The popular music streaming service Spotify went public. With shares went as high as $169 each at the day of IPO, the company becomes the largest music company in the world, worth about $27.4 billion.
Competing with services like Apple Music and Amazon Music. Spotify has branched out to video and podcasts. Powered by Artificial Intelligence, Spotify uses algorithms to filter and show almost a third of all music listened on its platform.
When Spotify was first launched in 2008, people were not sure that such service would become successful. Headquartered in Sweden, it was growing inside a country where the music industry has shrunk to at least a third of its size due to piracy.
Steve Jobs once called the streaming business model "bankrupt." This was one of the reasons why Apple was instead promoting the sale of downloadable MP3 files from the iTunes Store. At the time, Spotify tried to squeeze in to fill the gap between piracy and legitimate sources.
Then arrived the time when MP3 sales went down, the death of Winamp, the declining downloads of music on iTunes as well as on torrents websites. Spotify quickly took the spot.
But the company has yet to make its own revenue.
While it brings in about $5 billion a year, it needs to pay 79 percent of that to record labels, producers, songwriters and artists. According to David Pakman, a venture capitalist who ran several digital music companies including eMusic and Apple's Music Group, he said that what's left is so small to be said a profit.
"It's a business that's never made money - and I think it's unlikely to ever make money, which is a shame because it's an incredible service," said Pakman.
The problem is that much of recorded music is controlled by just a small number of companies, and "they are at the mercy of the record labels, who are really in control of Spotify's long-term economic success."
As of 2017, Spotify had 71 million paying users, or up from 48 million in 2016. Overall monthly active users, which includes paid and free users, accounted to about 159 million.