Spotify has a unique position with their amazing discovery/recommendations engine- they could potentially start their own "label" and promote their own artists that sign on. Small/independent musicians could see more exposure and Spotify can deliver more music tailored for individual tastes. I've personally found myself listening to lots of small/indie artists as a result of their algorithms, to the point that these now make up the majority of my listening experience.
I think getting into concert tickets/streams, merchandise etc could help them potentially capture quite a bit of value in the future as well.
I know the comparison is similar to original content & Netflix - but keep in mind there's an opportunity cost with media (one can only consume X amount of shows/songs within a period of time). The more attention Spotify can divert away from the major record labels the better.
This seems to be a common refrain that Spotify can just "pull a Netflix." And this is very unlikely.
Firstly no matter how much opriginal content they could create, if they don't have back catalog it's going to be a total non-starter for the mainstream. A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is going to shed users pretty quickly.
Also music and movies occupy very different spaces in peoples lives - emotionally, socially, where and how they're consumed and shared etc.
People need music for their commute, for their workouts, for their parties, at bars and for their workdays. People only need movies when they're home or maybe stuck on an airplane.
Lastly Spotify needs to stay in the record label's good graces. If they were ever to be viewed as a competitor or a thread to any the big 3 record labels it would be reflected in punitive price increase when it came time to renegotiate their licensing deals.
I disagree. I think for most people music is fungible; they just want something to listen to. I think Spotify can afford to have gaps in it's library. Sure, if a large enough portion of the music industry cut them off it would be an issue, but I don't think they're in imminent danger of that.
Rather, Bandcamp should start a streaming service. I've had a payment model in my pocket for years that I think would work really well for them.
Tidal has already been doing most of the stuff people are proposing here. It's a controversial topic but I don't think there is good evidence that music streaming services, from a business standpoint, shouldn't also be in the business of producing or sponsoring musicians.
I could mangage quite well without all these.
Just one datapoint but...
If like me you like composing playlists instead of playing one full album at a time then not having the vast majority of your music available on a single service is a huge deal breaker. When I hear a song out there and I want to add it to my playlist I expect that it will be available on Spotify and the vast majority of the time I'm right.
If I need to go hunt for songs on various services and I can't easily make a single unified playlist with all of it I think it'll be back to piracy for me, it won't be less convenient and it'll be much cheaper.
Music lovers also tend to be very particular and nuanced about their taste in music. Therefore, if I as a consumer don't find my music on spotify it means I'd have no reason to subscribe nor come back to spotify.
First and foremost, I agree that Spotify will struggle if they try to compete with other services on providing all artists.
It seems like listeners (or perhaps a subset) are listening by genre rather than by artist. I know genres and waves of music are nothing new, but with the lower barriers to creation as well as to consumption [1], we are seeing the number and frequency of new genres and sub-genres increase dramatically.
Anecdotally, I find myself using radio based music a lot more. E.g. I have a Synthwave station on SoundCloud that I listen to. I think this style is further exemplified with the popularity of sharing Spotify playlists. This is also why I think Spotify in particular are ahead -- the very people who would listen to Spotify published content are the people that already use Spotify.
In fact, I think this style better fits a lot of people who would use a streaming service in the first place. A lot of the people who want to listen to their favorite artists question the idea of paying for a subscription to maintain access to their favorite albums.
Of course, if Spotify goes this route, they are not alone. They would have to compete with services like SoundCloud and BandCamp. I think they could find success by toeing the line between major label content and indie content.
[1]: e.g. a "bedroom musician" can make their album over the course of a few weeks and then that album gets bought and listened to by someone thousands of miles away within minutes/hours of release. No printing copies, shipping, stocking, ticket purchasing, etc.
Their execution on doing their own content has been great. However the long term value of these movies / shows still has to prove out in profits at some point.
Perhaps when they're not competing as heavily with Apple and to a lesser extent Google they could start their own label and the major labels would just have to deal with it, but I don't think it's a realistic course of action until then.
This was less of an issue for Netflix as Netflix streaming already had an extremely limited selection of third-party licensed content.
Making a TV series or a movie is not the same as making Music. Artists sign with a label and they are more or less stuck with them.
They won't be able to get into concert tickets at the present time in any significant way due to the exclusive agreements between Ticketmaster and venues. Though maybe the could start with some smaller acts and venues and work their way up.
Live performances is where the money is for the artists which is why record labels are now signing acts up for complete deals which include not just the music rights but the concert and merch rights as well.
Edit: as somebody who has tried to buy tickets to a hot show on Ticketmaster the second they go on sale and watched the servers melt, it is Amazon that I would like to see get in the ticket game.
My pie in the sky recommendation would be to figure out a way to offer a record label's services for free without exclusivity. Then existing labels will have nowhere to turn.
