Investors weighing whether to bet on Spotify need only look at the chorus of predecessors that tried and failed to meet the same challenges.
It’s hard to be profitable when music-rights holders collect more than 75¢ on every dollar that comes in. The service has reported higher losses in three consecutive years despite quadrupling sales. There’s only one small flaw in the business model: Spotify doesn’t make any money. In private transactions, investors have valued the company at more than $20 billion, a market cap many analysts expect Spotify to justify when it lists its shares on April 3. More than 70 million people now pay Spotify an average of about $5 a month to access 35 million songs, plus playlists and podcasts. Total global music sales have grown three straight years after a 15-year decline. “The old model favored certain gatekeepers,” he said, but today “artists can produce and release their own music.”Įk, 35, started Spotify in 2006 because he thought he could stamp out the piracy that had ravaged the music business.
And like any modern CEO with faith in technology to reorganize the world, he celebrated by threatening anyone who stands in his way. Spotify, he wrote to investors, will render record labels and publishers obsolete by connecting artists directly to fans. 28, the day his streaming music company filed to go public on the New York Stock Exchange. Investors are about to sound off on whether it matters that the most popular music streaming service doesn’t make any money Lucas Shawĭaniel Ek, Spotify Technology SA’s co-founder and chief executive officer, was in a celebratory mood on Feb.
Can It Save Itself? Bloomberg Businessweek | March 26, 2018
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