Bismarck Brief

Bismarck Brief

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Bismarck Brief
Spotify’s Grand Bargain Remade the Music Industry
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Spotify’s Grand Bargain Remade the Music Industry

Europe’s most successful startup was born from an unlikely alliance between Swedish software pirates and U.S. record labels. While the alliance has faded, the company's business model won.

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Samo Burja
Jun 05, 2024
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Bismarck Brief
Bismarck Brief
Spotify’s Grand Bargain Remade the Music Industry
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Spotify cofounder, chairman, and CEO Daniel Ek in 2023. Screenshot from YouTube. Source.

The Swedish company Spotify is the world’s leading subscription music and podcast streaming service, holding an estimated 30% market share despite competition with the services of multiple U.S. tech giants like Apple Music, Amazon Music, and Google’s YouTube.1 As of April 2024, Spotify is also the most successful software startup in the European Union, with a market capitalization of over $58 billion.2 The company generates over $12 billion in revenue annually and is projected to grow further in 2024.3 All this makes Spotify a rare example of a European software company that can compete globally with Silicon Valley companies. Founded in 2006 by Swedish entrepreneurs Daniel Ek and Martin Lorentzon, Spotify has reshaped the economics of the music industry, which suffered an almost 50% decline in nominal revenues from 1999—when online file-sharing and piracy began to take off—to 2015.4 Similar to Netflix’s relationship with film and television, Spotify is thus also a rare example of a software company that has become a key player in a cultural industry.

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