
Spotify opens on NYSE, valuing company at almost $30B - harshgupta
https://techcrunch.com/2018/04/03/spotify-opens-at-165-90-valuing-company-at-30-billion/
======
synaesthesisx
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 potentially start their own "label" and promote their own
artists that sign on. Small/independent musicians could see more exposure and
Spotify can deliver more music tailored for individual tastes. I've personally
found myself listening to lots of small/indie artists as a result of their
algorithms, to the point that these now make up the majority of my listening
experience.

I think getting into concert tickets/streams, merchandise etc could help them
potentially capture quite a bit of value in the future as well.

I know the comparison is similar to original content & Netflix - but keep in
mind there's an opportunity cost with media (one can only consume X amount of
shows/songs within a period of time). The more attention Spotify can divert
away from the major record labels the better.

~~~
_zachs
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.

~~~
bogomipz
>"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 mainstream. A
streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc is
going to shed users pretty quickly.

Also music and movies occupy very different spaces in peoples lives -
emotionally, socially, where and how they're consumed and shared etc.

People need music for their commute, for their workouts, for their parties, at
bars and for their workdays. People only need movies when they're home or
maybe stuck on an airplane.

Lastly Spotify needs to stay in the record label's good graces. If they were
ever to be viewed as a competitor or a thread to any the big 3 record labels
it would be reflected in punitive price increase when it came time to
renegotiate their licensing deals.

~~~
bootlooped
> A streaming service that has no Beatles, Pink Floyd, No Motown, No AC/DC etc
> is going to shed users pretty quickly.

I disagree. I think for most people music is fungible; they just want
something to listen to. I think Spotify can afford to have gaps in it's
library. Sure, if a large enough portion of the music industry cut them off it
would be an issue, but I don't think they're in imminent danger of that.

~~~
tomc1985
Spotify's catalog is so spotty that it is borderline useless for me. Most
small indie labels still do not publish to Spotify

If you are the kind of person that will sometimes strongly desire to listen to
only one song/style/artist, and that desire is so strong that nothing else
satisfies it, then Spotify not having your track can be a big deal.

If I can't build a decent playlist because Spotify's lack of coverage, that's
going to be a big deal to me.

The mainstream is not sensitive to nor do they care about the logistics of
music distribution. I wish there was a way for Spotify to ignore these
bullshit distribution deals because the only people who care about them are
megalabels and their A&R reps. I don't know of a single artist making bank off
streaming...

~~~
rorykoehler
I don't know what music you listen to but i have a pretty broad and eclectic
taste and still find Spotify to be amazing for discovery.

~~~
tomc1985
I have never been happy with Spotify/Pandora as discovery system. Nothing
beats an hourlong mp3+tracklist with real DJs pushing real buttons :/

------
yonkshi
And in Sweden, home of Spotify, the other big news is that NYSE raised
Switzerland's flag.

[https://www.thelocal.se/20180403/spotify-swiss-or-swedish-
wh...](https://www.thelocal.se/20180403/spotify-swiss-or-swedish-whatevs-says-
new-york-stock-exchange-flies-the-wrong-flag)

~~~
quickthrower2
Not a mistake. It's a nod to the tax havens.

------
froindt
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?

~~~
albertgoeswoof
Are blue apron and stitch fix tech companies? I thought they were just sending
out boxes of stuff to subscribers, with a website/app for taking orders?

~~~
ericwood
I used to work at Blue Apron...sending people boxes of perishables is actually
a very tough problem to solve and there was extensive tech powering the
warehouse side of things. We had a fairly large engineering team working on
these problems.

At the end of the day who really cares what is and isn't a "tech company"?
Every company has a tech aspect to it these days.

~~~
astura
How's that different from, say, the logistics of grocery stores? Yet Wegmans
isn't considered a "tech company."

~~~
ericwood
Most grocery stores use off-the-shelf tech for this sort of thing; our
business model made a lot of that not feasible and there was a decision made
early on to build it ourselves, if anything because the tech we developed
could have its own value down the line.

If Wegman's was writing software like this (maybe they do! I have no idea)
then I'd happily consider them a tech company.

But like I said, it's a silly thing to argue about anyways.

