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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

#301

Post by jethro_tell »

dumbfounder wrote: post #296
mseebach wrote: post #288

Earlier quoted context omitted.

Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue? Netflix has plenty of third-party content. I would assume that Spotify's music licences are highly variable cost, ie almost entirely pay-per-stream. All they need to do is to get people to stream less licenced content and more own-produced.

Because people expect broad coverage in their music service. When I ask alexa to play a song and she doesn't know it, I am like wtf? But I don't care if Netflix doesn't have every Matrix movie, I just watch something else.

Not just watch something else, if they don't have that matrix movie, you might watch it somewhere else. People don't make movie playlists and consume 35 movies in a row. Switching from one service to another to make up content gaps is OK when you're talking about a 2-2.5 hour block of time. It's not something people are going to do to listen to a mix of artists at a party.

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

#302

Post by bln_wgc »

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.

Should be noted that those are gross revenue numbers... ~80% of their gross revenue goes to the record companies and that percentage is constant as Spotify grows (i.e., there's no economies of scale to it).

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.

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

#303

Post by [deleted] »

wilsonnb wrote: post #208
ohf wrote: post #171

Earlier quoted context omitted.

I'd wager that Spotify is nearing the point at which - if not already there - record labels cannot afford to revoke their license. If they can get away with it, they'll try to push some buttons, but I doubt a full confrontation. If there's any evidence against this, please let me know. I think it's interesting.

Spotify's market share is currently being attacked on both ends. 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…

[deleted]

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

#304

Post by ghaff »

lambda_lover wrote: post #204
exclusiv wrote: post #185

Earlier quoted context omitted.

Don't you think that as long as it's good users won't care? Netflix would likely have succeeded without originals but would have been nowhere near as pervasive. People were tired of the network crap and wanted content accessible everywhere. They delivered on those. Good content is good content. For music - it's even better if it's not yet well known because for some reason people think more highly of themselves for b…

I don't understand the appeal of this model. Do you really want to have to subscribe to 5 different streaming music services, one per label, just to listen to all your favorite artists?

I'm admittedly not a particularly big music person but I'd have trouble seeing subscribing to multiple music streaming services unless one of them was for some obscure sub-genre I was really into. A lot of music seems to be ambient. If there's some artist I really need, I'll but a CD now and then.

Mind you, I don't like video being fragmented but that's a more deliberate choice a lot of the time for me. I'll subscribe to a few places based on available and original content--somewhat grudgingly to be sure--but I accept those are my options.

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

#305

Post by pc2g4d »

_zachs wrote: post #168
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…

Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them. I wouldn't be surprised if Spotify tried poaching higher-level strategy people from Netflix.

Spotify already is a label. Right? A bunch of artists have done "Spotify Sessions".

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

#306

Post by oUrfsWY »

I doubt the current $150/share is sustainable given the waste, fraud, abuse, and royalties. I'm forecasting a wave of layoffs before next quarter's earnings. I'll concede the product is good and the UX is nailed. There just isn't enough innovation or growth to support the need for 5000 employees. Those of you who were users of the product 5+ years ago. How much has really changed? None of the recent acquisitions have provided any valuable gain to the company's core competencies. The company culture is a shell of what it once was, with a leader of HR hellbent on neutering the minds of employees to hire unqualified -but- DIVERSE! candidates.

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

#307

Post by bln_wgc »

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…

I think a different interesting comparable is Uber. Both have really promising revenue growth stories, but (unlike Netflix) have no control over content/supply costs. For both Spotify and Uber ~80% of that gross revenue number goes straight to either record companies or driver commissions and rider subsidies. And the 80% does not diminish with scale.

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?

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

#308

Post by bogomipz »

mseebach wrote: post #288
bogomipz wrote: post #222

Earlier quoted context omitted.

>"Starting their own label is exactly what they need to do to remain competitive. It's exactly what Netflix ended up doing and I think it's turning out pretty well for them." 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 mai…

Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue? Netflix has plenty of third-party content. I would assume that Spotify's music licences are highly variable cost, ie almost entirely pay-per-stream. All they need to do is to get people to stream less licenced content and more own-produced.

>"Why the assumption that "to pull a Netflix", they will have to get rid of the back catalogue?"

If they start poaching artists from the labels who own the back catalog or if the labels start to see Spotify as a competitor instead of customer there will a reckoning when it comes time for Spotify to renegotiate their licensing terms with the labels.

And then of course there's the risk of becoming a record label. For every Bruno Mars that blows up there are 30 or 40 other artist that failed to break. And each of those flops costs money and requires resources such marketing, A&R people etc.

>"All they need to do is to get people to stream less licensed content and more own-produced"

People want to listen to what they want to listen to when they want to listen to it. That's the whole value proposition of streaming for users. If someone has a specific record or song in my mind you aren't just going to persuade them to try some "non-licensed" content instead. It's not a sports drink.

>"I would assume that Spotify's music licenses are highly variable cost, ie almost entirely pay-per-stream."

No its most certainly not pay as you go. In fact the labels demand a certain percentage up front.

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

#309

Post by d1zzy »

bllguo wrote: post #187
komali2 wrote: post #47

I'm not quite clear on why people are choosing spotify over google play music - to me the google option is superior in UI and offerings (including ad-free youtube). 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)?

I use GPM, but that's because of the bundling with Youtube Red. I would prefer Spotify for a desktop app, nicer looking UI IMO, and so Google doesn't know my music prefs. But for now, ad-free YT is too nice to give up.

What operating system? I found Google Play Music Desktop Player to be pretty awesome (although it's just a browser underneath but it has much better integration with the rest of the system through themes, media keys) also native last.fm, lyrics, etc.

https://www.googleplaymusicdesktopplayer.com/

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