In 2005, Daniel Ek and Martin Lorentzon met in Stockholm and quickly bonded over business ideas—and a shared frustration with how hard it was to access music legally. Piracy ruled the internet then, and finding the songs you wanted often meant wading through torrents or sketchy downloads. Back home in India, it was no different. Your college playlist likely came from LimeWire, Orkut scraps, or a cousin’s Pendrive passed around the hostel. Legal music was either too expensive or too clunky, and no one paid unless they had to.
Ek and Lorentzon asked a simple question: What if there was a way to stream music instantly, legally, and affordably? That question led to Spotify. When it finally launched in 2008, it wasn’t just a product—it was a rebuttal to piracy. It offered what illegal platforms did, minus the hassle. Nearly two decades and billions in losses later, the gamble paid off. In 2024, Spotify posted its first-ever full-year operating profit: €1.4 billion. Today, with 675 million users and 263 million paying subscribers, it’s not just the largest music streaming service—it’s one of the most unexpected turnarounds in tech. So, how did a Swedish startup convince the world, including India, to start paying?
The freemium gamble or the gamble of freemium?
Spotify’s genius wasn’t inventing music streaming—it was making it free, legally. Its “free-mium” model, offering unlimited ad-supported music with the option to upgrade, was a direct challenge to piracy. The juicier question they placed in front of the public was why risk viruses on torrent sites when you could stream everything for free, and that too legally.
When it launched in India in 2019, it was late to the party. JioSaavn, Gaana, Wynk and even YouTube Music were already competing for ears and wallets. But Spotify brought something others didn’t: global taste with local sensibility. The app served up curated Hindi playlists, Carnatic and indie rock side-by-side, and algorithmic recommendations that understood what you liked. By 2025, Spotify had over 55 million users in India. While only a fraction pay, India became one of its top five markets by user base. The country is crucial to Spotify’s growth story—not as a source of profit today, but as a bet on tomorrow’s paying customer.
Fighting piracy with UX
Spotify didn’t try to guilt users out of piracy; it simply out-designed it. The app was light, fast, and intuitive. You could shuffle songs on just another Android phone, download them on patchy 3G, and move seamlessly from Lata Mangeshkar to BTS to Divine. And while Gaana or YouTube might throw in Bollywood remixes or unrelated tracks, Spotify built trust by letting you stay in your vibe. In India, piracy was never just about avoiding payments, it was about access. Spotify gave listeners dignity in their choices. You didn’t need to be rich to listen legally.
But freemium came with a price, in the literal sense. Spotify paid nearly 70% of its revenue to record labels, publishers, and artists. In 2024 alone, it shelled out over $10 billion in royalties. India made this harder. Premium users here pay just Rs 129/month, which is less than two dollars. Compare that to $10 in the US. While India helped Spotify’s global user numbers surge, it dragged down average revenue per user (ARPU). And yet, it stuck with the country, even launching prepaid plans (Rs 7/day, Rs 25/week) tailored to local spending habits. As Spotify’s subscriber ratio dipped, from 46% in 2019 to 39% in 2024, it knew the freemium engine needed fuel. And that is where, like a chef’s kiss, they brought in advertising.
The ads (I know you can hear the woman right now)
Spotify began treating its free-tier audience as a goldmine. With over 400 million non-paying users, it built Spotify Ad Studio (now Ads Manager) to help brands target listeners better by mood, language, genre, and even time of day. In India, brands like Swiggy, Cred, and small D2C players are increasingly experimenting with audio ads. Podcast sponsorships—like Ranveer Allahbadia’s The Ranveer Show or IVM Podcasts—offer brands new ways to connect.
The Indian ear
Spotify’s next bet? Owning more of your listening time.
Spotify’s Indian strategy is long-haul. It knows ARPUs (Average Revenue Per Unit) won’t match the West anytime soon. But if it can crack monetisation, through advertising, bundling, or loyalty pricing, it could make the subcontinent not just its largest market, but its most profitable one. Its India story isn’t perfect. Gaana is still more popular in small towns. YouTube remains king in Hindi music. And the average Indian listener still hesitates to pay for what they can stream for free.
But Spotify isn’t rushing. It never has. From fighting piracy in Sweden to selling audio ads in Surat, it’s played the long game. And finally, in 2024, the tune changed: for the first time, the business started singing back in profit.