~~~
astura
I used Wegmans as an example specifically because Wegmans is known for doing a
lot of their own R&D to improve their operations. I don't know if they write
some of their own software, but it wouldn't surprise me if they do.

------
guelo
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.

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

~~~
rainbowmverse
Bandcamp lets me download lists of people who've bought my music and of people
who follow my profile. This is because they understand the business is _mine_
, and they're simply a service provider for that business. Even their
subscription system runs right through the musician's own Stripe account, so
you can always take your subscriptions elsewhere.

I don't have any reason to trust that a VC-fueled monster like Spotify
understands this. If Spotify bought Bandcamp, I would remove my music from it.

VC-fueled behemoths like to make people dependent on them. I can't trust my
business to a company that gets most of its money from outside investors
instead of the people who use the service. Their incentives are fundamentally
misaligned with my interests.

~~~
chime
Apologies if I come across as harsh but as a consumer, I would prefer my
consumption activities to remain as private as possible. In light of FB news,
I don't think even some Options > Privacy Settings on Bandcamp would be
sufficient since most people wouldn't do it. I hope Bandcamp is opt-in for
this info.

~~~
atwebb
It's opt-out, I normally leave it checked, you get the option clearly when
purchasing music/items. The artist can then send updates/you get follow
notices, the volume is pretty low at the moment for me at least.

~~~
rainbowmverse
That's still generally seen as opt-in among marketing types, though I can
understand the perspective where pre-checking the opt-in is a kind of opt-out.

------
komali2
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)?

~~~
jklinger410
As someone who just made this choice, let me add some insight.

\- My friends use Spotify

\- Larger library

\- Well made playlists

\- Social feed

In the end, they are very similar products. I feel that Spotify has a huge
head start on Google here, and it shows. The more mature product is Spotify. I
think Google can't really compete in terms of curation and popularity.

Really, the edge cases of "music that is not on Spotify" ends up being so
small that Google's upload your own music feature doesn't tip it in their
favor. At least in my eyes.

~~~
Thaxll
Larger library? They all use the same base library afaik.

~~~
esMazer
Spotify "Over 35M" [1]

Google Music 40M [2]

Apple Music 45M [3]

[1][https://press.spotify.com/us/about/](https://press.spotify.com/us/about/)
[2][https://play.google.com/music/listen#/sulp](https://play.google.com/music/listen#/sulp)
[3][https://www.apple.com/apple-music/](https://www.apple.com/apple-music/)

------
mancerayder
Maybe they have enough capital now to adjust the Discover Weekly algorithm,
which provides a weekly recipe of 30 songs that have no basis in what I
listened to or have in my playlists. I do get to discover Millennial sleepily-
singing voices to a disco beat and a 'laid back' riff that promises to stay in
the background (thanks to a faux garagey sound). Is that what Indy means?

For pre-selected music that I listen to frequently, I use playlists with
Spotify.

For truly discovering music with algorithms that work, I use Pandora.

I do notice there is NOT a lot of overlap at times, due to bizarre licensing
restrictions and deals.

~~~
KozmoNau7
And I can only say that Discover Weekly and the Daily Mixes are absolutely
spot-on for me.

~~~
therealdrag0
It works great for me when I'm not experimenting. But if I listen to an album
of a genre I don't normally listen to my next weeks playlist gets pretty
spoiled.

~~~
KozmoNau7
You can switch to a private session if you don't want to affect your
recommendations, just a heads up.

~~~
therealdrag0
Woah. Thanks for pointing this out; never thought about that.

------
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.

~~~
KozmoNau7
>"waste, fraud, abuse"

Please give credible examples.

------
armandososa
I am a closeted hobbyist musician in a rather small niche (contemporary
christian music in Spanish LOL)but I don't want to live off my music. I just
want to be heard by somebody. And today, trough distrokid plus spotify this is
sooo posible. Which wouldn't have been in my wildest of dreams 20 years ago
when I wanted to start a band with my friends. Or even 10, when I toured with
a small time ska band. And since my goal is being heard and not profit I would
be glad to pay for listeners.

