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Spotify Technology S.A.

Spotify Technology S.A.SPOT财报

NYSE · 通信服务 · 广播电台

Spotify is a Swedish audio streaming and media service provider founded in April 2006 by Daniel Ek and Martin Lorentzon. As of December 2025, it was one of the largest providers of music streaming services, with over 751 million monthly active users comprising 290 million paying subscribers. Spotify is listed on the New York Stock Exchange in the form of American depositary receipts.

What changed in Spotify Technology S.A.'s 20-F — 2022 vs 2023

Top changes in Spotify Technology S.A.'s 2023 20-F

656 paragraphs added · 680 removed · 540 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

212 edited+48 added−50 removed274 unchanged
Item 3. Key Information A. [Reserved] B. Capitalization and Indebtedness. Not applicable. 4 Table of Contents C. Reasons for the Offer and Use of Proceeds. Not applicable. D. Risk Factors An investment in our ordinary shares involves a high degree of risk.
Item 3. Key Information A. [Reserved] B. Capitalization and Indebtedness. Not applicable. C. Reasons for the Offer and Use of Proceeds. Not applicable. 4 Table of Contents D. Risk Factors An investment in our ordinary shares involves a high degree of risk.
For example, if we fail to obtain licenses to stream sound recordings from major record labels; if the rates we pay for mechanical licenses that are set by the Copyright Royalty Board increase our royalty costs; if we are unable to comply with the requirements to maintain the compulsory mechanical license in the U.S.; if we are unable to obtain blanket licenses for public performance rights on reasonable terms; if our licenses with collecting societies and our direct licenses with publishers outside of the U.S. do not provide full coverage for all of the musical compositions we make available to our users; for podcasts, audiobooks, and other non-music content, if rights holders or content providers are unwilling to provide content on reasonable terms or do not comply with the terms and conditions of our license agreements as well as our Terms and Conditions of Use, our business, operating results, and financial condition could be materially harmed.
For example, if we fail to obtain licenses to stream sound recordings from major record labels; if the rates we pay for mechanical licenses that are set by the Copyright Royalty Board increase our royalty costs; if we are unable to comply with the requirements to maintain the blanket compulsory mechanical license in the U.S.; if we are unable to obtain blanket licenses for public performance rights on reasonable terms; if our licenses with collecting societies and our direct licenses with music publishers outside of the U.S. do not provide full coverage for all of the musical compositions we make available to our users; for podcasts, audiobooks, and other non-music content, if rights holders or content providers are unwilling to provide content on reasonable terms or do not comply with the terms and conditions of our license agreements as well as our Terms and Conditions of Use, our business, operating results, and financial condition could be materially harmed.
If the information provided to us does not comprehensively or accurately identify the ownership of musical compositions, or if we are unable to determine which musical compositions 16 Table of Contents correspond to specific sound recordings, it may be difficult or impossible to identify the appropriate rights holders from whom to obtain licenses or to whom to pay royalties.
If the information provided to us does not comprehensively or accurately identify the ownership of musical compositions, or if we are unable to determine which musical compositions correspond to specific sound recordings, it may be difficult or impossible to identify the appropriate rights holders from whom 16 Table of Contents to obtain licenses or to whom to pay royalties.
Consolidated Statements and Other Financial Information—Legal or Arbitration Proceedings.” Our ability to provide our Service is dependent upon our ability to license intellectual property rights to audio content, including sound recordings, any musical compositions embodied therein, podcasts, and audiobooks, as well as visual and related content, such as music videos, clips, album cover art, artist images, and any other media assets that content providers can add or provide with their content.
Consolidated Statements and Other Financial Information—Legal or Arbitration Proceedings.” Our Service is dependent upon our ability to license intellectual property rights to audio content, including sound recordings, any musical compositions embodied therein, podcasts, and audiobooks, as well as visual and related content, such as music videos, clips, album cover art, artist images, and any other media assets that content providers can add or provide with their content.
Although we expend significant resources to seek to comply with the statutory, regulatory, and judicial frameworks by, for example, entering into license agreements, we cannot assure you that we are not infringing or violating any third-party intellectual property rights, or that we will not do so in the future.
Although we expend significant resources to seek to comply with statutory, regulatory, and judicial frameworks by, for example, entering into license agreements, we cannot assure you that we are not infringing or violating any third-party intellectual property rights, or that we will not do so in the future.
We have initiated and are in negotiations of an Advance Pricing Agreement between Sweden and the United States governments for tax years 2014 through 2020 covering various transfer pricing matters. These transfer pricing matters may be significant to our consolidated financial statements. We believe that our tax positions, including our assumptions, judgments, and estimates within, are reasonable.
We have initiated and are in negotiations of an Advance Pricing Agreement between Sweden and the United States governments for tax years including 2014 through 2020 covering various transfer pricing matters. These transfer pricing matters may be significant to our consolidated financial statements. We believe that our tax positions, including our assumptions, judgments, and estimates within, are reasonable.
However, tax authorities in certain jurisdictions may disagree 28 Table of Contents with our position, including any judgements or estimates used.
However, tax authorities in certain jurisdictions 28 Table of Contents may disagree with our position, including any judgements or estimates used.
These provisions also may delay, prevent, or deter a merger, acquisition, tender offer, proxy contest, or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their ordinary shares.
These provisions may also delay, prevent, or deter a merger, acquisition, tender offer, proxy contest, or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their ordinary shares.
See “Risks Related to Our Metrics—Failure to effectively manage and remediate attempts to gain or provide unauthorized access to certain features of our Service could have an adverse impact on our business, operating results, and financial condition.” Additionally, errors, bugs, or other vulnerabilities may—either directly or if exploited by third parties—affect our ability to make accurate royalty payments.
See “Risks Related to Our Metrics—Failure to effectively manage and remediate attempts to gain or provide unauthorized access to certain features of our Service could have an adverse impact on our business, operating results, and financial condition.” Additionally, errors, misconfigurations, bugs, or other vulnerabilities may, either directly or if exploited by third parties, affect our ability to make accurate royalty payments.
For example, we have detected instances of botnet operators creating non-bona fide user accounts or hackers using passwords compromised as a result of a data breach on a non-Spotify service to access legitimate user accounts and streaming specific content repeatedly, thereby generating royalties each time the content is streamed or increasing its visibility on our or third-party charts.
For example, we have detected botnet operators creating non-bona fide user accounts or hackers using passwords compromised as a result of a data breach on a non-Spotify service to access legitimate user accounts and streaming specific content repeatedly, thereby generating royalties each time the content is streamed or increasing its visibility on our or third-party charts.
We may not succeed in capturing a greater share of our advertisers’ core marketing budgets, particularly if we are unable to achieve the scale, reach, products, and market penetration necessary to demonstrate the effectiveness of our advertising solutions, or if our advertising model proves ineffective or not competitive when compared to other alternatives and platforms through which advertisers choose to invest their budgets.
We may not succeed in capturing a greater share of our advertisers’ core marketing budgets, particularly if we are unable to achieve the scale, reach, frequency, products, and market penetration necessary to demonstrate the effectiveness of our advertising solutions, or if our advertising model proves ineffective or not competitive when compared to other alternatives and platforms through which advertisers choose to invest their budgets.
We attempt to protect our intellectual property under patent, trade secret, trademark, and copyright law through a combination of intellectual property registration, employee or third-party assignment and nondisclosure agreements, other contractual restrictions, technological measures, and other methods. These measures may only offer limited protection and, moreover, are constantly evolving to meet the expanding needs of our business.
We attempt to protect our intellectual property under patent, trade secret, trademark, and copyright law through a combination of intellectual property registration, employee or third-party assignment and nondisclosure agreements, other contractual restrictions, technological measures, and other methods. These measures may only offer limited protection and are constantly evolving to meet the expanding needs of our business.
Additionally, any errors, bugs, or other vulnerabilities discovered in our code or backend after release could damage our reputation, drive away users, allow third parties to manipulate or exploit our software, lower revenue, impact the stability or accuracy of our user metrics or other estimates, and expose us to claims for damages, any of which could seriously harm our business.
Additionally, any errors, misconfigurations, bugs, or other vulnerabilities discovered in our code or backend after release could damage our reputation, drive away users, allow third parties to manipulate or exploit our software, lower revenue, impact the stability or accuracy of our user metrics or other estimates, and expose us to claims for damages, any of which could seriously harm our business.
Additionally, rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies have created and may continue to create or attempt to create new rights or regulations that could require us to enter into license agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.
Additionally, rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies have created and may continue to create or attempt to create new rights or regulations that could require us to enter into license or other agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.
Techniques used to disrupt operations and gain unauthorized access to data and software are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to our technology infrastructure and systems or to confidential information, including but not limited to proprietary business information and data about our users, business partners, and employees, such as payment card or other sensitive personal data.
Techniques used to disrupt operations and gain unauthorized access to data and software are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to our technology infrastructure and systems or to confidential information, including but not limited to proprietary business information and data about our users, business partners, and employees, such as payment card or other personal data.
However, the impact of the shift in measurement from downloads to real impressions on our advertising revenue is uncertain, as is its acceptance by our advertising partners or our ability to scale this technology successfully. Further, the digital advertising industry increasingly uses data-driven technologies and advertising products, such as automated buying.
However, the impact of the shift in measurement from downloads to real impressions on our advertising revenue remains uncertain, as is its acceptance by our advertising partners or our ability to scale this technology successfully. Further, the digital advertising industry increasingly uses data-driven technologies and advertising products, such as automated buying.
The market price of our ordinary shares may fluctuate or decline significantly in response to the factors enumerated in this report, as well as other factors, many of which are beyond our control, including: • quarterly variations in our results of operations or those of our competitors; • the accuracy of our financial guidance or projections; • our announcements or our competitors’ announcements regarding new services, enhancements, significant contracts, acquisitions, or strategic investments; • the overall performance of the equity markets, including fluctuations due to general economic uncertainty or negative market sentiment; • any major change in our board of directors or management; • publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts; and • sales or expected sales, or repurchases or expected repurchases, of our ordinary shares by us, and our officers, directors, and significant shareholders.
The market price of our ordinary shares may fluctuate or decline significantly in response to the factors enumerated in this report, as well as other factors, many of which are beyond our control, including: • quarterly variations in our results of operations or those of our competitors; • the accuracy of our financial guidance or projections; • our announcements or our competitors’ announcements regarding new services, enhancements, significant contracts, acquisitions, or strategic investments; • the overall performance of the equity markets, including fluctuations due to general macroeconomic uncertainty or negative market sentiment; • any major change in our board of directors or management; • publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts; and • sales or expected sales, or repurchases or expected repurchases, of our ordinary shares by us, and our officers, directors, and significant shareholders.
Difficulties in obtaining accurate and comprehensive information necessary to identify the compositions embodied in sound recordings on our Service and the ownership thereof may impact our ability to perform our obligations under our licenses, affect the size of our catalog, impact our ability to control content acquisition costs, and lead to potential copyright infringement claims.
Difficulties in obtaining accurate and comprehensive information necessary to identify the musical compositions embodied in sound recordings on our Service and the ownership thereof may impact our ability to perform our obligations under our licenses, affect the size of our catalog, impact our ability to control content acquisition costs, and lead to potential copyright infringement claims.
For example, some of our key executives may sell a significant amount of ordinary shares, and such sales will not be required to be disclosed as promptly as sales made by key executives of companies organized within the United States. Accordingly, once such sales are eventually disclosed, our ordinary share price may decline significantly.
For example, some of our key executives may sell a significant amount of ordinary shares, and such sales may not be required to be disclosed as promptly as sales made by key executives of companies organized within the United States. Accordingly, once such sales are eventually disclosed, our ordinary share price may decline significantly.
We cannot assure you that we would have adequate resources to protect and police our intellectual property rights, and we cannot assure you that the steps we take to do so will always be effective. We have filed, and may in the future file, patent applications on certain of our innovations.
We cannot assure you that we would have adequate resources to protect and police our intellectual property rights, and we cannot assure you that the steps we take to do so will always be effective. We have filed, and may in the future file, patent applications on certain embodiments of our innovations.
Rights holders also may attempt to take advantage of their market power (including by leveraging their publishing affiliate) to seek onerous financial or other terms from us or otherwise impose restrictions that hinder our ability to further innovate our service offerings.
These rights holders also may attempt to take advantage of their market power (including by leveraging their publishing affiliate) to seek onerous financial or other terms from us or otherwise impose restrictions that hinder our ability to further innovate our service offerings.
Any failure to comply with these rules or requirements may subject us to higher transaction fees, fines, penalties, damages, and civil liability, and may result in the loss of our ability to accept credit and debit card payments.
Any failure to comply with these laws, rules, or requirements may subject us to higher transaction fees, fines, penalties, damages, and civil liability, and may result in the loss of our ability to accept credit and debit card payments.
The treatment of the issuance of the beneficiary certificates in February 2018 is unclear under the Swedish Income Tax Act and there is a risk that such issuance may have constituted an ownership or control change, as defined by the Swedish Income Tax Act.
The treatment of the issuance of the beneficiary certificates in February 2018 is unclear under the Swedish Income Tax Act and there is a possible risk that such issuance may have constituted an ownership or control change, as defined by the Swedish Income Tax Act.
Moreover, we rely on multiple software programmers to design our proprietary technologies, and we regularly contribute software source code under “open source” licenses and have made technology we developed available under open source licenses.
Moreover, we rely on multiple software programmers to design and create our proprietary technologies, and we regularly contribute software source code under “open source” licenses and have made technology we developed available under open source licenses.
We also compete for advertisers with a range of internet companies. Large internet companies with strong brand recognition, such as Google, Meta, and Amazon, have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising technology solutions, and traffic that provide a significant competitive advantage and have a significant impact on pricing for reaching these user bases.
We also compete for advertisers with a range of internet companies. Large internet companies with strong brand recognition, such as Alphabet, Meta, and Amazon, have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising technology solutions, and traffic that provide a significant competitive advantage and have a significant impact on pricing for reaching these user bases.
Any of these events could have a material adverse effect on our business, operating results, and financial condition and could cause our stock price to drop significantly. Our products are highly technical and may contain undetected errors, bugs, or vulnerabilities, which could manifest in ways that could seriously harm our reputation and our business.
Any of these events could have a material adverse effect on our business, operating results, and financial condition and could cause our stock price to drop significantly. Our products and services are highly technical and may contain undetected errors, misconfigurations, bugs, or vulnerabilities, which could manifest in ways that could seriously harm our reputation and our business.
We cannot be certain that additional funds and financing will be available on reasonable terms when needed or at all, and our ability to secure funding may be affected by macroeconomic conditions including rising inflation and interest rates, geopolitical conflict, tighter credit, currency fluctuations, and changes to fiscal monetary policy.
We cannot be certain that additional funds and financing will be available on reasonable terms when needed or at all, and our ability to secure funding may be affected by macroeconomic conditions including inflation and changes in interest rates, geopolitical conflict, tighter credit, currency fluctuations, and changes to fiscal or monetary policy.
Failure to successfully monetize and generate revenues from such content, including failure to obtain or retain rights to podcasts, audiobooks, or other non-music content on acceptable terms, or at all, or to effectively manage the numerous risks and challenges associated with such expansion, could adversely affect our business, operating results, and financial condition.
Failure to successfully monetize and generate revenues from non-music content, or to effectively manage the numerous risks and challenges associated with delivering such content, including failure to obtain or retain rights to podcasts, audiobooks, or other non-music content on acceptable terms, or at all, could adversely affect our business, operating results, and financial condition.
Moreover, our Work from Anywhere program may impact our ability to protect against cyber incidents as our workforce connects from a mix of physical office space and home options, which presents additional opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities in non-corporate networks.
Moreover, our Work from Anywhere program may impact our ability to protect against cyber incidents as our workforce connects from a mix of physical office space and home options, which presents additional opportunities for threat actors to engage in social engineering and to exploit vulnerabilities in non-corporate networks.
In addition, some of these competitors, including Apple, Google, and Amazon, have developed, and are continuing to develop, devices for which their music and/or podcast streaming service is preloaded and/or able to be used out-of-the-box without the need to log in, creating a visibility and access advantage.
In addition, some of these competitors, including Apple, Alphabet, and Amazon, have developed, and are continuing to develop, devices for which their music and/or podcast streaming service is preloaded and/or able to be used out-of-the-box without the need to log in, creating a visibility and access advantage.
We also accept payments through various payment solution providers, such as telco integrated billings and prepaid codes vendors. These payment solution providers provide services to us in exchange for a fee, which may be subject to change. Furthermore, we rely on their accurate and timely reports on sales and redemptions.
We also accept payments through various payment solution providers, such as telco integrated billings and prepaid code vendors. These payment solution providers provide services to us in exchange for a fee, which may be subject to change. Furthermore, we rely on their accurate and timely reports on sales and redemptions.
Changes to tax laws in any of the jurisdictions in which we operate, including new proposals on taxing digital companies and the ongoing work by the Organization for Economic Cooperation and Development (the "OECD"), could have a material adverse effect on our business, operating results, and financial condition.
Changes to tax laws in any of the jurisdictions in which we operate, including new proposals on taxing digital companies and the ongoing work by the Organization for Economic Cooperation and Development (the “OECD”), could have a material adverse effect on our business, operating results, and financial condition.
For example, Apple, Google, and Amazon own application store platforms and charge in-application purchase fees, which may not be levied on their own applications, creating a competitive advantage for themselves against us. If other competitors that own application store platforms and competitive services adopt similar practices, we may be similarly impacted.
For example, Apple, Alphabet, and Amazon own application store platforms and charge in-application purchase fees, which may not be levied on their own applications, creating a competitive advantage for themselves against us. If other competitors that own application store platforms and competitive services adopt similar practices, we may be similarly impacted.
Based on the trading price of our ordinary shares and the composition of our income, assets and operations, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ending on December 31, 2022, nor that we will be a PFIC in the foreseeable future.
Based on the trading price of our ordinary shares and the composition of our income, assets and operations, we do not believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ending on December 31, 2023, nor that we will be a PFIC in the foreseeable future.
The provisions include, among others, the authorization granted by the general meeting of shareholders to our board of directors to issue ordinary shares within the limits of the authorized share capital at such times and on such terms as our board of directors may decide for a maximum period of 31 Table of Contents five years after the date of publication in the Luxembourg official gazette ( Recueil électronique des Sociétés et Associations , as applicable) of the minutes of the relevant general meeting approving such authorization.
The provisions include, among others, the authorization granted by the general meeting of shareholders to our board of directors to issue ordinary shares within the limits of the authorized share capital at such times and on such terms as our board of directors may decide for a maximum period of five years after the date of publication in the Luxembourg official gazette ( Recueil électronique des Sociétés et Associations , as applicable) of the minutes of the relevant general meeting approving such authorization.
Some of our competitors, including Apple, Google, and Amazon, have developed, and are continuing to develop, devices for which their audio streaming services are preloaded or may also be set as the default providers, which puts us at a significant competitive disadvantage.
Some of our competitors, including Apple, Alphabet, and Amazon, have developed, and are continuing to develop, devices for which their audio streaming services are preloaded or may also be set as the default providers, which puts us at a significant competitive disadvantage.
In addition, changes to operating systems' practices and policies, such as Apple's App Tracking Transparency (“ATT”) framework, have reduced and may continue to reduce the quantity and quality of the data and metrics that can be collected or used by us and our partners.
In addition, changes to operating systems' practices and policies, such as Apple's App Tracking Transparency (“ATT”) framework and privacy manifests, have reduced and may continue to reduce the quantity and quality of the data and metrics that can be collected or used by us and our partners.
Risks Related to Owning Our Ordinary Shares • The trading price of our ordinary shares has been and will likely continue to be volatile. • Provisions in our articles of association, the issuance of beneficiary certificates, and the existence of certain voting agreements may delay or prevent our acquisition by a third party. • We do not expect to pay cash dividends in the foreseeable future. • The issuance of beneficiary certificates to certain shareholders, including our founders, will limit your voting power and your ability to influence our corporate governance.
