Swedish streaming giant Spotify is undergoing a radical overhaul of its management structure to enhance its competitiveness and boost profit margins. The company announced Tuesday that founding CEO Daniel Ek will step down from his position in January and become Chairman of the Board.
Ek will be replaced by current Chief Product and Technology Officer Gustav Söderström and Chief Operating Officer Paul Norström as Co-CEOs.
Spotify’s New Management Structure
Ek, the billionaire who built Spotify into a global consumer technology leader, will now step away from day-to-day operations. Ek will remain on the board and focus on capital allocation and long-term strategy in what he describes as a “European-style role.”
Ek described his role as a transition from a player to a coach.
The new Co-CEOs will be:
Gustav Söderström will be responsible for global technology strategy and product development.
Paul Norström will lead the music, podcast, and audiobook operations, as well as the subscription and advertising businesses.
Both Co-CEOs will report to Ek, with whom they have worked for 15 years.
Spotify is the clear market leader with approximately 700 million monthly users and a catalog of over 100 million songs. Its closest rival, Apple Music, has an estimated 90 million subscribers.
However, the company’s journey to profitability has been challenging. Founded in 2006 and critically involved in ridding the music industry of piracy, Spotify only reported its first annual profit in 2024 after a series of price increases and cost-cutting efforts.
Despite Spotify’s dominance, it must contend with competitors like YouTube Music’s extensive video integration and Amazon Music’s Prime-linked offerings. Furthermore, pressure on profit margins continues as artists push for higher payouts.
Spotify’s US shares, which have gained 63% this year, fell approximately 5% following the announcement.
While the co-CEO model has been adopted by companies like Oracle and Netflix, it is viewed with suspicion due to the risk of blurring jurisdiction.
“It’s unclear why Spotify needs a chairman and two chief executives,” commented Dan Coatsworth, an investment analyst at AJ Bell. “This suggests the idea that ‘too many chefs spoil the pot.’” Meanwhile, PP Foresight analyst Paolo Pescatore noted that Ek “left the CEO position on a high note” and that the new CEOs have a strong team in place to fill their shoes.
