Music for every occasion 2013 Annual Report
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PLANS & SERVICES
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FEATURES TEGAN & SARA
Citylocal natives Radiation City local native SHARING EXPERIENCE
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SPOTIFY SESSIONS
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THE FUTURE OF SPOTIFY FINANCIAL HIGHLIGHTS
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To Our Shareholders: Fiscal 2013 was another year of significant progress for the company. We executed several complex initiatives and continued to make great strides in delivering on the strategic initiatives that we have been working on for more than fiver years to improve the products and services we offer customers. Overall, the company’s operations, competitive posture and foundation for profitable growth are all stronger today than a year ago. In 2013, Spotify presented itself as a major resource for streaming music. Compared to the previous year, we have doubled our premium paying subscribers and plan on doing the same in the coming year. We pride ourselves on rightfully paying our shareholders. Our method is to provide an equal percentage to the artist based on what percentage they are listened to by users. Spotify has paid more than five million dollars to shareholders within the past five years. In closing, I want to thank the fifty employees whose creativity, hard work and customer dedication have made this year’s achievements possible. Our strong connection with customers continues to be a key asset in an increasingly competitive marketplace. While the economy remains challenging, we are well prepared to meet customers’ changing needs, pursue continued growth and maximize shareholder value.
Daniel Ek
Daniel Ek, CEO Spotify
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“... for people who love listening to music and people who love creating music �
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THE SPOTIFY MISSION We want to connect millions of people with their favorite songs and create a service that people love to use. We believe music should be easily accessible and that listening to music will make people live richer lives. We want to create a win-win situation for people who love listening to music and people who love creating music.
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Timeline 2011 Spotify launched in the United States. 2008 Spotify first began in Stockholm Sweden.
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2011 One million paying subscribers in Europe. 2010 Spotify received an investment from Founders Fund in order to win labels over.
2011 Spotify teams up with Facebook to make sharing music with friends even easier.
2012 Spotify announced that its app users listened to 1,500 years of music in three months.
2013 Spotify celebrates its fifth birthday in October.
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Music for your own beat
Plans & Services
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FREE
$0.00/MONTH • music is instant • available on desktop/laptop • millions of songs made possible by ads
UNLIMITED
$4.99/MONTH • music is instant • available on desktop/laptop • millions of songs • no ads or commitment
PREMIUM
$9.99/MONTH • music is instant • listen on all devices • listen offline and download • millions of songs • no ads or commitment
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Features
INSTANT MUSIC No need for individual digital files on your computer. Spotify can free up space on your computer hard drive by streaming music through the program.
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CREATE PLAYLIST Create a group of your favorite tracks dedicated to a certain theme, era, genre, artist, mood, or whatever you desire. On Spotify, you can turn albums and tracks into playlists so that you can listen to tracks as the artist had originally intended.
MUSIC ANYWHERE Premium subscribers have access to the ultimate Spotify experience. They can listen to any Spotify music on their compatible mobile devices. Spotify supports offline syncing to save tracks to your phone.
RESOURCES Spotify has a dedicated fan base. A huge number of Spotify blogs, services, and apps can help you make the most of Spotify while Spotify itself is concentrated on what it does best: delivering music to you.
SHARING MUSIC Spotify users can actively share links, or you can passively publish your playlists to your public Spotify profile on social media and leave it to your friends to dig around in your listening library.
PLAY LOCAL FILES Spotify indexes the local files on your computer and displays them in a convenient list. Most common file formats are supported, and you never need to open another music player again.
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Music for making a connection
Spotify is available in 32 markets across the world
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SHARING MORE
THAN JUST MUSIC Over the next year, Spotify will roll out a few new features to its web and mobile interfaces that will make getting to the music you want, faster. One of the more interesting features will be threading its music sharing features so that it’ll look more like a long conversation similar to other social media platforms. The new messaging will replace the inbox feature which was an interesting if not exactly fully featured way to learn about music from your friends on Spotify.
It will work in the way that threaded conversations work on Facebook or over SMS. If you haven’t shared with a friend in a while, you’ll still be able to review your entire conversation over time. It would be possible to play back an entire conversation with a friend as a playlist, becoming a more meaningful tool. Spotify is about to launch an entirely new way for you to browse its catalog with more sophisticated playlists. New web versions of these new features will be out for even more sharing.
