Mention the name “Spotify” and chances are you will likely find it as a mainstay application on the devices of many. Since its founding in 2006, it has grown to become among the most popular digital brands in the world.
What does it do and how does it make money?
Spotify (NYSE: SPOT) is at its core, a music streaming service. It first started out as a solution to the issue of piracy in the music industry. Its two founders, Daniel Ek and Martin Lorentzon, realized that music files were being shared illegally across peer-to-peer sharing networks, which resulted in huge blows to the industry. By building a library of titles through paying recording labels and artists, and then selling free to premium subscription services to listeners who now did not have to physically download songs, Spotify had essentially created new incentives to discourage such illicit activities.
Spotify operates on a “freemium” model...