Spotify preps to go public with 60M subscribers

https://techcrunch.com/2017/07/31/spotify-vs-apple-music/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29

by prostoalex • 9 years ago

88 70 9 years ago

techcrunch.com

pgeorgep• 9 years ago

I love Spotify and will happily continue to pay a few bucks a month to use their services. Is going public really their best move though?

It really seems logical that Apple would have acquired them by now and just merged them into Apple Music, once again giving Apple control over the online music industry.

JamesMcMinn2• 9 years ago

I'd rather Spotify went public than got bought by Apple, Google, Microsoft or Amazon. The competition is good for everyone.

adventured• 9 years ago

Going public is guaranteed to end in them getting acquired by a US media or tech company.

Once public, it won't take long for the present owners to lose control to far more powerful financial entities. The VCs will all liquidate out, leaving a power vacuum that will be gradually filled by those new parties, and they'll do the same thing they always do.

Crontab• 9 years ago

There might be legal issues if Apple tried to do that, especially after buying Beats and its streaming service.

pducks322• 9 years ago

I’ve been considering this the past few days. As long as Google is around no one will try and hit Apple with a monopoly on Music. Music is controlled by three companies so it seems purely hypocritical to attack Apple if they decided to take this route.

I don’t think they will by the way just from a theoretical point of view.

c3534l• 9 years ago

They'll need to raise a lot of money if they're going to be competing with a company as big as Apple, which appears to be their plan.

kayman2• 9 years ago

I use spotify. Love it. My family uses Spotify, loves it. I hope they go public.

darkstar999• 9 years ago

Why do you hope they go public?

elmar2• 9 years ago

he loves it so much he wants to buy shares, I can't think of other reason.

DarkTree2• 9 years ago

I've had Spotify for 5 years or so, and mostly used it to look up songs I already liked, and to create playlists to listen to while studying/working/programming. It was already pretty awesome for that. Then I started checking out the "Related Artist" section, and started discovering new music after such a hiatus of music discovery since my younger years.

But where Spotify has really just excelled, and dare I say changed the way I listen to music, is their newer ways of discovering music. Now I can make a playlist with all of my favorites, and then just check out the "Recommended Songs" section to find new favorites. And now I start most work weeks off listening to the "Discover Weekly" playlist and drag the songs I like over to my playlists. The amount of new music I've discovered hasn't been this volume since middle school.

twotimestuesday• 9 years ago

Yeah I agree that Spotify is the best in the game right now. Discover weekly has been spot on consistently since it was released but for me 30 tracks is barely enough. I've been using turntable inspired https://www.jqbx.fm for a little while. The social part of it gives it the extra push of randomness I need to discover music I wouldn't have stumbled on otherwise.

jlewallen• 9 years ago

Thank you for mentioning JQBX!

hbosch• 9 years ago

Try right clicking a playlist you like, and select "Make Similar Playlist" for a shortcut. Loved this feature when I found it.

DarkTree2• 9 years ago

Wow, didn't know about that feature. Thanks for mentioning!

andrewflnr• 9 years ago

I do eagerly await the discover playlist, but for me personally the quality is inconsistent at best. One week it will be great and have 10 songs that I keep, the next it will be full of crap. I guess I have weird enough taste that Spotify has a hard time satisfying it. It's still the best I've found, and beats Pandora by a big margin. Does anyone else have similar experiences?

pducks322• 9 years ago

I don’t want to start a which is better war but just want to talk about this discovery thread. My favorite thing about using Apple Music has been how much incredible music I have discovered through their playlists and through Beats One especially. I listen to pretty much any genre now and know deeply about the artists and the songs and their purpose. It’s just so incredible. This is a new era of music.

usegolang• 9 years ago

Google music's radio features (create a radio station from a playlist, song, artist, etc) along with recommendations have had a similar effect for me. I discover new music that I really enjoy all the time.

Cthulhu_3• 9 years ago

I liked the "radio" and daily mix things at first, but they often repeat the same songs and haven't really gotten me anything new for a while. They generate a new one if I go to a completely different genre, but it doesn't seem to evolve over time.

bgarbiak2• 9 years ago

Daily Mix is intended to work this way. It's ought to give you songs that you already know and like, not the new ones.

elfchief2• 9 years ago

Cool, maybe this means they'll finally be able to afford to implement the ability to play through a non-default sound device on Windows. You know, like the USB DACs a lot of music lovers have.

AbstractCache• 9 years ago

Am I missing something here? Can't you just change the default sound device to the DAC?

JamesMcMinn2• 9 years ago

I have a USB DAC, that's exactly how it works for me...it'll happily switch between the builtin audio and USB DAC while playing, too.

philsnow• 9 years ago

Maybe elfchief doesn't want chord.wav to play on the hi-fi system, so doesn't set the DAC as the default device

ProfessorLayton• 9 years ago

As much as I love competition, I can't see this ending any better than it did for Pandora. Its hard to make money by selling someone else's content, and Big Music seems content with leeching as much as they can from music providers, short of actually killing them.

