From optimizing its cost structure to boosting net interest income, while diversifying its revenue streams, Spotify's stock is up 138% YTD. Will the growth streak continue into 2024?
Your posts are always so well-written. I love the two minute version and the way you discuss the argument after. It makes so much sense when reading. I understand Spotify in a way I would never have otherwise! Thank you 🙂
Thank you Safar. I am thrilled that these posts are engaging and interesting to non-finance folks, that means a lot to me. I always like to stay away from jargon, though sometimes you get into the jargon trap, without even realizing.
I adopted my 2 minute version inspired by Axios, thought people should get the gist, even if they have no time to read through the rest.
I loved it when I discovered the Audiobook feature! Just means I can listen to more books than with my Audible subscription and to me, the subscription now feels a little more value for money as I listen to more books than music (but my husband loves the music and we share an account — not that I don't get endless emails about getting two memberships 🤦🏻♀️). Thanks for this interesting post.
Thanks Elaine, I actually have never used the Audiobook feature, partially because of my attention span issue, I think. So interesting though, that you listen more to books than music.
My husband (the co-author of this post Uttam) and I also share an account, while he has a more versatile taste in music, I just use the app to play Pitbull songs when I workout. Or Bollywood.
I did listen in my running days to fast-paced running mixes! 😂 but I also find that I can workout to audiobooks. 🤪 My husband has changed my Spotify wrapped so now it looks like I like pop music plus house music! 🙈
Great analysis on the present and future of Spotify. I feel that YouTube music which is now available with a YouTube premium subscription, may pose a threat to Spotify's growth.
You bring about a good point Sanuj. I was looking at the subscriber data and it appears that YT Music got really popular in India because of Google's first mover advantage across all Google products. Spotify still is a compelling alternative but YT & Apple Music is quite popular in India.
Oh Yes! Forgot about that. I think there is Gaana and Saavn that got acquired by Jio. I haven't checked the prices of these apps though? Do they have compelling price points & stable music catalog vs Spotify, Amazon or YT?
Not sure. I've only used Spotify and YT music as they have the best collection. Amazon's music collection is poor, at least in India. Gaana and Saavn put out a lot of ads. Much more than Spotify. This post says that there are 185 million monthly active users for Gaana.
I think Spotify should thank you as not only are you providing great research you are talking more people into using their services!!! I like to spread my business around and not rely on big companies like Amazon for too many things. It is also an advantage to combine music and audiobooks. It may actually talk me into using the premium for music. 🎶 Well done. 😀
Thank you Lynn. So glad you enjoyed the post. Yes, it is great to see smaller companies innovating to get on a level playing field with the big giants. Their product innovation to diversify revenue streams may also be a saving grace, if they see average revenue per user drop in the coming quarters.
Great post Uttam and Amrita! I was unaware of the transformation of their interest income vs interest expense ratio through the use of short-term treasuries, but it’s a very clever move.
I cancelled my premium membership a few years ago because I used to get premium for half price when I was a student. When I graduated I didn’t want to pay double for a premium membership and opted instead to listen to the ads. The addition of audiobooks brought me back to premium.
Spotify is a very interesting company. It’s worrying they are struggling to advance in less developed markets, but it’s clear they have innovative ideas in regard to podcasts and audiobooks and are working to improve their finances and market share over both sectors. Thank you for the great post!
Thank you very much Dylan! I did not know audiobooks was such a big thing until I started researching data for this post. From other fellow-readers comments on this post (including yours) and scrolling through subreddits it appears I was living under a rock for this trend.
Thanks Dylan. Wow, audiobooks brought you back to premium, I would have never guessed that it has become so powerful.
Yeah, the next steps the company takes will be important to watch. It has already cut a significant chunk of its workforce, so the next phase of their journey should be focused more on aggressive growth plans than on cost optimization.
I interview creators and artists who describe Spotify as a modern-day Hollywood Studio - a million downloads generate far less revenue than grinding out a tour. Now they compete with holographs of Elvis and Bing and wonder where their legacy will fall. They express real self-doubt and a sense of not submission but subsuming to the machine. The insidiousness of marketing self-expression has risen to new depths.
I don't speak for Spotify... just observing the trends at a high level and writing about what I see. But with financial conditions getting tighter, more and more companies like Spotify will look for ways to expand their profits. That could mean either raising fees for consumers or discounting payout rates to artists.
The good news is that these kind of situations usually cause some kind of disruption soon as consumers (and artists) start to revolt against these kind of incentives and pricing mechanisms. If this continues and profits become the main goal for the long run, expect Spotify to be disrupted soon.
To answer your questions, I happily pay for the family plan for both YouTube and Spotify because I don’t want my daughter, or myself to have to listen to ads, ever. And I give the YT premium as Xmas gifts every year to extended family and people love it.
Mostly, I listen to music and podcasts. My 16 year old is all music.
I will likely listen to some of the celebrity memoir audiobooks included in the subscription and may cancel my Audible subscription now that Spotify is including big name audiobooks.
Your posts are always so well-written. I love the two minute version and the way you discuss the argument after. It makes so much sense when reading. I understand Spotify in a way I would never have otherwise! Thank you 🙂
Thank you Safar. I am thrilled that these posts are engaging and interesting to non-finance folks, that means a lot to me. I always like to stay away from jargon, though sometimes you get into the jargon trap, without even realizing.
