Music is not a choice. It’s a part of our life.
And if you love music, you are probably well aware of Spotify.
After all, a handful of music streaming platforms are available today where you can listen to high-quality music without any interruptions.
However, while listening to your favorite music on the platform, have you ever thought about who owns Spotify?
If yes, it’s your lucky day.
In this post, we will reveal who owns Spotify, how this huge music streaming platform actually got started, who the founders of this platform are, and how much revenue it generates every year simply by becoming a mediator between you and music.
So, without wasting any further time, let’s dive right in.
Who Owns Spotify?
Before going in-depth, let’s first unveil the mystery and pull up the curtains.
Spotify is a Swedish music streaming platform and is currently owned by its founders, Daniel EK and Martin Lorentzon, along with some institutional investors, including Baillie Gifford & Co. and Morgan Stanley.
After Spotify was launched, there weren’t any major changes in the ownership of the company, and until now, the founders have maintained a majority share in the company with a large chunk of voting shares.
Spotify is a public company and is listed on the New York Stock Exchange in the form of depositary receipts under the holding company Spotify Technology SA.
Unlike other companies listed on the NYSE, Spotify directly made an entry into the stock market without any IPO listings.
Due to its availability on the stock market, anyone can buy Spotify stocks and indirectly become a partial owner of the company.
So, if you’re a die-hard Spotify fan, you can also become an owner of it.
Origin Story of Spotify
Spotify, the most famous music streaming platform, was founded on 23 April 2006 by two co-founders, Daniel EK and Martin Lorentzon.
It currently has more than 602 million monthly active users, and by user count, it’s the world’s largest music-streaming platform.
Currently, Spotify has more than 100 million songs and around 5 million podcasts in its database from various music labels and companies all around the globe.
Back then, there were no regulated music platforms available, and music piracy was also at its peak.
Platforms like Napster were leading music piracy, and most of the public also favored them because they were getting free music without any restrictions.
Due to this huge issue, music companies were losing money like water, and no solutions were available.
Music companies took the matter into their hand and battled Napster into court, which later led them to shut their operations completely.
Soon after Napster shut down, another illegal platform, Kazaa, took over the market.
Daniel EK saw this as a great opportunity as he thought that piracy is going to stay forever no matter how we try to control it, but if we create a better service than pirated music platforms while compensating the music industry, it could potentially solve the problem.
And this simple thought made the idea for Spotify.
Spotify was not Daniel’s first startup. In fact, he had previously built an online advertising company, Advertigo, which he had sold to TradeDoubler in 2006.
While he came up with the idea of Spotify, he discussed it with one of the co-founders of TradeDoubler, Martin Lorentzon, and asked him if he could join and found the project.
Martin was also impressed by the idea and decided to invest the initial investment into the company while working alongside the founding team.
After 2 years, in October 2008, Spotify was launched into the market for the public.
Initially, Spotify was also built on a peer-to-peer distribution model, but once they started acquiring more users, they shifted to a server-based client model.
In February 2010, Spotify introduced a free tier plan in the UK market, and following the announcement, user registration into the platform surged, and Spotify eventually had to halt the free tier service for some time.
Just after one year, Spotify decided to enter the US market with a six-month free trial period for the users.
Again, after a year, Spotify decided to remove all limitations from the free tier plan and made the platform absolutely free for everyone at the cost of listening to ads.
In October 2015, Martin Lorentzon decided to step down as chairman of the company, and Daniel took over his role alongside the CEO position.
In 2019, just ten years after its inception, Spotify had already acquired 217 million active users on the platform from all around the globe and became the #1 music streaming platform, surpassing Apple Music.
Following the success of Spotify, Daniel decided to step up the game and expand their services into many verticals and countries.
To support his vision, in June 2017, he decided to raise over $2.5 billion in venture capital funding from different firms.
Who Runs Spotify (Current Management)
Spotify is not a two-person show now.
While it started with just Daniel and Martin Lorentzon in the top management, Spotify now has a team of more than 5000+ people from all around the globe, making the world of music better every day.
Of course, we won’t be able to mention all the employees who are working with Spotify, but we have done a bit of research and found out all the top management of Spotify who are running the platform smoothly.
