Piracy was slowly killing music, but streaming has been revolutionary. As a result, the Spotify net worth is now double the value of the entire UK music industry.
Record sales hit a 25-year high in 2016, as Hipsters young and old bought into the latest fad. Cassette tape sales are also on the rise, with music fans now ditching their iPhones for a Walkman.
It’s only so long before our flannel shirt wearing friends are digging out their retro MP3 players to listen to obscure indie bands, with streaming taking the place of downloads as the new norm.
Streaming now makes up 51% of all revenue generated by the music industry. It is miles ahead of both digital downloads (24.1%) and physical sales (21.8%).
As more music fans opt for monthly subscription services over purchasing their music, the likes of Amazon, Apple, Google and Microsoft have all unveiled their own music platforms. Likewise, services such as Deezer and Tidal have also gained millions of users.
However, Spotify leads the pack, with more than 100 million monthly active users. That includes 30 million paid subscribers, who each pay £10 a month for ad-free streaming.
As a result, Spotify makes more than $2 billion in revenue annually, but how did they rise to become the go-to streaming service for music fans?
How Spotify took control of music
Spotify officially launched in 2008, having agreed to game-changing licensing deals with the music industry’s biggest names, such as Universal Music and Sony BMG.
Daniel Ek and Martin Lorentzon had spent the past two years working tirelessly to build and launch their startup. Their possessions consisted of mattresses and laptops. Fresh air was a rarity. Yet, they were confident that their years of struggle would be worth it in the end.
They expected success, but were eager to ensure that their servers weren’t overwhelmed by the public’s response. In preparation, they gradually launched the service using an invite-only model.
Before long, Spotify was attracting the interest of some major investors. They managed to raise more than $50 million in 2009. Much of that was used to keep the record labels on side.
Spotify has since gone global and is attracting huge numbers of listeners. The platform is also now integrated with Facebook and Uber, which has helped their user base to boom.
Unsurprisingly, investors are now offering huge amounts to get in on the music service. The latest offering raised $526 million, despite the fact that Spotify is yet to turn a profit.
What does that mean for the Spotify net worth?
Despite the company’s revenue continuing to grow at a rapid rate, Spotify is still recording losses in the hundreds of millions. Yet, that has done little to put off investors, who are certain that the market leaders will find a way to make their service profitable.
While Spotify has yet to go public, the company’s latest round of funding valued the company at $8.4 billion. Yet, with the service set to reach 100 million paying users by 2020, the Spotify net worth could rocket to more than $50 billion.
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