About
Spotify is an online music provider that offers digitally restricted streaming of selected songs from a wide range of artists and music genres, including both major and independent labels. Spotify is currently available both in the United States and over 15 other countries around the globe. Spotify uniquely allows users to precisely choose the artists, songs, and genres they wish to appear on their playlist, in direct contrast with Pandora that uses an algorithm to select similar music.
Thesis
Recently consumer preferences have shifted from owning music to “renting” it, allowing listeners to access their favorite songs seamlessly from their tablet, smartphone, and computer. We believe this trend will only continue to expand in the future as the world undergoes this shift.
People
Daniel Ek, Founder and CEO, has been a lifelong entrepreneur, founding his first company at age 14. Previously he was CTO at Jajja Communications, CTO at Stardoll, and CEO of uTorrent, the world’s most popular BitTorrent client. Since its emergence as a leading music platform, Spotify has been able to recruit a highly experienced executive team and practiced engineers.
Key Board Members:
- Sean Parker
- Chi-Hua Chien
- Klaus Hommels
Product
While the online music space is packed with competition, Spotify provides a different product compared to any of its competitors. By creating a lightweight software application, users are able to instantly access and listen to specific tracks with no buffering delay. Furthermore, their product is linked to Facebook, allowing users to share tracks with their friends in real time. Users can register for free, advertising-supported accounts, or paid subscriptions without ads that include extra features.
Potential
Portable music has become a staple to the everyday lives of people around the world. Spotify has gained an enormous market share in the digital music space and already has more than 18 million monthly active users. We see tremendous potential growth both in the U.S. and abroad as access to technology continues to improve and users seek additional use purposes for their computers, smartphones, and tablets.
Megatrends
- Internet
- Globalization
- Convergence
- Consolidation
How Big Can This Be?
Portable music has become a facet of the daily lives of people throughout the developed world. Spotify has already begun to reinvent the existing market and disrupt iTunes, the market leader, as consumers undergo the behavioral shift in preferences from music ownership to music rentals.
Predictability
Spotify has a rapidly expanding user base and is continually building upon its current universe of tracks to accommodate the changing preferences of consumers. In the foreseeable future, Spotify will remain the market leader because of its current contracts and expansive library.
Risks
The largest area of concern for Spotify is the legal and political climate surrounding record rights. Currently Spotify has contracts with essentially every major record label, although it still remains a point of future vulnerability.
