April 3, 2018 / 1:03 PM / 8 months ago

TIMELINE-Spotify's winding road from outsider to music industry ally

LONDON, April 3 (Reuters) - Spotify, the global streaming music leader could face a rocky reception from investors, Chief Executive Daniel Ek warned fans and employees ahead of a highly anticipated New York market listing on Tuesday.

“Nothing ever happens in a straight line — the past ten years have certainly taught me that,” Ek, the Swedish company’s co-founder wrote in a blog post on Monday.

Since launching its streaming music service in 2008, the Stockholm-founded company has overcome heavy initial resistance from big record labels and among some major music artists to transform how the industry makes money.

The stock market debut marks the coming of age of the first European company to emerge as a global Internet player capable of fending off rivals among the U.S. internet giants.

If successful, the new issue could mark the revival of music as a stock market investment theme after a decade-long drought in which music companies were absorbed into media conglomerates.

Here is a timeline of key events in the music industry:

1999

The rise of U.S. file-sharing service Napster triggers a tidal wave of music piracy by consumers, ravaging sales of CDs and creating a crisis for the music industry.

It sparks a decade of lawsuits and recrimminations against Napster and copycats such as Gnutella and Kazaa as well as against avid music fans by major record labels.

2001

Apple launches its iTunes media player and associated music downloading store. After a slow start, the computer maker and later smartphone giant will become the leader in digital album and song downloads by the end of the decade.

2003

The Myspace social network launches and explodes in popularity as a way for music artists to connect with fans across the United States and around the world. Its heyday is around 2005 but it is quickly eclipsed by the rise of Facebook.

2006

Spotify is founded as a peer-to-peer file sharing service by serial Swedish entrepreneurs Daniel Ek and Martin Lorentzon. Ek’s original idea morphs into offering a legal service that is “better than piracy and at the same time compensates the music industry”, the Spotify co-founder told The Telegraph in 2010.

2008

The Stockholm company publicly launches its Spotify service, offering listeners access to a vast library of recordings rather than making users pay for CDs or downloads of albums or tracks.

The music industry, then suffering from devastating consumer spending declines, resists Spotify’s promise of “unlimited access” to music in favour of the then current fashion of selling digital downloads based on the Apple iTunes model.

2011

Spotify signs its first U.S. licensing deals with major record labels, which had previously restricted contracts to experiments in overseas markets.

2014

Spotify pushes forward with a two-sided business model by offering a free, advertising-supported service to attract new users in order to eventually convince them to upgrade to a paid monthly, ad-free subscription service. In 2014, it attracts 10 million paying members from among its 40 million active users.

Popular artist Taylor Swift pulls her music off Spotify and other streaming services for three years, blaming them for the rapid decline in sales of CDs and other recording formats. Spotify and Swift reconcile in 2017 after Spotify strikes new licensing deals with record labels.

Global recorded music industry revenues hit rock bottom in 2014 after a 15-year free fall, having declined by 40 percent to $14.3 billion from $23.8 billion in 1999.

2015-2018

The music business returns to growth in 2015 driven by streaming service revenues, which now account for 60 percent of recorded music sales, according to market estimates, and Spotify claims to be a key factor in the revival as the market leader.

Global sales rose 3 percent in 2015, then another 6 percent to reach $15.7 billion in 2016, according to industry reports.

June 2015 - Spotify crosses 20 million subscribers.

2016 - 30 million paying subscribers.

September 2016 - 40 million paying subscribers.

March 2017 - 50 million subscribers.

January 2018 - Spotify says has 70 million paid-up subs.

In its first 10 years, Spotify claims to have paid out $8 billion in royalties to music artists, publishers and labels.

SOURCES: Company reports, Reuters, BTIG analyst Research Richard Greenfield

Reporting by Eric Auchard in London, editing by Louise Heavens

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