Spotify is an on-demand streaming music service launched in 2008. It allows users to access millions of songs from major music labels for free with ads or through paid subscriptions without ads or limits. While Spotify has over 20 million active users and is available in 9 countries, it still faces challenges in becoming profitable and providing full functionality across all platforms and regions. Some question if it can truly become the "YouTube of music" by replacing illegal downloading as the primary way people access music.

1. SPOTIFY
YouTube of music?

2. MUSIC LOVERS

3. MUSIC INDUSTRY

4. MUSIC LOVERS MUSIC INDUSTRY

5. TRADITIONAL SALES CHANNELS
DON’T WORK ANYMORE
Music industry fell from $27B in 1999 to $14B in 2008

6. $100M

7. $100M
Paid to right owners

8. $100M
Paid to right owners
2nd biggest revenue stream from music

9. AGENDA
1. What is Spotify?
2. Strengths
3. Weaknesses
4. YouTube of music?

10. WHAT IS SPOTIFY?

11. [VIDEO]

13. music player

14. streaming music player

15. On-demand streaming music player

16. Founded
in Sweden
2006

17. Founded
in Sweden Launch
2006 Oct
2008

18. Founded 1M
in Sweden Launch users
2006 Oct Mar
2008 2009

19. Founded 1M Mobile
in Sweden Launch users app
2006 Oct Mar Sep
2008 2009 2009

20. 3M
active
users
1.3M
subscribers
Founded 1M Mobile U.S.
in Sweden Launch users app launch
2006 Oct Mar Sep July
2008 2009 2009 2011

21. 3M 5M
active active
users users
1.3M 2M
subscribers subscribers
Founded 1M Mobile U.S. Facebook
in Sweden Launch users app launch integration
2006 Oct Mar Sep July Sep
2008 2009 2009 2011 2011

22. BUSINESS MODEL
Spotify Open Spotify Unlimited Spotify Premium
Free $4.99 / month $9.99 / month
No adds
Ad-supported No adds No limits
Limited tracks/month No limits Offline
Mobile

23. COMPETITION

24. DIRECT SALE STREAMING RADIO
iTunes Rhapsody
MOG
last.fm
Pandora
CD Rdio
Vinyl Napster
STORAGE PIRACY
Google Music RapidShare
Amazon Cloud Drive Grooveshark?
Apple iCloud

25. SPOTIFY’S STRONG POINTS

26. EASY TO USE
Find & play music in <1 second

27. UNIQUE TECHNOLOGY

28. PARTNERSHIP WITH MAJOR LABELS
EMI Music
Sony BMG
Universal Music Group
Warner Music Group

29. PLAYS YOUR OWN FILES TOO
Integrated with iTunes

30. IT’S SOCIAL
Sharing playlists
Facebook integration

31. EXCLUSIVE RELEASES
U2’s No Line On The Horizon in Jan 2009
Alicia Keys’ The Element of Freedom in Dec 2009
R.E.M.’s Collapse Into Now in Mar 2011
...

32. PARTNERSHIP WITH OTHER BRANDS
WD TV Live
Onkyo
Sonos
Shazam

33. SPOTIFY’S WEAK POINTS

34. FREE USERS
Although Spotify has 20% conversion rate (freemium models usually have 5-10%)
Spotify still has to pay for licenses
(e.g. in UK: 0.085p per streamed track, or 10.5% of your revenues, whichever is greater)
Average user listens to 70 minutes / month (2009)

35. OPERATING LOSS
-$26.1M (2009)
-$41.5M (2010)

36. AVAILABLE ONLY IN 9 COUNTRIES
Sweden Netherlands
Finland Germany
Norway France
Denmark UK
USA

37. NOT ALL ARTISTS
Only those that are digitalized & licensed for streaming

38. NEED TO DOWNLOAD DESKTOP CLIENT

39. LIMITED FUNCTIONALITY ON MOBILE

40. SO WILL IT BE “YOUTUBE OF MUSIC”?

41. SEAN PARKER

42. SEAN PARKER
Napster co-founder
Facebook investor
Spotify investor
“Spotify is the answer to piracy.”

43. PEOPLE DON’T WANT TO OWN
PEOPLE WANT TO USE

44. THANK YOU
QUESTIONS?
This presentation was proudly created while listening to Spotify

45. PHOTO CREDITS
(Spotify logo) http://www.spotify.com/us/about-us/press/images/
(Spotify application) http://www.spotify.com/us/about-us/press/images/
(abstract green) by Kevin Dooley http://www.flickr.com/photos/
12836528@N00/2853368756/
(race) by Oberazzi http://www.flickr.com/photos/42788859@N00/318947873/
(questions) by sickmonk http://www.flickr.com/photos/43013588@N03/5903272581/
(dog&gramophone) by Cea http://www.flickr.com/photos/33255628@N00/5522477000/
(baby) by TedsBlog http://www.flickr.com/photos/77154962@N00/43433855/