And I don't think I'm the only one.

~~~
thaumasiotes
> a rather small niche (contemporary christian music in Spanish LOL)

I would have expected this to be a very large niche? How do the Latin American
/ Spanish markets treat Christian music?

~~~
armandososa
Well, at least in Mexico there is no christian radio nor a big christian music
industry (no Top 20 charts or any of that). So that means touring and doing
the old church pilgrimage and hoping that your style of music isn't offending
to some people. The chances are bigger if you land a ministry on a big church
but that's not my case.

------
089723645897236
I personally have supported them since beta (when they charged more) so I will
probably pick up a share or two. They are certainly worth NFLX money. Music is
insanely easy to produce, it is certain they will start courting artists
directly, and if they can find an acquisition that fills the DIY punk music
scene that was Soundcloud they will be just fine. They need more DIY content
to go along with the curated big label stuff. And by DIY I mean letting every
small Bandcamp DJ and artist on there. Might as well swallow everything right?

The experience on the platform was always stellar and just keeps getting
better the more data they collect. It's a good example where big data isn't
creepy at all, it's amazing. They constantly filter my preferences and show me
the key types of songs I like to listen to, impressive in itself but the song
radio aping Pandora is also impressive and way more interactive than Pandora
itself.

Basically I'm mega bullish Spotify and am not even going to front like I'm
not. You don't need to buy it but I doubt it goes anywhere bad. /end-activist-
investor-rant

~~~
matwood
I'm as bearish as you are bullish. Spotify is getting squeezed with record
labels on one side and Google/Apple (now at 38M subs compared to Spotifys 71M
subs) on the other.

I also do not think the Spotify situation is anything like Netflix. First,
Netflix is an add-on service for most people that compliments other video
services. OTOH, few people will have multiple music streaming services. This
leads to a few issues for Spotify:

1) If Spotify starts its own label, and the other labels pull their music in
retaliation, Spotify is done.

2) Back catalogs and current big name artists/content is a must in music
streaming - a completely different situation than Netflix was ever in. DIY
punk will not carry Spotify, neither will becoming a niche DIY label.

Given Spotify's current loses I just don't see how they turn profitable. Can
Spotify turn the 90M non-paying users into subscriptions?

~~~
089723645897236
The old ways are going away.

Where is the relevance of the label system now that producers can master and
release tracks directly digital with no pressing time at all? Gucci Mane is
great example of a hugely popular artist who released track after track as
fast as he could grind them out, for years (decades now! go count how many
mixtapes the guy has made). This is the new normal, hyper creativity and high
speed production. Pop cylces are like 100x as fast. You're telling me some old
white dudes in suits can A&R faster than teenagers can hashtag and invent
there way into new genres and music with their laptops. Yeah right. Dinosaurs.

It was dead with Mp3s and the internet and it's just still gasping along like
all the old media giants. Smaller and smaller labels are able to survive these
days, finding more and more niche audiences. Music has gotten more diverse in
the last 17 years and you can tell. Genres launch and burn out in months now,
or develop a cult fan base and continue on for years (ICP still tours this is
like my perfect example of trash that still has fans).

I'm not saying Spotify is the king but people using "the labels" as a threat,
come on, we all know what disruption means. Bandcamp and Soundcloud and even
Youtube have runaround the label system.

The one thing I'll grant you is that maybe subscription fees aren't enough to
keep the infrastructure going. This is possible. But the big pile of data is
certainly worth something now and in the future, and the ability to scoop
trends might be the sword that tames whats left of the big labels monopoly.

~~~
matwood
Labels control the back catalogs, other than that I agree with you that the
old ways are changing. The problem is nothing you said gives Spotify some
unique advantage over Apple on the streaming side or something like cdbaby on
the publishing side. Spotify can't just be some 'small' label and survive, and
I'm also not sure what artist _only_ wants to be on Spotify.

Music streaming has been completely commoditized. It's an add on feature to
both major phone software makers. What can Spotify uniquely bring to the table
that will give it the money to survive?

------
swypych
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.

~~~
zer00eyz
The value, well it is "investor demand"

The going public part -- well that was foretold with their last round of
financing (it was a condition) and this was a strange way to do it.