Risks Related to Owning Our Ordinary Shares • The trading price of our ordinary shares has been and will likely continue to be volatile. • Provisions in our articles of association, the issuance of beneficiary certificates, and the existence of certain voting agreements may delay or prevent our acquisition by a third party. • We do not expect to pay cash dividends in the foreseeable future. • Beneficiary certificates will limit your voting power and ability to influence our corporate governance.
For example, prominent, well-funded competitors like Apple, Google, and Amazon have a competitive advantage because they can leverage the substantially broader product offerings in their ecosystem to gain subscribers through bundled offers and to monetize users.
For example, prominent, well-funded competitors like Apple, Alphabet, and Amazon have a competitive advantage because they can leverage the substantially broader product offerings in their ecosystem to gain subscribers through bundled offers and to monetize users.
Google has announced that it will implement similar changes with respect to its Android operating system, and major web browsers, like Firefox, Safari, and Chrome, have made or may make similar changes in the future as well.
Alphabet has announced that it will implement similar changes with respect to its Android operating system, and major web browsers, like Firefox, Safari, and Chrome, have made or may make similar changes in the future as well.
Additionally, many of our products are available on multiple operating systems and/or multiple devices offered by different manufacturers, and changes or updates to such operating systems or devices may cause errors or functionality problems in our products, including rendering our products inoperable by some users.
Additionally, many of our products and services are available on multiple operating systems and/or multiple devices offered by different manufacturers, and changes or updates to such operating systems or devices may cause errors, vulnerabilities, or functionality problems in our products, including rendering our products or services inoperable by some users.
For example, we have detected instances of third parties seeking to provide mobile device users a means to suppress advertisements without payment and gain access to features only available to the Ad-Supported Service on tablets and desktop computers.
For example, we have detected third parties seeking to provide mobile device users a means to suppress advertisements without payment and gain access to features only available to the Ad-Supported Service on tablets and desktop computers.
As of December 31, 2022, we had $1,500 million principal amount of indebtedness as a result of the 0% Exchangeable Senior Notes due 2026 (“Exchangeable Notes”) offering. We may also incur additional indebtedness to meet future financing needs.
As of December 31, 2023, we had $1,500 million principal amount of indebtedness as a result of the 0% Exchangeable Senior Notes due 2026 (“Exchangeable Notes”) offering. We may also incur additional indebtedness to meet future financing needs.
See also “—Difficulties in obtaining accurate and comprehensive information necessary to identify the compositions embodied in sound recordings on our Service and the ownership thereof may impact our ability to perform our obligations under our licenses, affect the size of our catalog, impact our ability to control content acquisition costs, and lead to potential copyright infringement claims.” Even when we are able to enter into license agreements with rights holders, we cannot guarantee that such agreements will continue to be renewed indefinitely.
See also “—Difficulties in obtaining accurate and comprehensive information necessary to identify the musical compositions embodied in sound recordings on our Service and the ownership thereof may impact our ability to perform our obligations under our licenses, affect the size of our catalog, impact our ability to control content acquisition costs, and lead to potential copyright infringement claims.” Even when we are able to enter into license agreements with rights holders, we cannot guarantee that such agreements will continue to be renewed indefinitely, or at all.
If we fail to successfully detect, remove, and address artificial streams and associated user accounts, it may result in the manipulation of our data, including the key performance indicators, which underlie, among other things, our contractual obligations with rights holders and advertisers (which could expose us to the risk of litigation), as well as harm our relationships with rights holders and advertisers.
If we fail to successfully detect, remove, and address artificial streams and associated user accounts, it may result in the manipulation of our data, including the 26 Table of Contents key performance indicators, which underlie, among other things, our contractual obligations with rights holders and advertisers (which could expose us to the risk of litigation), as well as harm our relationships with rights holders and advertisers.
Certain advertisers will measure the effectiveness of their advertising campaigns based on our 11 Table of Contents ability to serve their ads to audiences that match their demographic data benchmarks, and our ability to meet the requirements of these third-party measurement providers may be impacted when we do not have accurate or complete user data.
Certain advertisers will measure the effectiveness of their advertising campaigns based on our ability to serve their ads to audiences that match their demographic data benchmarks, and our ability to meet the requirements of these third-party measurement providers may be impacted when we do not have accurate or complete user data.
If we are unable to maintain our chargeback rate or refund rates at acceptable levels, credit card and debit card companies may increase our transaction fees or terminate their relationships with us. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.
If we are unable to maintain our chargeback rate or refund rates at acceptable levels, credit card and 24 Table of Contents debit card companies may increase our transaction fees or terminate their relationships with us. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.
Unfavorable publicity regarding, for example, relationships with record labels, publishers, artists, and other copyright owners, content on our Service, our privacy practices, terms of service, service changes, service quality, litigation or regulatory activity, government surveillance, employee matters, the actions of our advertisers or strategic partners, the actions of our developers whose services are integrated with our products or services, the actions of our users, or the actions of other companies that provide similar services to us, could materially adversely affect our reputation and brand.
Unfavorable publicity regarding, for example, relationships with record labels, music publishers, artists, podcasters, authors, and other creators or copyright owners, content on our Service, our privacy practices, terms of service, service changes, service quality, litigation or regulatory activity, government surveillance, employee matters, the actions of our advertisers or strategic partners, the actions of our developers whose services are integrated with our products or services, the actions of our users, or the actions of other companies that provide similar services to us, could materially adversely affect our reputation and brand.
A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions.
A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and 30 Table of Contents investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions.
Such partnerships may divert management focus and resources from other aspects of our business, it may take longer than expected for them to produce the expected benefits, they may subject us to additional and unknown licensing or regulatory requirements across different jurisdictions, and they on occasion fail to produce all of the expected benefits.
Such partnerships may divert management focus and resources from 13 Table of Contents other aspects of our business, it may take longer than expected for them to produce the expected benefits, they may subject us to additional and unknown licensing or regulatory requirements across different jurisdictions, and they on occasion fail to produce all of the expected benefits.
The success of these partnerships will depend in part on our ability to leverage them to enhance our 13 Table of Contents products and services, or to develop new products and services, and we may not be successful in doing so. Any adverse results related to our strategic partnerships could negatively impact our business, operating results, and financial condition.
The success of these partnerships will depend in part on our ability to leverage them to enhance our products and services, or to develop new products and services, and we may not be successful in doing so. Any adverse results related to our strategic partnerships could negatively impact our business, operating results, and financial condition.
We cannot assure you that the systems and processes that we have designed (or that third parties have designed) to protect our data and our users’ data, to prevent data loss, to disable undesirable accounts and activities on our platform, and to prevent or detect security breaches, will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks.
We cannot assure you that the systems and processes that we have designed (or that third parties have designed) to protect our data and our users’ data, to prevent data loss, to disable undesirable accounts and activities on our platform, and to prevent or detect security breaches, will provide absolute security, and we may incur significant costs in protecting against or remediating cyberattacks.
In addition, actions brought in a Luxembourg court against us, the members of our board of directors, or our officers to enforce liabilities based on U.S. federal securities laws may be subject to certain restrictions. In particular, Luxembourg courts generally do not award punitive damages.
In addition, actions brought in a Luxembourg court against us, the members of our board of directors, or our officers to enforce liabilities based on U.S. federal securities laws may be subject to certain restrictions. In particular, Luxembourg courts generally do not 33 Table of Contents award punitive damages.
If the FCC does not reinstate open internet rules beyond disclosure requirements and state laws fail to provide comparable protections, or if the EU modifies its own open internet rules, broadband service providers may be able to limit our 19 Table of Contents users’ ability to access our Service or make it a less attractive alternative to our competitors’ applications, and our business, operating results, and financial condition would be seriously harmed.
If the FCC does not reinstate open internet rules beyond disclosure requirements and state laws fail to provide comparable protections, or if the EU modifies its own open internet rules, broadband service providers may be able to limit our users’ ability to access our Service or make it a less attractive alternative to our competitors’ applications, and our business, operating results, and financial condition would be seriously harmed.
Our current and future competitors have introduced, and may continue to introduce, new ways of consuming or engaging with content, such as ByteDance, that cause our users, especially the younger demographic, to switch to another product or service, which would negatively affect our user retention, growth, and engagement.
Our current and future competitors have introduced, and may continue to introduce, new ways of consuming or engaging with content that cause our users, especially the younger demographic, to switch to another product or service, which would negatively affect our user retention, growth, and engagement.
If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court, or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such 17 Table of Contents claims.
If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court, or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such claims.
Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in 33 Table of Contents jurisdictions outside the United States, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.
Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.
These investments may not result in increased revenue or growth in our business. If we fail to continue to grow our revenue and overall business, our business, operating results, and financial condition would be harmed. 10 Table of Contents Failure to convince advertisers of the benefits of our advertising offerings could harm our business, operating results, and financial condition.
These investments may not result in increased revenue or growth in our business. If we fail to continue to grow our revenue and overall business, our business, operating results, and financial condition would be harmed. Failure to convince advertisers of the benefits of our advertising offerings could harm our business, operating results, and financial condition.
As a result of this organizational structure and the scope of our operations, we are subject to a variety of laws and regulations in different countries that involve matters central to our business, including privacy, data protection, content, intellectual property, advertising and marketing, competition, protection of minors, consumer protection, automatic subscription renewals, credit card processing, foreign exchange controls, and taxation.
As a result of this organizational structure and the scope of our operations, we are subject to a variety of laws and regulations in different countries that involve matters central to our business, including privacy, data protection, content, intellectual property, advertising and marketing, competition, machine learning and artificial intelligence, protection of minors, consumer protection, automatic subscription renewals, credit card processing, foreign exchange controls, and taxation.
The determination of the amount and timing of such payments is complex and subject to a number of variables, including the type of content streamed, the country in which it is streamed, the service tier such content is streamed on, the amount of revenue generated by the streaming of the content, the identity of the license holder to whom royalties are owed, the current size of our user base, our current ratio of Ad-Supported Users to Premium Subscribers, the applicability of any most favored nations provisions, and any applicable advertising fees and 15 Table of Contents discounts, among other variables.
The determination of the amount and timing of such payments is complex and subject to a number of variables, including the type of content streamed, the country in which it is 15 Table of Contents streamed, the product tier such content is streamed on, revenue generated per product tier, the identity of the license holder to whom royalties are owed, the current size of our user base, our current ratio of Ad-Supported Users to Premium Subscribers, the applicability of any most favored nations provisions, and any applicable advertising fees and discounts, among other variables.
In addition, effective in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures in the current period and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174.
For example, effective in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures in the current period and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174.
Additionally, our current and future competitors have engaged and will continue to engage in mergers or acquisitions with each other, to combine and leverage their broad audiences, content, and capabilities. 7 Table of Contents Relatedly, we compete for users based on our presence and visibility as compared with other businesses and platforms that deliver audio content through the internet and connected devices.
Additionally, our current and future competitors have engaged and will continue to engage in mergers or acquisitions with each other, to combine and leverage their broad audiences, content, and capabilities. Relatedly, we compete for users based on our presence and visibility as compared with other businesses and platforms that deliver audio content through the internet and connected devices.
This could negatively impact investor sentiment for the Company, and as a result, the price for our ordinary shares. Approximately 20% of our employees are in Sweden.
This could negatively impact investor sentiment for the Company, and as a result, the price for our ordinary shares. Approximately 18% of our employees are in Sweden.
The websites and applications of our competitors may rank higher than our website and our Spotify application in search engines or application stores, and/or our application may be difficult to locate in device application stores, which could draw potential users away from our Service and toward those of our competitors.
The websites and applications of our competitors may rank higher than our website and our Spotify application in search engines or application stores, and/or our application may be difficult to locate in device application stores, which could draw potential users away from our Service and toward those of our 7 Table of Contents competitors.
However, we cannot guarantee that the creators and users who provide content on our Service will comply with their obligations, and any failure of creators and users to do so may materially impact our business, operating results, and financial condition.
However, we cannot guarantee that the creators and users who provide content on our Service will comply with their obligations, and any failure of creators and users to do so may 12 Table of Contents materially impact our business, operating results, and financial condition.
Additionally, a number of regulatory initiatives that have been proposed to tackle the way platforms and digital services providers operate could generate operational and technical costs of compliance. In November 2022, the EU Digital Services Act (“DSA”) came into force, and the majority of the DSA’s substantive provisions will take effect between 2023 and 2024.
Additionally, a number of regulatory initiatives that have been proposed to tackle the way platforms and digital services providers operate could generate operational and technical costs of compliance. In November 2022, the EU Digital Services Act (“DSA”) came into force, and the majority of the DSA’s substantive provisions are taking effect between 2023 and 2024.
Therefore, there can be no assurance that we will not be classified as a PFIC in the future. Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our ordinary 30 Table of Contents shares.
Therefore, there can be no assurance that we will not be classified as a PFIC in the future. Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our ordinary shares.
For example, with respect to sound recordings, the music licensed to us under our agreements with Universal Music Group, Sony Music Entertainment, Warner Music Group, and Music and 14 Table of Contents Entertainment Rights Licensing Independent Network (“Merlin”), makes up the majority of music consumed on our Service.
For example, with respect to sound recordings, the music licensed to us under our agreements with Universal Music Group, Sony Music Entertainment, Warner Music Group, and Music and Entertainment Rights Licensing Independent Network (“Merlin”), makes up the majority of music consumed on our Service.
As consumer tastes and preferences change on the internet and with mobile and other connected products, including cars, in-home, and wearable devices, we will need to enhance and improve our existing Service, introduce new services and features, and maintain our competitive position with additional technological advances and an adaptable platform.
As consumer 6 Table of Contents tastes and preferences change on the internet and with mobile and other connected products, including cars, in-home, and wearable devices, we will need to enhance and improve our existing Service, introduce new services and features, and maintain our competitive position with additional technological advances and an adaptable platform.
Interruptions, delays, or discontinuations in service arising from our own systems or from third parties could harm our business. We have experienced, and may in the future experience, periodic service interruptions and delays involving our own systems and those of third parties that we work with.
Interruptions, delays, or discontinuations in service arising from our own systems or from third parties could harm our business. 20 Table of Contents We have experienced, and may in the future experience, periodic service interruptions and delays involving our own systems and those of third parties that we work with.
Furthermore, we cannot assure you that the growth in revenue we have experienced over the past few years will continue at the same rate or even continue to grow at all. We expect that, in the future, our revenue growth rate may decline because of a variety of factors, including increased competition and the maturation of our business.
Furthermore, we cannot assure you that the growth in revenue we have experienced over the past few years will continue at the same rate or even continue to grow at all. In the future, our revenue growth rate may decline because of a variety of factors, including market saturation, the maturation of our business, or increased competition.
To the extent our Premium Service revenue growth or advertising sales do not meet our expectations, our business, operating results, and financial condition could also be adversely affected as a result of such financial commitments.
To the extent our subscription revenue growth or advertising sales do not meet our expectations, our business, operating results, and financial condition could also be adversely affected as a result of such financial commitments.
Payment terms for certain content that we produce or commission will typically require more upfront cash payments than other content licenses or arrangements whereby we do not pay for the production of such content.
Payment terms for certain content that we produce or commission will typically require more upfront cash payments compared to other content licenses or arrangements whereby we do not pay for the production of such content.
Accordingly, our ability to achieve and sustain profitability and operating leverage on our Service in part depends on our ability to increase our revenue through increased sales of Premium Service and advertising sales on terms that maintain an adequate gross margin.
Accordingly, our ability to achieve and sustain profitability and operating leverage on our Service in part depends on our ability to increase our revenue through increased subscription and advertising sales on terms that maintain an adequate gross margin.
See “—The issuance of beneficiary certificates to certain shareholders, including our founders, will limit your voting power and your ability to influence the composition of the board of directors, strategy, or performance of the business.
See “—The issuance of beneficiary certificates to certain shareholders, including our founders, will limit your voting power and your ability to influence the composition of the board of 31 Table of Contents directors, strategy, or performance of the business.
In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our Premium Subscribers’ credit cards on a timely basis or at all, our business, operating results, and financial condition could be materially adversely affected.
In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our Premium Subscribers’ payment method on a timely basis or at all, our business, operating results, and financial condition could be materially adversely affected.
These decisions may not produce the long-term benefits that we expect, in which case our user growth and 9 Table of Contents engagement, our relationships with advertisers and partners, as well as our business, operating results, and financial condition could be seriously harmed.
These decisions may not produce the long-term benefits that we expect, in which case our user growth and engagement, our relationships with advertisers and partners, as well as our business, operating results, and financial condition could be seriously harmed.
Summary Risk Factors Risks Related to Our Business Model, Strategy, and Performance • We face significant competition for users, listening time, and advertisers, and we might not be successful at attracting prospective users and retaining existing users, including through predicting, recommending, and playing content that our users enjoy, or effectively monetizing our products and services, including podcasts, audiobooks, and other non-music content. • We face many risks associated with our growth and our international operations, including attracting, retaining, and motivating qualified personnel and obtaining rights to stream content on favorable terms. • Our new products or services may not be successful and our emphasis on long-term user engagement may not align with the market’s expectations. • We have incurred significant operating losses in the past and may not be able to generate sufficient revenue to be profitable or to generate positive cash flow on a sustained basis.
Summary Risk Factors Risks Related to Our Business Model, Strategy, and Performance • We face significant competition for users, listening time, and advertisers, and we might not be successful at attracting prospective users and retaining existing users, including through predicting, recommending, and playing content that our users enjoy, or effectively monetizing our products and services, including podcasts, audiobooks, and other non-music content. • We may not be able to effectively manage our growth, the scope and complexity of our business, and our international operations, including attracting, retaining, and motivating qualified personnel and obtaining rights to stream content on favorable terms. • Our new products or services may not be successful and our emphasis on long-term user engagement may not align with the market’s expectations. • We have incurred significant operating losses in the past and may not be able to generate profit or positive cash flow on a sustained basis.
Additionally, we expect to continue to expend substantial financial and other resources on: • securing top quality content from leading record labels, distributors, aggregators, and other content owners or providers, as well as any rights to works contained in that content; • our technology infrastructure, including development tools, scalability, availability, performance, security, and disaster recovery measures; • research and development, including investments in our research and development team and the development of new features, forms of content, and other products or services; • sales and marketing, including costs related to our field sales organization and advertising globally; • international operations in an effort to maintain and increase our member base, engagement, and sales; • capital expenditures that we will incur to grow our operations and remain competitive; and • general administration, including legal and accounting expenses.
Additionally, we expect to continue to expend substantial financial and other resources on: • securing top quality content from leading record labels, distributors, aggregators, and other content owners or providers, as well as any rights to works contained in that content; • our technology infrastructure, including development tools, scalability, availability, performance, security, and disaster recovery measures; • research and development, including investments in our research and development team and the development of new features, forms of content, and other products or services; • sales and marketing, including costs related to our field sales organization and advertising globally; • international operations in an effort to maintain and increase our user base, engagement, and sales; and • general administration, including legal and accounting expenses.
Changes in any such laws that shield us from liability could materially harm our business, operating results, and financial condition. See “Risk Related to 12 Table of Contents Our Operations—Our business is subject to complex and evolving laws and regulations around the world.
Changes in any such laws that shield us from liability could materially harm our business, operating results, and financial condition. See “Risk Related to Our Operations—Our business is subject to complex and evolving laws and regulations around the world.

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Additionally, new subscriber growth also is driven by the success of converting users from our trial programs to full-time Premium Subscribers. These trial campaigns typically offer certain features of our Premium Service for free or at a discounted price for a period of time.
Additionally, new subscriber growth is also driven by the success of converting users from our trial programs to full-time Premium Subscribers. These trial campaigns typically offer certain features of our Premium Service for free or at a discounted price for a period of time.
The license agreements also allow for the record label to terminate the agreement in certain circumstances, including, for example, our failure to timely pay sums due within a certain period, our breach of material terms, and in some situations that could constitute a “change of control” of Spotify.
The license agreements also allow for the record label to terminate the agreement in certain circumstances, including, for example, our failure to pay sums due within a certain period, our breach of material terms, and in some situations that could constitute a “change of control” of Spotify.
Below is a summary of certain provisions of our license agreements relating to sound recordings and the musical compositions embodied therein (i.e., the musical notes and the lyrics), as well as podcasts and other non-music content.
