Spotify opens on NYSE, valuing company at almost $30B
1/ Spotify is not Netflix. There won’t be a Netfix for music.<p>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<p>3/ Spotify delivers more than 70 percent of its sales to music rights holders, despite efforts to improve profit margins.<p>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.<p>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.<p>6/ It means once the growth of Spotify starts to slow even a bit, it will has very serious trouble.<p>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)<p>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.<p>“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.”<p>(Ref 4/: Those labels own 85% of the music on Spotify as measured by streams. Progress of empowering: 15%.)<p>9/ This goal sounds like “the Podcast model” started in 2005, unfortunately, by their biggest competitor: Apple.<p>Spotify's Dilemma: <a href="https://allenleein.github.io/brains/2018/03/spotifys-dilemma" rel="nofollow">https://allenleein.github.io/brains/2018/03/spotifys-dilemma</a>