Spotify is a Swedish music, podcast, and video streaming service, launched in October 2008 by startup Spotify AB, that provides digital rights management–protected content from record labels and media companies. It is available in most of Europe, the Americas, Australia, New Zealand, and limited Asian countries and territories.
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1. Spotify has apps available for most modern devices, including Microsoft Windows and Apple macOS computers, Android and iOS smartphones and tablets, and has “Spotify Connect” streaming functionality that lets users listen to music through a range of entertainment systems.
2. Music can be browsed or searched by artist, album, genre, playlist, and record label. Users can create, edit and share playlists, as well as share tracks on social networks, and make collaborative playlists with other users.
3. Spotify provides access to over 30 million songs, with more music being added every day. As of June 2016, Spotify has 100 million monthly active users, and as of September 2016, it has 40 million paying subscribers.
4. Spotify, together with the music streaming industry in general, faces some criticism from artists and producers claiming they are being unfairly compensated for their work as downloaded music sales decline and music streaming increases.
5. Unlike physical or download sales, which pay a fixed price per song or album, Spotify pays artists based on their “market share” (the number of streams for their songs as a proportion of total songs streamed on the service).
6. They distribute approximately 70% of total revenue to rights-holders, who will then pay artists based on their individual agreements.
7. The variable, and some say unsustainable, nature of this compensation, has led to criticism. Most notably, Radiohead’s Thom Yorke and Taylor Swift’s discography have been pulled from Spotify, with Swift claiming “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music”.
8. In response, Spotify claims that they are benefiting the music business by migrating “them away from piracy and less monetized platforms and allowing them to generate far greater royalties than before” by offering a free, ad-supported service tier, and then encouraging users to opt in to the paid subscription.
9. Spotify operates under a freemium model (basic services are free, while additional features are offered via paid subscriptions). Spotify makes its revenues by selling premium streaming subscriptions to users and advertising placements to third parties.
10. In December 2013, the company launched a new website, “Spotify for Artists”, that revealed its business model and revenue data.
11. Spotify gets its content from major record labels as well as independent artists, and pays copyright holders royalties for streamed music. The company pays 70% of its total revenue to rights holders.
12. Spotify for Artists states that the company does not have a fixed per-play rate, instead considers factors such as the user’s home country and the individual artist’s royalty rate. Rights holders received an average per-play payout between $.006 and $.0084.
13. Spotify offers an unlimited subscription package, close to the Open Music Model (OMM)—estimated economic equilibrium—for the recording industry. However, the incorporation of digital rights management (DRM) protection diverges from the OMM and competitors such as iTunes and Amazon Music that have dropped DRM.
14. Spotify encourages people to pay for music, with subscriptions as its main revenue source. The subscription removes advertisements and limits, and increases song bitrates to 320 kbit/s.
15. Spotify for Artists claims that “a Spotify Premium customer spends 1.6x more per year compared to the average spend of a US music consumer who buys music (not including those who spend $0 on music)”, with the annual value of the average US paying listener identified as $120.
16. The website also claims that “a Spotify customer is 1.6x more financially valuable than the average adult non-Spotify US music consumer.”
17. Additionally, the Spotify for Artists website includes a section titled “Spotify’s impact on piracy” as a response to the criticisms against the company regarding the exploitation of musicians. Spotify states that it has proven the theory ‘given a free and legal alternative, people will pirate less’, and uses Sweden, Norway, Denmark, USA, Netherlands and the United Kingdom to provide evidence. For example, in Norway, the figure of 1.2 billion unauthorized song downloads in 2008 is compared to a figure of 210 million from 2012.
18. BBC Music Week editor Tim Ingham wrote: “Unlike buying a CD or download, streaming is not a one-off payment. Hundreds of millions of streams of tracks are happening each and every day, which quickly multiplies the potential revenues on offer – and is a constant long-term source of income for artists.”
19. The country list includes Andorra, Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Bulgaria, Canada, China, Chile, Colombia, Costa Rica, Cyprus, the Czech Republic, Denmark, the Dominican Republic, Ecuador, El Salvador, Estonia, Finland, France, Germany, Greece, Guatemala, Honduras, Hong Kong, Hungary, Iceland, Indonesia, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, the Netherlands, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, the Philippines, Poland, Portugal, Singapore, Spain, Slovakia, Sweden, Switzerland, Taiwan, Turkey, the United Kingdom, the United States and Uruguay.
20. Spotify went live (by invitation only) in Scandinavia, the United Kingdom, France and Spain in October 2008.
21. Spotify launched in the United Kingdom in February 2009.
22. It launched in the Netherlands in May 2010, in the United States in July 2011, in Austria, Belgium, and Switzerland in November 2011, followed by Germany in March 2012, Australia and New Zealand in May 2012, and Ireland and Luxembourg in November 2012.
23. The expansion continued with Italy, Poland, and Portugal in February 2013, Mexico, Hong Kong, Malaysia, Singapore, Estonia, Latvia, Lithuania, and Iceland in April 2013, Argentina, Greece, Taiwan, and Turkey in September 2013, and in an additional 20 markets (Hungary, Czech Republic, Malta, Bulgaria, Slovakia, Cyprus, Chile, Colombia, Uruguay, El Salvador, Paraguay, Honduras, Panama, Nicaragua, Peru, Ecuador, Dominican Republic, Guatemala, Costa Rica, and Bolivia) in December 2013.
24. 2014 saw the service launch in the Philippines in April, Brazil in May, and Canada in September.
25. In 2016, Spotify launched in Indonesia in March, and in Japan in September.
26. Spotify music catalog may or may not vary from those available abroad. Licensing negotiations can be tricky, and even though some are reporting that Spotify’s full inventory is available in the U.S., some users have complained about some missing artists or titles.
27. Spotify doesn’t have every song known to man, though. Spotify’s catalog — with 13 to 15 million tracks — practically doubles Rdio’s, but can’t touch GrooveShark’s. So it’s a respectable size, but don’t be surprised if your favorite indie band’s not on here.
28. Spotify has 20+ million songs, but 20% have never been played.