You may love the product but will it last is the question. If I were going to
bet I would say that 5 years down the road someone buys it for pennies on the
dollar or it goes bankrupt due to toxic debt.

I wonder what the short position is on it.

~~~
TAForObvReasons
> this was a strange way to do it.

This was done partially because the company itself isn't raising money. If the
company executives believed they would need a large cash cushion, they would
have tried to raise some cash in the deal, so they must believe they can
reverse course before the cash crunch

~~~
zer00eyz
It wasn't about raising money - they had their hand forced by the last round
of debt/equity deal that they did:

[https://www.recode.net/2018/1/3/16847786/spotify-tpg-
tencent...](https://www.recode.net/2018/1/3/16847786/spotify-tpg-tencent-debt-
dragoneer-ipo-music-streaming)

Not that it is a great article but honestly that looks like a very messy
transaction. It also looks like Spotify got the raw end of that deal. The
whole thing is just crazy and I'm not sure how anyone can make sense of those
numbers.

------
jpalomaki
Can it be a problem for Spotify that it will be hard for them to increase the
revenue they extract even from the most loyal customers? If streaming music
becomes a commodity and price sensitive people switch to competing services
what will happen? Some companies like Apple are in nice position, because they
can just sell more stuff to the loyal customers. Phone, pad and watch instead
of just phone. And then more expensive variants of these.

Is there something Spotify could do to differentiate, something that matters
even for those who don't value the sophisticated playlists? Should they go the
Netflix route and start producing their own music? Or would it make sense to
produce some other audio content? Think programs like "Serial" [1]. Or maybe
some radio drama [2]?

[1] [https://serialpodcast.org/](https://serialpodcast.org/) [2]
[https://en.wikipedia.org/wiki/Radio_drama](https://en.wikipedia.org/wiki/Radio_drama)

~~~
whatok
Streaming music kind of already is a commodity and the main thing that keeps
users tethered to a service are playlists. I'm sure Spotify could eventually
raise prices a bit but obviously only so much.

I think their biggest threat would be Amazon getting their music service in
order and baking the current paid version into the cost of a Prime membership.

------
JumpCrisscross
Contrasting this offering, where there were no underwriters and things
proceeded spectacularly, with the Dropbox IPO, where the underwriters added
negative value, speaks profoundly to the future role of private markets in the
capital markets for technology companies.

Disclaimer: I bet my career on private markets supplanting public ones, in
respect of certain technology companies, many years ago.

~~~
fullshark
I don't get this argument. Don't the underwriters provide an obvious service
that will always have utility for some private companies: risk management?

~~~
jedberg
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.

In theory the service they provide is valuation, but in this day and age of
instant information, that really isn't necessary anymore. Back in the day when
it took a few days for a person to execute a trade, maybe they provided
valuable insight, but now, with stock trades for retail investors taking
seconds from "I want that" to "I have that", they don't really have better
information anymore.

~~~
chimeracoder
> 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
certainty, the forego the potential upside (the chance that the opening price
will be much higher, in which case the company is leaving money on the table).

In this case, Spotify isn't even raising any money (because this is a direct
listing, not an IPO), so there's no point for underwriters, because... well,
there's no uncertainty about how much money they'll be raising, since they're
not raising any.

~~~
jedberg
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.

~~~
chimeracoder
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.

~~~
jedberg
> because there's nothing preventing companies from foregoing underwriters.

Isn't that like saying "there is nothing that prevents you from using
highways"? Like sure, you don't _have_ to use an underwriter, but, as you
pointed out with the Google example, it won't go well for you if you leave
them out.

~~~
chimeracoder
> Like sure, you don't have to use an underwriter, but, as you pointed out
> with the Google example, it won't go well for you if you leave them out.

Well, the original claim was that underwriters provide negative value. There's
a tradeoff, but clearly they _do_ provide positive value, on net.

------
allenleein
1/ Spotify is not Netflix. There won’t be a Netfix for music.