Below is a summary of certain provisions of our license agreements relating to sound recordings and the musical compositions embodied therein (i.e., the musical notes and the lyrics), as well as podcasts, audiobooks, and other non-music content.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.” and “—Various existing, new, and changing laws and regulations as well as self-regulation and public concern related to privacy and data security pose the threat of lawsuits, regulatory fines, other liability and reputational harm, require us to expend significant resources, and may harm our business, operating results, and financial condition.” Human Capital At Spotify, we know that when our employees grow, Spotify grows.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.” and “—Various existing, new, and changing laws and regulations as well as self-regulation and public concern related to privacy and data security pose the threat of lawsuits, regulatory fines, other liability and reputational harm, require us to expend significant resources, and may harm our business, operating results, and financial condition.” 39 Table of Contents Human Capital At Spotify, we know that when our employees grow, Spotify grows.
Through Heart & Soul, our global mental health initiative, we focus on raising awareness and building knowledge, enabling self-care and professional support, and normalizing the conversation around mental health issues. Diversity, Inclusion, and Belonging We are dedicated to fostering a workplace free from discrimination and a culture built on the principle of inclusion.
Through Heart & Soul, our global mental health initiative, we focus on raising awareness and building knowledge, enabling self-care and professional support, and normalizing the conversation around mental health issues. Diversity, Equity, and Inclusion We are dedicated to fostering a workplace free from discrimination and a culture built on the principle of inclusion.
Organizational Structure The Company’s principal subsidiaries as at December 31, 2022 are as follows: Name Principal activities Proportion of voting rights and shares held (directly or indirectly) Country of incorporation Spotify AB Main operating company 100 % Sweden Spotify USA Inc.
Organizational Structure The Company’s principal subsidiaries as at December 31, 2023 are as follows: Name Principal activities Proportion of voting rights and shares held (directly or indirectly) Country of incorporation Spotify AB Main operating company 100 % Sweden Spotify USA Inc.
We attempt to protect our intellectual property under patent, trade secret, trademark, and copyright laws through a combination of intellectual property registration, employee or third-party assignment and nondisclosure agreements, other contractual restrictions, technological measures, and other methods. Seasonality See “Item 5.D. Trend Information” for a description of the seasonality of our business.
We attempt to protect our intellectual property under patent, trade secret, trademark, and copyright laws through a combination of intellectual property registration, employee or third-party assignment and nondisclosure agreements, other contractual restrictions, technological measures, and other methods. 38 Table of Contents Seasonality See “Item 5.D. Trend Information” for a description of the seasonality of our business.
Our pricing varies by plan and is adapted to each local market to align with consumer purchasing power, general cost levels, and willingness to pay for an audio service. Our Family Plan consists of one primary Premium Subscriber and up to five 36 Table of Contents additional sub-accounts, allowing up to six Premium Subscribers per Family Plan subscription.
Our pricing varies by plan and is adapted to each local market to align with consumer purchasing power, general cost levels, and willingness to pay for an audio service. Our Family Plan consists of one primary Premium Subscriber and up to five additional sub-accounts, allowing up to six Premium Subscribers per Family Plan subscription.
We continue to embrace our Work from Anywhere program adopted in 2021 that allows most employees to elect their work location from physical office space and home mix options. 40 Table of Contents Health, Safety, and Wellness We provide our employees and their families with robust healthcare benefits and a variety of mental health and wellness programs.
We continue to embrace our Work from Anywhere program adopted in 2021 that allows most employees to elect their work location from physical office space and home mix options. Health, Safety, and Wellness We provide our employees and their families with robust healthcare benefits and a variety of mental health and wellness programs.
We are registered with the Luxembourg Trade and Companies’ Register under number B.123.052. Our registered office is located at 5, place de la Gare L-1616, Luxembourg, Grand Duchy of Luxembourg, and our principal operational office 34 Table of Contents is located at Regeringsgatan 19, 111 53 Stockholm, Sweden.
We are registered with the Luxembourg Trade and Companies’ Register under number B.123.052. Our registered office is located at 5, place de la Gare L-1616, Luxembourg, Grand Duchy of Luxembourg, and our principal operational office is located at Regeringsgatan 19, 111 53 Stockholm, Sweden.
We believe this business model has allowed us to achieve scale with attractive unit economics and is a critical part of our success. Our Ad-Supported Service serves as a funnel, driving a significant portion of our total gross added Premium Subscribers.
We believe this business model has allowed us to achieve scale with attractive unit economics and is a critical 35 Table of Contents part of our success. Our Ad-Supported Service serves as a funnel, driving a significant portion of our total gross added Premium Subscribers.
These advertising arrangements are typically sold on a cost-per-thousand basis and are evidenced by an insertion order that specifies the terms of the arrangement such as the type of advertising product, pricing, insertion dates, and number of impressions or downloads in a stated period ("Insertion Order").
These advertising arrangements are typically sold on a cost-per-thousand basis and are evidenced by an insertion order that specifies the terms of the arrangement such as the type of advertising product, pricing, insertion dates, and 36 Table of Contents number of impressions or downloads in a stated period ("Insertion Order").
Specifically, we compete with: • free and/or subscription-based digital music streaming providers, such as Apple Music, YouTube Music, Amazon Music, Deezer, Joox, Pandora, and SoundCloud, for high-quality music content and the time and attention of our users; • online or offline providers of on-demand music, which may be purchased, downloaded, owned, or available for free, such as iTunes audio files, MP3s, or CDs; • providers of internet radio, some of which, such as Pandora, may leverage their advantage in content library, territorial coverage, existing infrastructure, and brand recognition to introduce additional streaming or on-demand music features to enhance user experience; • well-established providers of terrestrial radio, which often offer content that is free, unique and accessible; many terrestrial radio stations also broadcast digital signals providing high-quality audio transmission; • providers of satellite radio, such as SiriusXM and iHeartRadio, which may offer extensive and exclusive news, comedy, sports and talk content, and national signal coverage; • podcast streaming providers, such as Apple Podcasts, Google Podcasts (including YouTube), Audible, Facebook, Pandora, Deezer, and TuneIn, for high-quality podcasts and time and attention of our users; a growing variety of these podcast providers seek to differentiate their service through content offering, product features, and monetization ability; • podcast creation and hosting platforms, including SoundCloud, and a host of other smaller new entrants such as Acast, Buzzsprout, Podbean, and Libsyn; 39 Table of Contents • live talk audio content providers, such as Twitter, Clubhouse, Discord, Meta (including Facebook and Instagram), and ByteDance (including TikTok and Resso), for the rights to distribute content and time and attention of our users; • audiobook content providers, such as Amazon’s Audible, Apple Books, Google Audiobooks, Librivox, Kobo Audiobooks, Downpour, Storytel, and BookBeat, for the rights to distribute content and time and attention of our users; • companies that offer advertising inventory and opportunities, including large online advertising platforms and networks such as Google, Apple, Amazon, AppNexus, Criteo, and Meta (including Facebook and Instagram).
Specifically, we compete with: • free and/or subscription-based digital music streaming providers, such as Apple Music, YouTube Music, Amazon Music, Deezer, Joox, Pandora, SoundCloud, and TikTok Music, for high-quality music content and the time and attention of our users; • online or offline providers of on-demand music, which may be purchased, downloaded, owned, or available for free, such as iTunes audio files, MP3s, or CDs; • providers of internet radio, some of which, such as Pandora, may leverage their advantage in content library, territorial coverage, existing infrastructure, and brand recognition to introduce additional streaming or on-demand music features to enhance user experience; • well-established providers of terrestrial radio, which often offer content that is free, unique and accessible; many terrestrial radio stations also broadcast digital signals providing high-quality audio transmission; • providers of satellite radio, such as SiriusXM, which may offer extensive and exclusive news, comedy, sports and talk content, and national signal coverage; • podcast streaming providers, such as Apple Podcasts, YouTube, Audible, Facebook, Pandora, Deezer, and TuneIn, for high-quality podcasts and time and attention of our users; a growing variety of these podcast providers seek to differentiate their service through content offering, product features, and monetization ability; • podcast creation and hosting platforms, including Acast, Buzzsprout, Podbean, and Libsyn; • live talk audio content providers, such as X (formerly known as Twitter), Discord, Meta (including Facebook and Instagram), and ByteDance (including TikTok and Resso), for the rights to distribute content and time and attention of our users; • audiobook content providers, such as Amazon’s Audible, Apple Books, Google Audiobooks, Librivox, Kobo Audiobooks, Downpour, Storytel, and BookBeat, for the rights to distribute content and time and attention of our users; • companies that offer advertising inventory and opportunities, including large online advertising platforms and networks such as Google, Apple, Amazon, AppNexus, Criteo, and Meta (including Facebook and Instagram).
In contrast, traditional radio 35 Table of Contents relies on a linear distribution model in which stations and channels are programmed to deliver a limited song selection with little freedom of choice. We are actively investing in podcasts and other forms of alternative and spoken word content to complement the music library available through our platform.
In contrast, traditional radio relies on a linear distribution model in which stations and channels are programmed to deliver a limited song selection with little freedom of choice. We are actively investing in podcasts, audiobooks, and other forms of alternative and spoken word content to complement the music library available through our platform.
In February 2021, we announced the Spotify Audience Network (“SPAN”), an audio advertising marketplace that connects advertisers to listeners across our owned and exclusive podcasts, podcasts from enterprise publishers via Megaphone, and podcasts from emerging creators via Anchor.
In February 2021, we announced the Spotify Audience Network (“SPAN”), an audio advertising marketplace that connects advertisers to listeners across our owned and exclusive podcasts, podcasts from enterprise publishers via Megaphone, and podcasts from emerging creators via Spotify for Podcasters.
Timing and investments to implement our sustainability initiatives are subject to uncertainties. See “Item 3.D. Risk Factors—Risks Related to Our Operations—We are subject to risks associated with increased scrutiny of environmental, social, and governance matters.” 41 Table of Contents C.
Timing and investments to implement our sustainability initiatives are subject to uncertainties. See “Item 3.D. Risk Factors—Risks Related to Our Operations—We are subject to risks associated with increased scrutiny of environmental, social, and governance matters.” C.
Revenue from our Premium segment is a function of the number of Premium Subscribers who subscribe to our Premium Service. As of December 31, 2022 and 2021, we had 205 million and 180 million Premium Subscribers, respectively. New Premium Subscribers are primarily sourced from the conversion of our Ad-Supported Users.
Revenue from our Premium segment is a function of the number of Premium Subscribers who subscribe to our Premium Service. As of December 31, 2023 and 2022, we had 236 million and 205 million Premium Subscribers, respectively. New Premium Subscribers are primarily sourced from the conversion of our Ad-Supported Users.
USA operating company 100 % USA Spotify Ltd Sales, marketing, contract research and development, and customer support 100 % UK Spotify Spain S.L. Sales, marketing and other support services 100 % Spain Spotify GmbH Sales, marketing and other support services 100 % Germany Spotify France SAS Sales, marketing and other support services 100 % France Spotify Canada Inc.
USA operating company 100 % USA Spotify Ltd Sales, marketing, contract research and development, and customer support 100 % U.K. Spotify Spain S.L. Sales, marketing and other support services 100 % Spain Spotify GmbH Sales, marketing and other support services 100 % Germany Spotify France SAS Sales, marketing and other support services 100 % France Spotify Canada Inc.
Audiobook License Agreements with Audiobook Publishers and Authors With respect to audiobooks for which we obtain distribution rights directly from rights holders, we either negotiate licenses with audiobook publishers or authors or obtain rights through our owned and operated platform, Findaway Voices, that enables creators to post content directly to our Service after agreeing to comply with the applicable terms and conditions.
Audiobook License Agreements with Audiobook Publishers and Authors With respect to audiobooks for which we obtain distribution rights directly from rights holders, we either negotiate licenses with audiobook publishers or authors or obtain rights through our owned and operated service, Findaway Voices by Spotify, that enables creators to distribute content to our Service after agreeing to comply with the applicable terms and conditions.
Sound Recording License Agreements with Major and Independent Record Labels We have license agreements with record label affiliates of the three largest music companies—Universal Music Group, Sony Music Entertainment, and Warner Music Group—as well as Merlin, which represents the digital rights on behalf of hundreds of independent record labels.
Sound Recording License Agreements with Major and Independent Record Labels We have license agreements with record label affiliates of the three largest music companies—Universal Music Group, Sony Music Entertainment, and Warner Music Group—as well as Merlin, which represents the digital rights on behalf of hundreds of independent record labels. These agreements require us to pay royalties.
We also bundle the Premium Service with other services and products. We offer a variety of subscription pricing plans for our Premium Service, including our Standard Plan, Family Plan, Duo Plan, and Student Plan, among others, to appeal to users with different lifestyles and across various demographics and age groups.
We offer a variety of subscription pricing plans for our Premium Service, including our Standard Plan, Family Plan, Duo Plan, and Student Plan, among others, to appeal to users with different lifestyles and across various demographics and age groups.
Our Ad-Supported Users and Premium Subscribers spend significant time engaging with our Service. Combined, our audience streamed 132 billion hours of content for the year ended December 31, 2022, an increase of 20% compared to the year ended December 31, 2021.
Our Ad-Supported Users and Premium Subscribers spend significant time engaging with our Service. Combined, our audience streamed 165 billion hours of content for the year ended December 31, 2023, an increase of 25% compared to the year ended December 31, 2022.
Property, Plant and Equipment Spotify’s principal operational offices are located in Stockholm, Sweden and New York, New York under leases for approximately 463,000 and 594,000 square feet of office space, respectively, expiring in September 2027 and April 2034, respectively.
Property, Plant and Equipment Spotify’s principal operational offices are located in Stockholm, Sweden and New York, New York under leases for approximately 485,000 and 594,000 square feet of office space, respectively, expiring in December 2028 and April 2034, respectively.
Sales and marketing 100 % Mexico Spotify Singapore Pte Ltd. Sales and marketing 100 % Singapore Spotify Italy S.r.l. Sales and marketing 100 % Italy D.
Sales and marketing 100 % Mexico Spotify Singapore Pte Ltd. Sales and marketing 100 % Singapore Spotify Italy S.r.l. Sales, marketing and other support services 100 % Italy D.
Podcast License Agreements with Podcasters and Podcast Networks With respect to podcasts for which we obtain distribution rights directly from rights holders, we either negotiate licenses directly with individuals or entities or obtain rights through our owned and operated platforms, such as Anchor, 38 Table of Contents Soundtrap for Storytellers, and Spotify for Podcasters, that enable creators to post content directly to our Service after agreeing to comply with the applicable terms and conditions.
Podcast License Agreements with Podcasters and Podcast Networks With respect to podcasts for which we obtain distribution rights directly from rights holders, we either negotiate licenses directly with individuals or entities or obtain rights through our owned and operated services, such as Spotify for Podcasters, that enable creators to distribute content to our Service after agreeing to comply with the applicable terms and conditions.
Our license agreements with local collecting societies and direct license agreements with publishers worldwide are generally in place for one to three years and provide for reporting obligations on both us and the licensor and auditing rights for the licensors. Certain of these license agreements also provide for minimum guaranteed payments or advance payment obligations.
Our license agreements with local collecting societies and direct license agreements with publishers worldwide are generally in place for one to three years and provide for reporting obligations on both us and the licensor and auditing rights for the licensors.
Our two fastest growing regions are Latin America, with 21% of our MAUs, an increase of 19% from December 31, 2021 to December 31, 2022, and the rest of the world, with 28% of our MAUs, an increase of 50% from December 31, 2021 to December 31, 2022.
Our two fastest growing regions are Latin America, with 21% of our MAUs, an increase of 25% from December 31, 2022 to December 31, 2023, and the rest of the world, with 32% of our MAUs, an increase of 40% from December 31, 2022 to December 31, 2023.
Europe is our largest region with 148 million MAUs, accounting for 30% of our total MAUs as of December 31, 2022, an increase of 9% from the prior year. In our North America region, MAUs increased by 9% from December 31, 2021 to December 31, 2022 and now account for 21% of our MAUs.
Europe is our largest region with 169 million MAUs, accounting for 28% of our total MAUs as of December 31, 2023, an increase of 14% from the prior year. In our North America region, MAUs increased by 11% from December 31, 2022 to December 31, 2023 and now account for 19% of our MAUs.
In addition, we obtain the rights to produce and distribute audiobooks from book publishers and authors. License Agreement Extensions and Renewals From time to time, our license agreements with certain rights holders and/or their agents expire while we negotiate their renewals.
These licenses are generally consumption-based, with royalties paid on a quarterly or monthly basis. In addition, we obtain the rights to produce and distribute audiobooks from book publishers and authors. License Agreement Extensions and Renewals From time to time, our license agreements with certain rights holders and/or their agents expire while we negotiate their renewals.
Licensing Agreements In order to stream content to our users, we generally secure intellectual property rights to such content by obtaining licenses from, and paying royalties or other consideration to, rights holders or their agents.
Licensing Agreements In order to stream content to our users, we generally secure intellectual property rights to such content by obtaining licenses from, and paying royalties or other consideration to, rights holders or their agents. Certain of these license agreements also provide for minimum guaranteed payments or advance payment obligations.
In addition to accessing our catalog on computers, tablets, and mobile devices, users can connect through speakers, receivers, televisions, cars, game consoles, and smart devices. The Premium Service offers a music listening experience without commercial breaks. We generate revenue for our Premium segment through the sale of subscriptions to the Premium Service.
Premium Subscribers can also purchase audiobooks on an à la carte basis in select markets. In addition to accessing our catalog on computers, tablets, and mobile devices, users can connect through speakers, receivers, televisions, cars, game consoles, and smart devices. The Premium Service offers a music listening experience without commercial breaks.
Additionally, we generate revenue through arrangements with certain advertising automated exchanges, internal self-serve, and advertising marketplace platforms to distribute advertising inventory for purchase on a cost-per-thousand basis.
Additionally, we generate revenue through arrangements with certain advertising automated exchanges, internal self-serve, and advertising marketplace platforms to distribute advertising inventory for purchase on a cost-per-thousand basis. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period.
On March 29, 2021, we acquired Betty Labs Incorporated for a total purchase consideration of €57 million. The acquisition allows us to accelerate our entry into the live audio space. On June 17, 2021, we acquired Podz, Inc., a technology company focused on the podcast discovery experience, for a total purchase consideration of €45 million.
The acquisition allowed us to explore the live audio space. 34 Table of Contents On June 17, 2021, we acquired Podz, Inc., a technology company focused on the podcast discovery experience, for a total purchase consideration of €45 million.
As a digital platform, approximately 99% of our GHG emissions are Scope 3, which means they fall outside our direct control. We are teaming up with academics and partners across our value chain to investigate how we can better measure and understand these emissions as we continue our work to set tangible reduction pathways.
We are teaming up with academics and partners across our value chain to investigate how we can better measure and understand these emissions as we continue our work to set tangible reduction pathways.
The Premium Service is sold directly to end users and through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers. Premium partner subscription revenue is based on a per-subscriber rate in a negotiated partner agreement.
We generate revenue for our Premium segment through the sale of subscriptions to the Premium Service. The Premium Service is primarily sold directly to end users. The Premium Service is also sold through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers.
Spotify is the World's Most Popular Audio Streaming Subscription Service Spotify has transformed the way people access and enjoy music and podcasts. Today, millions of people around the world have access to over 100 million tracks and 5 million podcast titles through Spotify whenever and wherever they want.
Today, millions of people around the world have access to over 100 million tracks and 5 million podcast titles through Spotify whenever and wherever they want.
The rates set by the Copyright Royalty Board are also subject to further change as part of future Copyright Royalty Board proceedings. In 2022, the proceedings known as “Phonorecords IV Proceedings” began to set the rates for the Section 115 compulsory license for calendar years 2023 to 2027.
In 2022, the proceedings known as “Phonorecords IV Proceedings” began to set the rates for the Section 115 blanket compulsory license for calendar years 2023 to 2027.
We are the world's most popular audio streaming subscription service with a community of 489 million MAUs, including 205 million Premium Subscribers, across 184 countries and territories as of December 31, 2022.