Let’s have a quick look at them:
- Daniel EK: CEO and Chairman
- Martin Lorentzon: Board Member
- Barry McCarthy: Board Member
- Christopher (Woody) Marshall: Lead Independent Director
- Shishir Mehrotra: Board Member
- Heidi O’Neill: Board Member
- Ted Sarandos: Board Member
- Thomas Staggs: Board Member
- Mona Sutphen: Board Member
- Padmasree Warrior: Board Member
- Paul Vogel: Chief Financial Officer
- Katarina Berg: Chief Human Resource Officer
- Gustav Söderström: Chief Product & Technology Officer
- Dustee Jenkins: Chief Public Affairs Officer
- Alex Norstrom: Chief Business Officer
These are the great minds who have made Spotify what it is today.
Someone had truly said: “Companies are built by the team, not the founder.”
Now that you know who owns Spotify and how they are currently running the company, let’s have a look at the ownership percentage of shareholders in Spotify.
Keep in mind Spotify is a publicly traded company, so anyone who has invested their money on Spotify via the open market is technically a shareholder of the company.
However, the company has very little dilution into the stock market, so no one can buy a significant portion of the company through the stock market even if they have the money to spend.
Currently, only two individuals are top shareholders of Spotify and hold the majority of the stake within the company:
- Daniel EK: Owns 30.9 million shares of Spotify, which is 15.6% of the company.
- Martin Lorentzon: Owns 21 million shares of Spotify, which is roughly 10.9% of the company.
On top of that, Daniel holds around 30.5% of the total voting power within the company, while Martin holds 42.7% of the voting power as of today.
If we talk about institutional investors, here are a few firms that hold the majority of the stake in Spotify:
- Baillie Gifford & Co.: Owns 23.7 million shares of Spotify, which is around 12% of the company.
- Morgan Stanley: Owns 9.2 million shares of Spotify, which is roughly 4.6% ownership of the company.
- T. Rowe Price Associates Inc: Owns around 7.8 million shares of the music streaming platform Spotify, which comes to around 4.0% of the company.
- Tencent: Owns 16.6 million shares of Spotify, which is around 8.4% of the company.
So, these are the actual individuals and companies that own Spotify now and are currently running the company from the backend.
Spotify Revenue
Spotify is indeed the biggest music streaming platform by the number of users it has.
But is it really the #1 when it comes to revenue?
That’s what we’re going to find out.
Spotify currently runs on a freemium mode.
It means anyone can enjoy music on the platform for free.
But at the cost of listening to ads in between your music.
Spotify also has a premium model that eliminates all the ads for you, and you can enjoy music ads free for a tiny subscription fee.
Currently, Spotify has around 220 million paid subscribers who are paying a small amount of recurring monthly fees for listening to music ads free.
And when it comes to revenue, Spotify generated revenue of €11.72 billion in the year 2022 while incurring a loss of €236 million.
Spotify’s revenue has been growing rapidly at the rate of 21% year-on-year, but the company has never made a single penny profit since its inception.
Spotify is way ahead of its competitors in terms of user and revenue numbers, but the company is still consistently incurring losses without any hope for profitability.
FAQs Related to Spotify
Is Spotify an American company?
No, Spotify is a Swedish company, though Spotify’s parent company is registered in Luxembourg City.
Is Spotify public?
Yes, Spotify is public, and it’s trading on the New York Stock Exchange.
Does Disney own Spotify?
No, Disney does not own Spotify.
Does Facebook own Spotify?
No, Facebook does not own Spotify. Facebook mostly owns social media platforms like Instagram and WhatsApp.
Who is the largest shareholder of Spotify?
Currently, Daniel EK, one of the co-founders of Spotify, is the largest shareholder of Spotify and holds 15.6% of the company.
Who is the CEO of Spotify?
Co-founder Daniel EK is the current CEO of Spotify.
Does Spotify make a profit?
No, Spotify does not make a profit on the revenue. In the year 2022, Spotify incurred a loss of €236 million, and it’s always been a loss-making company since its launch.
Is Spotify in debt?
Yes, Spotify has a debt of $1.82 Billion, according to its latest financial reports published in 2023.
Who was Spotify’s first employee?
Andreas Ehn was the first employee of Spotify and CTO of the company.
What is the slogan of Spotify?
The slogan or tagline of Spotify is “Music for everyone.”
Who is Spotify’s biggest competitor?
Two of Spotify’s biggest competitors are Apple Music and YouTube Music.
Conclusion
So, we hope now you clearly know who owns Spotify.
Since its inception, no major changes have happened within the ownership structure of Spotify.
Currently, Daniel EK and Martin Lorentzon, the co-founders of Spotify, hold the majority of the Spotify share.
That’s a good thing because when founders have complete control over their company, they can take on difficult calls without answering anyone.
And most importantly, it’s good for the company culture, too.
1 Comment
Excellent commentary