After the era of cassette tapes, CDs, MP3s, and iTunes, music streaming services like Spotify is the present and the future. Even if you don’t use it yourself (but who doesn’t?), chances are you have heard of it. Spotify has shaken up the music industry by offering the tracks you like you can listen to anytime and anywhere – unlimited in its freemium service. With Spotify, you can listen to your favorite tracks without paying a dime, but if you like offline and commercial-free listening, you can opt for the paid subscription.
Spotify offers access to more than 60 million songs, and users can sign up and subscribe very easily. Users can browse music by parameters such as genre, artist, album, and can even create, edit, and share their own playlists. It can be used in most modern devices, including Windows, macOS, and Linux computers, and on smartphones and tablets run by Android or iOS.
As of July 2020, Spotify has around 300 million monthly active users, including 138 million paying subscribers. So how did it came to be the streaming giant it is today? Here’s the history of Spotify:
The Spotify CEO and co-founder Daniel Ek first thought of the idea for Spotify in 2002, when Napster, the controversial file-sharing network, stoped working and a subsequent music-downloading service Kazaa became ascendant. In 2006, Ek became a millionaire at age 23 after selling his adtech startup Advertigo to Martin Lorentzon.
Ek and Lorentzon decided to co-find Spotify together in 2006 in Stockholm, Sweden. The name of the company is the etymology of a combination of “spot” and “identify.” It took them two years to make licensing deals with record companies, and in 2008, Spotify was launched, opening paid subscriptions to everyone. Free accounts were only available by invitation.
Spotify wasn’t available in the United States yet in 2009, though there are ways to download it from Europe. Facebook CEO was one of those who tried it and posted it on his Facebook wall, “Spotify is so good.” So when Spotify launched its service in the United States, it allied with Facebook. In its first year in the US, Spotify quickly won one million paying users.
The company received a $100 million investment to make its launch to the United States possible. Sean Parker, the co-founder of Napster, was brought on board to secure relationships with major record labels.
In 2010, Spotify released a desktop music manager, amplifying the rumors that Spotify is competing with Apple and iTunes. In 2011, the company introduced the Spotify Apps service, making it possible for third-party developers to design apps that can be hosted within the Spotify computer software. That same year, Facebook announces a new Open Graph, allowing more user activity to be shared on Facebook Timeline. As users listened to Spotify, it publishes their listens on their timelines so that people could listen to that music within Facebook. It created a huge backlash amongst its users, which Facebook is used to, but it was the first instance of Spotify annoying its users. Ek rolled out a private listening mode a week later so that every song they listen to wouldn’t be shared with Facebook. However, two months after Facebook integration, Spotify gained seven million more users.
Spotify creators did not see the fast rise of smartphones coming. The original software was created for PCs, and the company was slow to build an app. Thankfully, they launched their service on Android smartphones in 2012, because if they did it later than that, it would have killed the company.
In 2012, Spotify also introduced a Spotify Play Button, an embeddable music player that can be added to websites, blogs, or social media profiles that allow visitors to listen to a specific playlist, album, or song without leaving the page. Spotify also rolled out a web player that doesn’t need any installation that same year.
Spotify made its first acquisition in 2013 when it bought Tunigo, which helped users create, find, and share new music and playlists on Spotify.
As Spotify continues its service, a problem emerged. Top artists began complaining that the streaming service was paying them too little and stripping down the value of their albums. In 2009, news circulated that Lady Gaga’s song “Poker Face” has been streamed for a million times on the platform, but Spotify only gave her a royalty check for $167. It started questions about Spotify’s value to artists. In 2014, Taylor Swift famously pulled out her music with Spotify over concerns about fees. At that time, Ek stated that Spotify has paid more than $2 billion to music rights holders since its launch in 2008, and argued that streaming is better than the piracy as piracy doesn’t pay artists a penny.
In 2015, Spotify updated and rebranded itself. It introduced a new “Home” page that would show recommended music, with recommendations improving over time. That same year, they also launched Discover Weekly, a weekly-generated playlist that gives users two hours of custom-made music recommendations by considering the user’s personal taste with their previous songs enjoyed. The company also expanded into podcasts, news radio, and video streaming, making deals with ESPN, Comedy Central, Vice, and BBC.
In June 2015, Spotify announced that the company raised an additional half a billion dollars and had 20 million subscribers out of 75 million listeners.
Spotify formed a partnership with music annotation service Genius in 2016, bringing the annotation information from Genius to info cards presented while playing songs on Spotify. This feature is limited to selected playlists and only on Spotify’s iOS app when it was launched, but it expanded to the Android app in 2017. They also introduced Release Radar, a personalized playlist that helps users stay up to date on new music releases from artists usually listen to. By September, Spotify launched Daily Mix, which is a series of up to six playlists with near-endless playback, mixing the user’s favorite tracks with new and recommended songs.
In 2017, Spotify made a new deal with Universal Music Group to license its music. Under the deal, some new music will only be available to subscribers for a brief period of time. It’s seen as an essential step in Spotify, getting all its record deals ready for its rumored IPO. That year, Taylor Swift comes around and returns to Spotify after her breakup with the streaming service in 2014.
The company introduced Spotify Codes for mobile apps in 2017, a way for users to share specific tracks, playlists, artists, or albums with other people. Before the year ended, Spotify and Tencent invested in each other, and the deal helped Spotify establish a strategic partnership with the largest digital service in China.
Spotify was planning to become public on the stock market in 2017 but decided to use an IPO in 2018. The value of its IPO ranges from $6.3 billion to $23 billion. However, Spotify did not issue new shares, but its existing shareholders would take their shares directly to the market. They did not intend to raise capital but to let investors get their returns.
In 2018, Spotify began to allow free users to listen on-demand to whatever songs they want to listen to, as long as the song is included in the users’ discovery playlists. They also introduced a new beta feature that gave labels, artists, and teams an easier way to submit unreleased music directly to Spotify for playlist consideration.
Spotify worked on improving what Spotify for your road trip in 2019. Car View for Android was introduced in Spotify, allowing Android devices to have a Now Playing screen when their device is connected to a car’s Bluetooth. Also, Spotify launched the Your Daily Drive custom playlist that replicates the drive time format of most traditional radio stations. This mixes short podcast news updates from NPR, The Wall Street Journal, and PRI to a mix of user’s favorite songs and artists interspersed with songs the listener has yet to discover.
In 2020, Spotify introduced the Group Session feature, allowing two or more Premium subscribers in the same location to share control over the music that’s being played. Spotify also removed the 10,000-song limit to the library.