I’m just as amazed by that this problem has yet to get solved today as I was 15 years ago.
Consumption is different, as well - several minutes at a time versus dedicated visual attention for a minimum of 22 minutes.
Do I think Spotify has anything special over Apple, Google, or Amazon? Call me skeptical. I'm just not sure you can make a direct comparison between an audio service and a video service.
Netflix is approaching - or already larger than - the size of Disney's comparable entertainment business, and Netflix is growing relatively fast whereas Disney's business isn't growing much or at all.
Disney's studio division does $8.3 billion in sales. Their media networks arm, which includes ABC & ESPN, does $23 billion.
Netflix will hit ~$14-$15 billion in sales this year. Apples to apples in terms of where they compete, Netflix will be comparable to or larger than Disney in size in 2018 or 2019.
Five years from now Disney isn't likely to be much larger than they are today (just look at their growth the last few years, flat to minimum). Netflix will very likely be over $25 billion in sales at that point (which would plausibly be larger than Disney's largest business, the media networks group).
At the scale Netflix has reached, every dollar of new growth that Netflix is obtaining is taking some bit of revenue away from Disney. Disney is going to mostly cannabilize themselves in switching to their own streaming service, including the mess at ESPN (the end of the hyper lucrative, subsidized cable & satellite subscribers that have been artificially fattening Disney's entertainment wallet for years).
Disney is mostly in a scenario of attempting to hold their ground. The same place Walmart is in with Amazon and for the exact same reason (minimum overall market expansion, low consumer spending growth across the developed world, while the new competitor is starting to eat your existing house).
Interestingly another similarity between those situations: Amazon is willing to compete at near zero profit generation in retail to pursue sales growth, which is brutal to an established giant like Walmart who has a huge investor base that expects them to generate considerable profits every year. Walmart can't just drop their profits dramatically to compete, their stock would implode. Disney is facing the same storm: Netflix operates at a level of minimal profit (~4%-5% net income margins), whereas Disney's long-established shareholders expect rich profits and a dividend (Disney typically sees 10%-20% margins in their entertainment groups, with a 16% overall net income margin). Netflix is willing to plow almost every dollar back into content production and licensing, and their shareholders cheer that on so long as the top-line growth continues.
For now. They have a large enough reach to essentially "become" a major record label, all they need is to start signing artists to contracts.
Google is worth 1000B, general motors is worth 60B.
Why? I'd contest GM has more 'stuff' and abilities to do 'anything'. Google has a bigger population, but what does that translate to when the value of tech might be lower.
I'm not saying tech isnt more valuable, but there might be something wrong with google being 1,700% larger market cap than GM.
GM exists in a very competitive industry with major competitors at or above their capacity, while Google has maybe 1 or 2 competitors in several of various industries, and dominates several independently and almost completely.
GM might be able to claw aware market-share from competitors, and end up more valuable, but not by that much. Google is in the sort of position that allows them to potentially capture a brand new industry if one appears.
GM could (relatively) easily get broken up or get massively devalued to to a large market event or by falling behind in an industry that is rapidly changing shape from what they are accustomed to. Google falling out of existence/dominance would almost have to be the result of a fundamental societal shift at this point (or anti-monopoly legislation somehow), and they could throw enormous amounts of cash at problems for years before facing insolvency (from my understanding).
Spotify definitely doesn't have enough market share for that to be true, and it's not clear that they ever will. Youtube has always had more free listeners than Spotify and Apple Music is set to surpass Spotify in number of paid listeners sometime this summer.
There's probably a danger that large record labels will threaten to revoke their licensing agreements if they think that Spotify may start competing with them on that front. Not sure if that will be a problem, though, I'm not familiar with the whole streaming market.
If there's any evidence against this, please let me know. I think it's interesting.
Apple Music is supposedly set to surpass Spotify in number of paid subscribers this summer.
Youtube has always had more free listeners than Spotify, as far as I know.
It's not at all clear who the major players in the music streaming business will be five years from now, which means that all of the power remains with the owners of the music that people want to listen to. AKA the major record labels.
In recent years artists like Drake have started their own labels and collaborated directly with tour organizers to generate different sources of income and cut out middlemen. While it's difficult to imagine Spotify generating hit music at the same pace as Netflix produces hit shows, there is nothing stopping them from becoming a tour organizer or bringing artists to perform at their own show (hint: iTunes festival).
If they are really serious about the long term they would be developing new ways to experience "live" music. Perhaps VR concerts and performances or features that let the audience send feedback to the artists.
The good news is that they have shown they are not afraid of trying new things (ex: Video player within the playlist and the RapGenius tie ins).
