Spotify's Biggest Hits In Its First Year As a Public Company

AP Photo/Richard Drew, File

A Spotify banner adorns the facade of the New York Stock Exchange on April 3, 2018.

It’s been exactly one year since Spotify went public on April 3, 2018, coming out of the gate with a bang at $165.90 a share, almost four times the Swedish streaming giant’s valuation during the funding round that preceded its public offering. Though Spotify’s market value fluctuated on its second day of trading, and label executives agonized over whether to sell shares, as of today (April 3, 2019), Spotify’s stock price is $144.80, according to MarketWatch -- just above its closing price on April 3, 2018 ($140.91).

In the 12 months since, Spotify has seen plenty of growth, even turning its first operating profit in February 2019. CEO Daniel Ek’s streaming service has taken substantial steps to fulfill the goals stated in its SEC filing: to expand further into “non-music content” including spoken word, original short-form videos, and, of course, podcasts. But Spotify has also experienced severe growing pains, from retracting its “hateful conduct” policy in mid-2018 and its current tussle with the US Copyright Royalty Board over songwriters’ streaming royalties to its beef with Apple in the EU and contentious launch in India amid legal challenges from Warner Music.

Below, we take a look back at Spotify’s most substantial leaps, bounds and stumbles over its first year as a public company.

APRIL 3, 2018
Spotify opens on the New York Stock Exchange
Almost immediately after Spotify went public, the three major labels began calculating when to sell their equity in the company, part of licensing deals they made with the streaming service that allowed it to launch stateside in 2011. "What message are we sending if we start dumping shares tomorrow and tell everybody about it?" one executive posited to Billboard at the time. "If we do that, other investors will head for the hills and that won't be good for the overall ecosystem."

Sony Music was the first to take the leap, selling 17.2 percent of its Spotify shares for $260.5 million on April 4, 2018. (That percentage would eventually go up to 50 percent.) Two months later, the company distributed its $750 million “Spotify windfall” to artists and labels under the SME umbrella based on earnings over the preceding decade, with artists receiving shares of the profit commensurate with their sales.

A month after Spotify’s NYSE opening, Warner Music Group took the plunge, selling three-quarters of its shares for $400 million. (That number went up as well in August 2018, when WMG sol the remainder for an additional $100 million.) Unlike Sony, however, WMG paid artists against unrecouped balances and owed expenses.  

APRIL 12, 2018
Spotify acquires music licensing platform Loudr
Originally established in 2009 as A Capella Records -- a licensing service geared towards a cappella groups by providing mechanical rights and direct-to-fan storefronts for cover songs -- Loudr rebranded and took on more genres in 2013, and in 2015 developed a service for artists and labels to acquire mechanical rights for cover songs. Three years later, it was acquired by Spotify in the newly-public company’s quest to more efficiently track and distribute royalties to music publishers. 

MAY 10, 2018
Spotify removes R. Kelly music from its playlists as part of a new hate content and hateful conduct policy
On April 30 of last year, the campaign to #MuteRKelly gained new traction with support from #TimesUp backers Ava DuVernay, Shonda Rhimes, Viola Davis, John Legend and more entertainment A-listers demanding that RCA Records, Apple Music and Spotify hold R. Kelly accountable for his alleged sexual misconduct. Just over a week later, Spotify announced that it would be removing the R&B singer’s music from its coveted placement on its owned playlists like RapCaviar, Discover Weekly or New Music Friday. "His music will still be available on the service, but Spotify will not actively promote it,” the company told Billboard in a statement. “We don’t censor content because of an artist’s or creator’s behavior, but we want our editorial decisions -- what we choose to program -- to reflect our values.” 

Spotify also removed the late Florida MC XXXTentacion’s “SAD!” from RapCaviar, where it held the No. 8 spot for the playlist’s 9.5 million followers. Later that day, a rep from XXXTentacion’s team presented not a comment but "just a question," to Billboard: “Will Spotify remove all [these] artists from playlists?” providing a list of artists including Gene Simmons from KISS, David Bowie, James Brown, Led Zeppelin, Michael Jackson, Miles Davis and Fabolous, among others. Allegations of sexual or domestic assault are attached to each name.

