Spotify has a strong business and its growing popularity, but it’s also a growing competitor in the music industry.
The company is facing increasing competition from Apple Music, Amazon Music, Spotify’s own YouTube Music, Rdio, Beats Music and others.
Spotify has invested heavily in acquiring music-streaming services.
In 2018, it bought Beats Music for $3.4bn and is looking to buy YouTube Music.
Its new chief executive, Richard Taylor, said Spotify would build on its success with its own music services.
But he warned that “this is a very different business than the music business that we started with”.
He said Spotify had been “unable to meet our commitments to investors, to partners and to customers”.
In January 2018, Spotify signed an agreement with Google to allow the search giant to offer users the ability to search Spotify’s music for free.
But Taylor said Spotify needed to “make a big push” in the search market to capture more customers.
“The music business is going to be the next big business in the next 20 years,” he said.
Spotify’s recent acquisition of Beats Music may not be as disruptive as Apple Music and other competitors.
But it will be a significant shakeup of the music-music-streamer business.
The deal with Beats has been controversial.
Beats was acquired by Apple for $320m in 2016.
Apple Music had previously paid Beats an initial $1bn to stream music from its own servers, but Apple said Beats had “not fulfilled its obligations”.
Spotify, meanwhile, has struggled to make headway with its streaming services.
It was acquired in 2018 by Google for $1.9bn.
Spotify is now paying $2bn a year in royalties to Google.
Its latest payment to Google came from this year’s US$1.3bn deal for Beats.
Spotify wants to be able to sell the service to advertisers.
Taylor said the company would use the money from the deal to expand its reach, but also to invest in its music business.
“It’s not just the music service that we’re looking to grow, but the music services and the music apps that are our business,” he told the BBC.
Spotify and Apple Spotify has been acquired by Google in 2018 for $321m.
The acquisition was criticised by the music companies.
“This is yet another example of Spotify taking a route that puts it at a competitive disadvantage with the best streaming services,” said Richard Taylor in a statement.
Spotify did not comment on the company’s payments to Google, but earlier this month it agreed to pay Apple $1,091m over four years.
Spotify said it was “committed to working with the music labels to deliver a sustainable business for Spotify”.