Time will tell but I am bullish on Spotify changing how we listen to music for the better because the industry is ripe for a new disruption (Records -> CDs -> Digital -> ???)
[1] - https://www.digitalmusicnews.com/2016/05/26/band-1-million-s...
In my view, Spotify have pretty much "won" the streaming war. They beat Apple to the market with their streaming offering, and they have a good product that people love.
The one area Apple has Spotify beat is in its understanding of the music industry. Apple's acquisition of Beats seemed ridiculous at the time, but getting Jimmy Iovine on your side in a music war is like having Goku on your side in a Universe Survival Tournament. When you've got the likes of Jimmy Iovine and Zane Lowe committed to your cause, you're going to know how record labels work, how the industry works, and given that Iovine recently came out to say that streaming services are similar and need to diversify to succeed I'd be inclined to agree with him.
Apple have failed in the past by trying to make its music exclusive and by having artists on its payroll try to attack Spotify (to backlash on both sides). It makes me think that Spotify could wrap things up by doing what you say, but licensing its own songs equally to all other streaming services. Instead of doing what Apple did, promote availability by ensuring their music is played on competing services.
Of course, to do this Spotify will need their own Iovine, and that's no mean feat. They'd need world-class talent behind them to find musicians, produce them, and market them in the way that Apple potentially could. If Spotify can build that dream team and create their own means of production then, in my view, they've won.
This should be considered when making points about what the Record Industry will allow spotify to get away with. They own a lot of the shares at play here.
Have you ever used last.fm? I would be interested to hear if people still think that last.fm gives better recommendations than spotify can. I use last.fm with various music streaming services, currently Google Play Music, previously Amazon, but always using last.fm for discovering.
With the amount of users spotify has, it wouldn't surprise me to hear that it has eclipsed last.fm in terms of recommendation quality.
Leaving legality aside, I was always really impressed with the level of curation people put into that particular private tracker. You could find every vinyl and CD release of Miles Davis' Kind of Blue in just about every file format you could hope for.
I hope eventually streaming services become so low-friction and commonly used that enforcing copyright takedowns on sites like what.cd will become a thing of the past and we can benefit from their value as a deep archive of esoterica.
Uber's 2017 gross revenue was 37B to Spotify's 4B, but the valuations are 50B to 30B. Think Spotify's valuation is a little overheated?
HERE'S THE PROBLEM: Spotify doesn't pay shit to artists. They will have to increase the level of financial contribution to artists if they take this avenue.
Quote: “I can tell you that Spotify has made me about 30% more than iTunes, Pandora, Amazon, Xbox Music, Google Play, eMusic, Rhapsody, Rdio, Deezer, MediaNet, Simky, Nokia, and MySpace Music combined in that period. Even if you tack on my checks from ASCAP to that long list, Spotify is still ahead,”
I thought that Spotify didn't pay ANYTHING to artists. They pay to labels, who then pay to artists depending on their recording contract.
For indies that have fewer requirements, there's lots of cheaper options such as TuneCore, DistroKid, and CD baby as well.
It seems like they can and are on their way already.
Am I missing something? Is it just one runs better on iPhones or is more hip (like why people choose snapchat over instagram or something)?
- My friends use Spotify
- Larger library
- Well made playlists
- Social feed
In the end, they are very similar products. I feel that Spotify has a huge head start on Google here, and it shows. The more mature product is Spotify. I think Google can't really compete in terms of curation and popularity.
Really, the edge cases of "music that is not on Spotify" ends up being so small that Google's upload your own music feature doesn't tip it in their favor. At least in my eyes.
For example, I like some noir movies and the jazz within that genre. There isn't a specific genre that most music playing devices would realize but Spotify has lots of user made playlists that has the type of music I want. Compared to Google's lackluster results
https://play.google.com/music/listen?u=0#/srst/noir+jazz/EAY
I don't really think that iTunes or Google Play has the same thing, I may be wrong though.
Many of the self publishing activity that Soundcloud was/is famous for has moved over to Spotify.
New releases from smaller acts seem to be Spotify FIRST right now.
Yeah I like the social feed. Wish you could get to it on mobile though.
Google Music 40M [2]
Apple Music 45M [3]
[1]https://press.spotify.com/us/about/ [2]https://play.google.com/music/listen#/sulp [3]https://www.apple.com/apple-music/
Uhm no they are all licensing the same content from the same 4 entities.
I think Spotify's UI is fantastic, and its multi-device awareness is functional and intuitive. To your point, Google does have ad-free Youtube, but the ads don't bother me enough/I don't watch enough Youtube for it to impact me like it does with music.
Finally, I like diversity sometimes; giving not-Google money is a plus, all other things being equal.
I guess that’s true if you define the “modern era” as “starting with Spotify”.