We are the world's most popular audio streaming subscription service with a community of 602 million MAUs, including 236 million Premium Subscribers, across 184 countries and territories as of December 31, 2023. Spotify is the World's Most Popular Audio Streaming Subscription Service Spotify has transformed the way people access and enjoy music and podcasts.
Talent Development We enable and empower our employees by offering a number of learning opportunities through a variety of platforms and delivery methods, including face-to-face sessions, virtual and online sessions, and podcasts. We also host onboarding events and programs for new employees to meet other new employees and hear from leaders from around the world, including our global leadership team.
Talent Development We enable and empower our employees' growth by offering a number of learning opportunities through a variety of platforms and delivery methods, including face-to-face sessions, virtual and online sessions, and coaching. We host onboarding events and programs for new employees to learn about Spotify and how to grow their careers at Spotify.
In December 2022, the Copyright Royalty Board issued final regulations adopting the parties' proposed rates and terms on an industry-wide basis for the Phonorecords IV period.
In December 2022, the Copyright Royalty Board issued final regulations adopting the parties' proposed rates and terms on an industry-wide basis for the Phonorecords IV period. Royalty rates beginning on January 1, 2028 may differ from those in effect today and are subject to change as part of future Copyright Royalty Board proceedings.
Our Diversity, Inclusion & Belonging team focuses on accelerating diversity, fostering inclusive leadership, enabling good mental health, co-designing equitable ways of working, building a culture of allyship, and amplifying a sense of belonging.
Our Diversity, Equity, and Inclusion team focused on accelerating diversity, designing for equity, fostering inclusive leadership, enabling good mental health, co-designing equitable ways of working, building a culture of allyship, and amplifying a sense of belonging. During 2023, we continued our efforts to build a diverse team that attracts and retains talent from historically marginalized and/or underrepresented backgrounds.
With respect to mechanical rights, in the United States, the rates that the Copyright Royalty Board set apply both to compositions that we license under the compulsory license in Section 115 of the Copyright Act and to a number of direct licenses that we have had with music publishers for U.S. rights, in which the applicable rate is generally pegged to the statutory rate set by the Copyright Royalty Board.
With respect to mechanical rights, in the United States, the rates that the Copyright Royalty Board set apply to compositions that we license under the compulsory license in Section 115 of the Copyright Act.
We are in the discovery business. Every day, fans from around the world trust our brand to guide them to entertainment that they would never have discovered on their own. If discovery drives customer satisfaction, and customer satisfaction drives engagement, and engagement drives discovery, we believe Spotify wins and so do our users.
We believe offering a more diverse selection of content will lead to a more enriching experience and higher user engagement. Spotify is more than an audio streaming service. We are in the discovery business. Every day, fans from around the world trust our brand to guide them to entertainment that they would never have discovered on their own.
We have planned capital expenditures of approximately €19 million in 2023 for projects in Amsterdam, Tokyo, Boston, and London, among others. We believe that our existing facilities are adequate to meet current requirements and that suitable additional or substitute space will be available as needed to accommodate any further physical expansion of operations and for any additional offices.
See Note 3 and Note 11 to our consolidated financial statements included elsewhere in this report for additional information. We believe that our existing facilities are adequate to meet current requirements and that suitable additional or substitute space will be available as needed to accommodate any further physical expansion of operations and for any additional offices. Item 4A.
During 2022, we launched a first iteration audiobook listening experience in select markets where people have access to more than 300,000 audiobooks. We have transformed the music industry by allowing users to move from a “transaction-based” experience of buying and owning music to an “access-based” model, which allows users to stream music on demand.
Currently, audiobooks are available for eligible Premium Subscribers in the U.S., U.K., and Australia. We have transformed the music industry by allowing users to move from a “transaction-based” experience of buying and owning music to an “access-based” model, which allows users to stream music on demand.
For original content that we produce or commission, we typically enter into multi-year commitments. Payment terms for content that we produce or commission will often require payments in advance of delivery of content.
For original content that we produce or commission, we typically enter into multi-year commitments. Payment terms for content that we produce or commission will often require partial payments in advance of complete delivery of content. Some of these agreements also include financial participations, which may require us to share associated revenues, and other payments contingent on performance of the content.
Premium Service Our Premium Service provides Premium Subscribers with unlimited online and offline high-quality streaming access to our catalog of music and podcasts. Premium Subscribers can also purchase audiobooks on an á la carte basis in select markets.
Premium Service Our Premium Service provides Premium Subscribers with unlimited online and offline high-quality streaming access to our catalog of music and podcasts. Premium Subscribers in select markets have 15 hours of access a month to audiobooks as part of a subscription to the Premium Service, currently available to eligible Premium Subscribers in the U.S., U.K. and Australia.
On March 2, 2021, Spotify USA Inc. issued US$1,500 million in aggregate principal amount of the Exchangeable Notes. Net proceeds from the issuance of the Exchangeable Notes were €1,223 million after deducting transaction costs. See Note 20 to our consolidated financial statements, included elsewhere in this report, for further information regarding our Exchangeable Notes.
Our agent for U.S. federal securities law purposes is Eve Konstan, General Counsel, 150 Greenwich Street, 63rd Floor, New York, New York 10007. On March 2, 2021, Spotify USA Inc. issued US$1,500 million in aggregate principal amount of the Exchangeable Notes. Net proceeds from the issuance of the Exchangeable Notes were €1,223 million after deducting transaction costs.
We provide development opportunities for both new and seasoned managers to learn how to lead, inspire their direct reports and peers, and shape organizational culture. In 2022, we celebrated one year with our internal talent marketplace that has helped us increase development opportunities and talent movement within the company.
We provide development opportunities for both new and seasoned managers to learn how to lead, inspire their direct reports and peers, and shape organizational culture. We also invest heavily in team development to promote the best conditions for leaders and employees to learn and execute.
In 2022, we continued to drive initiatives to reach our long-term goal of net zero emissions by the end of 2030 by focusing on ways to reduce emissions, complemented by additional carbon removal and/or avoidance projects.
In 2023, we continued to drive initiatives to reach our long-term goal of net zero emissions by the end of 2030 by identifying levers to reduce our climate impact, together with key partners, industry associates, and academic institutions.
In January 2021, we obtained a new blanket license available under U.S. law, administered by an entity called the Mechanical Licensing Collective. The Copyright Royalty Board set the rates for the Section 115 compulsory license for calendar years 2018 to 2022 in proceedings known as the “Phonorecords III Proceedings,” issuing its final written determination in November 2018.
In January 2021, we obtained a 37 Table of Contents new blanket compulsory license available under U.S. law, administered by an entity called the Mechanical Licensing Collective.
These agreements require us to pay royalties and, in some circumstances, make minimum guaranteed payments. They also often include marketing commitments, advertising inventory, financial and data 37 Table of Contents reporting obligations, and numerous prescriptions about the manner in which the Spotify service is operated.
They also often include marketing commitments, advertising inventory, financial and data reporting obligations, and numerous prescriptions about the manner in which the Spotify service is operated. Rights to sound recordings granted pursuant to these agreements accounted for approximately 74% of streams of audio content delivered by record labels for the year ended December 31, 2023.
Employees” for more information about our employees. Environmental Sustainability We strive to be part of the solution for addressing the climate crisis through our operations. Our approach focuses on two main areas of impact—reducing greenhouse gas (“GHG”) emissions and using our platform to inspire and support climate engagement and action among creators and listeners.
Our approach focuses on two main areas of impact—reducing our greenhouse gas (“GHG”) emissions and using our platform to inspire and support climate engagement and action among creators and listeners. As a digital platform, approximately 99% of our GHG emissions are Scope 3, which means they fall outside our direct control.
Rights to sound recordings granted pursuant to these agreements accounted for approximately 75% of streams of audio content delivered by record labels for the year ended December 31, 2022. Generally, these license agreements have a multi-year duration, are not automatically renewable, and apply worldwide.
Generally, these license agreements have a multi-year duration, are not automatically renewable, and apply worldwide.
During 2022, we continued to implement our inclusive hiring strategy to ensure that we are building a diverse team by attracting and retaining talent from historically marginalized and underestimated backgrounds. To do this, we identified clear goals, designed education for inclusive hiring practices, and introduced multiple bias interrupters into the recruiting process.
To do this, we designed educational programs for inclusive hiring practices with a shift to internal mobility and introduced multiple bias interrupters into the recruiting process. We also continued to support a growing number of Belonging Groups that are open to all employees and help foster belonging and inclusion for our historically marginalized and/or underrepresented talent.
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Our agent for U.S. federal securities law purposes is Eve Konstan, General Counsel, 150 Greenwich Street, 63rd Floor, New York, New York 10007. On March 6, 2020, we acquired Bill Simmons Media Group, LLC (“The Ringer”), a leading creator of sports, entertainment, and pop culture content, for a total purchase consideration of €170 million.
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See Note 19 to our consolidated financial statements, included elsewhere in this report, for further information regarding our Exchangeable Notes. On March 29, 2021, we acquired Betty Labs Incorporated for a total purchase consideration of €57 million.
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The acquisition allows us to expand our content offering, audience reach, and podcast monetization. On December 8, 2020, we acquired Megaphone LLC (“Megaphone”), a podcast technology company, for a total purchase consideration of €195 million. The acquisition allows us to expand and scale our podcast monetization and product offering for advertisers.
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In September 2022, we made available a catalog of audiobooks in the United States that our users may purchase on the web and listen to on our platform alongside our catalog of music and podcasts. In November 2022, we extended audiobooks availability to the United Kingdom, Ireland, Australia, and New Zealand.
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Music Industry Growth Continues to be Led by Streaming Following more than 10 years of decline as the industry transitioned from physical product sales to streaming access models, the global recorded music business hit its digital inflection point in 2015 and has grown ever since.
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Over 350,000 audiobooks are available à la carte to listen to on Spotify in these markets. During 2023, we launched a new audiobooks experience on our Premium Service, offering 15 hours of access a month to more than 200,000 audiobooks as part of a subscription to the Premium Service.
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According to the International Federation of the Phonographic Industry, global recorded music industry revenues grew 18% to $26 billion in 2021, following on growth of 7% in 2020, 8% in 2019, 10% in 2018, 8% in 2017, 9% in 2016, and 4% in 2015.
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If discovery drives customer satisfaction, and customer satisfaction drives engagement, and engagement drives discovery, we believe Spotify wins and so do our users.
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Industry-wide streaming revenues grew 24% in 2021, accounting for over 65% of global recorded music industry revenues. As the world's most popular global audio streaming subscription service, we are a key driver of global recorded music revenue growth.
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Premium partner subscription revenue is based on a per-subscriber rate in a negotiated partner agreement. We also bundle the Premium Service with other services and products.
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Through December 31, 2022, we have paid more than €34 billion in royalties to certain record labels, music publishers, and other rights holders since our launch. In 2022, our expenses for rights holders grew by 21% compared to the prior year, making us one of the largest engines for revenue growth to artists and labels in the music industry.
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The Copyright Royalty Board set the rates for the Section 115 compulsory license for calendar years 2018 to 2022 in proceedings known as the “Phonorecords III Proceedings.” On August 10, 2023, the Copyright Royalty Board issued final regulations for the Phonorecords III period.
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We believe offering a more diverse selection of content will lead to a more enriching experience and higher user engagement. To the extent such content is made exclusive to our platform through direct ownership or licensing arrangements, we believe these investments help differentiate our Service, attract incremental users, and enhance engagement. Spotify is more than an audio streaming service.
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With the help of our internal talent marketplace, we also offer learning opportunities on the job by connecting employees with projects, jobs, and mentorships to support our internal mobility efforts. In our bi-yearly development talks, managers and employees set a development plan for future development opportunities specific to each individual.
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In March 2019, Google, Amazon, Pandora, and we each filed an appeal of the Copyright Royalty Board’s determination. In August 2020, the D.C. Circuit Court of Appeals vacated the Copyright Royalty Board’s determination and remanded for further proceedings. On July 1, 2022, the Copyright Royalty Board issued its initial ruling to set those rates in light of the D.C.
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We also launched an internal Diversity, Equity, and Inclusion hub with all of our resources and engagement content. See “Item 6.D. Employees” for more information about our employees. From time to time, we implement organizational changes to pursue greater operating efficiencies and realign our strategic priorities. In 2023, we announced several such initiatives, including reductions in our employee base.
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Circuit’s opinion. That ruling will need to be adapted into regulations, which, when issued by the U.S. Copyright Office, will become law. Until the final rates are determined, our recorded royalty costs will be based on management estimates of the rates that will apply.
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We made it a priority to treat departing employees with empathy and respect.
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Some of these agreements also include participations, which may require us to share associated revenues, and can include minimum guarantees and other payments contingent on performance of the content.
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All impacted employees had a 1:1 meeting with HR and were provided with the following package: • Severance: starting with a baseline amount for all employees, plus additional months depending on employee location, tenure, notice period and other factors, with the average departing employee receiving approximately five months of severance and notice pay; • Paid time off: payment for all accrued and unused vacation; • Healthcare: coverage of the cost of healthcare during the severance period; • Immigration support: our Global Mobility team works with each impacted employee based on their needs; and • Career support: outplacement services for two months. 40 Table of Contents Environmental Sustainability We strive to be part of the solution for addressing the climate crisis through our operations.
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In addition, we expanded our efforts to increase racial equity with a commitment to raising awareness and providing education opportunities, among other cross-functional efforts. We also continue to support a growing number of Belonging Communities (formerly known as Employee Resource Groups) that help foster belonging and inclusion for our historically marginalized and/or underrepresented talent. See “Item 6.D.
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During 2023, as a result of our Work From Anywhere program and a comprehensive review of our real estate footprint and space utilization trends (collectively, the “Office Space Optimization Initiative”), we made the strategic decision to reduce our real estate footprint in certain locations and initiate subleases of these leased office spaces.
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Key initiatives included but were not limited to: • working with our suppliers to identify ways to collaborate on reducing GHG emissions, including with key cloud computing service providers; • creating internal streaming emission dashboards to better identify key emission sources; • updating climate tracking and risk assessment processes to support employees in identifying and addressing climate-related risks and opportunities.
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As a result of this initiative, 41 Table of Contents during the year ended December 31, 2023, we recognized non-cash impairment charges of €123 million, which represents the write-down of these real estate assets, including lease right-of-use assets and property and equipment.
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During 2022, to optimize our current portfolio and accommodate localized market growth, we invested in new and existing leased office spaces in Boston, London and Dubai among others. In 2022, we capitalized €19 million of fixed assets principally related to these build-outs.

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Additionally, new subscriber growth also is driven by the success of converting users from our trial programs to full-time Premium Subscribers. These trial campaigns typically offer certain features of our Premium Service for free or at a discounted price for a period of time.
Additionally, new subscriber growth is also driven by the success of converting users from our trial programs to full-time Premium Subscribers. These trial campaigns typically offer certain features of our Premium Service for free or at a discounted price for a period of time.
The rate of net growth in Premium Subscribers also is affected by our ability to retain our existing Premium Subscribers and the mix of subscription pricing plans. We have increased retention over time, as new features and functionality have led to increased user engagement and satisfaction.
The rate of net growth in Premium Subscribers is also affected by our ability to retain our existing Premium Subscribers and the mix of subscription pricing plans. We have increased retention over time, as new features and functionality have led to increased user engagement and satisfaction.
Cost of revenue consists predominantly of royalty and distribution costs related to content streaming. We incur royalty costs, which we pay to certain record labels, music publishers, and other rights holders, for the right to stream music to our users. Royalties are typically calculated monthly based on the combination of a number of different variables.
Cost of revenue consists predominantly of royalty and distribution costs related to content streaming. We incur royalty costs, which we pay to certain record labels, music publishers, and other rights holders, for the right to stream content to our users. Music royalties are typically calculated monthly based on the combination of a number of different variables.
(4) We are subject to various non-cancelable purchase obligations and service agreements with minimum spend commitments, including a service agreement with Google for the use of Google Cloud Platform and certain podcast and marketing commitments.
(4) We are subject to various non-cancelable purchase obligations and service agreements with minimum spend commitments, including a service agreement with Google for the use of the Google Cloud Platform and certain podcast and marketing commitments.
The social cost rate at which the accrual is made generally follows the tax domicile within which other compensation charges for a grantee are recognized. Content We incur royalty costs for the right to stream music to our users, paid to record labels, music publishers, and other rights holders.
The social cost rate at which the accrual is made generally follows the tax domicile within which other compensation charges for a grantee are recognized. Content We incur royalty costs for the right to stream content to our users, paid to record labels, music publishers, and other rights holders.
Amortization of podcast content assets is recorded over the shorter of the estimated useful economic life or the license period (if relevant) and begins at the release of each episode. We make payments to podcast publishers, whose content we monetize through advertising sales, which are also included in cost of revenue.
Amortization of podcast content assets is recorded over the shorter of the estimated useful economic life or the license period (if relevant) and begins at the release of each episode. We make payments to podcast publishers, whose content we monetize through advertising sales in SPAN, which are also included in cost of revenue.
Premium ARPU Premium ARPU is a monthly measure defined as Premium subscription revenue recognized in the quarter indicated divided by the average daily Premium Subscribers in such quarter, which is then divided by three months. Annual figures are calculated by averaging Premium ARPU for the four quarters in such fiscal year.
Premium ARPU Premium ARPU is a monthly measure defined as Premium revenue recognized in the quarter indicated divided by the average daily Premium Subscribers in such quarter, which is then divided by three months. Annual figures are calculated by averaging Premium ARPU for the four quarters in such fiscal year.
See Part I, “Item 3.D. Risk Factors”. (2) Consists of principal on our 0.00% Exchangeable Notes due March 15, 2026. (3) Included in the lease obligations are short term leases and certain lease agreements that we have entered into, but had not yet commenced as of December 31, 2022. Lease obligations primarily relate to our office space.
See Part I, “Item 3.D. Risk Factors”. (2) Consists of principal on our 0.00% Exchangeable Notes due March 15, 2026. (3) Included in the lease obligations are short term leases and certain lease agreements that we have entered into, but had not yet commenced as of December 31, 2023. Lease obligations primarily relate to our office space.
Our MAUs in the tables below are inclusive of Ad-Supported Users who may have employed methods to limit or otherwise avoid being served advertisements. For additional information, refer to the risk factors discussed under “Item 3.D. Risk Factors” included elsewhere in this report. The table below sets forth our MAUs as of December 31, 2022, 2021, and 2020.
Our MAUs in the tables below are inclusive of Ad-Supported Users who may have employed methods to limit or otherwise avoid being served advertisements. For additional information, refer to the risk factors discussed under “Item 3.D. Risk Factors” included elsewhere in this report. The table below sets forth our MAUs as of December 31, 2023, 2022, and 2021.
This is a highly sought-after demographic that has traditionally been difficult for advertisers to reach. By offering advertisers increased “self-serve options,” we continue to improve the efficiency and scalability of our advertising platform. Additionally, we believe that our largest markets, including Europe and North America, are among the top advertising markets globally.
This is a highly sought-after demographic that has traditionally been difficult for advertisers to reach. By offering advertisers increased “self-serve options,” we continue to improve the efficiency and scalability of our advertising platforms. Additionally, we believe that our largest markets, including Europe and North America, are among the top advertising markets globally.
Such valuations require management to make significant estimates, assumptions, and judgments, especially with respect to intangible assets and contingent consideration. Lease Agreements As most of our lease agreements do not provide an implicit rate of return, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments.
Such valuations require management to make significant estimates, assumptions, and judgments, especially with respect to intangible assets. Lease Agreements As most of our lease agreements do not provide an implicit rate of return, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments.
These advertising arrangements are typically sold on a cost-per-thousand basis and are evidenced by an Insertion Order. Additionally, we generate revenue through arrangements with certain advertising automated exchanges, 44 Table of Contents internal self-serve, and advertising marketplace platforms to distribute advertising inventory for purchase on a cost-per-thousand basis.
These advertising arrangements are typically sold on a cost-per-thousand basis and are evidenced by an 43 Table of Contents Insertion Order. Additionally, we generate revenue through arrangements with certain advertising automated exchanges, internal self-serve, and advertising marketplace platforms to distribute advertising inventory for purchase on a cost-per-thousand basis.
