Spotify has now become the most popular streaming music service, boasting in almost 79 countries, has 248 million monthly active users and 113 million subscribers, with its paid user base growing 31% year-over-year as per the records of 2019, Quarter-3. Spotify also provides a library of 35 million songs, meaning that virtually every genre and region is covered in terms of music preferences. But how did this Swedish music service, launched in 2008, get there, and why did it strike such a powerful chord with music fans?
HOW DID IT START?
Founded by Daniel Ek and Martin Lorentzon, Spotify actually started as a small start-up in Stockholm, Sweden in 2006. The streaming service launched on October 7, 2008 and the company initially limited the sign-up for free services by making it invite-only. Paid-for subscriptions were made available immediately. But despite this, Spotify reported a $4.4 million loss in 2008. The option of signing up for a free account wasn’t made generally available to the public in the UK until 2009. That’s also when Spotify launched on the Apple App Store and continued to grow as it provided an alternative to both legal and illegal downloading of music.
Further, In 2011, the company received a $100 million investment that it used to fund its launch into the United States. By 2012, the company had launched its service on Android smartphones. In 2015, the company updated and rebranded itself, adding music videos and clips to the service. By that point, the service had over 25 billion hours of songs available. Since then, Spotify rise and flourished almost all parts of the world.
EVOLUTION OF SPOTIFY
Podcasts, which has been one of the key focus areas for Spotify in 2019, is also witnessing growing adoption among its subscribers. About 14% of Spotify’s monthly active users currently listen to podcasts with a 39% increase in podcast hours streamed in Quarter-4 of 2019. Spotify has built its brand by using outdoor ads that target local users–like “Dear Person who played ‘Sorry’ 42 times on Valentine’s Day: What did you do?”–as well as creative content like teaming with New York City’s MTA to transform an entire station into a David Bowie tribute.
Moreover, in 2018, it also launched the ongoing Black History Is Now project that includes a new content hub where artists, creatives, and organizations that are working with communities of color tell stories through curated playlists, videos, and podcasts. Today, Spotify’s rise total valuation amounts to around $28 billion and there is no end to the number of increasing users each day. In the graph below, we can see the rise in the number of Monthly Active Users by 98 million and the rise in the number of subscribers by 51 million in just two years.
IMPACT OF SPOTIFY IN INDIA
Almost a year after declaring India as a big market in its IPO presentation, Spotify was launched in India in the month of February 2018. It made a quick burst, racking up one million users within the very first week, and later, garnered over 2 million active users in a month a quick rise for spotify. It was, what the Swedish streaming service calls, ‘swift’ movement, riding on high brand awareness among Indian users.
Also, about six months since launch, Spotify claims it is already among the top three players when it comes to consumption in India’s cluttered music-streaming market. “As Spotify grows, our goal is to bring millions of artists and billions of fans together from every country and background,” says Daniel Ek, Spotify founder and CEO. “India has an incredibly rich music culture and to best serve this market, we’re launching a custom-built experience. Not only will Spotify bring Indian artists to the world, but it will also bring the world’s music to fans across India. Spotify’s music family just got a whole lot bigger.”
RIVALS OF SPOTIFY
The company’s main rival Apple Music arrived in 2015. It secured exclusive deals with artists like Drake, Frank Ocean and Taylor Swift to stream their music first. Apple’s iTunes store had always allowed users to pay per download of a song or album. But Apple Music introduced paying a monthly subscription for unlimited access to a library of music. Another rivalry came up when SoundCloud launched SoundCloud Go in 2016. The company expanded from being a platform solely for new and unsigned musicians and DJs to share their work.
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However, its success has often been questioned as it only has half of the major label content found on Spotify and has to compete against other big names for rise. Even today, there is a tough competition going on between JioSaavn, Amazon Music, Pandora, Gaana, Google Music, and Apple Music. But, on advantage, Spotify is the only app that can be played in-app with Google Maps. It is the only app that is available on both, Xbox and PlayStation, making a safe refuge for gamers who like to have their choice in music.
FUTURE OF SPOTIFY
Over the next five years, the Samsung partnership could help Spotify rise as Samsung installs Spotify on all Samsung Galaxy phones sold in the United States. Millions of users gain exposure to the product as well as a free trial of Spotify Premium. In addition to this, the Wall Street forecasts call for average annual earnings growth of 130.55% over the next five years. If Spotify can come anywhere close to that level of earnings growth, it will surely rule the music industry.