- Better iOS app
- Native (well, Electron) MacOS app
- Playlist folders - niche feature but a big one for me
- Amazingly good music discovery on Spotify (not properly compared with Google but they get it so right a lot of the time even for niche genres)
I do wish Google Play could address some of these (most of all playlist folders! big one for me and how I organise music) as I do love the ability to store your own music along with cloud music that GPM gives, and it would be enough for me to switch with just a couple of changes.
In the same light, Spotify is incentivized to crush the music app space. They need the best UI, the best discovery experiences, etc... whereas Google’s product is like the rich family that funds their son’s strange lifestyle business: It can live or die and the world keeps spinning. They do not need to innovate or be better... and they really aren’t.
My wife used Spotify before we met. My sister uses it. My step mom uses it. All my buddies use it. I can count dozens of people around me that use it. It’s almost becoming a verb now: “Spotify it”. On the contrary, I only know one or two diehard google fanboys who use their music product.
So I guess at the end of the day.. to answer your question, yes you’re missing something!
A nimble team of people focused on solving one core problem, whose entire livelihood depends on it working well, triumphs the giants.
We can assume Microsoft and Google has enough middle management that they’ll fk it up along the way for sure. Too many agendas and failure doesn’t mean much.
Therefore it’s in the best interest of giants to acquire companies that fit their mission and scale them with their marketing power. YouTube, Android, docs, are all good plays by google.
- Better discovery
- Much cheaper (150kr/mo for 6 subscriptions, vs 100kr/mo for one with GPM)
- A desktop client (even if it's a crappy electron one)
- YTRed isn't available here anyway
- Google. Privacy.
- trying to shove the Android/Material UI on iOS, such
an impedance mismatch... I *hate* that.
- no dedicated client on desktop (so, no offline mode)
- the UI in the browser sucks (again, alien, and basically
*negative* information density if it could be so)
- uploading/downloading is a crapshoot[0] with official tools,
and the API is unofficial so hacks[1] may be short-lived.
The only thing I miss in Spotify from GPMAA/Apple Music+iTunes Match is the digital locker for seamless syncing of music I own.
FTR, despite having a native UI and digital locker, I moved from Apple Music to Spotify because discovery and reliability were terrible.
[0]: official tools behave similarly to this: https://github.com/simon-weber/gmusicapi/issues/140
I've switched to Amazon Music (free with my Prime membership) and although the app works well, the curated lists aren't as great.
My point is that maybe other people have started with the free Google Play (Music?) app and had the same experience and looked for options elsewhere.
They are all insanely buggy. I was a Spotify user for about 6 years before this and it was buggy, and is getting buggier as far as I can tell.
Some people on HN like areas especially might care about diversifying who they give their money and/or attention to. Spotify has an advantage there too.
Those websites will be looked at one day the same way we see Java and Real Player plugins today.
Simple answer: I'm a tech literate person (I read HN and a dozen other sites) and I hadn't even heard of "google play music" until now.
So that's one reason.
The other is likely that Spotify is pretty aggressive with marketing here (Sweden). E.g. get a phone contract and you get a year of spotify etc. But the most important reason is probably that after manty years on a product you get some lock-in. Now I wouldn't switch if the product was 10% better or if the price was 10% lower unless many of my friends switched and I could also port all playlists etc.
That being said... I've been underwhelmed by the app's UI and performance and have given frequent feedback but haven't got any response and there has been no changes. Typical of Google... Its been so bad that I'm considering switching to Spotify soon. Its really annoying when you're trying to select some romantic music for dinner with your partner and the app keeps refusing to work.
Another thing I really enjoy about spotify is their app's ability to pause a song on my laptop at work and press play on my phone when I get in my car and the song picks up right where I left it. And the remote control functionality during parties is great. They're also experimenting with some "auto-DJ" features which don't do too bad of a job for an algorithm :)
--Spotify's ML features are way way way way way way better than Googles --Everybody else uses Spotify, which means I can share it
The latter is obviously the thing Google won't win, so shouldn't try
Google know enough already!
* My TV has spotify and not play music. I could get a Chromecast but why? * Spotify exclusives are still a thing. * The daily mixes are still better than anything Google has for recommendations. It's surprising google is as bad as it is for music recommendation. * Google keeps things close to their chest for popularity. I like knowing if an artist's top song is 100 times more popular than their next, for example, or how many people follow a playlist. Spotify lets me know who runs a playlist, whereas that's hidden for GPM.
(Spotify has moved closer to their own playlists, which saddens me a little. I always hoped there would be room for curation from personalities. I miss DJs.)
In any case, I switched to GPMAA when it was launched and had the $7.99 a month rate locked in.