Ad-Supported MAUs We define Ad-Supported MAUs as the total count of Ad-Supported Users that have consumed content for greater than zero milliseconds in the last thirty days from the period-end indicated. The table below sets forth our Ad-Supported MAUs as of December 31, 2022, 2021, and 2020.
Ad-Supported MAUs We define Ad-Supported MAUs as the total count of Ad-Supported Users that have consumed content for greater than zero milliseconds in the last thirty days from the period-end indicated. The table below sets forth our Ad-Supported MAUs as of December 31, 2023, 2022, and 2021.
Other than as disclosed here and elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments, or events since December 31, 2022 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity, or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Other than as disclosed here and elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments, or events since December 31, 2023 that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity, or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
The assumptions used for estimating fair value and assessing available headroom based on conditions that existed at the testing date are disclosed in Note 14 to our consolidated financial statements included elsewhere in this report.
The assumptions used for estimating fair value and assessing available headroom based on conditions that existed at the testing date are disclosed in Note 13 to our consolidated financial statements included elsewhere in this report.
The Premium Service is sold directly to end users and through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers. Premium partner subscription revenue is based on a per-subscriber rate in a negotiated partner agreement.
The Premium Service is primarily sold directly to end users. The Premium Service is also sold through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers. Premium partner subscription revenue is based on a per-subscriber rate in a negotiated partner agreement.
Operating and Financial Review and Prospects.” 54 Table of Contents D. Trend Information Our results reflect the effects of our trial programs, both discounted and free trials, in addition to seasonal trends in user behavior and, with respect to our Ad-Supported segment, advertising behavior. Historically, Premium Subscriber growth accelerates when we run such trial programs.
Operating and Financial Review and Prospects.” D. Trend Information Our results reflect the effects of our trial programs, both discounted and free trials, in addition to seasonal trends in user behavior and, with respect to our Ad-Supported segment, advertising behavior. Historically, Premium Subscriber growth accelerates when we run such trial programs.
To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results.
To the extent that the final tax outcome of these matters is different 56 Table of Contents than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results.
Historically, we have run two programs per year during the second and fourth quarters. During both 2021 and 2022, we launched a total of three programs in each year which were run during the second, third, and fourth quarters.
Historically, we have run two programs per year during the second and fourth quarters. During both 2022 and 2023, we launched a total of three programs in each year which were run during the second, third, and fourth quarters.
We invest heavily in research and development in order to drive user engagement and customer satisfaction on our platform, which we believe helps drive organic growth in MAUs, which in turn drives additional growth in, and better retention of, Premium Subscribers, as well as increased advertising opportunities to our users.
We invest heavily in research and development in order to drive user engagement and customer satisfaction on our platform, which we believe helps drive organic growth in MAUs, which in turn drives additional 44 Table of Contents growth in, and better retention of, Premium Subscribers, as well as increased advertising opportunities to our users.
Item 5. Operating and Financial Review and Prospects For discussion related to our financial condition, changes in financial condition, and results of operations for 2021 compared to 2020, refer to Part I, Item 5.
Item 5. Operating and Financial Review and Prospects For discussion related to our financial condition, changes in financial condition, and results of operations for 2022 compared to 2021, refer to Part I, Item 5.
The Family Plan was a meaningful contributor of total gross additions in Premium Subscribers, while our free trial offers and global campaigns also accounted for a significant portion of gross additions in Premium Subscribers. In addition, there was an increase in the number of Premium Subscribers on our Duo Plan.
Our free trial offers and global campaigns were meaningful contributors of total gross additions in Premium Subscribers, while our Family Plan also accounted for a significant portion of gross additions in Premium Subscribers. In addition, there was an increase in the number of Premium Subscribers on our Duo Plan.
(5) Included in deferred consideration are obligations to transfer €40 million of cash consideration over the next four years to former owners of certain entities we have acquired. C. Research and Development, Patents and Licenses For a detailed analysis of research and development policies and costs, see “Item 4.B. Business Overview” and discussions elsewhere in this “Item 5.
(5) Included in deferred consideration are obligations to transfer €27 million of cash consideration over the next two years to former owners of certain entities we have acquired. C. Research and Development, Patents and Licenses For a detailed analysis of research and development policies and costs, see “Item 4.B. Business Overview” and discussions elsewhere in this “Item 5.
Foreign exchange impact on total revenue The general movement of the Euro relative to certain foreign currencies, primarily the U.S. dollar, for the year ended December 31, 2022, as compared to 2021, had a favorable net impact on our revenue.
Foreign exchange impact on total cost of revenue The general movement of the Euro relative to certain foreign currencies, primarily the U.S. dollar, for the year ended December 31, 2023, as compared to 2022, had a favorable net impact on our cost of revenue.
Foreign exchange impact on total cost of revenue The general movement of the Euro relative to certain foreign currencies, primarily the U.S. dollar, for the year ended December 31, 2022, as compared to 2021, had an unfavorable net impact on our cost of revenue.
Foreign exchange impact on total revenue The general movement of the Euro relative to certain foreign currencies, primarily the U.S. dollar, for the year ended December 31, 2023, as compared to 2022, had an unfavorable net impact on our revenue.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this report.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this report. 57 Table of Contents
Cost of revenue also includes credit card and payment processing fees for subscription revenue, customer service, certain employee compensation and benefits, cloud computing, streaming, facility, and equipment costs. Research and Development .
Cost of revenue also includes credit card and payment processing fees for subscription revenue, advertising serving, advertising measurement, customer service, certain employee compensation and benefits, cloud computing, streaming, facility, and equipment costs. Research and Development .
A higher revised forfeiture rate than previously estimated will result in an adjustment that will decrease the stock-based compensation expense recognized in the consolidated statement of operations. A lower revised forfeiture rate than previously estimated will result in an adjustment that will increase the stock-based compensation expense recognized in the consolidated statement of operations.
A higher revised forfeiture rate than previously estimated will result in an adjustment that will decrease the stock-based compensation expense recognized in the consolidated statement of 54 Table of Contents operations. A lower revised forfeiture rate than previously estimated will result in an adjustment that will increase the stock-based compensation expense recognized in the consolidated statement of operations.
Revenue from our Premium segment is a function of the number of Premium Subscribers who subscribe to our Premium Service. As of December 31, 2022 and 2021, we had 205 million and 180 million Premium Subscribers, respectively. New Premium Subscribers are primarily sourced from the conversion of our Ad-Supported Users.
Revenue from our Premium segment is a function of the number of Premium Subscribers who subscribe to our Premium Service. As of December 31, 2023 and 2022, we had 236 million and 205 million Premium Subscribers, respectively. New Premium Subscribers are primarily sourced from the conversion of our Ad-Supported Users.
Premium Subscribers include subscribers in a grace period of up to 30 days after failing to pay their subscription fee. 46 Table of Contents The table below sets forth our Premium Subscribers as of December 31, 2022, 2021, and 2020.
Premium Subscribers include subscribers in a grace period of up to 30 days after failing to pay their subscription fee. 45 Table of Contents The table below sets forth our Premium Subscribers as of December 31, 2023, 2022, and 2021.
Of the total accruals and provisions to rights holders at December 31, 2022 and December 31, 2021, approximately €441 million and €308 million, respectively, relate to liabilities that were incurred more than 12 months prior to the date of the statement of financial position.
Of the total accruals and provisions to rights holders at December 31, 2023 and December 31, 2022, approximately €455 million and €441 million, respectively, relate to liabilities that were incurred more than 12 months prior to the date of the statement of financial position.
Revenue is recognized based on the number of impressions delivered. Share-based Compensation Our employees and members of our board of directors receive remuneration in the form of share-based compensation transactions, whereby employees render services in consideration for equity instruments. The fair value of a stock option is estimated on the grant date using the Black-Scholes option-pricing model.
Share-based Compensation Our employees and members of our board of directors receive remuneration in the form of share-based compensation transactions, whereby employees render services in consideration for equity instruments. The fair value of a stock option is estimated on the grant date using the Black-Scholes option-pricing model.
The lease terms are up to 12 years. See Note 12 to the consolidated financial statements included elsewhere in this report for further details regarding leases.
The lease terms are up to 10 years. See Note 11 to the consolidated financial statements included elsewhere in this report for further details regarding leases.
In February 2021, we announced SPAN, an audio advertising marketplace that connects advertisers to listeners across our owned and exclusive podcasts, podcasts from enterprise publishers via Megaphone, and podcasts from emerging creators via Anchor.
In February 2021, we announced SPAN, an audio advertising marketplace that connects advertisers to listeners across our owned and exclusive podcasts, podcasts from enterprise publishers via Megaphone, and podcasts from emerging creators via Spotify for Podcasters.
General and administrative expenses primarily comprise employee compensation and benefits for functions such as finance, accounting, analytics, legal, human resources, consulting fees, and other costs including facility and equipment costs, directors' and officers’ liability insurance, director fees, and fair value adjustments on contingent consideration. Key Performance Indicators We use certain key performance indicators to monitor and manage our business.
General and administrative expenses primarily comprise employee compensation and benefits for functions such as finance, accounting, analytics, legal, human resources, consulting fees, and other costs including facility and equipment costs, directors' and officers’ liability insurance, and director fees. Key Performance Indicators We use certain key performance indicators to monitor and manage our business.
You should not consider Free Cash Flow in isolation, or as a substitute for an analysis of our results as reported on our consolidated financial statements appearing elsewhere in this report. For the year ended December 31, 2022, as compared to 2021, Free Cash Flow decreased by €256 million.
You should not consider Free Cash Flow in isolation, or as a substitute for an analysis of our results as reported on our consolidated financial statements appearing elsewhere in this report. For the year ended December 31, 2023, as compared to 2022, Free Cash Flow increased by €657 million.
Launch of audiobooks In September 2022, we launched a first iteration catalog of audiobooks in the United States that our users may purchase and listen to on our platform alongside our catalog of music and podcasts. In November 2022, we extended availability to the United Kingdom, Ireland, Australia, and New Zealand.
Launch of audiobooks In September 2022, we made available a catalog of audiobooks in the United States that our users may purchase on the web and listen to on our platform alongside our catalog of music and podcasts. In November 2022, we extended audiobooks availability to the United Kingdom, Ireland, Australia, and New Zealand.
Foreign exchange impact on total operating expenses The general movement of the Euro relative to certain foreign currencies, primarily the U.S. Dollar, for the year ended December 31, 2022, as compared to 2021, had an unfavorable net impact on our operating expenses.
Foreign exchange impact on total operating expenses The general movement of the Euro relative to certain foreign currencies, primarily the U.S. Dollar, for the year ended December 31, 2023, as compared to 2022, had a favorable net impact on our operating expenses.
We aim to design products and features that create and enhance user experiences, and new technologies are at the core of many of these opportunities. Research and development expenses were 12%, 9%, and 11% of our total revenue in each of 2022, 2021, and 45 Table of Contents 2020, respectively.
We aim to design products and features that create and enhance user experiences, and new technologies are at the core of many of these opportunities. Research and development expenses were 13%, 12%, and 9% of our total revenue in each of 2023, 2022, and 2021, respectively.
The decrease in Free Cash Flow was due primarily to a decrease in net cash flows from operating activities of €315 million, as described above. Indebtedness As of December 31, 2022, our outstanding indebtedness, other than lease liabilities, consisted primarily of the Exchangeable Notes that mature on March 15, 2026 and bear no interest.
The increase in Free Cash Flow was due primarily to an increase in net cash flows from operating activities of €634 million, as described above. Indebtedness As of December 31, 2023, our outstanding indebtedness, other than lease liabilities, consisted primarily of the Exchangeable Notes that mature on March 15, 2026 and bear no interest.
Generally, Premium Service royalties are based on the greater of a percentage of revenue and a per user amount. Royalties for the Ad-Supported Service are typically a percentage of relevant revenue, although certain agreements are based on the greater of a percentage of relevant revenue and an amount for each time a sound recording and musical composition are streamed.
Generally, Premium Service royalties are based on the greater of a percentage of revenue and a per user amount. Royalties for the Ad-Supported Service are typically a percentage of relevant revenue, although certain agreements are based on the greater of a percentage of relevant revenue and an amount for each time a track is streamed.
As of December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in millions, except percentages) Premium Subscribers 205 180 155 25 14 % 25 16 % Premium Subscribers were 205 million as of December 31, 2022. This represented an increase of 14% from the preceding fiscal year.
As of December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in millions, except percentages) Premium Subscribers 236 205 180 31 15 % 25 14 % Premium Subscribers were 236 million as of December 31, 2023. This represented an increase of 15% from the preceding fiscal year.
The table below sets forth our average Premium ARPU for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Premium ARPU € 4.52 € 4.29 € 4.31 € 0.23 5 % € (0.02) — % For the year ended December 31, 2022, Premium ARPU was €4.52.
The table below sets forth our average Premium ARPU for the years ended December 31, 2023, 2022, and 2021. Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Premium ARPU € 4.39 € 4.52 € 4.29 € (0.13) (3) % € 0.23 5 % For the year ended December 31, 2023, Premium ARPU was €4.39.
We estimate that total operating expenses for the year ended December 31, 2022 would have been approximately €215 million lower if foreign exchange rates had remained consistent with foreign exchange rates for 2021.
We estimate that total operating expenses for the year ended December 31, 2023 would have been approximately €102 million higher if foreign exchange rates had remained consistent with foreign exchange rates for 2022.
We estimate that total revenue for the year ended December 31, 2022 would have been approximately €682 million lower if foreign exchange rates had remained consistent with foreign exchange rates for the year ended December 31, 2021.
We estimate that total revenue for the year ended December 31, 2023 would have been approximately €399 million higher if foreign exchange rates had remained consistent with foreign exchange rates for the year ended December 31, 2022.
We estimate that total cost for the year ended December 31, 2022 would have been approximately €523 million lower, if foreign exchange rates had remained consistent with foreign exchange rates for the year ended December 31, 2021.
We estimate that total cost for the year ended December 31, 2023 would have been approximately €305 million higher, if foreign exchange rates had remained consistent with foreign exchange rates for the year ended December 31, 2022.
Three months ended December 31, 2022 Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Premium ARPU € 4.55 € 4.40 € 4.26 € 0.15 3 % € 0.14 3 % For the quarter ended December 31, 2022, Premium ARPU was €4.55. This represented an increase of 3% year-over-year.
Three months ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Premium ARPU € 4.60 € 4.55 € 4.40 € 0.05 1 % € 0.15 3 % For the quarter ended December 31, 2023, Premium ARPU was €4.60. This represented an increase of 1% year-over-year.
Based on our definition, our Free Cash Flow is summarized as follows: 53 Table of Contents Year ended December 31, 2022 2021 2020 (in € millions) Net cash flows from operating activities 46 361 259 Capital expenditures (25) (85) (78) Change in restricted cash — 1 2 Free Cash Flow 21 277 183 We believe Free Cash Flow is a useful supplemental financial measure for us and investors in assessing our ability to pursue business opportunities and investments and to service our debt.
Based on our definition, our Free Cash Flow is summarized as follows: Year ended December 31, 2023 2022 2021 (in € millions) Net cash flows from operating activities 680 46 361 Capital expenditures (6) (25) (85) Change in restricted cash 4 — 1 Free Cash Flow 678 21 277 We believe Free Cash Flow is a useful supplemental financial measure for us and investors in assessing our ability to pursue business opportunities and investments and to service our debt.
Sales and marketing Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Sales and marketing 1,572 1,135 1,029 437 39 % 106 10 % As a percentage of revenue 13 % 12 % 13 % For the year ended December 31, 2022, as compared to 2021, sales and marketing expense increased by €437 million, or 39%.
Sales and marketing Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Sales and marketing 1,533 1,572 1,135 (39) (2) % 437 39 % As a percentage of revenue 12 % 13 % 12 % For the year ended December 31, 2023, as compared to 2022, sales and marketing expense decreased by €39 million, or 2%.
As of December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in millions, except percentages) Ad-Supported MAUs 295 236 199 59 25 % 37 19 % Ad-Supported MAUs were 295 million as of December 31, 2022. This represented an increase of 25% from the preceding fiscal year.
As of December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in millions, except percentages) Ad-Supported MAUs 379 295 236 84 28 % 59 25 % Ad-Supported MAUs were 379 million as of December 31, 2023. This represented an increase of 28% from the preceding fiscal year.
As of December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in millions, except percentages) MAUs 489 406 345 83 20 % 61 18 % MAUs were 489 million as of December 31, 2022. This represented an increase of 20% from the preceding fiscal year.
As of December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in millions, except percentages) MAUs 602 489 406 113 23 % 83 20 % MAUs were 602 million as of December 31, 2023. This represented an increase of 23% from the preceding fiscal year.
If we conclude that it is not probable that our tax position will be accepted, the effect of that uncertainty is reflected at either the most likely amount or the expected value, taking into account a range of possible outcomes.
If we conclude that it is not probable that our tax position will be accepted, the effect of that uncertainty is reflected at either the most likely amount or the expected value, taking into account a range of possible outcomes. The resolution of tax examinations and the APA may be significant to the consolidated financial statements.
Some rights holders have allowed the use of their content on our platform while negotiations of the terms and conditions of individual agreements or determination of statutory rates are ongoing. In these instances, royalties are calculated based on our best estimate of the eventual payout. In addition, on August 11, 2020, the United States Court of Appeals for the D.C.
Some rights holders have allowed the use of their content on our platform while negotiations of the terms and conditions of individual agreements or determination of statutory rates are ongoing. In these instances, royalties are calculated based on our best estimate of the eventual payout.
However, our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our rate of revenue growth, the timing and extent of spending on content and research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, our continued international expansion, the acquisition of other companies, competitive factors, the COVID-19 pandemic, and global economic conditions.
However, our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our rate of revenue growth, the timing of new product introductions, market acceptance of our products, the acquisition of other companies, competitive factors, and global economic conditions.
Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Finance income 421 246 94 175 71 % 152 162 % As a percentage of revenue 4 % 3 % 1 % For the year ended December 31, 2022, as compared to 2021, finance income increased by €175 million.
Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Finance income 161 421 246 (260) (62) % 175 71 % As a percentage of revenue 1 % 4 % 3 % For the year ended December 31, 2023, as compared to 2022, finance income decreased by €260 million.
The increases in general and administrative expenses described above include the impact of foreign exchange rate movements during the respective periods. A significant portion of our operating expenses are denominated in the U.S. dollar which strengthened 6% against the Euro for the year ended December 31, 2022, contributing to the overall increase in operating expenses.
The decreases in general and administrative expenses described above include the impact of foreign exchange rate movements during the respective periods. A significant portion of our operating expenses are denominated in the U.S. dollar which weakened 3% against the Euro for the year ended December 31, 2023, partially offsetting the overall increase in operating expenses.
Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Finance costs (132) (91) (510) (41) 45 % 419 (82) % As a percentage of revenue (1) % (1) % (6) % For the year ended December 31, 2022, as compared to 2021, finance costs increased by €41 million.
Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Finance costs (220) (132) (91) (88) 67 % (41) 45 % As a percentage of revenue (2) % (1) % (1) % For the year ended December 31, 2023, as compared to 2022, finance costs increased by €88 million.
Cost of revenue also reflects discounts provided by certain rights holders in return for promotional activities in connection with marketplace programs. Additionally, it includes the costs of discounted trials. Cost of revenue also includes the amortization of podcast content assets (both produced and licensed).
Cost of revenue also reflects discounts provided by certain rights holders in return for promotional activities in connection with marketplace programs. Additionally, it includes the costs of discounted trials. Royalties payable in relation to audiobook licenses are generally consumption-based. Cost of revenue also includes the cost of podcast content assets (both produced and licensed).
Ad-Supported revenue For the years ended December 31, 2022 and 2021, Ad-Supported revenue comprised 13% and 12% of our total revenue, respectively. For the year ended December 31, 2022, as compared to 2021, Ad-Supported revenue increased by €268 million or 22%.
Ad-Supported revenue For the years ended December 31, 2023 and 2022, Ad-Supported revenue comprised 13% of our total revenue. For the year ended December 31, 2023, as compared to 2022, Ad-Supported revenue increased by €205 million or 14%.
