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Daniel Ek

Spotify-Music for everyone.

Daniel Ek (born 21 February 1983) is a Swedish billionaire entrepreneur and technologist. Ek is known for being the co-founder and CEO of Spotify, themusic streaming service.Ek grew up in the Rågsved district of Stockholm, Sweden.

Education

Ek graduated high school from IT-Gymnasiet in Sundbyberg in 2002, and subsequently studied engineering at the KTH Royal Institute of Technology before dropping out to focus on his IT career.

Business career-Early ventures

Ek's first foray into the business world began at age 13 when he started a business making websites for clients from home. He charged the first client $100, but then charged the next client who asked $200. Eventually, he started charging $5,000 per website. To help expand the business, Ek recruited students from his class to work on the websites from the school computer lab by bribing them with video games. His earnings eventually reached $50,000 per month and by age 18 he was managing a team of 25. Ek's parents started to notice his earnings once he started bringing home large TVs.

Ek later served in a senior role at the Nordic auction company, Tradera, which was acquired by eBay in 2006. Ek also served as CTO of the browser-based game and fashion community, Stardoll. Ek later started another company, Advertigo, an online advertising company. Advertigo was sold to TradeDoubler in 2006.[6] After selling Advertigo, Ek briefly became the CEO of μTorrent, working with μTorrent founder, Ludvig Strigeus. This ended when μTorrent was sold to BitTorrent on December 7 of 2006. Strigeus would later join Ek as a Spotify developer.

Spotify

The sale of Advertigo, as well as his previous work, made Ek wealthy enough that he decided to retire. However, after a few months, Ek realized that money was meaningless without a project he was passionate about which led to the founding of Spotify. Ek first had the idea for Spotify in 2002 when peer-to-peer music service, Napster, shut down and another illegal site, Kazaa, took over. Ek said he "realized that you can never legislate away from piracy. Laws can definitely help, but it doesn't take away the problem. The only way to solve the problem was to create a service that was better than piracy, and at the same time, compensate the music industry – that gave us Spotify."

Ek incorporated Spotify AB with Martin Lorentzon in Stockholm, Sweden in 2006. Lorentzon had previously worked at, and co-founded, TradeDoubler which had acquired Ek's previous company, Advertigo. In October 2008, the company launched its legal music streaming service, Spotify. Initially, Spotify ran on a peer-to-peer distribution model, similar to uTorrent, but switched to a server-client model in 2014.Ek serves as CEO of Spotify. In October 2015, Spotify co-founder, Martin Lorentzon, announced he would be stepping down as Chairman and Ek would be taking over, alongside his current role as CEO.As of April 2019, Spotify has 217 million active users,and as of June 2017, had raised over $2.5 billion in venture funding.

Political positions

In 2016, Ek and fellow Spotify co-founder, Martin Lorentzon, wrote an open letter to the Swedish government on Medium,the blogging platform,saying that if certain changes to Swedish law regarding housing, taxation, and education are not made, Spotify will be forced to re-locate from the country. More specifically, Ek claims that the high taxes on stock options in Sweden makes it difficult to incentivize programmers to work at startups, when startups have trouble competing with larger companies on salary. Moreover, Ek claims Swedish permitting policy is overly restrictive, limiting the supply of affordable housing.

In 2017, Daniel Ek was named as the most powerful person in the music industry by Billboard.

Personal life

In 2016, Ek married Sofia Levander, his longtime partner, at Lake Como. At Ek's wedding, Bruno Mars was invited to perform and Chris Rock officiated; he invited numerous guests, including Mark Zuckerberg. Ek and his wife have two children together.

Net worth

In 2016,it was reported that Ek owns approximately $825 million of Spotify (10.3125%), when it was valued at $8 billion.As of 2017, Spotify was valued at $16 billion, which would put Ek's share at over $1.6 billion, assuming he did not sell any of his stake.Since 2017, the value of Spotify Enterprises has risen to $40 billion.

The company has more than 180 million users, 87 million of whom are paying subscribers.

Via a dual-class share system, Ek owns nearly 9% of the shares, but has 37% of voting control.

Ek and his business partner, Martin Lorentzon, founded the company in 2006 in Sweden, and launched the product in 2008.