Then, GPMAA started adding tracks to my playlist, etc. at random. No, Google, I don't want your suggestions to be auto-added to my collection. I simply want to listen to what I want to listen.
I want to get away from Spotify but there are no better options. Amazon Music seemed promising for a bit but their catalog isn't as comprehensive and their app is just wonky. E.g.: the app won't sync / display song time when streaming over Bluetooth to my car audio. Deal breaker for me.
If I read that correctly, it implies the bulk of the recording industry is worth less than Spotify.
1. https://www.reuters.com/article/us-warnermusic/blavatniks-ac...
I wouldn't be surprised, though, if less-popular tracks for artists moved to another service. You want to hear The Chainsmoker's radio singles? Play them non-stop on Spotify! But if you're a huge fan and want to hear back tracks, demos, etc, you can pay them $10/mo on a Patreon-like site. Basically, charging more for a closer relationship to studios you like, while their more popular music is released for free.
What Spotify has going for it is that indie artists can easily (or at least relatively easily) put their music up on Spotify, which bypasses the record labels. Now, not all of that music is going to be good but that is a way they are already bypassing record labels.
> According to Spotify's F-1 filing, 85 per cent of their streamed music is owned by the three major labels -- Universal, Sony and Warner -- and Merlin, a network for independents. The major labels also hold a sizable equity position in Spotify, as much as 18 per cent back 2009. This gave Spotify some help when it was renegotiating licensing deals last year. [0]
[0] https://ftalphaville.ft.com/2018/03/26/1522056334000/Canvass...
Which would make them (like Netflix) one exclusive content provider (potentially among many) which is fine for them if they can get good content, but not great for users who may find music fragmented like streaming video. The great thing about Spotify now is that they have access to nearly everything. Netflix has a decent streaming library of TV series, but their movie archive is terrible compared to the red envelope DVD.com option (or Blockbuster in its prime). It would be a shame for that to happen to music, too.
I don't have any reason to trust that a VC-fueled monster like Spotify understands this. If Spotify bought Bandcamp, I would remove my music from it.
VC-fueled behemoths like to make people dependent on them. I can't trust my business to a company that gets most of its money from outside investors instead of the people who use the service. Their incentives are fundamentally misaligned with my interests.
Bandcamp is maybe one of the few examples of a service/shop that actually benefits artists and fans. Having them bought out by some VC tech behemoth will almost certainly see their offering ruined.
Bandcamp's site loooks like it was designed by a schizophrenic person.
A lot of music sites in general seem to prefer form over function IMHO.
Discogs.com is a notable exception of course.
Didn't Starbucks try something like that? I think it was called Hear Music.
For a long time we weren't seeing too many big tech IPO's. Did something fundamentally change in the market to lead to this, or did all these companies just happen to make it to "market maturity" around the same time?
One successful IPO will beget a whole raft of follow-ons in similar segments to profit from the 'atmosphere' as much as possible. Until the first one that bombs, then it is immediately game over. So there tends to be a bursty nature to this IPO thing.
At the end of the day who really cares what is and isn't a "tech company"? Every company has a tech aspect to it these days.
Stitch Fix has quite a team of data scientists working on their recommendation system. They typically send about 5 items per shipment, so they need to be very confident the 5 will fit, you'll like them, and you'll like the price.
With Spotify or Netflix, the user can browse around and can skip between songs or shows quickly. If their recommendation engine wasn't phenomenal, it'd still be a viable product. Stitch Fix typically has 1 shot per month to sell you stuff you care about.
2017 4.09 billion
2016 2.95 billion
2015 1.94 billion
Net Loss (Euros)
2017 1.2 billion
2016 539 million
Impressive revenue growth, but I can't understand the valuation given the losses.
I love their product though.
The going public part -- well that was foretold with their last round of financing (it was a condition) and this was a strange way to do it.
You may love the product but will it last is the question. If I were going to bet I would say that 5 years down the road someone buys it for pennies on the dollar or it goes bankrupt due to toxic debt.
I wonder what the short position is on it.
This was done partially because the company itself isn't raising money. If the company executives believed they would need a large cash cushion, they would have tried to raise some cash in the deal, so they must believe they can reverse course before the cash crunch
https://www.recode.net/2018/1/3/16847786/spotify-tpg-tencent...
Not that it is a great article but honestly that looks like a very messy transaction. It also looks like Spotify got the raw end of that deal. The whole thing is just crazy and I'm not sure how anyone can make sense of those numbers.
https://www.investopedia.com/ask/answers/05/062905.asp
Looks like it's allowed, but difficult
Spotify presumably is being valued like this because investors are betting that their strong customer growth will allow them to find new ways of generating profits - such as signing their own artists directly to cut out license fees, much like how Netflix started funding their own shows.
