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Company | Profile

Spotify

Spotify is a Swedish company that streams music, video, and podcasts through licensing agreements with record labels and media companies; it also offers its own exclusive content. Spotify, which is available in the Americas, Western Europe, parts of Asia, and Australia and its surrounding islands, was founded in 2006 by now-CEO Daniel Ek and Martin Lorentzon. The company is known for helping to legitimize the "freemium" model: the tiered pricing strategy whereby basic services like music streaming are provided free of charge (with advertising, in Spotify's case), but premium services like ad-free listening and direct downloads cost users extra. Despite controversy over artist pay and some musicians--like Taylor Swift and Adele--withholding their music from the service, Spotify continues to grow. Now with more than 75 million total users and 20 million paid subscribers in 2015--double its paid number in 2014--as well as $3 billion in royalties paid to artists, Spotify has become a veritable music-industry powerhouse. Even longtime licensing holdouts The Beatles have entered the platform's massive library. Much of Spotify's success is due to increasingly sophisticated data collection, which allows it to keep releasing new products that captivate its users around a particular mood or moment in time rather than offering the same tired genres. Users can constantly change up and enhance their listening experience with data-powered features like a Discovery tool for new music that rivals Pandora's capabilities, a Running feature that curates music timed to the beat of your workout, and Taste Rewind--which tells you what you would have listened to in the past by analyzing what you listen to now. The company has started using the fruits of its labor to expand, teaming up with Songkick to provide concert recommendations based on listening behavior and location.And now that Spotify has proved that people will pay for convenient, one-stop access to their tunes--all in the face of Apple's marketing blitz for Apple Music, no less--the next big move will be a transition into premium-only content.

The company's competitive advantage in 2016:

Massive amounts of data

The biggest challenges standing in this company's way in 2016:

Profitability
Withstanding big artists pulling music from the platform
Beating Apple Music in the music streaming race

What to look out for:

Expansion into premium only and continued battles over artist pay

Social media handles:

Twitter: @Spotify
Instagram: @Spotify
Facebook: Facebook.com/Spotify
Tumblr: spotify.tumblr.com

Data

Competition
People
valuation
$8.5 billion
public or private
Private
profitable
No
staff
1,354
users
75 million users; 20 million paid subscribers
headquarters
Stockholm, Sweden