JUNE 1, 2018
Spotify reverses artist conduct policy weeks after removing R. Kelly and other artists from its playlists
Though Spotify’s decision to selectively remove R. Kelly and XXXTentacion from playlists was initially lauded, the move was also regarded with skepticism by members of the music industry, who suggested the policy’s vague language could lead to capricious decisions. "Banning a particular artist because of allegations is dangerous," Laurie Soriano, a partner at Los Angeles firm King, Holmes, Paterno & Soriano, LLP, told Billboard at the time. "I have confidence that our legal system is the best way to determine whether or not someone is guilty of or liable for bad behavior."

Just three weeks later, Spotify backpedaled, returning XXXTentacion’s music to its playlists (though R. Kelly seemed to remain off of them). “Spotify recently shared a new policy around hate content and conduct," its announcement began. "And while we believe our intentions were good, the language was too vague, we created confusion and concern, and didn't spend enough time getting input from our own team and key partners before sharing new guidelines." 

JUNE 6, 2018
Spotify offers managers and artists advances to license music directly
It came as a surprise to many in the music industry that Spotify had been discreetly offering advances to some managers and independent artists in exchange for licensing their music directly to the streaming service. Moving into the artist services sphere, the streaming platform cut deals that allowed those entities to earn 50 percent of revenue per Spotify play, slightly less than the 54 percent record labels receive before apportioning to artists. While these types of deals benefit artists, who can license the same music to other platforms under different agreements, they also benefit Spotify: cutting out the middleman had the potential of streamlining costs and preventing money sinks like the $470 million loss on its $4.7 billion in revenue as of March 2018. But it also worried some who were concerned that Spotify was acting more like a label, while explicitly saying they were not.

SEPT. 20, 2018
Spotify announces Spotify for Artists' direct-upload feature
A select group of artists who control their copyrights and release music without label or distribution agreements -- including Noname, Michael Brun, VIAA and Hot Shade -- were invited to participate in Spotify For Artists’ direct-upload feature, which was still in the beta-testing phase. This allowed artists to collect their royalties directly from the streaming service (via payment-processing provider Stripe) rather than going through a distributor like CD Baby, TuneCore or DistroKid, the latter of which Spotify would take a minority stake in just a few months later.

JAN. 11, 2019
Spotify reaches 200 million active users
After a hot streak adding 9 million monthly active users in the last couple of months of 2018, Sweden's greenest export announced at 2019's CES that it had hit 200 million MAUs. It wasn't made clear how many of those 9 million users are actually paying for the service, but at the time it was known that as of November, the streaming platform had 87 million paid subscribers and 109 million users of its ad-supported tier. Global head of communications Dustee Jenkins, who broke the news at CES, also noted that Spotify "has done a great job of prioritizing growth and making the service better, because there's a lot of competition and we're only as good as the user thinks we are, so we have to continue to enhance our service."

JAN. 21, 2019
Spotify now allows you to mute artists
Another month, another year, another Spotify initiative. This one attempted to right the accidental wrong that was the Swedish streaming export’s hateful conduct policy by putting the agency to boycott artists in the hands of listeners. In keeping with cancel culture, Spotify introduced a “mute” feature, with a “Don’t play this artist” button located in the menu area for every artist, which is easily undoable if you change your mind. Rather than being blindsided by this move to silence artists who behaved reprehensibly, listeners had actually been requesting the ability to bypass songs they didn’t want to hear for those reasons on Spotify for some time.

FEB. 6, 2019
Spotify acquires podcasting startups Gimlet Media and Anchor
In early February, Ek's decision to acquire Gimlet Media (which produces acclaimed podcasts including Reply All, Homecoming and the Nod) and Anchor FM for $340 million sent shockwaves through both the streaming world and podcasting business. But ultimately, the decision made a lot of sense financially for both Gimlet and Spotify.

In an interview with Recode, Gimlet co-founder Matt Lieber said, “We looked at the path of joining a large platform with global distribution and, you know, multiple billion dollars of revenue and data and discovery and an amazing technology platform that was invested in audio, and for us, that felt like a better path where we could realize our ambitions and our goals. And also, make money back for our investors and provide a healthy return.”

Spotify chief content officer Dawn Ostroff also suggested that the company would be looking into additional podcasting opportunities, which has been borne out by recent news that it was also purchasing Parcast, the network behind Cults and Serial Killers. "We’re looking at a broad range of opportunities,” she said in an interview. “The business is so nascent. A lot of what we’re doing is obviously strategically targeting this area that we want to be a leader in... We’re open to seeing ways we can strategically fit with other companies.”

