NEW YORK (BLOOMBERG, REUTERS) - Spotify Technology's stock debut just made its founders two of Sweden's richest people.
Chief executive officer Daniel Ek, 35, is worth US$2.4 billion thanks to his 9 per cent economic stake in the music-streaming service. Co-founder Martin Lorentzon, 49, gains a US$3.4 billion fortune from his 12 per cent holding, according to the Bloomberg Billionaires Index.
On its first day of trading on the New York Stock Exchange on Tuesday, the music streaming service finished with a valuation of US$26.5 billion. The share price closed at US$149.01, up 12.9 per cent from a reference price of US$132 set by the NYSE.
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.
Its 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 US internet giants. It also marks the revival of music as a stock market investment theme after a decade-long drought in which music companies were absorbed into media conglomerates.
Spotify was founded in 2006 as a peer-to-peer file sharing service by serial Swedish entrepreneurs Ek and Lorentzon. Ek's original idea morphed into offering a legal service that is "better than piracy and at the same time compensates the music industry", he told The Telegraph in 2010.
In 2008, the company publicly launched 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, resisted 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.
Since then, Spotify has overcome resistance from big record labels and some major music artists to transform how people listen to music. But it still does not make a profit and faces intense competition from Apple Inc and others.