School of Entrepreneurship
University of Tehran
Spotify is proprietary music streaming program, whitch allows instant
listening to specific tracks or albums with almost no buffering delay.
What is Spotify?
Spotify is a music service that gives on-demand access to
over millions of songs, wherever you are. The music
service makes it easier than ever to discover, manage and
share music with friends, while making sure that artists
get a fair deal. Spotify is available on the computer,
smartphone, and a whole heap of other devices from
Android to iPod.
• Downloadable application
• Share songs and playlists with friends
Spotify was developed in 2006 by a team at Spotify AB, in Stockholm, Sweden.
The company was founded by Daniel Ek, former CTO of Stardoll, and Martin
Lorentzon, co-founder of Trade Doubler. Spotify Ltd. now operates as the
parent company in London. Spotify AB handles research and development in
Daniel Ek (born 21 February 1983) is a serial entrepreneur and technologist who
started his first company in 1997 at the age of 14. He is currently the CEO of Spotify.
He founded his first company in 1997 at the age of 14. His ventures have
included the founding of Ad vertigo, the advertising company acquired by Trade
Doubler and has been a part of the Nordic auction company Trader (acquired by
EBay) and Evertigo.
Ek's previous jobs include CTO at Jajja Communications, CTO at Stardoll and
CEO of uTorrent one of the most popular bitTorrent Clients. Daniel Ek joined the
IT Gymnasium in Sundbyberg. He enrolled at the KTH Royal Institute of
Technology but did not complete his degree. He has a total net worth of
approximately $400 million.
On 3 October 2013 Daniel Ek was inducted into SUP46's Swedish Startup Hall of
Martin Lorentzon (born 1 April 1969) Is a Swedish entrepreneur. He is the co-
founder and chairman of the music streaming service Spotify. Martin
Lorentzon alongside Felix Haganö founded Trade Doubler in June 1999. He
quit his position in 2006. Martin started working at Telia Sonera in 1995 as a
management trainee. He stayed at the company until 1998. Shortly after, he
started working at Cell Ventures as a business strategist.
The Spotify application was launched for public access on 7 October 2008.
While free accounts remained available by invitation to manage the growth of
the service, the launch opened paid subscriptions to everyone. At the same
time, Spotify AB announced licensing deals with many major music labels. The
company reported a US$4.4 million loss for 2008.
The first steps towards offering free accounts to the public without invitations
were taken on 10 February 2009, when Spotify opened free registration in the
United Kingdom. Registrations surged following the release of the Spotify
mobile service, leading Spotify to stop open registrations in the UK for part of
2009, returning to an invitation-only policy.
On 4 March 2009, Spotify announced a security flaw in the service, by which private account
information (including email addresses and hashed salted passwords) of members registered
prior to 19 December 2008 were potentially exposed.
On 28 January 2010, Symantec's antivirus software marked Spotify as a Trojan horse, disabling
the software across millions of computers.
In February 2010, Spotify received a small investment from Founders Fund, where board
member Sean Parker was recruited to assist Spotify in "winning the labels over in the world's
largest music market".
On 18 May 2010, Spotify announced that two more types of accounts were available: Spotify
Unlimited, an equivalent to Spotify Premium without mobile and other features, and Spotify
Open, a reduced-feature version of Spotify Free, which allows users to listen to up to 20
hours of music per month.
On 1 September 2010, the World Economic Forum announced the company as a Technology
Pioneer for 2011.
During 2010, Spotify paid more than €45 million to its licensors.
In March 2011, Spotify announced that it had one million paying subscribers across Europe,
and by September the number of paying subscribers had doubled to two million.
On 25 March 2011, Spotify temporarily removed display advertising from external sources on
its open and free accounts, due to an attack which used an exploit in Java to place malicious
code on victims' computers.
All this being said, Spotify still has tremendous room to grow. In December
2013 Spotify launched in over 20 new markets, taking the total number of
countries where Spotify is available to 55. In 2014,
Spotify has already made considerable progress towards restoring the value lost to piracy and other less well
monetized forms of music consumption. As of November 2014, Spotify had over 50 million global users. 37.5
million of them were using free tier, where in listeners pay for their consumption by viewing and listening to
advertisements. At that time, as well, more than 12.5 million users were paying a $9.99 / £9.99 /
€9.99 monthly subscription to use Spotify’s Premium tier.
Spotify’s model aims to regenerate this lost value by converting music fans from these poorly
monetized formats to our paid streaming format, which produces far more value per listener. The
chart below shows the money a Spotify Premium customer spends per year compared to the
average spend of a US music consumer who buys music (not including those who spend $0 on
The average amount of money spent by
US adults on music is $25, whereas the
average Spotify user is worth $41.
Simply put, a Spotify customer is 1.6x
more financially valuable than the
average adult non-Spotify US music
Spotify’s high royalty payments in comparison to these other services means that if all of this
streaming activity (from video and radio services) was through Spotify instead, then the amount
of royalties generated in the US by streaming activity would more than double from $530m in
2013 (actual streaming royalties across all services) to $1.3bn (if all streaming occurred on