The Trade Desk, an online marketing company. This acquisition gave Spotify access to a wide range of marketing tools and the ability to create more personalized advertising campaigns for its users.

These strategic decisions have solidified Spotify’s position as one of the top music streaming services worldwide. However, some experts have criticized these acquisitions, claiming that they have reduced the value of Spotify’s stock and hindered its ability to provide a competitive alternative to other streaming services.

To strengthen its presence in the podcasting industry, Spotify acquired podcasting companies Gimlet Media and Anchor in 2019. They further expanded their podcasting portfolio in 2020 with the acquisition of Megaphone.

Conclusion:

Spotify is a leading digital streaming service that facilitates the artists and audience equally by providing original tracks. It saves one from illegally downloading music, which affects the owner of the tracks. It safeguards the copyrights of all the tracks it contains and pays royalties to the owners. Daniel Ek founded Spotify in partnership with Martin Lorentzon. It came into the market in 2006 but officially got launched in 2008. More people are directed towards Spotify and getting subscriptions due to its quality performance and services. It is an easy-to-operate application that can also be used on any device and browser. This application stands out from other competitive music streaming services due to its compelling features of the separate account, separate playlist creation, sharing activities with your friends, and group sessions. Apart from music, this app has a vast range of podcast streaming. It has enabled both free and paid services, and the main difference is the quality of the content. The free user gets to listen to songs on Spotify, but the premium user gets to experience additional benefits. Spotify owners and their institutional shareholders have built a bridge between music lovers and art.