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Music for new discoveries
Spotify Sessions A GLIMPSE INTO THE MINDS OF UP-AND-COMING ARTISTS
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The Spotify Sessions series was developed as a way for artists to introduce themselves and their music to Spotify’s global audience. From parks to restaurants to treetops to the Big Green Bus itself, we commandeered artists and set the sky as the limit.
Spotify has now increased functionality and extra features. Each Tuesday, the music service releases a live EP that was recorded at its studios in Stockholm or New York featuring a different up-and-coming artist, and nearly everyone is worth a listen.
There’s Oscar-winning singer/songwriter Glen Hansard closing his sixsong set with the traditional Irish funeral song “The Parting Glass” in honor of the late The Band frontman Levon Helm. Seattle rapper Macklemore performing his pro-gay-marriage hit, Same
Love, has reached a high on the music charts with his inspiring lyrics. He says,“When you have a song that has the potential to resonate with people then that song has a life that might change people’s perspective. And within that, there’s power.”
City and Colour
Spotify is working more into promoting these recordings each week and making a main landing page upon which all of these EP’s and records can be readily found. Customers will be able to more easily search for and discover talented up-and-coming artists.
Spotify has its opponents, namely artists like The Black Keys and Jason Isbell who told the New York Times it was just another way of ripping off musicians. But by offering free Spotify Sessions, the service is lending a hand to up-andcoming bands and giving
listeners a chance to hear some of their favorite artists live and in concert. It’s not too far-fetched to believe this kind of music experience could lead to increased ticket sales for participating artists. But more than anything, the Spotify Sessions series is
for customers and music lovers. This programs offers an easier way to get new artists names out there. Customer can then share the new music that they listen to. This creates a win-win for those who love make music and those who love listening to music.
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FEATURED ARTISTS City and Color MAKLEMORE AND RYAN LEWIS TWO DOOR CINEMA CLUB Miguel ALT-J
THE 1975 Ed Sheeran Lord Huron
ANGEL HAZE
minus the bear
the shins MUMFORD & SONS Grouplove
geographers MUTEMATH Band of Horses
TEGAN & SARA
local natives
Radiation City
WARE VILLAGERS JESSIE ROBIN THICKE HAIM
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Music for the future
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BEYOND THE MP3 In an effort to compete with popular streaming video services like Netflix, Amazon Prime, and HBO Go, Spotify is discussing to create it’s own streaming video service. Spotify is planning to take a cue from Netflix and stream both existing television series and original ones after the success of Netflix’s House of Cards. Spotify is also playing around with the idea of streaming music
videos and live concerts to make the music experience that much greater for the customers. As of right now the idea is a thought in the mind but something Spotify is looking to explore. In an interview, CEO Daniel Ek stated, “I won’t rule it out because we’re a company that looks at what we’re doing incredibly for the long term. But right now, we’re all focused on music.”
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Financial Highlights Spotify Users As of 2013
30% 70% = Free Spotify Users 2011
2012
2013
YEAR
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= 1 million users
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= Paying Spotify Users
Spotify Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts)
As of January 31, 2012
Assets Current assets: 44,126 $ Cash and cash equivalents 46,455 Short-term investments Accounts receivable, net of allowances of $590 and $761 at January 31, 2012 66,738 and 2013, respectively 2,806 Prepaid expenses and other current assets 160,125 Total current assets 15,576 Property and equipment, net 2,314 Other assets $ 178,015 Total assets Liabilities and stockholders’ equity Current liabilities: Accounts payable Accrued liabilities Accrued royalties Deferred revenue Accrued compensation Total current liabilities Other long-term liabilities Total liabilities Commitments and contingencies Stockholders’ equity: Preferred stock, $0.0001 par value: 1,000,000,000 shares authorized as of January 31, 2012 and 2013, respectively: 163,569,361 and 172,506,051 shares Issued and outstanding as of January 31, 2012 and 2013, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders’ equity Total liabilities, redeemable convertible preferred stock and stockholders’ equity.
$
2,053 3,838 33,822 19,232 11,962 70,907 2,568 73,475
-205,955 (101,426) (5) 104,540 $ 178,015
As of January 31, 2013
$
65,725 23,247
103.410 6,232 198,614 17,758 2,460 $ 218,832
$
4,471 7,590 53,083 29,266 21,560 115,970 3,873 119.843
-238,552 (139,574) (6) 98,989 $ 218,832
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www.spotify.com