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Spotify opens on NYSE, valuing company at almost $30B

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Re: Spotify opens on NYSE, valuing company at almost $30B

#51

Post by komali2 »

harshgupta wrote: post #30
guelo wrote: post #23

I just don't see how this can be a successful company long term. If the labels see any profit they will demand more fees at the next deal negotiation. To become music's Netflix they would have to produce their own music which people want to listen to, which is a lot easier said then done. The easiest route is probably to become Tidal and give the company away to a few big artists in exchange for exclusives.

Thats fair, but accessing free music is a lot easier than free tv. If they can get people to pay anything for music, thats at least better than zero for labels.

I think the music industry still isn't quite sure what to do about pirating. Seems their solution is "send spec-op soldiers to kick down doors of people in other countries" still.

Re: Spotify opens on NYSE, valuing company at almost $30B

#52

Post by paxy »

guelo wrote: post #23

I just don't see how this can be a successful company long term. If the labels see any profit they will demand more fees at the next deal negotiation. To become music's Netflix they would have to produce their own music which people want to listen to, which is a lot easier said then done. The easiest route is probably to become Tidal and give the company away to a few big artists in exchange for exclusives.

The equivalent would be to start their own label and sign artists. It's hard, sure, but not impossible. They have the same advantage Netflix did - an intimate knowledge of people's musical tastes and habits. Plus they have already shown willingness to diversify into other areas - merch, concerts, original shows, videos etc.

Re: Spotify opens on NYSE, valuing company at almost $30B

#53

Post by whatok »

gm-conspiracy wrote: post #46
synaesthesisx wrote: post #27

I do love Spotify as a product, however I don't think it will scale the same way Netflix does. Spotify is at the mercy of major record labels, and as their books become more transparent the record labels will squeeze every dollar they can for licensing. That is, unless they find a way to upend the record industry entirely. Spotify has a unique position with their amazing discovery/recommendations engine- they could p…

It is alot easier (cost and effort) to start a band and put on album on Spotify, compared to creating a movie/tv show. Consumption is different, as well - several minutes at a time versus dedicated visual attention for a minimum of 22 minutes.

And how is anyone supposed to sift through all that garbage to find something worthwhile?

Re: Spotify opens on NYSE, valuing company at almost $30B

#54

Post by jetti »

guelo wrote: post #23

I just don't see how this can be a successful company long term. If the labels see any profit they will demand more fees at the next deal negotiation. To become music's Netflix they would have to produce their own music which people want to listen to, which is a lot easier said then done. The easiest route is probably to become Tidal and give the company away to a few big artists in exchange for exclusives.

>To become the music's Netflix they would have to produce their own music which people want to listen to, which is a lot easier said then done.

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.

Re: Spotify opens on NYSE, valuing company at almost $30B

#55

Post by whitepoplar »

whatok wrote: post #53
gm-conspiracy wrote: post #46

Earlier quoted context omitted.

It is alot easier (cost and effort) to start a band and put on album on Spotify, compared to creating a movie/tv show. Consumption is different, as well - several minutes at a time versus dedicated visual attention for a minimum of 22 minutes.

And how is anyone supposed to sift through all that garbage to find something worthwhile?

Discover Weekly

Re: Spotify opens on NYSE, valuing company at almost $30B

#56

Post by synaesthesisx »

whatok wrote: post #53
gm-conspiracy wrote: post #46

Earlier quoted context omitted.

It is alot easier (cost and effort) to start a band and put on album on Spotify, compared to creating a movie/tv show. Consumption is different, as well - several minutes at a time versus dedicated visual attention for a minimum of 22 minutes.

And how is anyone supposed to sift through all that garbage to find something worthwhile?

Personalized playlists, artist radios etc. The point is you don't have to sift because they do it for you.

Re: Spotify opens on NYSE, valuing company at almost $30B

#57

Post by froindt »

maxxxxx wrote: post #18
froindt wrote: post #5

Maybe my perception is off, but it seems like we're getting lots of tech IPO's in a relatively short time. Stitch Fix, Dropbox, Blue Apron, Snap, and Roku to name a few. 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?

I think they are dumping their stock on the public before the market takes a downturn. For most of these stocks the only way to go is down.

Snap is certainly fitting that pattern. Down 48% in the 13 months since IPO.

Re: Spotify opens on NYSE, valuing company at almost $30B

#58

Post by atwebb »

guelo wrote: post #23

I just don't see how this can be a successful company long term. If the labels see any profit they will demand more fees at the next deal negotiation. To become music's Netflix they would have to produce their own music which people want to listen to, which is a lot easier said then done. The easiest route is probably to become Tidal and give the company away to a few big artists in exchange for exclusives.

They could look at purchasing Bandcamp, which has done a great job of promoting and selling independent music.

Re: Spotify opens on NYSE, valuing company at almost $30B

#59

Post by ttul »

swypych wrote: post #7

Spotify Revenue (Euros) 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.

30 / 4 = about 7x ARR. That's a very high SaaS valuation multiple, but not ridiculous vs comparables like loss-making Salesforce (9-10x).

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.

Re: Spotify opens on NYSE, valuing company at almost $30B

#60

Post by chimeracoder »

jedberg wrote: post #38
chimeracoder wrote: post #33

Earlier quoted context omitted.

> My understanding is that the underwriters are gatekeepers, not risk managers. If your stock underperforms, you have to pay them back, but if your stock over performs, they keep the extra. That's typically not true. The underwriter isn't guaranteed the difference. They're basically an insurer: the company is able to know (before the IPO) exactly how much money they can expect to make on it. In exchange for this cert…

That's what I thought too, but someone from the investment banking industry corrected me the last time I said that, and pointed out that "banks never lose money", and that the company does eventually have to repay them.

Underwriters aren't gatekeepers by definition, because there's nothing preventing companies from foregoing underwriters. But almost every single company that goes public chooses to[0], because they gain significant value from the process.

There are a few exceptions - Google is the most famous one. But they're rare, and even Google ran into trouble with theirs - they literally had to cut the size of the amount they raised in half about a week before the IPO, because the demand was lower than they thought, and then ended up leaving a lot money on the table.

We forget about all of that today because Google is now a successful public company. But their IPO was unambiguously a disaster from the company's perspective - they would have raised much more money with a conventional process.

> That's what I thought too, but someone from the investment banking industry corrected me the last time I said that, and pointed out that "banks never lose money", and that the company does eventually have to repay them.

No, that's not true. If the IPO is undersubscribed, the company isn't liable for making the bank whole. If that were true, then yes, there would be literally no reason for a company to use an underwriter, because there's no requirement to.

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