Spotify opened up for business in October 2008 and much has changed in the ensuing decade.
Founded by Swedes Martin Lorentzon and Daniel Ek, Spotify first launched in a handful of EU regions on 7 October 2008. 10 years later, the company is now trading on the stock market and is available in 65 regions.
A slow start for Spotify
Initially, it took a while for the platform to truly take off. In 2007, music streaming was in its infancy, accounting for just 1pc of global music revenues, according to Statista. By the time the firm turned five in 2013, Spotify had approximately 30m active users and 8m paying subscribers for its Premium service.
The latter half of the company’s decade is really where the growth began happening. By June 2018, free and paying users sat at 180m and 83m, respectively. On 8 October 2018, the company was valued at $28.9bn. In April of this year, Spotify went public after a long run-up, which included deals with Universal, Sony Music and Warner Music Group.
Some say that Spotify is the saviour of the music industry, as its popularity saw music industry revenue increase steadily since May 2015, according to Quartz.
Music industry transformation
Statista figures show just how different the music industry landscape was in 2007 before Spotify came on the scene. $14.1bn of that year’s music revenue was from physical copies such as CDs. In 2017, this plummeted to just $5.2bn.
While digital music sales (aside from streaming) rates have remained much the same, streaming now constitutes a massive $6.6bn of global recorded music industry revenues – nearly 40pc of global music revenues. In 2007, this figure was just $0.2bn.
Not immune to criticism
The streaming platform has been lauded as Europe’s most successful tech company, but opinions are divided on how it has affected the music industry. Spotify has run into trouble with music publishers in the past and some artists say the business model sees them earning very little money in reality. Bigger names such as Taylor Swift and Radiohead’s Thom Yorke have spoken about the payment rates, while smaller independent artists say it is difficult for them to earn money through the platform.
People have also noted the underrepresentation of women on popular playlists on the platform. Critic Liz Pelly said that the rise of branded corporate playlists is another issue and added that the playlist in general is changing how we approach music listening. “In its quest for total power and control, Spotify has prioritised its own content and it has made it notably more difficult to find albums rather than playlists. Search an artist’s name and you’ll more quickly find a Spotify-branded compilation of that musician’s work than an album.”
As far as its future goes, although Spotify’s operating loss widened to $103.8m in the quarter ending 30 June, it added millions of new users. It faces fierce competition from trillion-dollar Apple, with its own music service gaining traction, particularly in the US market.