Spotify is a leading music streaming platform that offers a library of legal music and podcasts that fans across the world can enjoy. But have you ever wondered who stands behind the success of this streaming service? Discover who owns Spotify in this article.
Spotify has captivated the hearts and ears of over 515 million users and 210 million paying subscribers since 2008. For years now, the leading streaming platform has dominated the music streaming industry with its vast catalog of over 100 million songs and 5 million podcasts. But who owns Spotify?
In this blog post, we'll dive into the ownership structure of Spotify, shedding light on the key players who have propelled the company to its current position of prominence. Keep reading to learn more.
Who Founded Spotify?
Spotify was founded by two friends, Daniel Ek, and Martin Lorentzon, in 2006. The two wanted to create a platform that would provide artists with a fair way to earn income while giving fans an enjoyable music streaming experience. Let's learn more about the Spotify co-founders.
Who Is Daniel Ek?
Daniel Ek is a Swedish entrepreneur and the co-founder of Spotify. Ek began his career as a programmer, developing websites for businesses during his teenage years. After high school, Daniel joined the KTH Royal Institute of Technology but would soon drop out to focus on his Information Technology career.
Daniel worked for various web-based companies, including Nordic and Stardoll, until later, when he founded his online advertising company, Advertigo. In 2006, he sold Advertigo to a Swedish digital marketing company, Tradedoubler.
After selling Advertigo, Ek decided to start another company, and that's when Spotify was born. The idea for Spotify actually came to Ek in 2002. At that time, the music industry was undergoing a serious crisis due to the rise of illegal file sharing. The Spotify founder recognized the need for a service that would combat piracy and provide fair compensation to artists.
Today, Daniel EK is the CEO of Spotify. He owns 16.5% of the company's total shares and has 31.7% of voting control.
Who Is Martin Lorentzon?
Martin Lorentzon is a Swedish entrepreneur and the co-founder of Spotify and Tradedoubler. Just like Daniel, Martin had a passion for technology from a young age. He attended Chalmers University of Technology in Gothenburg, Sweden, where he studied industrial economics.
After completing his studies, Lorentzon moved to San Francisco, where he worked for the Web search engine AltaVista in Silicon Valley. In 1999, Lorentzon co-founded an online marketing company, Tradedoubler, initially, Netstrategy. Tradedoubler was a huge success. In fact, the company won several awards, including the “IT Rookie of the Year” awarded by the Swedish Guldmusen.
In 2006, Tradedoubler purchased Daniel Ek's company, Advertigo. It was during this time that Martin and Daniel's friendship blossomed, and the two business partners decided to start Spotify. Martin was the CEO of Spotify from 2006 to 2013, when Ek took over. He owns 10.9% of the company's total shares and has 42.6% of voting control.
When Was Spotify Founded?
The foundation of Spotify dates back to 2006 when Daniel Ek and Martin Lorentzon decided to create a legal music streaming service that would benefit both artists and listeners. Lorentzon gave Ek €1 million, which they combined with the money that Ek had made after selling Advertigo.
Naming the Company
The name Spotify was actually not an intentional choice but rather a result of an accidental occurrence during a brainstorming session. It is said that the duo wanted to come up with a very unique and catchy name for their new company. And as they were throwing around different ideas, Daniel misheard a word that Martin shouted to him as Spotify.
Ek and Lorentzon decided to adopt the name for their music streaming service, and they registered the domain name. However, convincing record labels to license their music to Spotify was a major challenge, and as a result, the launch of Spotify was delayed.
The Launching of Spotify
After months of negotiations and hard work, Spotify officially launched to the public in October 2008. Soon after, Spotify continued to expand its reach, launching in several European countries, including:
- The UK
In 2011, Spotify launched in the United States.
Spotify Freemium Model
Spotify introduced a freemium business model which offered users the option to access Spotify's music library for free, supported by ads, and a premium subscription option too. This innovative model attracted millions of users, and by August 2012, the service had 15 million active users, including 4 million paying subscribers.
Today, the Spotify freemium model continues to be a key pillar of the company's business strategy. The model has played a crucial role in establishing the platform as the leading music streaming service worldwide. Currently, Spotify has over 515 million active users, with 210 million being paying subscribers.
Spotify Early Investors
When Spotify was still in its early stages, several investors recognized its potential and made significant investments in the company. In 2008, Northzone and Creandum invested $21.6 million. The money helped the company get off the ground and expand its operations.
A year later, Spotify received $50 million from several investors, including Horizon Ventures. And in 2010, Founders Fund invested €11.6 million. Spotify bosses had another fundraising in 2011, where they raised $100 million from Accel Partners and Kleiner Perkins.
Spotify Major Shareholders
Spotify is owned by both individual shareholders and institutional shareholders. The majority of Spotify shares are owned by Daniel Ek and Martin Lorentzon. Ek owns 31.9 million shares or 16.5% of the total share. On the other hand, Lorentzon owns 21.5 million shares or 11.1% of the total shares.
Baillie Gifford & Co. is one of the major institutional shareholders of Spotify. The firm owns 27.9 million shares or 14.5% of the total shares. Other major institutional shareholders include:
- Rowe Price – owns 9.7 million shares or 5.0% of the total shares
- Tecent – owns 16.6 million shares or 8.6% of the total shares
- Morgan Stanley – owns 8.38 million shares or 4.4% of the total shares
Spotify has definitely come a long way since its inception. This streaming service has provided a platform for musicians to reach a wider audience and earn a fair income. And as Spotify continues to flourish, we can't help but commend the co-founders Daniel Ek and Martin Lorentzon for their passion, dedication, and entrepreneurial spirit in creating a platform that has transformed how we consume and engage with music.