Spotify files for its IPO
I don&#x27;t think this is a good long term investment.<p>Disclaimer: I worked for a Spotify competitor in the past, so i have a pretty solid understanding of how the business works.<p>I think it is a bad investment for one simple reason: Spotify purchases its main product (music) from a oligopoly. I&#x27;d estimate that 95%+ of the tracks streamed (by total playtime) are from one of the 3 major music labels: Universal, Sony or Warner. That includes sublabels that in some cases may have a seperate deal with Spotify, but at the end of the day are still part of the big 3. Imagine you are a Sony executive, walking by a news stand and the Wall Street Journal Headline is &quot;Spotify Q2 earnings 30% up&quot;. What are you gonna do? You will squeeze them, make them pay, just enough that they survive. And Spotify has zero negotiation power here. If Sptify fails to have a deal with any 1 of these 3 labels, they become useless overnight. People will switch to Apple Music, Amazon PrimeMusic, Tidal or any other service quickly. It doesn&#x27;t matter if Spotifys app is slighty better than the competitors software if they lack 1&#x2F;3 of the music.