Spotify is available in most of Europe, most of the Americas, Australia, New Zealand, and parts of Asia. It is available for most modern devices, including Windows, macOS, and Linux computers, as well as iOS and Android smartphones and tablets. Music can be browsed through or searched for by parameters such as artist, album, genre, playlist, or record label. Users can create, edit, and share playlists, share tracks on social media, and make playlists with other users. Spotify provides access to more than 30 million songs. As of June 2017, it had more than 140 million monthly active users and more than 60 million paying subscribers as of July 2017.
Spotify pays royalties based on the number of artists' streams as a proportion of total songs streamed on the service, unlike physical or download sales, which pay artists a fixed price per song or album sold. They distribute approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements. Spotify has faced criticism from artists and producers, including Taylor Swift and Radiohead singer Thom Yorke, who feel that it does not fairly compensate music creators as music sales decline and streaming increases. Spotify announced in April 2017 that artists will be able to make new album releases exclusively available on the Premium service for a maximum of two weeks if they are part of Universal Music Group and Merlin Network, as part of its efforts to renegotiate new license deals with record labels for a reported interest in going public.
Spotify operates under a freemium model (basic services are free, while additional features are offered via paid subscriptions). Spotify makes its 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 copyright holders royalties 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 considers factors such as the user's home country and the individual artist's royalty rate. Rights holders 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 equilibriumfor the recording industry. However, the incorporation of digital rights management (DRM) protection diverges from the OMM and competitors such as iTunes Store and Amazon Music that have dropped DRM.
Spotify encourages people to pay for music, with subscriptions as its main revenue source. The subscription removes advertisements and limits, and increases song bitrates to 320 kbit/s.
The Spotify for Artists website claims that a Spotify Premium customer spends 1.6x more per year compared to the average spending of a U.S. music consumer who buys music (not including those who spend $0 on music)", with the annual value of the average U.S. paying listener identified as $120. The website also claims that "a Spotify customer is 1.6x more financially valuable than the average adult non-Spotify U.S. music consumer."
Additionally, the website also includes a section entitled "Spotify's impact on piracy" as a response to the criticisms against the company regarding the exploitation of musicians. Spotify states that it has proven the theory 'given a free and legal alternative, people will pirate less', and uses Sweden, Norway, Denmark, the United States, Netherlands and the United Kingdom to provide evidence. For example, in Norway, the figure of 1.2 billion unauthorized song downloads in 2008 is compared to a figure of 210 million from 2012.
BBC Music Week editor Tim Ingham wrote: "Unlike buying a CD or download, streaming is not a one-off payment. Hundreds of millions of streams of tracks 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."