If customers were unsatisfied with Spotify, then their churn would be higher - for instance defecting to Apple Music, which by many measures is "better" because of Apple's heft and reach into their devices.
It's similar to Uber, who had $37 billion gross revenue for 2017, but pays out 80% of that in driver commissions and additional subsidies to riders and drivers.
Seems like a problem for both industries; they'd need to hit insane scale (hard in music streaming for Spotify to 5x) or take control of the content/supply base to hold down costs.
They're not operating as a sustainable business at this point. They will most likely need the VCs to continue throwing money at them.
Who knows, maybe it'll work. I personally wouldn't bet on it though.
One of my hopes it that just like NFLX, once the company focuses on producing / licensing it's own content they can do really well.
I'm interested in hearing what others have to say on this! Did you buy, will you buy? Why?
I think the issue is that music content is so much more than just streaming. Musicians want a label that can also help with promotion, touring, merchandise, radio play, tv/movie placements. I'm not sure Spotify has experience with that. Therefore musicians will have to sign one deal for (All Items - Streaming), and a Streaming License. Are the major labels going to agree to that?
The experience on the platform was always stellar and just keeps getting better the more data they collect. It's a good example where big data isn't creepy at all, it's amazing. They constantly filter my preferences and show me the key types of songs I like to listen to, impressive in itself but the song radio aping Pandora is also impressive and way more interactive than Pandora itself.
Basically I'm mega bullish Spotify and am not even going to front like I'm not. You don't need to buy it but I doubt it goes anywhere bad. /end-activist-investor-rant
I also do not think the Spotify situation is anything like Netflix. First, Netflix is an add-on service for most people that compliments other video services. OTOH, few people will have multiple music streaming services. This leads to a few issues for Spotify:
1) If Spotify starts its own label, and the other labels pull their music in retaliation, Spotify is done.
2) Back catalogs and current big name artists/content is a must in music streaming - a completely different situation than Netflix was ever in. DIY punk will not carry Spotify, neither will becoming a niche DIY label.
Given Spotify's current loses I just don't see how they turn profitable. Can Spotify turn the 90M non-paying users into subscriptions?
Where is the relevance of the label system now that producers can master and release tracks directly digital with no pressing time at all? Gucci Mane is great example of a hugely popular artist who released track after track as fast as he could grind them out, for years (decades now! go count how many mixtapes the guy has made). This is the new normal, hyper creativity and high speed production. Pop cylces are like 100x as fast. You're telling me some old white dudes in suits can A&R faster than teenagers can hashtag and invent there way into new genres and music with their laptops. Yeah right. Dinosaurs.
It was dead with Mp3s and the internet and it's just still gasping along like all the old media giants. Smaller and smaller labels are able to survive these days, finding more and more niche audiences. Music has gotten more diverse in the last 17 years and you can tell. Genres launch and burn out in months now, or develop a cult fan base and continue on for years (ICP still tours this is like my perfect example of trash that still has fans).
I'm not saying Spotify is the king but people using "the labels" as a threat, come on, we all know what disruption means. Bandcamp and Soundcloud and even Youtube have runaround the label system.
The one thing I'll grant you is that maybe subscription fees aren't enough to keep the infrastructure going. This is possible. But the big pile of data is certainly worth something now and in the future, and the ability to scoop trends might be the sword that tames whats left of the big labels monopoly.
Music streaming has been completely commoditized. It's an add on feature to both major phone software makers. What can Spotify uniquely bring to the table that will give it the money to survive?
I'm not just being snide. Think about Elvis. When was the last time you heard something from Elvis on the radio or in your stream?
Heuristic: parents pass on their teenage music preferences to kids but don't pass on their own parent's teenage music preferences to their kids?
Where did the increase in share value come from? Just the liquidity of going public?
Disclaimer: I bet my career on private markets supplanting public ones, in respect of certain technology companies, many years ago.
Agreed--the comparison is enough to spring a reasonable hypothesis, nothing more. That said, Spotify is a large foreign lister; Dropbox is a small domestic seller.
I'm not advocating the death of underwriters. They're a necessary part of the ecosystem. What we're seeing here is a broadening of the options available to the ecosystem. That's new, and that's good.
IPOs have (a) companies issuing stock, (b) private investors selling stock and (c) public investors pricing an asset never before continuously priced. All this happens simultaneously. If the ball drops on one, it drops on them all. Underwriting is a good way to manage that risk.
Private markets challenge that simultaneity. Instead of selling into the IPO, companies can sell some in the private markets and some after going public. Instead of having every insider sell on opening day, they can sell in private secondaries and then after the lock-up. That leaves element (c) isolated. That's difficult--Spotify still hired bankers--but it doesn't need underwriting.
