The Story of Spotify

Posted on Apr 23rd 2021 by Miira Vehviläinen
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Spotify is one of the leading streaming platforms in the world. It was founded back in 2008 by two Swedish entrepreneurs, Daniel Ek and Martin Lorentzon. Spotify was created to solve the problem of music piracy, for example, a platform called LimeWire. Before the option of legal streaming platforms, people downloaded songs illegally from the internet and probably didn't even know how illegal it actually was. They stated that there were obviously laws against it, but there was not a solution such as an alternative platform that people could turn to. The name "Spotify" was accidentally said out loud and had a nice ring to it and thus became the name of the upcoming leading streaming platform. Spotify hit one million subscribers back in 2011, the same year it was launched in the U.S. 


Currently, according to SensorTower, Spotify has been ranking in the Top 30 of All categories for a good while now. Statistics since February also show that Spotify has been stably ranked 1st in the Free Music c category in many countries such as the US, Australia, Canada and many European countries. Currently, in Q4 of 2020, Spotify had 345 million users and 155 paid premium subscribers (Spotify) and its revenue has been stably increasing since 2013 (Statista).

Features of Spotify


Pricing of Spotify

Spotify is free to a certain limit, which is a feature that many streaming platforms don't have - some maybe due to the controversy among freemium and the value of artists. But anyway, you can basically use Spotify free but you have to listen to the advertisements and won’t be able to skip over songs more than 3 times in a row. But that’s the point - when you listen to those advertisements long enough and are forced to listen to a certain song you were not in the mood for, the 9.99$ per month won't sound that pricy anymore. There also an option for a Duo Premium, which allows you to have two separate accounts for 12.99$. And actually, it is quite affordable to create a Family Premium account for 6 people who live in the same household, which eventually costs approximately 2.5$ per people when the pricing is 14.99$ per month. When the prices are compared to Spotify's biggest competitor, Apple Music, the prices are the same, except Apple Music doesn't offer freemium at all. Spotify is also in collaboration with Headspace, an app for meditation, anti-stress and sleeping. This Spotify + Headspace Premium bundle is available in Sweden, Denmark, Finland, Netherlands and the United Kingdom. This bundle is only 10.99€ for the first three months after which it has the price of 15.99€.

Allegations, Apple Music and Podcasts

Spotify has had a problem with artist value and the revenues they receive. Spotify faced its first controversy back in 2009 when Lady Gaga's song Poker Face streamed one million on Spotify, according to rumours she received 167$. Recently it was discussed that Apple Music pays approximately a penny per stream whereas Spotify only pays half of the price. But it's important to remember that one million streams don't directly mean the same as one million downloads. Spotify has a platform called Loud & Clear in which they answer many relevant questions regarding the matter. In there they clarify the "penny per stream" assumption and remind people that the streaming numbers are exponentially growing. Approximately 550,000 songs have passed the one million stream milestone and over a hundred dongs have passed one billion. So the streaming numbers are currently really high. Spotify states that they focus more on the total size of the payments rather than the sum per stream. This decision might lower the per stream value, but it increases the total outcome.

2015 was a big one for Spotify since it launched its podcast option, the same year Apple launched Apple Music. Podcasts have been highly successful throughout the years and podcasts had a 200% increase in podcast listening in 2019. Apple Music is currently considered to be the biggest competition for Spotify but Spotify still remains to be a few steps ahead. Some of the per-stream allegations have come from Apple Music, which obviously has put people thinking whether the talking is mainly to decrease Spotify's popularity. Currently, Spotify is available in 178 countries and Apple Music in 167. Another competitor that is on its way, is YouTube Music. Google replaced their regular Google Play Music with YouTube Music in 2020. However, comparing the subscribers and users, Spotify is holding its crown pretty strongly with its 345 million users and Apple Music coming second with 72 million

Miira Vehviläinen
Miira Vehviläinen

ASO Specialist

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