Economy

Spotify finally launches – five things you didn’t know about the streaming service

Engel Schmidl /

After years of speculation – and plenty of waiting by tech fans – streaming music service Spotify has launched in Australia.

The company is only four years old, but like many other technology businesses over the past few years it’s managed to gain a following of millions. Already, tens of thousands of Australians have signed up for a notification for when the service goes live.

Local marketing director Kate Vale says the past six months have been spent getting the company up to speed for the local launch, hence the various rumours over the first half of this year about when the service would launch. But now, she says, everything is going to plan with a team of 10 staff already assembled.

“We’re hoping Spotify will change the way people listen to music and use music. It’s more about access, rather than ownership, and we hope to get people in through there.”

Australia is notorious for its pirates, with users illegally downloading music, films and television shows at rates higher than in other countries due to the time it takes for content to reach our shores.

Vale says the company will be directly targeting the millions of Australians who download illegal content, saying the service itself was built with the intent to fight piracy.

“If we can get these people on to a free service, a better quality service, and have a large library of music and get them on to a paid service, we’ll have done very well.”

The service is completely free, although users can sign up for extra subscriptions to listen to music on mobile devices. Users download a desktop application, which allows them to search through music and listen to it without having to download it onto a hard drive.

Integrated through Facebook, users can share music with friends and download apps to sit alongside their music libraries.

The biggest challenge, Vale says, is making sure people know about the service. A marketing director has just been brought on board to help promote it.

“Spotify was founded in Europe, so it’s popular there. But we’ve had a lot of interest and talk around our launch, so that will help.”

With Spotify being such a new entrant into the local music market, here are five things you may not have realised about the service:

1. Sean Parker helped get Spotify off the ground

Sean Parker co-founded Napster in the 1990s, the first popular application that allowed users to share music files over the internet. He was attacked for promoting piracy – now he’s backed a start-up attempting to kill it.

He was introduced to the service in 2009, and contacted founder Daniel Ek. Soon after, Parker invested $15 million in the company and now sits on the board.

He was influential in establishing a partnership between Facebook and Spotify, which is now a key part of the service – users need a Facebook account to log in.

Ek has since said Napster was the one internet experience that changed him the most.

2. Surprise, surprise – it hasn’t made a profit

Like many other tech companies, Spotify isn’t profitable. Across the world it has three million paying customers, and it makes money from revenue, estimated to be about $US900 million. A $US100 million investment last year pegged the company’s valuation at $US4 billion.

Last year, Ek said the company took a $US60 million loss – it’ll be a while before Spotify follows Facebook and completes an initial public offering.

3. The music catalogue has some restrictions

Spotify prides itself on having a huge catalogue of music available for streaming. But it doesn’t have everything.

Currently the catalogue sits somewhere in the region of 16 million songs. But there are many that aren’t on there, including the Beatles, who have an exclusive deal with iTunes. Many other users have become frustrated about the lack of lesser-known artists, who may not have struck deals with the company to include their music.

4. It’s run by a 28-year-old whiz kid

Daniel Ek, the entrepreneur who created Spotify, is another entrepreneur barely out of graduate school – he’s 28 years old.

But he was actually successful before Spotify even took off. He studied at the Sweden Royal Institute of Technology, dropped out, and worked on creating a new software program for an advertising company. He made millions by the time he was 23.

5. Investors read like a who’s-who list

The number of investors in Spotify reads like a who’s-who of Silicon Valley and the worldwide tech scene. Apart from Sean Parker, the company counts Digital Sky Technologies, Kleiner Perkins Caufield & Byers, along with Wellington Partners, the Hong-Kong based billionaire Li Ka-shing and Northzone Ventures.

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