Another way to look at it: three services were bundled into the traditional IPO. Bankers charged richly for the bundle. Private markets give companies the option, to dis-assemble the bundle and price and time them separately.
Edit: yep.
> The digital music company isn’t selling its shares on the stock market, meaning the company isn’t raising any money today. Instead, the event known as a “direct listing,” is a collection of transactions from existing shareholders (like employees and investors) selling shares directly to stock market investors. It took a while for the market makers to sort this out.
Yes, and furthermore, the Spotify listing is anomaly in a lot of ways due to the idiosyncratic terms under which they raised money previously, and the fact that the major labels (who are their primary vendors) had ownership stakes in them from the very beginning.
In IPOs, companies raise money, and underwriters serve as insurers to guarantee the amount that the company will raise. But Spotify isn't even raising any money today! They're just providing liquidity for existing shareholders. That's dramatically different from IPOs, so of course the underwriters are superfluous for this particular case.
I don't think it makes sense to generalize anything from Spotify, but certainly not the role of underwriters.
In theory the service they provide is valuation, but in this day and age of instant information, that really isn't necessary anymore. Back in the day when it took a few days for a person to execute a trade, maybe they provided valuable insight, but now, with stock trades for retail investors taking seconds from "I want that" to "I have that", they don't really have better information anymore.
And I don't think I'm the only one.
I would have expected this to be a very large niche? How do the Latin American / Spanish markets treat Christian music?
And from the big ones (Apple, Google, Amazon) I feel like Spotify is the most motivated to make the music thing work. I think discovery is the key here. For the others is a small side hobby.
And also you'd be surprised by the digital music scene in latin America. Most people still fill their android devices with pirated music. Spotify is one of the cheapest legal option.
Well, I have only released a single and plan to release an EP later this year and I'll figure out what to do. I'm thinking Facebook ads since I figure there's where my audience will be, but I don't really know.
I wish I was more photogenic so I could do the YouTube thing but, alas, I'm not.
That's where I think Spotify comes handy, because it has helped me to discover awesome artists that I wouldn't otherwise and I wish it could do the same for my music and other small artists.
> Losses for last year were 1.2 billion Euros ($1.47 billion), which compares to 539 million Euros ($661 million) the year before.
Well, there's the short of the year.
I think you're missing SNAP.
Tech stocks are regularly IPO'd on pure hype, and the market will regularly turn on them when they don't understand the business model.
Edit: this is where I got the $30 million figure from: https://www.bloomberg.com/view/articles/2018-01-16/spotify-w...
https://www.bloombergquint.com/markets/2018/01/16/spotify-wi...
I think nothing.
It's a direct sale, so the insiders (including the employees, not just the execs) get to sell however many shares they want directly to public shareholders.
So the company doesn't make any money either, just the shareholders. I suppose at some point the company itself could sell shares, and then maybe a banker would get involved, but since it would already be publicly listed, I'm not sure they'd have to be.
https://www.bloomberg.com/news/articles/2018-03-26/spotify-l...
https://www.thelocal.se/20180403/spotify-swiss-or-swedish-wh...
/s
If this is the future it doesn’t feel like progress.
So for any new music you may want to get, you're now forced into either purchasing a digital copy from a provider and burning copies yourself, or using a subscription service.
Eventually it becomes too cumbersome to manage your music in two places, so you reduce to one, and stop using your physical discs assuming you found replicas in your subscription.
But, to be honest, I've never had so much access to unknown artists' works for so cheap before. I can build whole playlists of very specific types of music and pay effectively less per month than one CD used to cost me 20 years ago for that one song I liked.
So I, for one, welcome our subscription overlords.
For pre-selected music that I listen to frequently, I use playlists with Spotify.
For truly discovering music with algorithms that work, I use Pandora.
I do notice there is NOT a lot of overlap at times, due to bizarre licensing restrictions and deals.
still, impressive for them to make it this far, if they can really find a path to profitability that also fairly compensates artists, I wish them the best! I think it's more likely that as apple/google/amazon force them to continue to operate at a loss, downward pressure on their stock will make them a good acquisition target for one of the big tech companies looking to compete with Apple Music (Amazon seems like a real possibility here - a spotify acquisition feels similar in size and scope to their recent WF acquisition, essentially another double-down on their "everything store" vision/story).
[1] https://www.fastcompany.com/40525409/why-apple-is-the-worlds...
Google Play Music could be an option, at least they have a functional web player, but neither it nor the Android app are anywhere close to Spotify's apps.
Apple Music can run break-even as a platform feature, like the App Store was (at least in the early days). Or they could pay artists more with that margin and get more exclusives. Either way, it's a fundamental long term competitive disadvantage for Spotify.
