Spotify Business Model and Future Growth Potential
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Spotify was founded in 2006 in Stockholm, Sweden by Martin Lorentzon and Daniel Ek, the current CEO. It has raised over $530 million from investors including The Coca-Cola Company, Goldman Sachs, Founders Fund, and Sean Parker. The document provides financial information about Spotify, including that it has 75 million total users, 15 million of whom are premium subscribers. Spotify generates $2.7 billion in total yearly revenue and pays out $1.89 billion to rights holders.
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Spotify Business Model and Future Growth Potential
- 1. James M. Reed / UGTTW Spring 15
- 2. Background • Founded in 2006 by Martin Lorentzon and Daniel Ek (current CEO) • Based in Stockholm, Sweden • Has raised more than $530m through Angel, VC, and institution funding • Series F completed in November 2014 • Notable investors include • The Coca – Cola Company • Goldman Sachs • Founders Fund • Sean Parker • Kleiner Perkins James M. Reed – January 2015
- 3. Internet & Music James M. Reed – January 2015
- 4. Recorded Music Industry Revenue James M. Reed – January 2015
- 5. Digital Music Sales James M. Reed – January 2015
- 6. Freemium Business Model James M. Reed – January 2015
- 7. Spotify User Base James M. Reed – January 2015
- 8. Payout James M. Reed – January 2015
- 9. Simplified Financial Statement Premium revenue / person / year $120.00 Non - premium revenue / person / year $15.00 Premium members 15,000,000.00 Non - premium members 60,000,000.00 Total revenue from premium members $1,800,000,000.00 Total revenue from non - premium members $900,000,000.00 Total yearly revenue $2,700,000,000.00 Payout $1,890,000,000.00 Retained $810,000,000.00 James M. Reed – January 2015
- 10. • Purchased in March of 2014 for $100m • Based in Somerville, MA • Dual focus • Meeting with Shane Tobin • Business development • Spent four years at The Echo Nest • Boston College ‘94 James M. Reed – January 2015
- 11. The Echo Nest • Recommendations • “Billions of data points” • The need to curate • Lean-forward • Lean-back • Platform building • First – wave failure • “Facebook Connect of Music” • APIs / SDKs James M. Reed – January 2015
- 12. Challengers James M. Reed – January 2015
- 13. Future James M. Reed – January 2015 • Improved advertising revenues • Successful lean – back listening • Artist relations • 3rd party development • Will they ever be profitable? • Leverage creation
- 14. Questions? James M. Reed – January 2015