Spotify is a Swedish commercial music streaming, podcast and video service that provides digital rights management–protected content from record labels and media companies. It is available in most of the Americas, Western Europe and Oceania. Music can be browsed or searched by artist, album, genre, playlist, or record label.
Spotify operates under a freemium business model, with two music streaming tiers: Spotify Free (160kbit/s) and Spotify Premium (up to 320kbit/s). Paid Premium subscriptions remove advertisements, improve audio quality and allow users to download music for offline listening.
Spotify was launched in September 2008 by Swedish startup Spotify AB. As of June 2015 Spotify had more than 75 million active users, including about 20 million paid users. The amount of paid subscribers reached 30 million in March 2016. Spotify Ltd. operates as the parent company, headquartered in London, while Spotify AB handles research and development in Stockholm.
Spotify, together with the music streaming industry in general, faces some criticism from artists claiming they are being unfairly compensated for their work as downloaded music sales decline and music streaming increases. Unlike physical or download sales, which pay a fixed price per song or album, Spotify pays artists based on their 'market share' (the number of streams for their songs as a proportion of total songs streamed on the service). They distribute approximately 70% to rights-holders, who will then pay artists based on their individual agreements. The unpredictable, and some say inadequate, nature of this compensation, which has been calculated to be as low as US$0.0011 per stream, has led to artist criticism. Most notably, Thom Yorke and Taylor Swift's discography have been pulled from Spotify, with Swift claiming "I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music." In response, Spotify claims that they are benefiting the music business by migrating "them away from piracy and less monetised platforms and allowing them to generate far greater royalties than before" by encouraging users to use their paid service.