[1] Apple Music is set to surpass Spotify in paid US subscribers this summer https://www.theverge.com/2018/2/4/16971436/apple-music-surpa...
The problem here is that I purchase these subscriptions so that I can have access to all of the music I haven't decided that I want to own forever yet. If this trend continues and streaming platforms become more and more exclusive, I will likely cancel my subscriptions, buy my music from the artists directly, and say goodbye to renting rather than owning music.
That's just how I think the comp would work, I don't think any of those companies are worth those values, including Spotify.
I don't agree with this. Most people build up a catalog of songs/playlists on one platform and moving to a new one and re-discovering all your music is quite a pain in the ass. This was one of the main reasons I was a late adopter of Spotify (I work in the Music Industry).. there was no easy way for me to take local libraries/playlists and create Spotify playlists from them.
I really hope they have a solid roadmap and wish them the best.
Something doesn't add up here.
This is kind of FUD. There's a lot of royalties flowing out of Spotify. While it's true the payouts for many artists are smaller than they should be, 90+% of artists simply get very few plays on Streaming services and thus make no money.
And Spotify isn't the only one to blame here. Most music goes through a process like this:
Artist -> Label -> Distributor -> Storefront
Spotify is only the storefront.. but both the Distributor (the "big three" labels UMG, Sony, and Warner do their own distribution) and the record label take a cut. There's also additional overhead for the artist, such as paying out to producers, writers (if they don't write themselves) etc.
But as always, they exploit their artists and pay them a pittance. Blame the labels.
They are paying 35 - 40 euros or ~$45 million at the midpoint. If they float $1 billion in shares today, that means fees are 4.5% of the overall “offering”, or almost exactly what Dropbox paid.
https://www.bloomberg.com/news/articles/2018-03-26/spotify-l...
2. If a client wants to buy/sell snapchat, the investment bank is still going to make broker fees on the transactions.
Please give credible examples.
Is there something Spotify could do to differentiate, something that matters even for those who don't value the sophisticated playlists? Should they go the Netflix route and start producing their own music? Or would it make sense to produce some other audio content? Think programs like "Serial" [1]. Or maybe some radio drama [2]?
[1] https://serialpodcast.org/ [2] https://en.wikipedia.org/wiki/Radio_drama
I think their biggest threat would be Amazon getting their music service in order and baking the current paid version into the cost of a Prime membership.
Sure, you'll collect all of your favorite music, but what if you want to branch out a little? What if you want recommendations that are tailored for you, based on your music taste?
For me, one of the main services Spotify provides is access to occasional music, stuff that I wouldn't bother to collect, but is nice to have on hand, either for parties or just curiosity. The other main service is their recommendation engine, which reliably presents me with interesting bands and albums that I didn't know about, but fit very well with my tastes.
I consider $10/month a bargain for those services.
(I still keep an offline collection of my absolute very favorite albums, of course)
2/ Netflix, with almost 118 million subscribers worldwide, has allayed concerns about its slowing growth by reminding analysts there are more than 700 million broadband households. Spotify, with 71 million paying users, touts an even larger number in its filing: 1.6 billion payment-enabled smartphone owners expected by 2021. #Growth
3/ Spotify delivers more than 70 percent of its sales to music rights holders, despite efforts to improve profit margins.
4/ Universal Music Group, Sony Music Entertainment, Warner Music Group, Merlin (the representative for many independent labels), which own 87% of the music on Spotify as measured by streams.
5/ It seems highly unlikely Spotify’s Cost of Revenue will improve much in the short-term: those record deals are locked in until at least next year.
6/ It means once the growth of Spotify starts to slow even a bit, it will has very serious trouble.
7/ Netflix is building its own studio to produce shows on its own. Spotify says it has no interest in signing artists, or paying for artists to record. (They don’t have the capital)
8/ However, it has another plan to reduce its reliance on its main suppliers: by making them less relevant. “The old model favoured certain gatekeepers. Artists had to be signed to a label,” chief executive Daniel Ek wrote in a letter included in the filing.
“They needed access to a recording studio, and they had to be played on terrestrial radio to achieve success. Today, artists can produce and release their own music. Labels, studios, and radio still matter, but in a cluttered landscape, artists’ biggest challenge is navigating this complexity to get heard. We believe Spotify empowers them to break through.”
(Ref 4/: Those labels own 85% of the music on Spotify as measured by streams. Progress of empowering: 15%.)
9/ This goal sounds like “the Podcast model” started in 2005, unfortunately, by their biggest competitor: Apple.
Spotify's Dilemma: https://allenleein.github.io/brains/2018/03/spotifys-dilemma
Maybe it's me. I have no track record identifying winners or losers.