James M. Reed / UGTTW Spring 15

Background

• Founded in 2006 by Martin Lorentzon and Daniel Ek (current CEO)

• Based in Stockholm, Sweden

• Has raised more than $530m through Angel, VC, and institution funding

• Series F completed in November 2014

• Notable investors include

• The Coca – Cola Company

• Goldman Sachs

• Founders Fund

• Sean Parker

• Kleiner Perkins

James M. Reed – January 2015

Internet & Music

James M. Reed – January 2015

Recorded Music Industry Revenue

James M. Reed – January 2015

Digital Music Sales

James M. Reed – January 2015

Freemium Business Model

James M. Reed – January 2015

Spotify User Base

James M. Reed – January 2015

Payout

James M. Reed – January 2015

Simplified Financial Statement

Premium revenue / person / year $120.00

Non - premium revenue / person / year $15.00

Premium members 15,000,000.00

Non - premium members 60,000,000.00

Total revenue from premium members $1,800,000,000.00

Total revenue from non - premium members $900,000,000.00

Total yearly revenue $2,700,000,000.00

Payout $1,890,000,000.00

Retained $810,000,000.00

James M. Reed – January 2015

• Purchased in March of 2014 for $100m

• Based in Somerville, MA

• Dual focus

• Meeting with Shane Tobin

• Business development

• Spent four years at The Echo Nest

• Boston College ‘94

James M. Reed – January 2015

The Echo Nest

• Recommendations

• “Billions of data points”

• The need to curate

• Lean-forward

• Lean-back

• Platform building

• First – wave failure

• “Facebook Connect of Music”

• APIs / SDKs

James M. Reed – January 2015

Challengers

James M. Reed – January 2015

Future

James M. Reed – January 2015

• Improved advertising revenues

• Successful lean – back listening

• Artist relations

• 3rd party development

• Will they ever be profitable?

• Leverage creation

Questions?

James M. Reed – January 2015