Spotify (NYSE:SPOT), the undisputed leader in the streaming music market, has been put on notice: Competitors are circling. And it's not just Apple that has investors worried. It's also Amazon (NASDAQ:AMZN) and potentially ByteDance, owner of short video app TikTok. 

Stockholm, Sweden-based Spotify was dealt some blows earlier this week as rival Amazon announced it was expanding its free streaming music service beyond its Echo devices. At the same time, a report surfaced that ByteDance of China is gearing up to launch a new streaming music service.

All this increased competition has gotten Spotify investors spooked. They know how quickly a leader can be displaced, particularly in the technology market. One need only look to Fitbit as a glaring example. It was once the leader in wearable devices but is now being sold to Alphabet after years of declining market share. Snap, the maker of the disappearing messaging app SnapChat, was supposed to steal Facebook's thunder but has been relegated to a third-place player since its IPO in March of 2017.

Amazon's ad supported streaming music service.

Image source: Amazon.

Amazon has its sights on Spotify 

Amazon is hoping to eventually knock Spotify off its perch, announcing an expansion of its free streaming music service. Now, non-Prime members can listen to a selection of ad-supported music, including playlists and thousands of radio stations, for free on the Amazon Music app, iOS, Android, Fire TV, or the internet. In the past, Prime members and Apple Music Unlimited subscribers could listen to tunes on Echo devices. The expanded service is available for customers in the U.S., U.K., and Germany. There's a big catch, though -- users can't search for individual songs or artists with this free service.

Then there's ByteDance. The short video app platform operator is reportedly gearing up to launch a new streaming music service as soon as December. Sources told the Financial Times ByteDance is having conversations with Universal Music, Sony Music, and Warner Music about joining its new subscription service. The idea is to first launch in India, Indonesia, and Brazil before coming to the U.S., as reported by Financial Times.

That could be particularly worrisome for Spotify since it's experiencing red-hot growth in India, with the country outperforming its forecast by 30% in the third quarter. Spotify is hanging its hat outside the U.S. for sustained growth.

ByteDance's service, which will reportedly cost under $10 a month, will include the ability to stream music on demand and sync it to short videos. The service will reportedly encourage users to share such contnet. ByteDance hasn't announced a name for the music platform.

Investors bail on Spotify 

The expanded availability of Amazon music and ByteDance's potential entrance into the market didn't sit well with Spotify investors, who sent shares down as much as 5% last week. The stock is still under pressure, although it's still up over 20% year to date. Amazon may be a smaller rival at the moment, but investors know how quickly that can change. The e-commerce giant offers Prime members access to two million songs ad-free. Members pay $7.99 a month, while non-Prime members pay $9.99 to access more than 50 million songs. It also has a higher-tier subscription that gives customers access to music in HD.

Spotify, with 243 million users, 113 million of which subscribe , also has as an ad-free subscription that costs $9.99 a month.

It's not clear what impact Amazon's stepped-up efforts or TikTok's entrance into the marketplace will have on Spotify, but judging from their success, Spotify could be in for some formidable competition. In the year since its U.S. debut, TikTok has become hugely popular with Generation Z.

One thing is clear: Spotify investors should prepare for some volatility. It's something they've undoubtedly gotten used to ever since the stock began trading in April 2018. The stock has had and continues to have a tumultuous run. Will this latest sell-off, investors are clearly worried about the new competitive threats and Spotify's ability to hold on to its top-dog status in the streaming music market, injecting risk into the investment thesis.