I adopted my 2 minute version inspired by Axios, thought people should get the gist, even if they have no time to read through the rest.
Thank you for your ongoing support.
I loved it when I discovered the Audiobook feature! Just means I can listen to more books than with my Audible subscription and to me, the subscription now feels a little more value for money as I listen to more books than music (but my husband loves the music and we share an account — not that I don't get endless emails about getting two memberships 🤦🏻♀️). Thanks for this interesting post.
Thanks Elaine, I actually have never used the Audiobook feature, partially because of my attention span issue, I think. So interesting though, that you listen more to books than music.
My husband (the co-author of this post Uttam) and I also share an account, while he has a more versatile taste in music, I just use the app to play Pitbull songs when I workout. Or Bollywood.
I did listen in my running days to fast-paced running mixes! 😂 but I also find that I can workout to audiobooks. 🤪 My husband has changed my Spotify wrapped so now it looks like I like pop music plus house music! 🙈
I do the same thing to Amrita's Spotify account. And now her 2023 Wrapped had Deep House and she thought her Spotify Wrapped was broken. 🤣
🤣🤣🤣🤦🏻♀️ I can’t share my Spotify wrapped on Instagram now because of the house music. 🤪 I feel Amrita’s pain!
Great analysis on the present and future of Spotify. I feel that YouTube music which is now available with a YouTube premium subscription, may pose a threat to Spotify's growth.
You bring about a good point Sanuj. I was looking at the subscriber data and it appears that YT Music got really popular in India because of Google's first mover advantage across all Google products. Spotify still is a compelling alternative but YT & Apple Music is quite popular in India.
That's not all. There are local music apps too which are quite popular.
Oh Yes! Forgot about that. I think there is Gaana and Saavn that got acquired by Jio. I haven't checked the prices of these apps though? Do they have compelling price points & stable music catalog vs Spotify, Amazon or YT?
Not sure. I've only used Spotify and YT music as they have the best collection. Amazon's music collection is poor, at least in India. Gaana and Saavn put out a lot of ads. Much more than Spotify. This post says that there are 185 million monthly active users for Gaana.
https://www.businessofapps.com/data/music-streaming-market/
I think Spotify should thank you as not only are you providing great research you are talking more people into using their services!!! I like to spread my business around and not rely on big companies like Amazon for too many things. It is also an advantage to combine music and audiobooks. It may actually talk me into using the premium for music. 🎶 Well done. 😀
Thank you Lynn. So glad you enjoyed the post. Yes, it is great to see smaller companies innovating to get on a level playing field with the big giants. Their product innovation to diversify revenue streams may also be a saving grace, if they see average revenue per user drop in the coming quarters.
Great post Uttam and Amrita! I was unaware of the transformation of their interest income vs interest expense ratio through the use of short-term treasuries, but it’s a very clever move.
I cancelled my premium membership a few years ago because I used to get premium for half price when I was a student. When I graduated I didn’t want to pay double for a premium membership and opted instead to listen to the ads. The addition of audiobooks brought me back to premium.
Spotify is a very interesting company. It’s worrying they are struggling to advance in less developed markets, but it’s clear they have innovative ideas in regard to podcasts and audiobooks and are working to improve their finances and market share over both sectors. Thank you for the great post!
Thank you very much Dylan! I did not know audiobooks was such a big thing until I started researching data for this post. From other fellow-readers comments on this post (including yours) and scrolling through subreddits it appears I was living under a rock for this trend.
Thanks Dylan. Wow, audiobooks brought you back to premium, I would have never guessed that it has become so powerful.
Yeah, the next steps the company takes will be important to watch. It has already cut a significant chunk of its workforce, so the next phase of their journey should be focused more on aggressive growth plans than on cost optimization.
I interview creators and artists who describe Spotify as a modern-day Hollywood Studio - a million downloads generate far less revenue than grinding out a tour. Now they compete with holographs of Elvis and Bing and wonder where their legacy will fall. They express real self-doubt and a sense of not submission but subsuming to the machine. The insidiousness of marketing self-expression has risen to new depths.
I don't speak for Spotify... just observing the trends at a high level and writing about what I see. But with financial conditions getting tighter, more and more companies like Spotify will look for ways to expand their profits. That could mean either raising fees for consumers or discounting payout rates to artists.
The good news is that these kind of situations usually cause some kind of disruption soon as consumers (and artists) start to revolt against these kind of incentives and pricing mechanisms. If this continues and profits become the main goal for the long run, expect Spotify to be disrupted soon.
Fascinating.
To answer your questions, I happily pay for the family plan for both YouTube and Spotify because I don’t want my daughter, or myself to have to listen to ads, ever. And I give the YT premium as Xmas gifts every year to extended family and people love it.
Mostly, I listen to music and podcasts. My 16 year old is all music.
I will likely listen to some of the celebrity memoir audiobooks included in the subscription and may cancel my Audible subscription now that Spotify is including big name audiobooks.
Thank you for sharing your experiences, Charlotte.
Also, I’m a big Rogan fan, so I’d maybe only have YT if Rogan was still on YT.
Yes. I know lots of people that moved over to Spotify just because of Spotify's exclusive deal with Rogan.
I loved their Wrap up of the year and it is a company I like for long time.
Thank you for sharing your thoughts!
Glad you enjoyed the post.
Glad you enjoyed it J.R.