2/ Netflix, with almost 118 million subscribers worldwide, has allayed
concerns about its slowing growth by reminding analysts there are more than
700 million broadband households. Spotify, with 71 million paying users, touts
an even larger number in its filing: 1.6 billion payment-enabled smartphone
owners expected by 2021. #Growth

3/ Spotify delivers more than 70 percent of its sales to music rights holders,
despite efforts to improve profit margins.

4/ Universal Music Group, Sony Music Entertainment, Warner Music Group, Merlin
(the representative for many independent labels), which own 87% of the music
on Spotify as measured by streams.

5/ It seems highly unlikely Spotify’s Cost of Revenue will improve much in the
short-term: those record deals are locked in until at least next year.

6/ It means once the growth of Spotify starts to slow even a bit, it will has
very serious trouble.

7/ Netflix is building its own studio to produce shows on its own. Spotify
says it has no interest in signing artists, or paying for artists to record.
(They don’t have the capital)

8/ However, it has another plan to reduce its reliance on its main suppliers:
by making them less relevant. “The old model favoured certain gatekeepers.
Artists had to be signed to a label,” chief executive Daniel Ek wrote in a
letter included in the filing.

“They needed access to a recording studio, and they had to be played on
terrestrial radio to achieve success. Today, artists can produce and release
their own music. Labels, studios, and radio still matter, but in a cluttered
landscape, artists’ biggest challenge is navigating this complexity to get
heard. We believe Spotify empowers them to break through.”

(Ref 4/: Those labels own 85% of the music on Spotify as measured by streams.
Progress of empowering: 15%.)

9/ This goal sounds like “the Podcast model” started in 2005, unfortunately,
by their biggest competitor: Apple.

Spotify's Dilemma: [https://allenleein.github.io/brains/2018/03/spotifys-
dilemma](https://allenleein.github.io/brains/2018/03/spotifys-dilemma)

------
joshjkim
biggest jump ball: Apple/Google/Amazon competing services. spotify deserves
real credit for changing how people consume music, and I think that story will
serve them well in the short-term, but their biggest risk is
Apple/Google/Amazon who provide competing services that don't have any current
pressure to turn a profit - Tim Cook basically said "we don't plan to make
money"[1], a bad thing to hear from your primary competitor who also happens
to be the most valuable company in the world. as i've said before on diff
threads, I would not be surprised if Apple announces a big price decrease or
other apple music news right before Spotify's first or second earnings report.

still, impressive for them to make it this far, if they can really find a path
to profitability that also fairly compensates artists, I wish them the best! I
think it's more likely that as apple/google/amazon force them to continue to
operate at a loss, downward pressure on their stock will make them a good
acquisition target for one of the big tech companies looking to compete with
Apple Music (Amazon seems like a real possibility here - a spotify acquisition
feels similar in size and scope to their recent WF acquisition, essentially
another double-down on their "everything store" vision/story).

[1] [https://www.fastcompany.com/40525409/why-apple-is-the-
worlds...](https://www.fastcompany.com/40525409/why-apple-is-the-worlds-most-
innovative-company)

~~~
KozmoNau7
I for one would not switch to Apple Music. No web app, no desktop app for
Linux.

Google Play Music _could_ be an option, at least they have a functional web
player, but neither it nor the Android app are anywhere close to Spotify's
apps.

------
abalone
Not enough people talking about this: The fundamental challenge for Spotify is
they have to make money while Apple Music doesn't.

Apple Music can run break-even as a platform feature, like the App Store was
(at least in the early days). Or they could pay artists more with that margin
and get more exclusives. Either way, it's a _fundamental long term competitive
disadvantage_ for Spotify.

~~~
vlunkr
I know it’s just an acecdote, but I don’t know a single person that uses Apple
Music. Spotify already has a huge library and mindshare. It was too little too
late for Apple IMO

~~~
abalone
Which is why you should never draw conclusions from anecdotes.[1]

[1] _Apple Music is set to surpass Spotify in paid US subscribers this summer_
[https://www.theverge.com/2018/2/4/16971436/apple-music-
surpa...](https://www.theverge.com/2018/2/4/16971436/apple-music-surpass-
spotify-us-subscribers)

~~~
pertsix
Most of these users are converting from their shrinking iTunes business.

~~~
abalone
So what’s your point? Apple Music is still overtaking Spotify this year. And
just like iTunes, they don’t need to make much money on it.