General and administrative Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) General and administrative 626 450 442 176 39 % 8 2 % As a percentage of revenue 5 % 5 % 6 % For the year ended December 31, 2022, as compared to 2021, general and administrative expense increased by €176 million or 39%.
General and administrative Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) General and administrative 585 626 450 (41) (7) % 176 39 % As a percentage of revenue 4 % 5 % 5 % For the year ended December 31, 2023, as compared to 2022, general and administrative expense decreased by €41 million or 7%.
The increase was due primarily to an increase in personnel-related costs of €316 million that included increased salaries, share-based compensation, and other employee benefits as a result of increased headcount to support our growth, partially offset by a decrease in social costs due primarily to changes in share price movements.
The increase was due primarily to an increase in personnel-related costs of €153 million that included increased salaries and other employee benefits as a result of increased headcount, and an increase in social costs of €86 million due primarily to changes in share price movements.
Cost of revenue Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Premium 7,355 5,986 5,126 1,369 23 % 860 17 % Ad-Supported 1,446 1,091 739 355 33 % 352 48 % Total 8,801 7,077 5,865 1,724 24 % 1,212 21 % Premium cost of revenue For the year ended December 31, 2022, as compared to 2021, Premium cost of revenue increased by €1,369 million, or 23%, and Premium cost of revenue as a percentage of Premium revenue increased from 71% to 72%.
Cost of revenue Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Premium 8,231 7,355 5,986 876 12 % 1,369 23 % Ad-Supported 1,619 1,446 1,091 173 12 % 355 33 % Total 9,850 8,801 7,077 1,049 12 % 1,724 24 % Premium cost of revenue For the year ended December 31, 2023, as compared to 2022, Premium cost of revenue increased by €876 million, or 12%, and Premium cost of revenue as a percentage of Premium revenue decreased from 72% to 71%.
For the year ended December 31, 2022, as compared to 2021, Premium revenue increased by €1,791 million or 21%. The increase was due primarily to an increase in the number of Premium Subscribers and an increase in Premium ARPU, as noted above.
For the year ended December 31, 2023, as compared to 2022, Premium revenue increased by €1,315 million or 13%. The increase was due primarily to an increase in the number of Premium Subscribers, partially offset by a decrease in Premium ARPU of 3%, as noted above.
Cash and cash equivalents and short term investments consist mostly of cash on deposit with banks, investments in money market funds, and investments in government securities, corporate debt securities, and collateralized reverse purchase agreements.
Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents, short term investments, and cash generated from operating activities. Cash and cash equivalents and short term investments consist mostly of cash on deposit with banks, investments in money market funds, and investments in government securities, corporate debt securities, and collateralized reverse purchase agreements.
The increase was due primarily to an increase in personnel-related costs of €104 million that included increased salaries, share-based compensation, and other employee benefits as a result of increased headcount to support our growth, partially offset by a decrease in social costs due primarily to changes in share price movements.
These decreases were partially offset by an increase in other personnel-related costs of €51 million that included salaries and other employee benefits as a result of increased headcount, and an increase in social costs of €29 million due primarily to changes in share price movements.
Income tax expense/(benefit) Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Income tax expense/(benefit) 60 283 (128) (223) N/A 411 N/A As a percentage of revenue 1 % 3 % (2) % 51 Table of Contents For the year ended December 31, 2022 , income tax expense was €60 million, as compared to income tax expense of €283 million for the year ended December 31, 2021.
Income tax expense Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Income tax expense 27 60 283 (33) (55) % (223) (79) % As a percentage of revenue — % 1 % 3 % For the year ended December 31, 2023 , income tax expense was €27 million, as compared to income tax expense of €60 million for the year ended December 31, 2022.
Gross profit and gross margin Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Gross profit Premium 2,896 2,474 2,009 422 17 % 465 23 % Ad-Supported 30 117 6 (87) (74) % 111 1,850 % Consolidated 2,926 2,591 2,015 335 13 % 576 29 % Gross margin Premium 28 % 29 % 28 % Ad-Supported 2 % 10 % 1 % Consolidated 25 % 27 % 26 % Premium gross profit and gross margin For the year ended December 31, 2022, as compared to 2021, Premium gross profit increased by €422 million and Premium gross margin decreased from 29% to 28%.
Gross profit and gross margin Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Gross profit Premium 3,335 2,896 2,474 439 15 % 422 17 % Ad-Supported 62 30 117 32 107 % (87) (74) % Consolidated 3,397 2,926 2,591 471 16 % 335 13 % Gross margin Premium 29 % 28 % 29 % Ad-Supported 4 % 2 % 10 % Consolidated 26 % 25 % 27 % Premium gross profit and gross margin For the year ended December 31, 2023, as compared to 2022, Premium gross profit increased by €439 million and Premium gross margin increased from 28% to 29%.
These changes were partially offset by a decrease in net cash outflows from purchases and sales and maturities of short term investments of €33 million and a decrease in capital expenditures of €60 million. For the year ended December 31, 2022, as compared to 2021, net cash flows from financing activities decreased by €1,290 million.
There was also a decrease in capital expenditures of €19 million. These changes were partially offset by an increase in net cash outflows from purchases and sales and maturities of short term investments of €122 million . For the year ended December 31, 2023, as compared to 2022, net cash flows from/(used in) financing activities changed by €274 million.
Operating Results Revenue Year ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (in € millions, except percentages) Premium 10,251 8,460 7,135 1,791 21 % 1,325 19 % Ad-Supported 1,476 1,208 745 268 22 % 463 62 % Total 11,727 9,668 7,880 2,059 21 % 1,788 23 % Premium revenue For the years ended December 31, 2022 and 2021, Premium revenue comprised 87% and 88% of our total revenue, respectively.
Operating Results Revenue Year ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (in € millions, except percentages) Premium 11,566 10,251 8,460 1,315 13 % 1,791 21 % Ad-Supported 1,681 1,476 1,208 205 14 % 268 22 % Total 13,247 11,727 9,668 1,520 13 % 2,059 21 % Premium revenue For the years ended December 31, 2023 and 2022, Premium revenue comprised 87% of our total revenue.
The increase in Premium cost of revenue was driven primarily by increases in new Premium Subscribers, publishing licensing rates and costs incurred to deliver enhanced product features, partially offset by benefits from certain marketplace programs. These collectively resulted in higher royalty costs of €1,152 million.
The increase in Premium cost of revenue was driven primarily by increases in Premium revenue and audiobook licensing costs, partially offset by benefits from certain marketplace programs. These collectively resulted in higher royalty costs of €814 million.
Amortization of podcast content assets is recorded in cost of revenue over the shorter of the estimated useful economic life or the license period, and begins at the release of each episode. The economic life and expected amortization profile of podcast content assets is estimated by management based on historical listening patterns and is evaluated on an ongoing basis.
Amortization of podcast content assets is recorded in cost of revenue over the shorter of the estimated useful economic life or the license period, and begins at the release of each episode.
In addition, there was an increase in information technology costs of €62 million due to increase in our usage of cloud computing services and additional software license fees.
In addition, there were employee severance costs of €119 million and real estate impairment charges of €75 million. There was also an increase in information technology costs of €15 million due to an increase in our usage of cloud computing services and additional software license fees.
Cash and cash equivalents and short term investments decreased by €150 million from €3,500 million as of December 31, 2021 to €3,350 million as of December 31, 2022.
Cash and cash equivalents and short term investments increased by €864 million from €3,350 million as of December 31, 2022 to €4,214 million as of December 31, 2023.
We are the world's most popular audio streaming subscription service. With a presence in 184 countries and territories, our platform includes 489 million MAUs and 205 million Premium Subscribers as of December 31, 2022. We currently monetize our Service through both subscriptions and advertising. Our Premium Subscribers grew 14% year-over-year as of December 31, 2022 to 205 million.
With a presence in 184 countries and territories, our platform includes 602 million MAUs and 236 million Premium Subscribers as of December 31, 2023. We currently monetize our Service through both subscriptions and advertising. Our Premium Subscribers grew 15% year-over-year as of December 31, 2023 to 236 million. Our 602 million MAUs grew 23% year-over-year as of December 31, 2023.
For each performance obligation within the bundle, revenue is recognized either on a straight-line basis over the subscription period or at a point in time when control of the service or product is transferred to the customer.
For other bundles, revenue is recognized either on a straight-line basis over the subscription period or at a point in time when control of the service or product is transferred to the customer. Premium partner subscription revenue is based on a per-subscriber rate in a negotiated partner agreement.
The increase of €0.15 was primarily driven by favorable movements in foreign exchange rates, increasing Premium ARPU by €0.21, partially offset by a decrease in Premium ARPU as a result of changes in product and market mix. 47 Table of Contents A.
The increase of €0.05 was primarily driven by an increase in Premium ARPU of €0.39 as a result of price increases. The increase was partially offset by changes in product and market mix, decreasing Premium ARPU by €0.18 as well as unfavorable movements in foreign exchange rates, decreasing Premium ARPU by €0.17. 46 Table of Contents A.
Additionally, there was an increase in royalty costs of €131 million due to growth in both advertising revenue and streams as well as publishing licensing rate increases and additional costs incurred to deliver enhanced product features, partially offset by benefits from certain marketplace programs for the year ended December 31, 2022.
The increase in Ad-Supported cost of revenue was driven primarily by an increase in content costs of €125 million due primarily to growth in both advertising revenue and streams, partially offset by benefits from certain marketplace programs and a decrease in costs incurred to deliver enhanced product features of €32 million for the year ended December 31, 2023.
See Note 20 to our consolidated financial statements included elsewhere in this report for further information regarding our Exchangeable Notes. We may from time to time seek to incur additional indebtedness. Such indebtedness, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.
See Note 19 to our consolidated financial statements included elsewhere in this report for further information regarding our Exchangeable Notes. We may from time to time seek to incur additional indebtedness.
Revenue Recognition Premium Revenue We generate revenue for our Premium segment through the sale of subscriptions to the Premium Service. The Premium Service is sold directly to end users and through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers.
The Premium Service is also sold through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers. Typically, the Premium Service is paid for on a monthly basis in advance.
Our incremental borrowing rate is determined based on estimates and judgments, including the credit rating of our leasing entities and a credit spread. Goodwill Impairment 58 Table of Contents In accordance with the accounting policy described in Note 2 to our consolidated financial statements included elsewhere in this report, we annually perform an impairment test regarding goodwill.
Goodwill Impairment In accordance with the accounting policy described in Note 2 to our consolidated financial statements included elsewhere in this report, we annually perform an impairment test regarding goodwill.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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In addition, for certain employees, including the named executive officers, if within six months following a change in control, such employee (i) resigns because he or she is required to perform duties that are materially inconsistent with the ones normally performed by someone in such position or (ii) otherwise experiences a constructive termination, any unvested stock options held by the employee will vest as of such resignation.
In addition, for certain employees, including the named executive officers, if in connection with or within six months following a change in control, such employee (i) resigns because he or she is required to perform duties that are materially inconsistent with the ones normally performed by someone in such position or (ii) otherwise experiences a constructive termination, any unvested stock options held by the employee will vest as of such resignation.
Norström or Söderström is required to perform duties that are materially inconsistent with those normally performed by the executive or if the executive is otherwise constructively dismissed following the change in control, subject to the named executive officer’s execution and non-revocation of a release of claims, the named executive officer would be entitled to receive a lump sum severance payment of 12 months’ salary and subsidized health benefits.
Norström, Söderström or Vogel is required to perform duties that are materially inconsistent with those normally performed by the executive, or if the executive is otherwise constructively dismissed following the change in control, subject to the named executive officer’s execution and non-revocation of a release of claims, the named executive officer would be entitled to receive a lump sum severance payment of 12 months’ salary and subsidized health benefits.
In addition, he has responsibility for marketing, global markets, partnerships, licensing, payments, and customer service. Mr. Norström was previously our Chief Freemium Business Officer and prior to that our Vice President of Growth and Vice President of Subscriptions. Prior to joining Spotify in 2011, Mr. Norström was Chief New Business Officer at King.com Ltd.
In addition, he has responsibility for marketing, global markets, partnerships, licensing, payments, and customer service. Mr. Norström was previously our Chief Freemium Business Officer and prior to that our Chief Premium Business Officer, Vice President of Growth, and Vice President of Subscriptions. Prior to joining Spotify in 2011, Mr. Norström was Chief New Business Officer at King.com Ltd.
For certain employees, including the named executive officers, upon termination of an employee’s employment (i) by the Company for any reason other than Cause or (ii) by the employee due to the Company’s material breach of the employee’s employment agreement, a portion of the individual’s unvested RSUs will immediately vest.
However, for certain employees, including the named executive officers, upon termination of an employee’s employment (i) by the Company for any reason other than Cause or (ii) by the employee due to the Company’s material breach of the employee’s employment agreement, a portion of the individual’s unvested RSUs will immediately vest.
Our people experience and compensation committee has the following responsibilities, among others: 68 Table of Contents • reviewing and making recommendations to our board of directors related to our incentive-compensation plans and equity-based plans; • establishing and reviewing the overall compensation philosophy of the Company; • overseeing matters relating to the attraction, engagement, development, and retention of directors and employees, including executive officers; • reviewing and approving total compensation for our chief executive officer and other executive officers; • reviewing and making recommendations regarding the compensation to be paid to our non-employee directors; • selecting and retaining a compensation consultant; • monitoring our diversity, inclusion, and belonging strategy; and • such other matters that are specifically delegated to the people experience and compensation committee by our board of directors from time to time.
Our people experience and compensation committee has the following responsibilities, among others: • reviewing and making recommendations to our board of directors related to our incentive-compensation plans and equity-based plans; • establishing and reviewing the overall compensation philosophy of the Company; • overseeing matters relating to the attraction, engagement, development, and retention of directors and employees, including executive officers; • reviewing and approving total compensation for our chief executive officer and other executive officers; • reviewing and making recommendations regarding the compensation to be paid to our non-employee directors; 67 Table of Contents • selecting and retaining a compensation consultant; • monitoring our diversity, inclusion, and belonging strategy; and • such other matters that are specifically delegated to the people experience and compensation committee by our board of directors from time to time.
He also has served as a member of the board of directors of Pandora from 2011 to 2013 (Chairman of the audit committee), Eventbrite from 2011 to 2015, Chegg from 2010 to 2015 (Chairman of the audit committee), and MSD Acquisition Corp. from 2021 to 2022 (Chairman of the audit committee). Since 2011, Mr.
He also has served as a member of the board of directors of Pandora from 2011 to 2013 (Chairman of the audit committee), Eventbrite from 2011 to 2015, Chegg from 2010 to 2015 (Chairman of the audit committee), and MSD Acquisition Corp. from 2021 to 2022 (Chairman of the audit committee). From 2011 to 2022, Mr.
Mr. Marshall holds a Bachelor of Arts in Economics from Hamilton College and a Master of Business Administration from the Kellogg School of Management at Northwestern University. Barry McCarthy is a member of our board of directors.
Marshall holds a Bachelor of Arts in Economics from Hamilton College and a Master of Business Administration from the Kellogg School of Management at Northwestern University. Barry McCarthy is a member of our board of directors.
Compensation of our named executive officers consists of the following elements: • base salary; • equity incentive compensation; • certain severance benefits; • retirement savings plans; and • health and welfare benefits and certain limited perquisites and other personal benefits.
Compensation of our named executive officers consists of the following elements: • base salary; • incentive compensation; • certain severance benefits; • retirement savings plans; and • health and welfare benefits and certain limited perquisites and other personal benefits.
He has been a member of our board of directors since June 13, 2017, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. Mr. Mehrotra previously served as our Strategic Advisor to the Chief Executive Officer from December 2015 to May 2017. Mr.
He has been a member of our board of directors since June 13, 2017, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. Mr. Mehrotra previously served as our Strategic Advisor to the Chief Executive Officer from December 2015 to May 2017. Mr.
Ek is responsible for guiding the vision and strategy of the Company and leading the management team. He has been a member of our board of directors since July 21, 2008, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022.
Ek is responsible for guiding the vision and strategy of the Company and leading the management team. He has been a member of our board of directors since July 21, 2008, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023.
He has been a member of our board of directors since January 8, 2020, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. Mr. McCarthy previously served as our Chief Financial Officer from 2015 to January 2020.
He has been a member of our board of directors since January 8, 2020, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. Mr. McCarthy previously served as our Chief Financial Officer from 2015 to January 2020.
Specifically, this section provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each compensation component that we provide. In addition, we explain how and why the people experience and compensation committee of our board of directors arrived at specific compensation policies and decisions involving our named executive officers during 2022.
Specifically, this section provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each compensation component that we provide. In addition, we explain how and why the people experience and compensation committee of our board of directors arrived at specific compensation policies and decisions involving our named executive officers during 2023.
Our total compensation for our named executive officers other than our CEO (who, as we note below, did not receive any cash or equity compensation in 2022), including cash and equity compensation, was between the 50 th and 75 th percentile of our Peer Group.
Our total compensation for our named executive officers other than our CEO (who, as we note below, did not receive any cash or equity compensation in 2023), including cash and equity compensation, was between the 50 th and 75 th percentile of our Peer Group.
If we or our successor terminates an optionee’s employment without Cause within six months following a transaction constituting a change in control, any unvested stock options held by the optionee will vest as of such termination.
If we or our successor terminates an optionee’s employment without Cause in connection with or within six months following a transaction constituting a change in control, any unvested stock options held by the optionee will vest as of such termination.
He has been a member of our board of directors since June 16, 2015, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. In addition to his role on our board of directors, Mr.
He has been a member of our board of directors since June 16, 2015, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. In addition to his role on our board of directors, Mr.
For further information on our equity award programs, please see “—Stock Options,” “—Restricted Stock Units” and “—Cash Program” below. In 2022, each of our named executive officers, other than Mr. Ek, participated in the incentive mix program.
For further information on our equity award programs, please see “—Stock Options,” “—Restricted Stock Units” and “—Cash Program” below. In 2023, each of our named executive officers, other than Mr. Ek, participated in the incentive mix program.
Although we consider these personal security services to be appropriate and necessary for the reasons described above, the costs related to such services are reported as other compensation to our named executive officers in the “2022 Summary Compensation Table” below.
Although we consider these personal security services to be appropriate and necessary for the reasons described above, the costs related to such services are reported as other compensation to our named executive officers in the “2023 Summary Compensation Table” below.
Directors and Senior Management.” Our directors may be removed at any time, with or without cause, by a resolution of the shareholders’ meeting. See “Item 10.B. Memorandum and Articles of Association.” People Experience and Compensation Committee Our board of directors has established a people experience and compensation committee that consists of Christopher Marshall, Martin Lorentzon, and Shishir Mehrotra. Mr.
Directors and Senior Management.” Our directors may be removed at any time, with or without cause, by a resolution of the shareholders’ meeting. See “Item 10.B. Memorandum and Articles of Association.” People Experience and Compensation Committee Our board of directors has established a people experience and compensation committee that consists of Christopher Marshall, Martin Lorentzon, Shishir Mehrotra, and Heidi O'Neill.
She holds a Bachelor of Arts with Honors from Eckerd College and a Juris Doctor degree from Columbia Law School. Alex Norström is our Co-President, Chief Business Officer. As our Chief Business Officer, Mr. Norström oversees our subscriber and advertising businesses and all licensed, distributed, and owned content on the platform across music, podcasts, and audiobooks.
She holds a Bachelor of Arts with Honors from Eckerd College and a Juris Doctor degree from Columbia Law School. Alex Norström is our Co-President, Chief Business Officer. He oversees our subscriber and advertising businesses and all licensed, distributed, and owned content on the platform across music, podcasts, and audiobooks.
In addition, the personal safety of our employees, including our named executive officers, is of the highest importance to us and in 2022 we paid for personal security services for certain named executive officers pursuant to the Company's personal security program for senior management.
In addition, the personal safety of our employees, including our named executive officers, is of the highest importance to us and in 2023 we paid for personal security services for certain named executive officers pursuant to the Company's personal security program for senior management.
(2) Amounts of option awards reflect the grant-date Black-Scholes value of the stock options granted during 2022 computed in accordance IFRS 2, rather than the amounts paid to or realized by the named individual.
(2) Amounts of option awards reflect the grant-date Black-Scholes value of the stock options granted during 2023 computed in accordance IFRS 2, rather than the amounts paid to or realized by the named individual.