Turns out the first week in February was a good one for Spotify, which also announced that it had reached almost 100 million subscribers, and turned its first profitable quarter in Q4 of 2018.

FEB. 26, 2019
Spotify launches in India -- without WMG deal
Second only to China, India's massive population of 1.3 billion people is a potential treasure trove of audio streamers, with 400 million individuals connected to the internet. It's an alluring prospect for Spotify, which launched in India earlier this year after months of delays, albeit behind competitors Apple Music and Amazon Prime Music, and local streaming platforms Gaana and JioSaavn. In less than a week, the Sweden-based company accrued 1 million users across its free and premium tiers at 119 Indian Rupees -- or $1.68 -- per month.

But it wasn't all sunshine and roses for Spotify. On Monday, Feb. 25, WMG filed an injunction to stop the service from launching in India with songs from the Warner/Chappell Music Publishing catalog. Recordings that are owned by WMG, like Ed Sheeran's "Perfect" and Cardi B's "I Like It," aren't available, but Indian users can access songs like Beyonce's "Formation" and Maroon 5's "Girls Like You," which WMG publishes.

A Mumbai court deferred the injunction for several weeks, giving Spotify the opportunity to establish itself in India unobstructed, but that didn't stop some heated back-and-forth. After the filing, Spotify accused WMG of “abusive behavior [that] would harm many non-Warner artists, labels and publishers, and prevent Spotify from competing in the market,” while WMG called Spotify’s comments “appalling,” adding, “We’re shocked that they would exploit the valuable rights of songwriters without a license.”

MARCH 7, 2019
Spotify, Google, Amazon and Pandora lodge legal appeals against the US Copyright Royalty Board
After the Copyright Royalty Board announced that it would increase digital services' payouts to songwriters and publishers by 44 percent between 2018-2022, a determination that was supported by the NMPA at the top of 2018, Google, Pandora and Spotify gave a joint statement that the CRB's decision raised "serious procedural and substantive concerns" and that they wanted to appeal the decision. NMPA president and CEO David Israelite escalated the conflict when he accused Spotify and Amazon of trying to "sue songwriters in an attempt to cut their payments by nearly one-third." 

The organization Songwriters of North America (SONA) has also condemned the DSPs' actions, which antagonized the creator community just months after the passage of the Music Modernization Act. "Instead of acting in good faith, where we were all on board, they were secretly filing the appeal on the side after they got what they wanted in the MMA,” Dina LaPolt said in an interview with Music Business Worldwide. “It does not smell as though we are one big community, which is the thing they’ve been preaching for the past three/four years since we’ve been trying to modify the copyright act legislatively."

Apple Music, the one DSP that did not appeal the CRB's decision, seems to be winning the PR war -- especially after the company has shown itself amenable and adaptable to the needs of musicmakers since 2015, when it changed its policy to pay artists during the three-month free trial period for listeners, following an open letter from Taylor Swift.

MARCH 13, 2019
Spotify files complaint against Apple with European Commission over App Store charges
In a blog post last month, Ek explained to users (and other interested parties) that the company filed a complaint against Apple, which requires Spotify and other digital services to pay a 30 percent charge when using Apple's payment system, which is of course applicable when users want to purchase a subscription to the streaming service via the App Store. While acknowledging that Apple Music directly competes with Spotify, he alleged, "They continue to give themselves an unfair advantage at every turn." He took his cause to the European Commission because it regulates fair and nondiscriminatory competition in business practices. 

"We aren’t seeking special treatment," Ek wrote, recalling language used in other antitrust struggles. "We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo, who aren’t subject to the Apple tax and therefore don’t have the same restrictions."

Spotify isn't the only streaming company up against Apple's billing charges. Netflix has also been encouraging users to sign up for the app in ways other than through the App Store since August 2018. And in 2016, Spotify said that Apple was blocking a new version of its iPhone app that would allow users to bypass the extra fees, arguing that Apple was "causing grave harm to Spotify and its customers." The move also led to a public war of the words between the two companies, with Apple hitting back at Spotify's "misleading rhetoric" and Spotify accusing Apple of being a "monopolist."