~~~
KozmoNau7
Only in the US, Spotify is _huge_ in Europe and other parts of the world,
where Apple Music is basically unknown.

~~~
abalone
Spotify is actually _small_ in the world. All music service subscribers
combined are a mere ~110 million.

Eddy Cue recent pegged the market opportunity at 2 billion.[1]

And Apple Music ramping the fastest.[2]

[1] [https://www.cnet.com/news/apple-music-hits-38-million-
subscr...](https://www.cnet.com/news/apple-music-hits-38-million-subscribers/)

[2]
[https://twitter.com/asymco/status/973568200616050688?ref_src...](https://twitter.com/asymco/status/973568200616050688?ref_src=twsrc%5Etfw)

~~~
KozmoNau7
Comparing Spotify to other streaming services, obviously.

Apple music is basically a no-show in Europe and Asia.

And those numbers are only paid subs. Spotify has a ton of free, ad-listening
users.

------
diogenescynic
Congrats to them, but I don’t think I’ll ever understand renting music. I can
understand Netflix’s success because movie content is much less replayable and
more expensive, but music is relatively cheap to own your own collection. I
love music, but I don’t understand the appeal of Spotify and Pandora—I’d
rather take the cost of subscription and build out my library over time.

~~~
KozmoNau7
Think of it as a subscription to a larger library than you'll ever be able to
amass yourself.

Sure, you'll collect all of your favorite music, but what if you want to
branch out a little? What if you want recommendations that are tailored for
you, based on your music taste?

For me, one of the main services Spotify provides is access to occasional
music, stuff that I wouldn't bother to collect, but is nice to have on hand,
either for parties or just curiosity. The other main service is their
recommendation engine, which reliably presents me with interesting bands and
albums that I didn't know about, but fit very well with my tastes.

I consider $10/month a bargain for those services.

(I still keep an offline collection of my absolute very favorite albums, of
course)

------
jdlyga
Spotify is fantastic. Excellent usability. I can control the output of my
iPhone Spotify app using the app running on my linux computer.

~~~
KozmoNau7
Spotify Connect is one of their real killer features. It just _works_ so damn
well, and independent of Airplay, Chromecast, Sonos and other locked-down
methods.

------
stochastic_monk
I'm afraid about what will happen as more of these streaming services compete.
It seems to be mirroring the Netflix/Hulu/Disney battleground -- subscription
platforms which start differentiating themselves by owning exclusive content.
Spotify has started this, and Jay-Z & Co have refused to give streaming rights
to their competitors, such that Spotify doesn't have access to any Jay-Z, or,
oddly enough, any Metallica.

The problem here is that I purchase these subscriptions so that I can have
access to all of the music I haven't decided that I want to own forever yet.
If this trend continues and streaming platforms become more and more
exclusive, I will likely cancel my subscriptions, buy my music from the
artists directly, and say goodbye to renting rather than owning music.

~~~
pgm8705
Metallica's collection is definitely available on Spotify... at least in the
US.

~~~
stochastic_monk
Oh, thank you! I had it backwards. Tidal doesn't have Metallica, while Spotify
doesn't have Jay-Z and friends.

------
fortythirteen
> The company says that in 2018, shares traded on the private markets between
> $90 and $132.50.

> Losses for last year were 1.2 billion Euros ($1.47 billion), which compares
> to 539 million Euros ($661 million) the year before.

Well, there's the short of the year.

~~~
ttul
May I introduce you to the Efficient Market Hypothesis
([https://en.wikipedia.org/wiki/Efficient-
market_hypothesis](https://en.wikipedia.org/wiki/Efficient-
market_hypothesis)).

~~~
Afforess
I can't tell if you're serious (Poe's Law), but very few economists find EMH
to be credible. Did you even read the "Criticisms" section of that wikipedia
entry?

~~~
ttul
I went further and read many books on both the EMH and behavioral economics,
which is basically its polar opposite. I believe EMH to be true at a point in
time. One of the inputs to the price is market psychology.

------
fogzen
Nothing to celebrate. My CDs from twenty years ago still work. Why would I
invest time in Spotify when one day all the music just disappears, or they
raise prices, etc.?

If this is the future it doesn’t feel like progress.

