Spotify AB was Spotify's prototype. Daniel Ek and Martin Lorentzon wanted to make the platform as lightweight and intuitive as possible. They aimed at fighting piracy in the music market.
The only music alternative for illegal Napster was iTunes, with $2 per single song. Ek and Lorentzonwanted to be in the middle. They focused on reducing latency, so that all the songs would be played with no waiting time - just like right from a hard drive.
They contacted music bloggers in Sweden and asked them to beta-test Spotify. The testers loved it because of its quality, and then they spread the word. Spotify became an instant jackpot in the music industry.
Getting a real catalog meant convincing the major labels to license their music to a free, ad-supported product instead of treating it like another Napster. Sony BMG, Universal, Warner, and the independent label body Merlin all signed on, and instead of a pure royalty deal, each took equity in Spotify itself. A December 2008 filing later uncovered by Music Business Worldwide showed the labels and Merlin together holding close to 18% of the company before it ever launched to the public.
Spotify went live on October 7, 2008, in Sweden, the UK, France, Spain, Norway, and Finland, invite only at first. The UK opened free registration in February 2009, then had to close it again that September after a surge tied to the mobile-app launch, reverting to invites. By October 2010, Spotify had reached 10 million registered users across Europe, 500,000 of them paying. The United States, the market the labels cared about most, didn't get Spotify until July 2011, almost three years after the European launch, because those negotiations took that much longer to close.