Spotify was founded in 2006 in Stockholm, Sweden,  by Daniel Ek, former CTO of Stardoll, and Martin Lorentzon, co-founder of Tradedoubler. According to Ek, the company's title was initially misheard from a name shouted by Lorentzon. Later they conceived a portmanteau of "spot" and "identify".

In February 2009, Spotify opened public registration for the free service tier in the United Kingdom. Registrations surged following the release of the mobile service, leading Spotify to halt registration for the free service in September, returning the UK to an invitation-only policy.

Spotify launched in the United States in July 2011, and offered a six-month, ad-supported trial period, during which new users could listen to an unlimited amount of music for free. In January 2012, the free trial periods began to expire, limiting users to ten hours of streaming each month and five plays per song. Using PC streaming, a similar structure to the one used today allowed the listener to play songs freely, but with ads every 4–7 songs depending on listening duration. Later that same year, in March, Spotify removed all limits on the free service tier indefinitely, including mobile devices.