~~~
delecti
Spotify is a service, not a product. Unless you similarly eschew cellular
service and grid electricity, I'm not sure what your point is.

~~~
z3t4
What to come and look at my electric collection ? Just don't touch any of the
capacitors.

------
hkmurakami
As of writing this the market price is $150, dropping from $165. But almost
surely this is a win for employees who derail the 6 month lockup uncertainty.

------
sksareen1
I wonder how you'd value Google Play Music alone based on this type of comp.
Anyone have an idea of what the number could be like w/ rationale?

~~~
lazerpants
Apple Music and Google Play Music are each approximately half the size of
Spotify (by subscriber). Assuming that the revenues for each service are
similar (on a subscriber basis) and overhead would be similar if they were
spun out, then you are just valuing them based on the number of current
subscribers. Given the low friction in switching services, subscribers are
around the same value for each service. My guess based on this back of the
napkin math then, is that $15B for would be the comp for each of Apple Music
and Google Play Music, though you would need to consider any debt held by the
companies (standing for Spotify, or as part of the spin-out by the other two).

That's just how I think the comp would work, I don't think any of those
companies are worth those values, including Spotify.

~~~
seabrookmx
> low friction of switching services

I don't agree with this. Most people build up a catalog of songs/playlists on
one platform and moving to a new one and re-discovering all your music is
quite a pain in the ass. This was one of the main reasons I was a late adopter
of Spotify (I work in the Music Industry).. there was no easy way for me to
take local libraries/playlists and create Spotify playlists from them.

------
pure_ambition
How is Spotify raising capital from this if it's not selling shares directly?
Will it wait until later to offer stock directly to the markets?

~~~
occamrazor
They aren’t raising any capital. This is an opportunity for the shareholders
(and maybe for employees with stock options) to cash out.

------
ebbv
Company valued at $30 billion. Artists continue to receive almost nothing for
their music being played.

Something doesn't add up here.

~~~
seabrookmx
> Artists continue to receive almost nothing for their music being played

This is kind of FUD. There's a lot of royalties flowing out of Spotify. While
it's true the payouts for many artists are smaller than they should be, 90+%
of artists simply get very few plays on Streaming services and thus make no
money.

And Spotify isn't the only one to blame here. Most music goes through a
process like this:

Artist -> Label -> Distributor -> Storefront

Spotify is only the storefront.. but both the Distributor (the "big three"
labels UMG, Sony, and Warner do their own distribution) and the record label
take a cut. There's also additional overhead for the artist, such as paying
out to producers, writers (if they don't write themselves) etc.

------
bsvalley
Let the buzz fade away... wait for it to drop below $100 then look at your
options. I don't understand why people still want to jump and buy shares the
same day a private company goes public considering the hype, etc. Why would
you lose that much that fast?

------
verelo
So i bought in, who knows where this will go though :)

One of my hopes it that just like NFLX, once the company focuses on producing
/ licensing it's own content they can do really well.

I'm interested in hearing what others have to say on this! Did you buy, will
you buy? Why?

~~~
browie
I don't know much about buying shares but I would like to buy in and invest.
Care to give me feedback on that? Where did you buy in?

~~~
praneshp
I don't know too much about buying shares, but anyone that knows less than
even me should not be buying individual stocks (that too based on IPO day
hype).

[https://www.bogleheads.org/wiki/Getting_started](https://www.bogleheads.org/wiki/Getting_started)

~~~
KozmoNau7
Absolutely. Buy index funds, don't worry so much about fluctuations, keep a
long-term perspective.

~~~
verelo
I agree with the above two remarks. In my situation the money i “experiment”
with at an individual stock level is not relevant to my end of work plan. I
assume the spend is as healthy as buying a sports car, and while I’d love to
be wrong, I’d encourage you to buy index funds and treat individual stock
picks in the same manner.

------
ggm
I don't get it. They don't own the IPR so at best it's a thin revenue model on
giant cashflow to agencies. All it's got is cost side risk and a thin skin of
ui advantage.

Maybe it's me. I have no track record identifying winners or losers.

------
TekMol
Since this is just shares changing hands and not bringing money into the
company - what is the impact for Spotify? Does the company itself own shares?
How much money has Spotify in the bank these days?

------
foobaw
Their product is a lot more powerful than Soundcloud's (even though the target
users might slightly differ).

I really hope they have a solid roadmap and wish them the best.

