Spotify, a music streaming platform, is no less than a heaven for music lovers all across the globe. The company started its operations in 2006 in Sweden. Originally, the formation of this company was a response to the growing piracy issues in the music industry. Spotify became a huge success as the organization expanded to 79 different markets.
Right now, Spotify is the biggest global music streaming platform. Spotify has captured 33.8 percent of the global market share for paid music streaming services. Here are some important statistics related to this industry giant.
- Founded in 2006 by Martin Lorentzon and Daniel EK, in Sweden
- Headquarters: New York, USA
- Official name: Spotify Technology, SA ( a public company listed on NYSE)
- Monthly Active Users: 365 million (till Q2, 2021)
- Paying Subscribers: 165 million (till Q2, 2021)
- Total revenue in 2020: 7.88 billion Euros
- Revenue from paid subscribers: 3.98 billion Euros (till Q2, 2021)
- Revenue from ads: 491 million Euros (till Q2, 2021)
- Total number of employees: 7085
- Number of music tracks (as of late 2021): more than 70 million
- Total number of podcasts (as of October 2021): 3.2 million
Spotify generates its revenue through two different channels, including paid subscriptions and advertisements from businesses all over the world. The company takes 30% of its net revenue, while the remaining is distributed between artist payments, music deals, and licensing.
The following table presents how much music streaming companies pay per stream.
| Music Streaming Service | Average Pay Per Stream |
|---|---|
| Spotify | $0.00437 |
| Tidal | $0.01284 |
| Napster | $0.019 |
| Apple Music | $0.00783 |
| Amazon Music | $0.00402 |
| Pandora | $0.00133 |
| YouTube | $0.002 |
| Deezer | $0.0064 |
| Napster | $0.019 |
Table of Contents
Spotify Revenue Generation
Spotify generates its revenue through two different sources;
- Premium subscriptions
- Advertising
Premium Subscriptions
Spotify earns its major portion of net revenue through premium/paid subscriptions. In fact, according to the statistics, 90% of Spotify’s revenue comes from premium subscriptions. The company currently offers two types of paid subscriptions in the United States. The premium version costs $9.99, where users can get on-demand mobile access and listen to ad-less tracks offline. Apart from that, the third plan offers 6 accounts for the same family (sharing the same address).
Advertisements
Almost 10% of Spotify’s revenue comes from paid advertisements from the brands. Spotify allows businesses to advertise in different formats, including video takeovers, branded moments, homepage takeovers, branded playlists, sponsored playlists, audio, and leaderboards.
Top 10 Competitors of Spotify
Apple Music
- Founded: 2015
- Head Quarters: Cupertino, California, USA
Apple Music is a streaming service from Apple Inc. that allows its users to access the music content on-demand or save it for later listening. Apple Inc. launched Apple Music back in 2015, and the company now holds a 19% market share in the music streaming industry, standing next to Spotify.
According to an estimate, Apple Music had a worldwide subscription base of 72 million in June 2020. Overall, the Music streaming services showed promising growth in the last decade, grew by 23%
Apart from that, the company’s workforce has grown to 154,000 employees. Apple Inc., through its services, including Apple Music, Apple TV, iCloud, and App Store, generated revenue of $18.3 billion in the 4th fiscal quarter of 2021. It is safe to say that Apple Music is the biggest competitor of Spotify right now.
SoundCloud
- Founded: 2007
- Head Quarters: Berlin, Germany
Developed by an artist, Erik Wahlfross, and a sound producer Alex Ljung in 2007 in Germany, Sound is basically a social networking platform. Sound Cloud purchased Repost Red, a distribution platform, in 2019, and in the next year, it made an investment of 75 million USD in Sirius XM USA.
Sound cloud is more like an artist-oriented platform that helps new or struggling artists to launch their completed soundtracks and get feedback or comments from the platform users.
SoundCloud hosts over 250 million tracks on its platform. According to the latest available data, registered users are around 70 million, with over 170 million monthly listeners. The platform offers it customers paid as well as free subscriptions.
Spotify and SoundCloud are the key players in music streaming services. Spotify mainly focuses on mainstream music, whereas Soundcloud focuses on news and startup artists. Soundcloud is good for collaboration and interaction with listeners directly.
Google Play Music
- Founded: 2011
- Head Quarters: Mountain Vieux, CA, USA
Google Play Music was launched in 2010, by the internet giant Google, as an android app. Google is a child company of Alphabet and has almost 140,000 employees with a whopping $181.69 billion revenue in 2020. In 2019, Google announced that the company was going to shift the Google Music users to Youtube music, but the transition hasn’t taken place so far.