Perhaps if they went with the Netflix model and signed artists themselves, but thats also extremely capital-intensive. Netflix is apparently 20B in debt [1]

http://www.latimes.com/business/hollywood/la-fi-ct-netflix-d...

dano• 9 years ago

^^^^ This

For the future of Spotify, look no further than $P https://finance.yahoo.com/quote/p?ltr=1

They pay the same royalties.

Their cost structures are very similar.

Their differences are in capabilities, which can be mimic'd (see Instagram vs Snapchat stories)

Buy for the pop, sell before its too late.

teekno• 9 years ago

Spotify has become one of the few subscription services that, barring a large price increase, I have no plans to cancel. I listen to content for at least 4 hours each day and I'm more than happy pay $10 a month for offline storage and no ads. The additions of Discover Weekly and daily mixes made losing What.CD slightly more bearable.

jsjohnst• 9 years ago

I wonder if the reason for the non-traditional IPO was due to the raise they did a while back under rather predatory terms?

anilshanbhag• 9 years ago

Google recently started aggressively marketing Youtube Red. When you watch a youtube video, a small popup asks if you want an ad-free experience, consider upgrading ..

This is worrying as Spotify has no moat. Youtube Red is definitely a better value as you ad-free + offline youtube with music. I am a paying Spotify customer and if they improve their client, I might jump ship.

peterjlee• 9 years ago

I was using Spotify then jumped ship to Youtube Red and used Google Music for about a year. But their music curation wasn't good so I jumped back to Spotify. Then I got tired of watching Youtube ads so now I just pay for both...

TheHegemon• 9 years ago

I'm surprised as I've found Google Music's radio feature is a lot better at finding music I would like. Spotify used to play music that was slightly related and would throw me off all the time.

eveningcoffee• 9 years ago

Youtube Red is definitely a better value

Well, it is not as it is still Google and then you are forced to give them your real identity through payment details.

I understand that many people have already done that by other means but such factors are important for me.

nikanj• 9 years ago

For me, Spotify's moat is the music that keeps on playing when I lock my phone.

majani• 9 years ago

Background play is one of YouTube Red's features as well.

ClassyJacket• 9 years ago

Youtube Red and Google Play Music both have that, and both come together for the price of just Spotify.

That being said, I'm a Spotify subscriber, because its apps are the best.

pjc50• 9 years ago

"Youtube red is not available in the United Kingdom"

mrweasel• 9 years ago

It's really weird that Youtube Red isn't available in countries outside the US. Many of the Youtube ads make very little sense outside the US (not all of cause), so one would think that there would be more money to be made from Red than in the US, vs. having ads.

Even the localised ads are for the same five or six companies, it's really annoying at this point. I do feel bad about using an adblock, because I do think that content creators should get paid for their work, but by not offering Youtube Red here, I'm deliberately being prevented from paying for content.

scarface742• 9 years ago

Spotify is nice, but do they really have in chance of being decently profitable on such slim margins? They are competing against two large companies that don't live or die by whether their music subscription business is profitable - Apple and Google.

ultimoo• 9 years ago

Amazon too, especially with the Alexa ecosystem.

ehnto• 9 years ago

That they are profitable at all is better than many IPOs.

Edit: I assumed the were profitable, it seems I was wrong.

I hope they stick around, it's always a shame when a cool service shuts down.

ksec• 9 years ago

That is assuming Apple or Google has a product that even tries to complete on quality.

Both of their Music product is far inferior to Spotify. And this is speaking form an Apple Fans who really wanted to paid Apple some money but cant.

scarface742• 9 years ago

Whether or not Apple Music and Google's offers are inferior, are they inferior enough that Spotify can overcome the "power of defaults"? If I'm all in in either ecosystem, the integration benefits of Apple Music may make up for any inferiority. The same could be said about Youtube Red.

clfougner• 9 years ago

Subscribers pay 10$ a month, of which 70% goes to the artists/record labels. Spotify itself then has a a revenue of 3$ per user per month, or 36$ per user per year. 60 million subscribers gives an annually recurring revenue of 2.16 billion dollars. From the chart in the article, they grew from 50 to 60 million subscribers over 4 months, so that annualises to a 60% growth rate on 2.16 billion in revenue (ex royalties). Questionable how long they'll be able to maintain that growth rate, but at the moment it's looking great.

One factor that hasn't been accounted for is the hosting costs for streaming/data transfer. Ballpark: assume the average user listens to music 1 hour/day, 365 days a year, at a bitrate of 320 kbps: 320 * 60 * 60 * 365 = 420480000 kilobits = ~50 gb per user per year. AWS' pricing page [1] has the lowest listed rate of 0.05$/gb (in reality likely lower for a huge client like Spotify), which amounts to a data transfer cost of 2.5$ per user per year, on a revenue of 36$.

Further Spotify has a large number of free subscribers (around 50-100 million, don't think figures have been released for this recently), which produce far less revenue per user from ads, but do generate revenue nonetheless.