~~~
skinnymuch
I’m not familiar too much with SoundCloud recently. But didn’t they almost go
bankrupt before having last minute money raised?

~~~
foobaw
Yeah, SoundCloud has an unsustainable ecosystem.

------
mslate
Does anyone have any idea how much Spotify is used for music vs. spoken
content (e.g. podcasts/audiobooks)? Or in Soundcloud's case?

------
jiggunjer
How much are the investment bankers earning on this?

~~~
jedberg
Edit: Apparently I was wrong, they still paid a bunch of bankers for advice,
but technically they aren't making anything by skimming off the top like most
IPOs.

I think nothing.

It's a direct sale, so the insiders (including the employees, not just the
execs) get to sell however many shares they want directly to public
shareholders.

So the company doesn't make any money either, just the shareholders. I suppose
at some point the company itself could sell shares, and then maybe a banker
would get involved, but since it would already be publicly listed, I'm not
sure they'd have to be.

~~~
jonknee
They're actually making more from Spotify's direct listing than they did for
Dropbox's full on IPO... So much for disrupting the business model!

[https://www.bloomberg.com/news/articles/2018-03-26/spotify-l...](https://www.bloomberg.com/news/articles/2018-03-26/spotify-
listing-disrupts-the-ipo-but-keeps-the-costs)

------
rdl
I'm glad the DPO model was successful -- would be great if it, or something
like it, became the default.

------
elvirs
im curious why spotify does not enable artist sell merchandise and tickets on
its platform. as a free user I would prefer to see ads for merch and events
happening near my town from my favorite artists rather than annoying ads of
products and services I have 0 interest in.

------
ConcernedCoder
If the original investors want to sell their shares, I'm not sure it's a good
sign?

~~~
nielsole
VCs usually aim for very high ROI. Even if your investment still increases in
value more than market rate interest rates, for a VC it might be more valuable
to sell them to preserve its own metrics (each year you keep the shares, your
average ROI decreases).

------
udfalkso
Maybe they'll make an Apple TV app now? Does anyone know why that doesn't
exist yet?

------
SirLJ
With no underwriting Banks to support the IPO the price is steadily going down
since the open...

~~~
kolbe
There is no IPO price. This is not an IPO.

~~~
SirLJ
Precisely... How much down did it close at the end?

~~~
kolbe
There is no "down" because there was no IPO price to begin with. price_change
= current_price - previous_price. There was no made up IPO price on Monday, so
there was no made up level to defend.

The only previous price we had was the last private round. And I think the
close was about 60% higher than their last funding round.

~~~
SirLJ
Open for regular investors to trade at 165.90, close at 149.01 = almost 10%
down for the first day...

Today open at 140.00 another 6% gap down...

------
z3t4
today at the gym i heard some awesome songs so i asked what it was and they
said "spotify radio". its impossible for me to recreate that list.

------
rs86
Google can kill them at any moment with Play.

~~~
KozmoNau7
Really? How?

------
rado
Not enough for a native desktop app?

------
LeicaLatte
Congrats Spotify!

------
PaulHoule
This has investment bankers quaking in their boots.

~~~
wweidendorf
Not even remotely - they made out better on this than other recent IPOs.

They are paying 35 - 40 euros or ~$45 million at the midpoint. If they float
$1 billion in shares today, that means fees are 4.5% of the overall
“offering”, or almost exactly what Dropbox paid.

[https://www.bloomberg.com/news/articles/2018-03-26/spotify-l...](https://www.bloomberg.com/news/articles/2018-03-26/spotify-
listing-disrupts-the-ipo-but-keeps-the-costs)