(3) Amounts reflect the aggregate grant-date Black-Scholes value of the stock options granted during 2022 computed in accordance IFRS 2, rather than the amounts paid to or realized by the named individual.
(3) Amounts reflect the aggregate grant-date Black-Scholes value of the stock options granted during 2023 computed in accordance IFRS 2, rather than the amounts paid to or realized by the named individual.
Marshall currently serves on the boards of directors of Payoneer Global, Inc. and Nerdy, Inc., as well as a number of private companies. Since 2008, he also has served as a general partner of Technology Crossover Ventures, a private equity firm. Prior to that, Mr. Marshall spent 12 years at Trident 60 Table of Contents Capital, a venture capital firm.
Marshall currently serves on the boards of directors of Payoneer Global, Inc. and Nerdy, Inc., as well as a number of private companies. Since 2008, he also has served as a general partner of Technology Crossover Ventures, a private equity firm. Prior to that, Mr. Marshall spent 12 years at Trident Capital, a venture capital firm. Mr.
We provide information regarding the assumptions used to calculate the value of all stock awards made in “Operating and Financial Review and Prospects” and in Note 19 of the consolidated financial statements included elsewhere in this report.
We provide information regarding the assumptions used to calculate the value of all stock awards made in “Operating and Financial Review and Prospects” and in Note 18 of the consolidated financial statements included elsewhere in this report.
We provide information regarding the assumptions used to calculate the value of all option awards made in “Operating and Financial Review and Prospects” and in Note 19 of the consolidated financial statements included elsewhere in this report.
We provide information regarding the assumptions used to calculate the value of all option awards made in “Operating and Financial Review and Prospects” and in Note 18 of the consolidated financial statements included elsewhere in this report.
Ostroff as part of our incentive mix program. 3/48ths of the cash retention award vested on the third calendar month following the date of grant, and 1/48th of the cash retention award granted vests on the first day of each calendar month thereafter, subject to continued employment. (4) As of July 1, 2017, we ceased paying Mr.
Jenkins as part of our incentive mix program. 3/48ths of the cash award vested on the third calendar month following the date of grant, and 1/48th of the cash award granted vests on the first day of each calendar month thereafter, subject to continued employment. (4) As of July 1, 2017, we ceased paying Mr.
(2) Value realized is calculated based on the closing price of our ordinary shares as reported on the NYSE on the date of vesting. (3) Includes 2,199 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Mr. Vogel related to the vesting of such RSUs.
(2) Value realized is calculated based on the closing price of our ordinary shares as reported on the NYSE on the date of vesting. (3) Includes 4,998 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Mr. Vogel related to the vesting of such RSUs.
Except as described below, we have not adopted any policy or guidelines for allocating compensation between currently-paid and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. 64 Table of Contents Each of the primary elements of our executive compensation program is discussed in more detail below.
Except as described below, we have not adopted any policy or guidelines for allocating compensation between currently-paid and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. Each of the primary elements of our executive compensation program is discussed in more detail below.
These benefits are provided to our named executive officers on the same general terms as they are provided to all of our full-time employees in the applicable countries. 66 Table of Contents We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices.
These benefits are provided to our named executive officers on the same general terms as they are provided to all of our full-time employees in the applicable countries. We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices.
Board Practices Board of Directors Structure Our board of directors currently consists of eleven directors and is composed of Class A and Class B directors. Our articles of association provide that the board of directors must be composed of at least three members.
Board Practices Board of Directors Structure Our board of directors currently consists of ten directors and is composed of Class A and Class B directors. Our articles of association provide that the board of directors must be composed of at least three members.
We provide information regarding the assumptions used to calculate the value of all stock awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 19 of the consolidated financial statements included elsewhere in this report. (3) Amount reflects the cash retention award granted to Ms.
We provide information regarding the assumptions used to calculate the value of all stock awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 18 of the consolidated financial statements included elsewhere in this report. (3) Amount reflects the cash award granted to Ms.
We provide information regarding the assumptions used to calculate the value of all option awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 19 of the consolidated financial statements included elsewhere in this report. (3) Amount reflects the cash retention award granted to Ms.
We provide information regarding the assumptions used to calculate the value of all option awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 18 of the consolidated financial statements included elsewhere in this report. (3) Amount reflects the cash award granted to Ms.
(4) The table below shows the aggregate numbers of stock awards and stock options held as of December 31, 2022 by each non-employee director who was serving as of December 31, 2022.
(4) The table below shows the aggregate numbers of stock awards and stock options held as of December 31, 2023 by each non-employee director who was serving as of December 31, 2023.
Ek may be deemed to share beneficial ownership of the ordinary shares held by TME Hong Kong, Image Frame, Tencent 71 Table of Contents Mobility Limited, and Distribution Pool Limited. Additionally, each of D.G.E. Holding and Mr. Ek may be deemed to share beneficial ownership of the ordinary shares held by D.G.E. Investments. The business address of D.G.E.
Ek may be deemed to share beneficial ownership of the ordinary shares held by TME Hong Kong, Image Frame, Tencent Mobility Limited, and Distribution Pool Limited. Additionally, each of D.G.E. Holding and Mr. Ek may be deemed to share beneficial ownership of the ordinary shares held by D.G.E. Investments. The business address of D.G.E.
Marshall is the chair of our people experience and compensation committee.
Mr. Marshall is the chair of our people experience and compensation committee.
In 2022, Compensia provided the people experience and compensation committee with total cash compensation data and total compensation data (including cash compensation and equity compensation) at various percentiles within the Peer Group.
In 2023, Compensia provided the people experience and compensation committee with total cash compensation data and total compensation data (including cash compensation and equity compensation) at various percentiles within the Peer Group.
She served as the Chief Executive Officer of NIO USA and Chief Development Officer of NIO Inc. from December 2015 to 2018. In 2019, she founded Fable Group, where she serves as President and Chief Executive Officer.
She served as the Chief Executive Officer of NIO USA and Chief Development Officer of NIO Inc. from December 2015 to 2018. In 2019, she founded Fable Group, where she serves as President and Chief Executive 60 Table of Contents Officer.
(now Hill+Knowlton Strategies) specializing in crisis and financial transactions, the director of communications of the Department of Housing and Urban Development as an appointee of President George W. Bush, and Press Secretary for U.S. Senator Kay Bailey Hutchison. Ms. Jenkins also serves on the board of New York Women in Communications. Eve Konstan is our General Counsel.
(now Hill+Knowlton Strategies) specializing in crisis and financial transactions, the director of communications of the Department of Housing and Urban Development as an appointee of President George W. Bush, and Press Secretary for U.S. Senator Kay Bailey Hutchison. Ms. Jenkins also serves on the board of directors of Tech:NYC. Eve Konstan is our General Counsel.
In addition, Ms. Warrior was a member of the board of directors of The Gap, Inc. from 2013 to 2016 and a member of the board of directors of Box, Inc. from 2014 to 2016. From 2008 to 2015 Ms. Warrior worked at Cisco, most recently as Chief Technology and Strategy Officer.
Warrior was a member of the board of directors of Microsoft from 2015 to 2023, The Gap, Inc. from 2013 to 2016, and Box, Inc. from 2014 to 2016. From 2008 to 2015 Ms. Warrior worked at Cisco, most recently as Chief Technology and Strategy Officer.
McCarthy also has served as an Executive Adviser to Technology Crossover Ventures. From 1999 to 2010, Mr. McCarthy served as the Chief Financial Officer and Principal Accounting Officer of Netflix. Before joining Netflix, Mr. McCarthy served in various management positions in management consulting, investment banking, and media and entertainment. Mr.
McCarthy served as an Executive Adviser to Technology Crossover Ventures. From 1999 to 2010, Mr. McCarthy served as the Chief Financial Officer and Principal Accounting Officer of Netflix. Before joining Netflix, Mr. McCarthy served in various management positions in management consulting, investment banking, and 59 Table of Contents media and entertainment. Mr.
Heidi O’Neill is a member of our board of directors. She has been a member of our board of directors since December 5, 2017, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. Ms.
Heidi O’Neill is a member of our board of directors. She has been a member of our board of directors since December 5, 2017, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. In addition to her role on our board of directors, Ms.
The Management Members disclaim beneficial ownership of the ordinary shares and the ordinary shares issuable upon vesting of non-qualified stock options and RSUs, except to the extent of their respective pecuniary interest therein. (5) Includes 187,554 ordinary shares held by Rivers Cross Trust, an entity wholly owned by Mr. McCarthy.
The Management Members disclaim beneficial ownership of the ordinary shares and the ordinary shares issuable upon vesting of non-qualified stock options and RSUs, except to the extent of their respective pecuniary interest therein. (4) Includes 381,797 ordinary shares held by Rivers Cross Trust, an entity wholly owned by Mr. McCarthy.
She has been a member of our board of directors since June 13, 2017, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. In addition to her role on our board of directors, Ms.
She has been a member of our board of directors since June 13, 2017, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. Ms.
Prior to founding Spotify in 2006, Mr. Ek founded Advertigo, an online advertising company acquired by Tradedoubler, held various senior roles at the Nordic auction company Tradera, which was acquired by eBay, and served as Chief Technology Officer at Stardoll, a fashion and entertainment community for pre-teens. In 2021, he co-founded Prima Materia, a European investment company.
Prior to founding Spotify in 2006, Mr. Ek founded Advertigo, an online advertising company acquired by Tradedoubler, held various senior roles at the Nordic auction company Tradera, which was acquired by eBay, and served as Chief Technology Officer at Stardoll, a fashion and entertainment community for pre-teens.
The principles and objectives of our compensation and benefits programs for our executive leadership team and other employees are to: • attract, engage, and retain the best executives to work for us, with experience and managerial talent enabling us to be an employer of choice in highly competitive and dynamic industries; • align compensation with our corporate strategies, business and financial objectives, and the long-term interests of our shareholders; • motivate and reward executives whose knowledge, skills, and performance ensure our continued success; and • ensure that our total compensation is fair, reasonable, and competitive.
The principles and objectives of our compensation and benefits programs for our executive leadership team and other employees are to: • attract, engage, and retain the best executives to work for us, with experience and managerial talent enabling us to be an employer of choice in highly competitive and dynamic industries; • align compensation with our corporate strategies, business and financial objectives, and the long-term interests of our shareholders; • motivate and reward executives whose knowledge, skills, and performance ensure our continued success; and • ensure that our total compensation is fair, reasonable, and competitive. 61 Table of Contents We compete with many other companies in seeking to attract and retain experienced and skilled executives.
She has been a member of our board of directors since April 21, 2021, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 61 Table of Contents 2022.
She has been a member of our board of directors since April 21, 2021, and her term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023.
(1) Includes 14,499,407 ordinary shares held by D.G.E. Investments Limited (“D.G.E. Investments”). Mr. Ek is the sole shareholder of D.G.E. Holding Limited (“D.G.E. Holding”), which is the sole shareholder of D.G.E. Investments.
(1) Includes 13,424,407 ordinary shares held by D.G.E. Investments Limited (“D.G.E. Investments”). Mr. Ek is the sole shareholder of D.G.E. Holding Limited (“D.G.E. Holding”), which is the sole shareholder of D.G.E. Investments.
We provide information regarding the assumptions used to calculate the value of all option awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 19 of the consolidated financial statements included elsewhere in this report.
We provide information regarding the assumptions used to calculate 72 Table of Contents the value of all option awards made to executive officers in “Operating and Financial Review and Prospects” and in Note 18 of the consolidated financial statements included elsewhere in this report.
Ted Sarandos is a member of our board of directors. He has been a member of our board of directors since September 13, 2016, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. In addition to his role on our board of directors, Mr.
He has been a member of our board of directors since September 13, 2016, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. In addition to his role on our board of directors, Mr. Sarandos serves on the board of directors of Netflix.
Staggs holds a Bachelor of Science in Business from the University of Minnesota and a Master of Business Administration from the Stanford Graduate School of Business. Cristina Stenbeck is a member of our board of directors.
Staggs holds a Bachelor of Science in Business from the University of Minnesota and a Master of Business Administration from the Stanford Graduate School of Business. Mona Sutphen is a member of our board of directors.
Berg held human resources roles in various multinational companies, such as Swedbank, 3 Scandinavia, and Kanal 5 (SBS Broadcasting). Ms. Berg holds a Master of Arts in Human Resources Management and Development in Behavioral Science from Lund University. Dustee Jenkins is our Global Head of Public Affairs.
Berg held human resources roles in various multinational companies, such as Swedbank, 3 Scandinavia, and Kanal 5 (SBS Broadcasting). Ms. Berg holds a Master of Arts in Human Resources Management and Development in Behavioral Science from Lund University. 58 Table of Contents Dustee Jenkins is our Chief Public Affairs Officer.
The 2021 dollar amounts are based on a currency translation of SEK 9.04 per dollar as published by Reuters on December 31, 2021. The 2022 dollar amounts are based on a currency translation of SEK 9.60 per dollar as published by Reuters on December 31, 2022. The amounts include vacation pay received by Messrs.
The 2021 dollar amounts are based on a currency translation of SEK 9.04 per dollar as published by Reuters on December 31, 2021. The 2022 dollar amounts are based on a currency translation of SEK 9.60 per dollar as published by Reuters on December 31, 2022.
Retirement Savings and Other Benefits Our retirement programs are designed to comply with local laws and regulations. For our employees who reside in Sweden, including Messrs. Ek, Söderström, and Norström, we participate in an occupational pension plan.
Retirement Savings and Other Benefits Our retirement programs are designed to comply with local laws and regulations. For our employees who reside in Sweden, including Mr. Söderström (and, for a portion of 2023, Mr. Norström), we participate in an occupational pension plan.
In 2021, we entered into collective bargaining agreements with The Ringer and Gimlet unions, respectively, to be in effect until February 2024. In 2022, we entered into a collective bargaining agreement with the Parcast union to be in effect until February 2025. E.
In 2021, we entered into collective bargaining agreements with The Ringer and Gimlet unions, respectively, to be in effect until February 2024. In 2022, we entered into a collective bargaining agreement with the Parcast union to be in effect until February 2025. We are in the process of negotiating renewed collective bargaining agreements with The Ringer and Gimlet unions, respectively.
To succeed in this environment, we must continuously develop solutions that meet the needs of our rapidly growing user base in a rapidly changing environment, efficiently develop and refine new and existing products and services, and demonstrate a strong return on investment to our advertisers.
This industry is characterized by rapidly changing market requirements and the emergence of new competitors. To succeed in this environment, we must continuously develop solutions that meet the needs of our rapidly growing user base in a rapidly changing environment, efficiently develop and refine new and existing products and services, and demonstrate a strong return on investment to our advertisers.
Ek a base salary; however, the people experience and compensation committee may, from time to time, provide Mr. Ek with a discretionary bonus as it determines to be appropriate. Mr. Ek did not receive a bonus for fiscal years 2020, 2021, or 2022. (5) For 2022, amount reflects $181,085 for home security services.
Ek a base salary; however, the people experience and compensation committee may, from time to time, provide Mr. Ek with a discretionary bonus as it determines to be appropriate. Mr. Ek did not receive a bonus for fiscal years 2021, 2022, or 2023. (5) For 2023, amount reflects $1,431,654 for personal security services.
For the 2020 Plan and 72 Table of Contents 2021 Plan, if the board allows the unvested options to continue vesting, 3/96th of the unvested options will vest after the first cliff vesting date as described above, and 1/96th of the remaining options will vest on each subsequent regularly scheduled vesting occasion.
If the board allows the unvested options to continue vesting, 3/96th of the unvested options will vest after the first cliff vesting date as described above, and 1/96th of the remaining options will vest on each subsequent regularly scheduled vesting occasion.
From time to time, we have engaged temporary employees to fill open positions. As of December 31, 2022, 76 employees of The Ringer, 38 employees of Gimlet, and 36 employees of Parcast, wholly-owned indirect subsidiaries of the Company, were represented by the Writers Guild of America-East labor union.
From time to time, we have engaged temporary employees to fill open positions. As of December 31, 2023, 74 employees of The Ringer, 18 employees of Gimlet, and 4 employees of Parcast, wholly-owned indirect subsidiaries of the Company, were represented by the Writers Guild of America-East labor union.
Marshall and the other members of TCV VII Management and TCV VIII Management (collectively, the “Management Members”) may be deemed to have the shared power to dispose or direct the disposition of the 18,496 ordinary shares, the 23,527 unvested non-qualified stock options, and the 15,632 vested non-qualified stock options held by Mr. Marshall.
Marshall and the other members of TCV VII Management and TCV VIII Management (collectively, the “Management Members”) may be deemed to have the shared power to dispose or 70 Table of Contents direct the disposition of the 18,496 ordinary shares, the 18,708 unvested non-qualified stock options, and the 25,421 vested non-qualified stock options held by Mr. Marshall.
Thomas Staggs is a member of our board of directors. He has been a member of our board of directors since June 13, 2017, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. In addition to his role on our board of directors, Mr.
He has been at Netflix since 2000. Thomas Staggs is a member of our board of directors. He has been a member of our board of directors since June 13, 2017, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023.
The following table describes our average number of employees by department per fiscal year: December 31, % Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Content Production and Customer Service 785 705 580 11 % 22 % Sales and Marketing 2,043 1,654 1,436 24 % 15 % Research and Development 4,169 3,175 2,624 31 % 21 % General and Administrative 1,362 1,083 944 26 % 15 % 69 Table of Contents The following table describes our average number of employees by geographic location: December 31, 2022 2021 2020 United States 4,332 3,435 2,746 Sweden 1,853 1,845 1,688 United Kingdom 881 576 463 Additionally, for the years ended December 31, 2022, 2021, and 2020, we had an average of approximately 1,294, 761, and 687 employees and contractors, respectively, in the aggregate in Australia, Argentina, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Mexico, Netherlands, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, Türkiye, and United Arab Emirates.
The following table describes our average number of employees by department per fiscal year: December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Content Production and Customer Service 663 785 705 (16) % 11 % Sales and Marketing 2,403 2,043 1,654 18 % 24 % Research and Development 4,719 4,169 3,175 13 % 31 % General and Administrative 1,338 1,362 1,083 (2) % 26 % 68 Table of Contents The following table describes our average number of employees by geographic location: December 31, 2023 2022 2021 United States 4,574 4,332 3,435 Sweden 1,706 1,853 1,845 United Kingdom 1,048 881 576 Additionally, for the years ended December 31, 2023, 2022, and 2021, we had an average of approximately 1,795, 1,294, and 761 employees and contractors, respectively, in the aggregate in Australia, Argentina, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, Türkiye, and United Arab Emirates.
Directors and Senior Management The following table sets forth the names, ages, and positions of our senior management and directors as of the date of this report: Name Age Position Daniel Ek 39 Founder, Chief Executive Officer, Chairman, and Director Martin Lorentzon 53 Co-Founder and Director Katarina Berg 54 Chief Human Resources Officer Dustee Jenkins 44 Global Head of Public Affairs Eve Konstan 54 General Counsel Alex Norström 46 Co-President, Chief Business Officer Gustav Söderström 46 Co-President, Chief Product & Technology Officer Paul Vogel 49 Chief Financial Officer Christopher Marshall 54 Lead Independent Director Barry McCarthy 69 Director Shishir Mehrotra 43 Director Heidi O’Neill 58 Director Ted Sarandos 58 Director Thomas Staggs 62 Director Cristina Stenbeck (1) 45 Director Mona Sutphen 55 Director Padmasree Warrior 62 Director ______________________ (1) Ms.
Directors and Senior Management The following table sets forth the names, ages, and positions of our senior management and directors as of the date of this report: Name Age Position Daniel Ek 40 Founder, Chief Executive Officer, Chairman, and Director Martin Lorentzon 54 Co-Founder and Director Katarina Berg 55 Chief Human Resources Officer Dustee Jenkins 45 Chief Public Affairs Officer Eve Konstan 55 General Counsel Alex Norström 47 Co-President, Chief Business Officer Gustav Söderström 47 Co-President, Chief Product & Technology Officer Paul Vogel (1) 50 Chief Financial Officer Christopher Marshall 55 Lead Independent Director Barry McCarthy 70 Director Shishir Mehrotra 44 Director Heidi O’Neill 59 Director Ted Sarandos 59 Director Thomas Staggs 63 Director Mona Sutphen 56 Director Padmasree Warrior 63 Director ______________________ (1) As previously announced, Mr.