Seems to me that it should be entirely possible to become decently profitable, provided that customer acquisition costs don't grow out of hand. For context: Facebook had an ARPU in the US and Canada in Q2 2017 of 19$, whereas Spotify has an ARPU of 9$ per quarter (ex royalties). If Spotify can be half as profitable as Facebook (on a per user base) and can keep growth going at this rate, they should be able to do fine.

[1] https://aws.amazon.com/ec2/pricing/on-demand/

parr0t• 9 years ago

Was a paying Spotify user for about two years and recently jumped ship to Google Play Music to give it a shot and I'm pretty happy about it thus far. Haven't been any songs that I had on my Spotify playlist that I couldn't find. There is a few things it is missing that's not ideal (no podcasts in Australia) but the bundling of YouTube Red with the subscription + the ability to upload my bandcamp-downloaded tracks that I can stream back that aren't on either Spotify or Google Play Music is fantastic.

Podcasts is just the main thing I am wanting at the moment, but I can still access them via the Spotify free account.

nodesocket• 9 years ago

Nice. Maybe they can purchase SoundCloud with the IPO proceeds.

FatalBaboon2• 9 years ago

Now that's a neat idea, they could offer the artists a platform to support them from genesis to well-known

elmar2• 9 years ago

Spotify is gearing up for what’s being called a “direct listing,” where the company intends to go public without doing an IPO. Insiders, not the company, will be selling shares to the stock market.

No proceeds, only investors caching out.

znedw• 9 years ago

I'm using spotify through mopidy & mopidy-spotify, i can use ncmpcpp to play playlists and search spotify just like a local MPD server with a lot of music, it's excellent.

bananaoomarang• 9 years ago

Have been meaning to set something like this up.

My only issue with Spotify is that it doesn't integrate with my local collection very nicely/at all on Android.

RileyJames• 9 years ago

I wish they would focus on the "Your Library" side of the app & search.

1. Connectivity. I am online, maybe check and retry a few times, rather than tell me I've done something wrong. No other app makes this as painful as Spotify. This makes searching a horrible experience.

2. Visit artist page, visit album page. All these options are hidden behind buttons that say ". . ." Nothing! Browsing through my collection of saved music to find something to listen to should be JOYFUL and fast. Not slow and confusing.

3. I can see what's in my queue, but what did I just listen to? Why is not available in one touch from the same screen?

It seems like their UI has a long way to go. It currently gets in the way of an otherwise excellent experience.

factsaresacred• 9 years ago

$10 a month for a never-ending stream of joy, nostalgia and discovery. The easiest purchase I'll ever make.

In addition to all that, Spotify never bugs me. Discover weekly lands every Monday without fanfare, I rarely if ever receive an email, and - with the exception of some licencing issues - the library of music just keeps expanding. So yeah, hurrah for their growth.

One question though: what happened with the purchase of Soundwave? I'm guessing some of their ideas went into making Discover weekly as good as it is.

jamesmattis• 9 years ago

60M subscribers and still not profitable, why?

Would you buy a stock in a company that has been in business from last 11 years and cannot make a profit yet?

Cthulhu_3• 9 years ago

Still heavily investing in acquiring music licenses and expanding their business I guess?

That's the modern time, businesses don't aim to make a profit anymore, they aim to grow. AMD is a good example of this practice, it usually ends each quarter with a half a billion in losses [1], with some exceptions here and there. It goes from an almost 4 billion loss to a 1.3 billion profit. It's amazing it still exists, but that's what investor money is for I guess.

[1] https://ycharts.com/companies/AMD/net_income_ttm

jpalomaki• 9 years ago

To fuel growth, they have been subsidizing the free tiers from the money they get from paid subscriptions. I believe they could actually make profit if they wanted to. Of course it might then hurt their future growth.

slowmotiony• 9 years ago

If you go to any neighbourhood media store, you will notice the Spotify logo on at least more than half of receivers, TVs, radios, media boxes and so on. They are still growing like crazy so I guess this is where all the money is going for now.

dan12342• 9 years ago

60M subscribers - but how many of them are premium subscribers?

simonswords82• 9 years ago

Love Spotify.

Now if only there was a Spotify equivalent for films in terms of depth and breadth of the available library and spot on recommendations of new films.

hycaria• 9 years ago

I'm still angry at Spotify and don't use their service as a consequence. I got Spotify during the beta. Then the advantages were gradually revoked (first a "free" account with less ads iirc, now no perks at all). Nothing surprising but there are way too many other ways to listen to music (and needed to use others for some tracks anyways) for me to comply and subscribe.

Mostly using HypeMachine now. Although it is probably gonna shut down, and all there will be left will be subscription based music services :(

dirtylowprofile• 9 years ago

I love Spotify but their Mac app is so slow and won't load anymore.

dan12342• 9 years ago

Their Mac app randomly consuming an entire core was the reason I grudgingly switched to Apple Music (though iTunes has different issues, it usually behaves itself when in the background).

Spotify preps to go public with 60M subscribers

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