Source: Spotify. 

Spotify has become a worldwide leader in digital music, and it's just a matter of time before you will be able to share in its success as an investor. The Spotify IPO seemed inevitable back in February when the Swedish company posted a job opening for an external reporting specialist, seen by many on Wall Street as a sign that a filing with the SEC to get the process rolling was about to get under way. 

Things quieted down in the months that followed, but then Spotify turned heads in August by advertising again for the same regulatory filings expert position. Like a catchy song, there's a melody building here. Now investors are merely waiting for the hook. 

We don't have fresh financial statements to mow through just yet. Its most recent corporate filing in Luxembourg -- where Spotify is registered -- was for 2012 where it posted a loss with revenue more than doubling to the US equivalent of $558 million.

This doesn't mean that we can't assess Spotify's success. The dot-com darling has graced the market with some pretty impressive metrics in recent months, giving us a great snapshot of its global reach.

  • Spotify now has more than 40 million active users worldwide, and more than 10 million of those are premium subscribers. 
  • With May's launch in Brazil, Spotify is now available in 57 different markets. 
  • There are now 1.5 billion playlists that have been created on Spotify. On any given day an average of 5 million playlists are either created or updated.

These are some pretty big numbers, but isn't music streaming becoming a cutthroat market with cash-rich tech giants and hungry app-building upstarts battling for eardrums? This may all be true, but let's take a closer look at the competition.

It's not a concert -- it's a festival
It's true that Spotify isn't the only company growing successfully in the realm of streaming music, but this was never going to be a one-man band. Research firm eMarketer sees music streaming as a business growing 160% over the next four years. There will be plenty of opportunities for those that get it right to shine. 

Man sitting in papasan chair, listening to music on headphones

Image source: Getty Images.

Pandora (NYSE:P) is widely viewed as the market leader when it comes to streaming music. It served up more than 5 billion hours of content in its latest quarter. It had 76.4 million active listeners at the end of June. That's a pretty sizable audience, and the market has bestowed a $5.5 billion market cap on Pandora.

It's not perfect. For starters, its user base isn't growing as quickly as Spotify, up just 7.5% over the past year and up less than 14% since the end of 2012. Spotify, on the other hand, has seen its user base and premium subscribers double since late 2012. 

The vast majority of Pandora users are also freeloaders. Just 3.5 million of those active listeners are actually paying Pandora either $3.99 or $4.99 a month for commercial-free access. In other words, Pandora may have nearly twice as many active listeners, but Spotify has nearly three times as many premium subscribers. This explains why Spotify was generating slightly more revenue than Pandora in 2012, and that gap has probably widened since then. 

This doesn't mean that Pandora is a dud. It's doing quite well for a platform that's presently only available in three countries after the stateside darling expanded into Australia and New Zealand. There is certainly global upside to be had if it's able to obtain licenses and operate in more regions. However, for now Spotify is the speedster worth watching. 

Big tech crashes the party
This battle of the brands isn't merely limited to Pandora and Spotify. The country's largest tech companies -- Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT) -- all want some more skin in digital music. 

Given the popularity of streaming music as a mobile diversion, it's not a surprise to see that Google, Apple, and Microsoft happen to be behind the country's three most popular mobile operating systems in Android, iOS, and Windows Phone. They're also not shy about cutting big checks to make up for lost time. 

Apple ushered in the era of legal digital music with iTunes in 2003. However, with digital music sales peaking two years ago the new battleground is streaming. Apple rolled out the Pandora-like iTunes Radio late last year. Google and Microsoft chose to go after Pandora's on-demand model with their own platforms just before that. 

Outside of Apple putting out selective metrics on the success of iTunes Radio, it's widely assumed that the tech giants aren't making a dent in Pandora and Spotify's market share. Apple's stats rely mostly on folks that have checked out iTunes Radio but it's been surprisingly mum on engagement where Pandora and Spotify shine. We know that Pandora's serving up more than 5 billion hours of content a month, but Spotify bragged in September that its audience spends an average of 146 minutes a day streaming the service across multiple devices. 

Big tech isn't giving up. Apple got the market's attention earlier this year with its $3 billion purchase of Beats, a deal that included the Spotify-like Beats Music service. Google and Microsoft may very well follow with major acquisitions of their own, and that's probably more of an opportunity than a threat for Pandora and Spotify since they are the two most likely companies to be snapped up at a premium.

So start gearing up for a Spotify IPO that will be brash, loud, and infectious -- just like your favorite Spotify playlist. You may as well try to get in as a retail investor in the coming months if Google or Microsoft don't beat you to it first. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.