Spotify listed its shares on the New York Stock Exchange in early April 2018 in an unusual direct listing, eschewing the services of investment banks.

Business model

Spotify operates under a freemium business model (basic services are free, while additional features are offered via paid subscriptions). Spotify generates revenues by selling premium streaming subscriptions to users and advertising placements to third parties.

In December 2013, the company launched a new website, "Spotify for Artists", that explained its business model and revenue data. Spotify gets its content from major record labels as well as independent artists and pays royaltiesto copyright holders for streamed music. The company pays 70% of its total revenue to rights holders. Spotify for Artists states that the company does not have a fixed per-play rate; instead it considers factors such as the user's home country and the individual artist's royalty rate. Rightsholders received an average per-play payout between $.006 and $.0084.

Spotify offers an unlimited subscription package, close to the Open Music Model (OMM)—estimated economic equilibrium—for the recording industry. However, the incorporation of digital rights management (DRM) limitation[119], diverges from the OMM and competitors such as the iTunes Store and Amazon Music that have dropped DRM.

BBC Music Week editor Tim Ingham wrote: "Unlike buying a CD or download, streaming is not a one-off payment. Hundreds of millions of track streams are happening each and every day, which quickly multiplies the potential revenues on offer – and is a constant long-term source of income for artists.

Monetization

In 2007, just after its launch, the company made a loss of 31.8 million Swedish kronor ($4.4 million).[131]

In October 2010, Wired reported that Spotify was making more money for labels in Sweden than any other retailer "online or off".[132]

Years after growth and expansion, a November 2012 report suggested strong momentum for the company. In 2011, it reported a near US$60 million net loss from revenue of $244 million, while it was expected to generate a net loss of $40 million from revenue of $500 million in 2012.[133]

Another source of income was music purchases from within the app. This service was removed in January 2013.[134]

In May 2016, Spotify announced "Sponsored Playlists", a monetization opportunity in which brands can specify the audiences they have in mind, with Spotify matching the marketer with suitable music in a playlist.[135][136]

That September, Spotify announced that it had paid a total of over $5 billion to the music industry.[137] In June 2017, as part of renegotiated licenses with Universal Music Group and Merlin Network, Spotify's financial filings revealed its agreement to pay more than $2 billion in minimum payments over the next two years.[138][139]

As of 2017, Spotify had not yet been a profitable company.[140]

Spotify's revenue for Q1 2020 amounted to €1.85 billion ($2 billion). A large part of this sum, €1.7 billion ($1.84 billion), came from Spotify Premium subscribers. Gross profit in the same quarter amounted to €472 million ($511 million), with an operating loss of €17 million ($18 million).[141]

Funding

In February 2010, Spotify received a small investment from Founders Fund, where board member, Sean Parker, was recruited to assist Spotify in "winning overthe labels in the world's largest music market".In June 2011, Spotify secured $100 million of funding and planned to use this to support its US launch. The new round of funding valued the company at $1 billion.A Goldman Sachs-led round of funding closed in November 2012, raising around $100 million at a $3 billion valuation.

In April 2015, Spotify began another round of fundraising, with a report from The Wall Street Journal stating it was seeking $400 million, which would have valued the company at $8.4 billion. The financing was closed in June 2015, with Spotify raising $526 million, at a value of $8.53 billion.

In January 2016, Spotify raised another $500 million through convertible bonds.

In March 2016, Spotify raised $1 billion in financing by debt plus a discount of 20% on shares, once the initial public offering (IPO) of shares takes place. The company was, according to TechCrunch, planning to launch on the stock market in 2017, but in 2017 it was seen as planning on doing the IPO in 2018 in order to "build up a better balance sheet and work on shifting its business model to improve its margins".

With Spotify, it’s easy to find the right music or podcast for every moment – on your phone, your computer, your tablet, and more.

There are millions of tracks and episodes on Spotify. So whether you’re behind the wheel, working out, partying or relaxing, the right music or podcast is always at your fingertips. Choose what you want to listen to, or let Spotify surprise you.

You can also browse through the collections of friends, artists, and celebrities, or create a radio station and just sit back.

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