104/264 Content Hours Consumed Quarterly How is Spotify Different? Spotify is the largest global music streaming subscription service, with 159 million MAUs and 71 million Premium Subscribers as of December 31, 2017, which we believe is nearly double the scale of our closest competitor, Apple Music. Spotify’s streaming market share was approximately 42% in 2016 based on management estimates and industry reports. • Scale Provides Unique Data which Enables a Differentiated and Personalized Experience. Many music services have large catalogs, but we believe Spotify is differentiated from other services because we provide Users with a more personalized experience, driven by powerful music search and discovery engines. We have a large and growing base of Users that are highly engaged on Spotify, which enables us to continuously learn about their listening behaviors throughout the day. We use this information to create a more personalized and engaging experience for each incremental visit to our platform. We believe this personalized experience is a key competitive advantage as Users are more likely to engage with a platform that reflects their real­time moods and activities and captures a unique understanding of moments in their lives. This deep understanding of our Users also helps us to tailor content, advertising, marketing, and product bundling effectively. Our goal is to continue using data and our proprietary algorithms to enhance the listening experience, while also driving discovery of artist content on our platform. • Superior User Experience Drives Industry Leading User Engagement. We believe our superior User experience is what has enabled Spotify to become the largest global music streaming subscription service. Investing in the User experience has and will continue to generate significant benefits for our platform. As our personalization becomes more refined and music discovery becomes more seamless, we believe we will increase our current Users’ engagement and will attract new Users to our platform. On average, 25 Content Hours Per MAU were streamed in each month of the fourth quarter of 2017. Our 159 million MAUs have grown 29% year­over­year as of December 31, 2017. Our Premium Subscribers have grown 46% year­over­ year as of December 31, 2017 to 71 million. A portion of this growth is due to the popularity of our Family Plan, which allows up to six Premium Subscribers in a household for one fixed monthly rate. Our Premium Subscribers include both the master Family Plan account as well as any sub­accounts associated with each household. • Spotify Playlists are the Driving Force Behind Music Discovery and Demand Creation on our Service. As our Service has grown, our challenge has been to connect millions of Users—all with distinct listening preferences—with a large catalog of over 35 million tracks as of December 31, 2017. Spotify has become an essential partner to both aspiring and established artists by enabling their music to be discovered. Our playlists have become a key discovery tool for Users to find new artists and new music from their favorite artists. Given the success of our playlists in driving music discovery, they have become one of the primary tools that labels, artists, and managers use in order to boost artists and measure success. 97