Spotify was founded in 2006 in Stockholm, Sweden,[13] by Daniel Ek, former CTO of Stardoll, and Martin Lorentzon, co-founder of Tradedoubler.[14][15] 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".[16] Daniel Ek's initial pitch to Lorentzon was not initially related to music, but rather a way for streaming content such as video, digital films, images or music to drive advertising revenue.[17]

In February 2009, Spotify opened public registration for the free service tier in the United Kingdom.[14] 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.[18]

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.[19] 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.[20]

In April 2016, Ek and Lorentzon wrote an open letter to Swedish politicians, demanding action in three areas that they claimed hindered the company's ability to recruit top talent as Spotify grew, including access to flexible housing, better education in the programming and development fields, and stock options. Ek and Lorentzon wrote that to continue competing in a global economy, politicians needed to respond with new policies, or thousands of Spotify jobs would be moved from Sweden to the United States.[21]

In February 2017, Spotify announced the expansion of its United States operations in Lower Manhattan, New York City, at 4 World Trade Center, adding approximately 1,000 new jobs and retaining 832 existing positions.[22] The company's US headquarters are in New York City's Flatiron District.[23]

On 14 November 2018, the company announced 13 new markets in the MENA region, including the creation of a new Arabic hub and several playlists.[24]

In October 2015, "Thinking Out Loud" by Ed Sheeran became the first song to pass 500 million streams.[25] A month later, Spotify announced that "Lean On" by Major Lazer and DJ Snake featuring MØ was its most-streamed song of all time with over 525 million streams worldwide.[26] In April 2016, Rihanna overtook Justin Bieber to become the biggest artist on Spotify, with 31.3 million monthly active listeners.[27] In May 2016, Rihanna was overtaken by Drake with 31.85 million monthly listeners.[28] In December 2016, Drake's just-under 36 million monthly listeners were overtaken by the Weeknd's 36.068 million.[29] Later that same month, Drake's song "One Dance" became the first song to hit one billion streams on Spotify.[30][31] Upon its release in August 2017, the single "Look What You Made Me Do" by Taylor Swift earned over eight million streams within 24 hours, breaking the record for the most single-day streams for a track.[32] On 19 June 2018, XXXTentacion's hit single "Sad!" broke Swift's single-day streaming record, amassing 10.4 million streams the day after he was fatally shot in Florida.[33]

In March 2011, Spotify announced a customer base of 1 million paying subscribers across Europe,[34] and by September 2011, the number of paying subscribers had doubled to two million.[35] In August 2012, Time reported 15 million active users, four million being paying Spotify subscribers.[36] User growth continued, reaching 20 million total active users, including five million paying customers globally and one million paying customers in the United States, in December 2012.[37] By March 2013, the service had 24 million active users, six million being paying subscribers,[38] which grew to 40 million users (including ten million paying) in May 2014,[39] 60 million users (including 15 million paying) in December 2014, 75 million users (20 million paying) in June 2015, 30 million paying subscribers in March 2016,[40] 40 million paying subscribers in September 2016,[41] and 100 million total users in June 2016.[42] In April 2020, Spotify reached 133 million premium users.[43] In countries affected by the COVID-19 pandemic, Spotify registered a fall in users in late February, but it has seen a recovery.[44] In March 2022, Spotify had 182 million premium subscribers.[45] At the end of Q2 2022, Spotify reported 188 million paying subscribers and 433 million total users.[46] At the end of Q3 2024, Spotify reported 252 million subscribers and 640 million monthly active users.[47]

The Financial Times reported in March 2017 that, as part of its efforts to renegotiate new licensing deals with music labels, Spotify and major record labels had agreed that Spotify would restrict some newly released albums to its Premium tier, with Spotify receiving a reduction in royalty fees to do so. Select albums would be available only on the Premium tier for a period of time, before general release. The deal "may be months away from being finalized, but Spotify is said to have cleared this particular clause with major record labels".[48][49][50] New reports in April confirmed that Spotify and Universal Music Group had reached an agreement to allow artists part of Universal to limit their new album releases to the Premium service tier for a maximum of two weeks. Spotify CEO Daniel Ek commented that "We know that not every album by every artist should be released the same way, and we've worked hard with UMG to develop a new, flexible release policy. Starting today, Universal artists can choose to release new albums on premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy".[51][52][53] It was announced later in April that this type of agreement would be extended to indie artists signed to the Merlin Network agency.[54][55]