A user can access Google Music via android smartphone, desk, browser, and mobile operating system (if they support Adobe Flash). Google Music is available in 63 different territories and allows users to store up to 50,000 songs. The company has more than 15 million paying customers.
YouTube Music
- Founded: 2015
- Head Quarters: San Bruno, CA, USA
Youtube started Youtube Music, a music streaming platform, back in 2015. Youtube Music offers a music streaming service, and it allows the users to browse audios and videos of any genre and make playlists. YouTube generated revenue of $7 billion in 2021’s third quarter. Youtube Music has more than 20 million paid subscribers and has grabbed a 6% share in the music streaming industry. This makes Youtube Music the 4th biggest competitor of Spotify.
Amazon Music
- Founded: 2007
- Head Quarters: Seattle, Washington, USA
Amazon Music was launched by the global eCommerce juggernaut, Amazon.com Inc, in 2007 under Amazon’s brand “Amazon MP3”. After a year, it turned into the first online music store ever.
Amazon Music is one of the fastest-growing music streaming services in the West, with more than 55 million users and subscribers. It has also captured 15% of the global music streaming market, making it the second biggest Spotify competitor. Not to mention, Amazon Music is the third biggest music streaming platform in the West.
Tencent Music
- Founded: 2016
- Head Quarters: Shenzhen, China
Tencent Music is an online music streaming platform launched by Tencent Music Entertainment Group (TMEG)in 2015. The company is registered in New York Stock Exchange, and it is one of the leading music streaming (audio and video) platforms in China.
Tencent Music Entertainment Group has other highly innovative and popular music apps such as WeSing, Kuwo Music, Kugou Music, and QQ Music. These apps allow the users/subscribers to create, share, stream, and enjoy music.
The platform boasts different services related to music such as online karaoke, online audio, online music, online concert services, music-centric live streaming, and a lot more. Tencent Music Entertainment has more than 71 million paid users and more than 30 million soundtracks.
Pandora
- Founded: 2000
- Head Quarters: Oakland, California, USA
Pandora was founded in 2000, but it was later acquired by SiriusXM satellite radio network for a whopping $3500 million in 2018. This was also the biggest merger in the history of the audio entertainment industry.
Pandora highly recommends Music Genome Project to its users. It truly is an amazing feature that collects and explains the substance of any music track on the basis of its rhythm, instrumentation, harmony, and melody.
At the end of the fiscal year 2020, Pandora had 6.3 million paid subscribers, 58 million users, and the company generated total revenue of $1.69 billion.
Deezer Music
- Founded: 2006
- Head Quarters: Paris, France
Founded in France in 2007, Deezer Music is one of the most popular music streaming platforms in the world. Deezer is literally fun in so many ways. For example, if you are a registered user, you can enjoy endless music tracks, create your own playlist, and communicate with other users on Deezer privately. You can also share your recommendations, music, and opinions through the blog.
Deezer is a global music streaming network currently operating in 185 countries and boasts 73 million soundtracks. The company has so far generated revenue of $67.4 million in 2021, with more than 7 million customers worldwide.
Napster
- Founded: 1999
- Head Quarters: Seattle, Washington, USA
A music file delivery service, Napster founded by Sean Parker and Shawn Fanning in the United States in 1999. It was the first peer-to-peer (P2P) music exchange system. It amalgamated with Rhapsody in 2011 and launched a new premium service throughout Europe and other parts of America.
Currently, Napster is working in collaboration with Movistar (a mobile company) and providing streaming services in Latin America. The company’s total revenue in the first half of 2021 was $44.2 million, 3 million paying subscribers, and 42 million music tracks.
Tidal
- Founded: 2014
- Head Quarters: Malmo, Sweden
A Norwegian company, Aspiro, first introduced Tidal, a subscription-based music service, in 2014. One year later, Panther, a project from Shawn Carter, acquired the company. Tidal offers both video and audio streaming only for paying subscribers. That means there is nothing free on this platform. A significant portion of royalties goes to the artists.
Tidal entertains its subscribers with the latest tracks and music from different genres. The company offers different subscription plans, including Hifi and Premium, and is offering its services in 54 countries. The Tidal generated net revenue of $166.9 million in the fiscal year 2019.
The Takeaway
Even after starting late than many names on this list, Spotify has indeed made an unparalleled success in the global music streaming industry. Apple Music, Google Music, and Amazon Music are giving a tough time to Spotify, but the industry leader is far ahead right now, and the competitors need to do a lot of catching. That’s it for today!
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