Ek’s employment agreement also includes employee and customer non-solicitation clauses that will apply for 12-months post-termination and that do not require us to pay any additional consideration. Our employment agreements with Messrs. Norström and Söderström provide for an indefinite employment period, a base salary and participation in our benefit plans. The agreements further provide that we can terminate Mr.
Ek’s employment agreement also includes employee and customer non-solicitation clauses that will apply for 12 months post-termination and that do not require us to pay any additional consideration. Our employment agreements with Messrs. Norström, Söderström, and Vogel, and Ms. Jenkins provide for an indefinite employment period, a base salary and participation in our benefit programs and long-term incentive compensation plans.
(2) Of each option grant, 3/48ths of the total number of options granted vested on the third calendar month following the date of grant, and thereafter 1/48th of the total number of options granted vests on the first day of each calendar month thereafter, subject to continued employment.
The stock options generally vest as to 3/48ths of the total number of options granted on the third calendar month following the date of grant, and as to 1/48th of the total number of options granted on the first day of each calendar month thereafter, subject to continued employment.
As a result of this compensation practice, we have tied a greater percentage of each executive leadership team member’s total compensation to shareholder returns and kept cash compensation at modest levels, while providing the opportunity to be well-rewarded through equity if we perform well over time.
As a result of this compensation practice, a greater percentage of each executive leadership team member’s total compensation has been tied to shareholder returns, with cash compensation kept at modest levels, which provides an opportunity to be well-rewarded through equity if we perform well over time.
(11) Messrs. Söderström and Norström were each paid in Swedish Krona in 2020, 2021, and 2022. The 2020 dollar amounts are based on a currency translation of SEK 8.23 per dollar as published by Reuters on December 31, 2020.
These 2023 dollar amounts are based on a currency translation of SEK 10.08 per dollar as published by Reuters on December 31, 2023. (9) Messrs. Söderström and Norström were each paid in Swedish krona in 2021, 2022, and 2023.
O’Neill previously served as a member of the board of directors of Skullcandy, where she also was the Chair of the compensation committee, and the Nike School Innovation Fund, of which she was a founding member. Ms. O’Neill also serves as the President of Consumer and Marketplace, a division of Nike, Inc.
O'Neill serves on the board of directors of Hyatt Hotels Corp. She previously served as a member of the board of directors of Skullcandy, where she also was the Chair of the compensation committee, and the Nike School Innovation Fund, of which she was a founding member. Ms.
For further information on our incentive mix program, please see “—Long Term Incentives” above. Each such grant generally vests ratably over four years. The non-employee director RSUs will fully vest upon the occurrence of a change in control.
For further information on our incentive mix program, please see “—Long Term Incentives” above. Each such grant generally vests ratably over four years. The non-employee director RSUs will fully vest upon the occurrence of a change in control. Like employee RSUs, the RSUs are settled within 30 days following vesting, and unvested RSUs are forfeited on termination of service.
Norström and Söderström will also be entitled to pay in lieu of notice through the end of the notice period. If Mr. Norström’s or Söderström’s employment is terminated within 12 months after a change in control of the Company, or if either Mr.
Jenkins will also be entitled to pay in lieu of notice through the end of the notice period, subject to compliance with certain restrictive covenants. If Mr. Norström’s, Söderström’s, or Vogel’s employment is terminated within 12 months after a change in control of the Company, if Mr.
D. Employees In 2022, 2021, and 2020, we had 8,359, 6,617, and 5,584 full-time employees on average, respectively.
D. Employees In 2023, 2022, and 2021, we had 9,123, 8,359, and 6,617 full-time employees on average, respectively.
As noted above, for the cash awards granted in 2022, 3/48ths of the cash payment vested on the third calendar month following the date of grant, and thereafter 1/48th of the cash payment granted vests on the first day of each calendar month thereafter, subject to continued employment.
As noted above, for the cash awards granted in 2023, 3/48ths of the cash payment vested on the third calendar month following the date of grant, and thereafter 1/48th of the cash payment granted vests on the first day of each calendar month thereafter, subject to continued employment. Warrants On July 1, 2019, Mr. Ek purchased, through D.G.E.
Martin Lorentzon is our co-founder and a member of our board of directors. He has been a member of our board of directors since July 21, 2008, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2022. Mr.
He has been a member of our board of directors since July 21, 2008, and his term will expire on the date of the general meeting of shareholders to be held to approve the annual accounts of 2023. Mr. Lorentzon previously served as Chairman of our board of directors from 2008 to 2016.
(4) Includes 13,060 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Ms. Ostroff related to the vesting of such RSUs. (5) Includes 6,910 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Mr.
(4) Includes 3,618 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Ms. Jenkins related to the vesting of such RSUs. (5) Includes 11,205 RSUs which the Company retained as part of a net share settlement to satisfy the applicable tax withholding liability of Mr.
Investments, upon the effective net settlement of 1,600,000 warrants that were granted on July 13, 2017. On July 1, 2019, Mr. Ek purchased, through D.G.E. Investments, 800,000 non-compensatory warrants in the Company, pursuant to a subscription agreement. Each warrant was purchased for $20.61, the then-current fair market value per share. The terms and conditions for the warrants provide that D.G.E.
On July 1, 2022, 800,000 warrants that were granted on July 1, 2019 expired unexercised. On August 23, 2021, Mr. Ek purchased, through D.G.E. Investments, 800,000 non-compensatory warrants in the Company, pursuant to a subscription agreement. Each warrant was purchased for $46.01, the then-current fair market value per share. The terms and conditions for the warrants provide that D.G.E.
In addition, for certain employees, including the named executive officers, if within six months following a change in control, the individual (i) resigns because he or she is required to perform duties that are materially inconsistent with the ones normally performed by someone in such position or (ii) otherwise experiences a constructive termination, all of the individual’s outstanding unvested RSUs will accelerate and vest.
In addition, for certain employees, including the named executive officers, if in connection with or within six months following a change in control, the individual (i) resigns because he or she is required to perform duties that are materially inconsistent with the ones normally performed by someone in such position or (ii) otherwise experiences a constructive termination, all of the individual’s outstanding unvested RSUs will accelerate and vest. 71 Table of Contents For our employees in certain countries, upon vesting of an RSU, the Company is required to pay a social security contribution in an amount equal to the profit an employee realizes upon vesting multiplied by the applicable tax rate.
Lorentzon founded Tradedoubler, an internet marketing company based in Stockholm, Sweden, and initially served as a member of its board of directors. Additionally, Mr. Lorentzon has held senior roles at Telia Company and Cell Ventures. He holds a Master of Science in Civil Engineering from the Chalmers University of Technology. Katarina Berg is our Chief Human Resources Officer.
Additionally, Mr. Lorentzon has held senior roles at Telia Company and Cell Ventures. He holds a Master of Science in Civil Engineering from the Chalmers University of Technology. Katarina Berg is our Chief Human Resources Officer.
We also may cancel an optionee’s options upon the optionee’s commission of a material breach of the terms and conditions governing the options. The board of directors may provide for a new exercise period upon a change in control. If the board of directors sets a new exercise period, 50% of each holder’s unvested options will accelerate and vest.
We also may cancel an optionee’s options upon the optionee’s commission of a material breach of the terms and conditions governing the options. The board of directors may, among other things, provide for a new exercise period upon a change in control.
Investments, an entity indirectly wholly owned by him , as described below in “Warrants.” 63 Table of Contents The current compensation levels of our executive leadership team, including the named executive officers, primarily reflect the varying roles and responsibilities of each individual.
Investments, an entity indirectly wholly owned by him , as described below in “Warrants.” The current compensation levels of our executive leadership team, including the named executive officers, primarily reflect the varying roles and responsibilities of each individual. Engagement of Compensation Consultant The people experience and compensation committee has engaged the services of Compensia to provide executive compensation advisory services.
Ek has not received a base salary. (2) Messrs. Söderström, and Norström are each paid in Swedish Krona. Such amounts are based on the exchange rate of SEK 9.60 per dollar as of December 31, 2022 as published by Reuters.
Ek has not received a base salary. (2) Mr. Norström was paid in Swedish krona and British pound. Such amounts are based on the exchange rate of SEK 10.08 per dollar and GBP 0.79 per dollar as of December 31, 2023 as published by Reuters. (3) Mr. Söderström was paid in Swedish krona.
We currently do not have employment agreements or other service contracts with any members of our board of directors, except for Mr. Ek. Mr. Ek’s employment agreement provides for an indefinite term that automatically expires upon Mr. Ek’s retirement at age 65, a fixed monthly salary (although the board of directors determined that, commencing July 1, 2017, Mr.
We currently do not have employment agreements or other service contracts with any members of our board of directors, except for Mr. Ek. Mr. Ek’s employment agreement provides for an indefinite term that automatically expires upon Mr.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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(5) Includes 4,276,200 ordinary shares held of record by TME Hong Kong, 9,076,240 ordinary shares held of record by Image Frame, 3,227,920 ordinary shares held of record by Tencent Mobility Limited, and 51,609 ordinary shares held by Distribution Pool Limited received in connection with a distribution in kind of the Company’s ordinary shares by a fund in which an affiliate of Distribution Pool Limited is a limited partner.
(4) Includes 4,276,200 ordinary shares held of record by TME Hong Kong, 9,076,240 ordinary shares held of record by Image Frame, 3,227,920 ordinary shares held of record by Tencent Mobility Limited, and 51,609 ordinary shares held by Distribution Pool Limited received in connection with a distribution in kind of the Company’s ordinary shares by a fund in which an affiliate of Distribution Pool Limited is a limited partner.
Major Shareholders The following table sets forth, as of December 31, 2022 (except where noted), the number of our ordinary shares and beneficiary certificates held by each person we know to be the beneficial owner of more than 5% of our ordinary shares and beneficiary certificates, respectively, and the percentage of total votes held by each such person.
Major Shareholders The following table sets forth, as of December 31, 2023 (except where noted), the number of our ordinary shares and beneficiary certificates held by each person we know to be the beneficial owner of more than 5% of our ordinary shares and beneficiary certificates, respectively, and the percentage of total votes held by each such person.
The beneficiary certificates, subject to certain exceptions, are non-transferable and shall be automatically canceled for no consideration in the case of sale or transfer of the ordinary share to which they are linked. See “Item 10.B. Memorandum and Articles of Association.” (7) Mr.
The beneficiary certificates, subject to certain exceptions, are non-transferable and shall be automatically canceled for no consideration in the case of sale or transfer of the ordinary share to which they are linked. See “Item 10.B. Memorandum and Articles of Association.” (6) Mr.
Lorentzon that are exercisable within 60 days of December 31, 2022. Mr. Lorentzon is the sole shareholder of Amaltea, which is the sole shareholder of Rosello. As such, each of Amaltea and Mr. Lorentzon may be deemed to share beneficial ownership of the shares held of record by Rosello.
Lorentzon that are exercisable within 60 days of December 31, 2023. Mr. Lorentzon is the sole shareholder of Amaltea, which is the sole shareholder of Rosello. As such, each of Amaltea and Mr. Lorentzon may be deemed to share beneficial ownership of the shares held of record by Rosello.
Our beneficiary certificates carry no economic rights and are issued to provide the holders of such beneficiary certificates additional voting rights; however, each beneficiary certificate entitles its holder to one vote. 78 Table of Contents In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the ordinary shares issuable pursuant to options, warrants, and RSUs that are exercisable or settled within 60 days of December 31, 2022.
Our beneficiary certificates carry no economic rights and are issued to provide the holders of such beneficiary certificates additional voting rights; however, each beneficiary certificate entitles its holder to one vote. 76 Table of Contents In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the ordinary shares issuable pursuant to options, warrants, and RSUs that are exercisable or settled within 60 days of December 31, 2023.
Related Party Transactions Luxembourg law prescribes certain procedures for related party transactions with directors, and our articles of association mandate that directors with a direct or indirect personal interest in any transaction that conflicts with the Company’s 79 Table of Contents interest shall make that interest known and recorded in the board minutes and shall not participate in discussing or voting on such transaction.
Related Party Transactions Luxembourg law prescribes certain procedures for related party transactions with directors, and our articles of association mandate that directors with a direct or indirect personal interest in any transaction that conflicts with the Company’s interest shall make that interest known and recorded in the board minutes and shall not participate in discussing or voting on such transaction.
Share Ownership—Warrants” and Note 26 to the consolidated financial statements included elsewhere in this report for a description of the transactions relating to the warrants purchased by Messrs. Ek and Lorentzon. We have entered into an indemnification agreement with each of our directors, executive officers, and certain other employees.
Share Ownership—Warrants” and Note 26 to the consolidated financial statements included elsewhere in this report for a description of the transactions relating to the warrants purchased by Mr. Ek. We have entered into an indemnification agreement with each of our directors, executive officers, and certain other employees.
(6) Our shareholders have authorized the issuance of up to 1,400,000,000 beneficiary certificates to shareholders of the Company without reserving to our existing shareholders a preemptive right to subscribe for the beneficiary certificates issued in the future.
(5) Our shareholders have authorized the issuance of up to 1,400,000,000 beneficiary certificates to shareholders of the Company without reserving to our existing shareholders a preemptive right to subscribe for the beneficiary certificates issued in the future.
The business address of D.G.E. Holding and D.G.E. Investments is 1 Alexandrou Panagouli, Office 2B, Novel Tower, 6057 Larnaca, Cyprus. The business address of Mr. Ek is c/o Spotify AB Regeringsgatan 19, 111 53 Stockholm, Sweden. (2) Includes 21,469,762 ordinary shares held by Rosello. Also includes 38,719 ordinary shares issuable pursuant to options that are held of record by Mr.
Holding and D.G.E. Investments is 1 Alexandrou Panagouli, Office 2B, Novel Tower, 6057 Larnaca, Cyprus. The business address of Mr. Ek is c/o Spotify AB Regeringsgatan 19, 111 53 Stockholm, Sweden. (2) Includes 21,469,762 ordinary shares held by Rosello. Also includes 52.039 ordinary shares issuable pursuant to options that are held of record by Mr.
In addition, our articles of association provide that any such conflict of interest must be reported to the next general meeting of shareholders of the Company prior to any resolution taking place at such meeting. Please see “Item 6. Directors, Senior Management and Employees—E.
In addition, our articles of association provide that any such conflict of interest must be reported to the next general meeting of shareholders of the Company prior to any resolution taking place at such meeting. 77 Table of Contents Please see “Item 6. Directors, Senior Management and Employees—E.
As such, Mr. Ek may be deemed to share beneficial ownership of the ordinary shares held of record by TME Hong Kong, Image Frame, Tencent Mobility Limited, and Distribution Pool Limited. Additionally, each of D.G.E. Holding and Mr. Ek may be deemed to share beneficial ownership of the ordinary shares held of record by D.G.E. Investments.
Ek may be deemed to share beneficial ownership of the ordinary shares held of record by TME Hong Kong, Image Frame, Tencent Mobility Limited, and Distribution Pool Limited. Additionally, each of D.G.E. Holding and Mr. Ek may be deemed to share beneficial ownership of the ordinary shares held of record by D.G.E. Investments. The business address of D.G.E.
Mr. Ek is the sole shareholder of D.G.E. Holding, which is the sole shareholder of D.G.E. Investments. Mr. Ek exercises voting power over the ordinary shares held of record by TME Hong Kong, Image Frame, Tencent Mobility Limited, and Distribution Pool Limited through his indirect ownership of D.G.E. Investments, which holds an irrevocable proxy with regard to these ordinary shares.
Ek exercises voting power over the ordinary shares held of record by TME Hong Kong, Image Frame, Tencent Mobility Limited, and Distribution Pool Limited through his indirect ownership of D.G.E. Investments, which holds an irrevocable proxy with regard to these ordinary shares. As such, Mr.
We have issued ten beneficiary certificates per ordinary share issued by us and held of record to entities beneficially owned by our founders, Daniel Ek and Martin Lorentzon, for a total of 349,876,040 beneficiary certificates outstanding as of December 31, 2022.
We have issued ten beneficiary certificates per ordinary share issued by us and held of record to entities beneficially owned by our founders, Daniel Ek and Martin Lorentzon, for a total of 343,841,690 beneficiary certificates outstanding as of December 31, 2023.
As of December 31, 2022, the registrar and transfer agent for our Company reported that 157,820,962 of our ordinary shares were held by 426 record holders in the United States and none of our beneficiary certificates were held by record holders in the United States.
As of December 31, 2023, the registrar and transfer agent for our Company reported that 162,752,342 of our ordinary shares were held by 422 record holders in the United States and none of our beneficiary certificates were held by record holders in the United States.
(3) Based on information reported on Schedule 13G/A, as filed by Baillie Gifford & Co (Scottish partnership) (“Baillie Gifford”) with the SEC on January 20, 2023, Baillie Gifford has the following powers with respect to our ordinary shares: (i) sole voting power: 21,446,037; (ii) shared voting power: 0; (c) sole dispositive power: 27,937,554; and (iv) shared dispositive power: 0.
(3) Based on information reported on Schedule 13G/A, as filed by Baillie Gifford & Co (Scottish partnership) (“Baillie Gifford”) with the SEC on January 26, 2024, Baillie Gifford has the following powers with respect to our ordinary shares: (i) sole voting power: 17,522,563; (ii) shared voting power: 0; (c) sole dispositive power: 23,657,094; and (iv) shared dispositive power: 0.
The percentage of beneficial ownership for the following table is based on 193,293,269 total ordinary shares and 349,876,040 total beneficiary certificates outstanding as of December 31, 2022.
The percentage of beneficial ownership for the following table is based on 197,143,389 total ordinary shares and 343,841,690 total beneficiary certificates outstanding as of December 31, 2023.
Rowe Price (4) 16,102,881 8.3 % — — 3.0 % Tencent (5) 16,631,969 8.6 % — — — (7) ________________________ (1) Includes 14,499,407 ordinary shares that are held by D.G.E. Investments. Also includes 800,000 ordinary shares issuable pursuant to warrants that are held of record by D.G.E. Investments that are exercisable or settled within 60 days of December 31, 2022.
Investments. Also includes 800,000 ordinary shares issuable pursuant to warrants that are held of record by D.G.E. Investments that are exercisable or settled within 60 days of December 31, 2023. Mr. Ek is the sole shareholder of D.G.E. Holding, which is the sole shareholder of D.G.E. Investments. Mr.
Ordinary Shares Beneficiary Certificates (6) Percent of Total Voting Power Name Number Percent Number Percent Daniel Ek (1)(6) 31,931,376 16.5 % 140,278,420 40.1 % 31.7 % Martin Lorentzon (2) 21,514,864 11.1 % 209,597,620 59.9 % 42.6 % Baillie Gifford & Co (3) 27,937,554 14.5 % — — 5.1 % T.
Ordinary Shares Beneficiary Certificates (5) Percent of Total Voting Power Name Number Percent Number Percent Daniel Ek (1)(6) 30,856,376 15.6 % 134,244,070 39.0 % 30.5 % Martin Lorentzon (2) 21,528,184 10.9 % 209,597,620 61.0 % 42.7 % Baillie Gifford & Co (3) 23,657,094 12.0 % — — 4.4 % Tencent (4) 16,631,969 8.4 % — — — (6) ________________________ (1) Includes 13,424,407 ordinary shares that are held by D.G.E.
The business address for Baillie Gifford is Carlton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK. (4) Based on information reported on Schedule 13G/A, as filed by T. Rowe Price Associates, Inc. (“T. Rowe Price”) with the SEC on February 14, 2022, T.
The business address for Baillie Gifford is Carlton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, U.K.
Removed
Rowe Price has the following powers with respect to our ordinary shares: (i) sole voting power: 6,915,777; (ii) shared voting power: 0; (iii) sole dispositive power: 16,102,881; and (iv) shared dispositive power: 0. The business address of T. Rowe Price is 100 E. Pratt St, Baltimore, MD 21202.

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