Who Owns Spotify? Know the Biggest Stakeholders

Spotify has become the most popular music streaming service, with over 500 million active users. It’s among the most used apps by Gen Z and Millennials. But have you ever wondered who owns Spotify? If yes, this post will answer your queries with an in-depth case study on Spotify’s ownership.

Before becoming a profitable industry leader, Spotify was a small Swedish company allowing users to rent songs and albums. It has a very interesting story about its inception and growth. Over the years, it has acquired and partnered with numerous other companies and evolved into the biggest music streaming app.

Who Owns Spotify Currently?

Spotify has shared ownership after the firm went public around five years back. Currently, the single largest shareholder in Spotify at the close of 2022 was the company’s co-founder and CEO, Daniel Ek. According to the latest SEC filings, he held 31.93 million shares, which is around 16.5% of the total.

In 2018, Ek held around 36.83 million shares (19.8%). However, his holdings gradually reduced over the years. Ek owns most of his shares through holding companies. A firm named D.G.E. Investments, owned by D.G.E Holdings from Cyprus owns most of Ek’s shares.

Martin Lorentzon, the other co-founder of Spotify, has the second largest holding with 21.51 million shares, which is around 11.1% of the company’s total as of the close of 2022. Lorentzon also owns his share through a pair of holding companies, Rosello Company Limited, which Almatea further owns.

After that comes Spotify’s largest institutional shareholder, Baillie Gifford and Company, an Edinburg-based investment firm. Baillie Gifford & Co. will own around 14.5% of the company’s shares at the end of 2022. Interestingly, Baillie Gifford & Co. also owns 4.48% of Tencent Music Entertainment (TME) shares.

Tencent is another major shareholder at Spotify and owns around 8.6% of shares through several holding companies owned by Tencent Holdings or Tencent Music Entertainment. T. Rowe is the next shareholder with 8.4% (16.1 million) of the total shares, followed by Morgan Stanley, which owns 4.4% (8.38 million).

Universal Music Group and Sony Music Entertainment are two more names with a significant stake in Spotify. According to UMG’s annual report, it owned 6.41 million shares in Spotify, around 3.30% of the total shares. Meanwhile, Sony Music Entertainment owns around 2.35% of the total shares.

Who Is Daniel Ek?

Daniel Ek is one of the founders of Spotify. He is also one of the principal shareholders who owns 16.5% of the company’s total shares. His shares will be worth  $3.75 billion at the end of 2022. The value had declined greatly since last year, when it was valued at $8.48 billion.

Back to Ek’s life, he is a Swedish entrepreneur, developer, and billionaire who co-founded Spotify in 2006 with his friend and business partner Martin Lorentzon. He was making around $50,000 per month from his bedroom at 18 by selling websites and hosting services.

After that, he went to study at university but then dropped out of it just weeks later. He continued to focus on his passion for information technology and founded an online advertising company named Advertigo. Later, Ek sold Avertigo to Martin Lorentzon

Who Is Martin Lorentzon?

Martin Lorentzon is the co-founder of Spotify and another principal shareholder. His current holding of 11.5% of total shares is worth around $2.5 billion. He is a Swedish entrepreneur who also founded Tradedoubler. His first success came from Netstrategy, which he founded in 1999 with Felix Hagnö.

The duo met at Cell Ventures in Silicon Valley. They also launched Tradedoubler together to utilize the emerging affiliate marketing industry. In 2006, Lorentzon met Daniel Ek when Tradedoubler acquired Advertigo. They went on to launch Spotify together after the P2P music service Napster failed.

In 2018, Lorentzon owned 12.7% of all shares, but his holdings have dropped slightly. However, Ek and Lorentzon continue to control a majority of the voting shares in the company. According to the SEC filings at the end of 2022, they hold 74.3% of the total voting power of Spotify, with Ek having 31.7% and Lorentzon having 42.6%.

The Origin And History Of Spotify:

The idea of Spotify came to Daniel Ek in 2002 after Napster had been shut down a year ago. He figured out that the music industry was facing a problem despite similar services like Kazaa and LimeWire being available to replace Napster.

“I realized that you can never legislate away from piracy. Laws can help, but it doesn’t take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time, compensates the music industry. That gave us Spotify,” he revealed in an interview in 2010.

Ek met Martin Lorentzon after he acquired his firm Advertigo. The duo then started working on Spotify together. They sat in Ek’s Stockholm flat to first think of a catchy name. They discussed several names and also used an online name-generator tool to find ideas.

Spotify Was Founded On April 23, 2006:

On April 23, 2006, Spotify was founded, and the name was decided after Ek misheard a word that Lorentzon shouted. The idea was then interpreted to combine “Spot” and “Identify” to form Spotify. The duo then registered the domain name and started working with designers and engineers on the project.

Ludvig Strigeus, the co-founder of µTorrent was also among their team. They created the platform within a few months but delayed the launch due to negotiations with record companies. Before working on Spotify, Ek decided to retire after becoming a millionaire at 23. However, he came back.

Ek was instrumental in convincing record companies to work with Spotify. It was a challenge to convince them as many were already skeptical due to the recent failure of Napster. He approached them with the idea of making their music available for consumers to rent rather than buy for free.

Spotify Was Launched On October 07, 2008:

It took two years to convince enough record labels and music companies. After that, Spotify was launched on October 7, 2008, exclusively in Sweden and a few European countries. The North American market soon followed as Spotify was launched in the United States in July 2011.

Spotify initially launched a streaming music playback application for computers. Users could use a free account, but another person on the platform must invite them. However, they could choose a paid subscription plan if someone wanted access.

In 2009, Spotify released an iOS app with a $100 million investment from Russian firm DST. It is believed that Spotify’s business model threatened Apple and took steps to prevent it from entering the U.S. market. However, Spotify became successful as the first company of its type.

Spotify Went Public In 2018:

On April 03, 2018, Spotify went public on the New York Stock Exchange. It didn’t follow the traditional IPO route and opted to go public with a direct listing instead. This step was possibly chosen as Spotify was in a strong financial position and felt that selling shares to raise capital would dilute existing shareholders.

Spotify now offers curated music discovery services, music stations, audio customization, and private listening, and also ventured into streaming podcasts, poetry, audiobooks, comedy, and short stories. It has over 517.9 million users and over 229 million Spotify Premium subscribers.

Frequently Asked Questions:

Final Words:

Spotify is the best music streaming service right now, and a group of shareholders and retail investors owns it. Daniel Ek is the company’s founder and CEO, while Lorentzon, the other co-founder, is a board member. Before Ek, Lorentzon was the CEO of Spotify until 2013.

The two Swedish entrepreneurs are still very good friends. One of the reasons behind the success of Spotify is the approach of the founders to its business model and their confidence in it. They launched it as a freemium service, and it’s still running on the same model with certain evolutions.

Spotify provided music to the listeners legally while simultaneously compensating the music companies. This was the secret of its perennial profitability. That’s all for this guide.