
Spotify may delay IPO to 2018 as it rethinks licensing deals - JumpCrisscross
https://techcrunch.com/2017/02/02/sources-spotify-may-delay-ipo-to-2018-as-it-rethinks-licensing-deals/
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resharker
I work for Spotify and I can tell you the company's spending is completely out
of control. Between throwing parties where they fly every single employee out
to Sweden to party or purchasing Echo Nest, only to ditch the tech later for
in-house tech (Discover Weekly), they really have no clue how to manage their
capital. We have nearly 2000 employees and no roadmap for profitability. Talk
of an IPO has been ongoing since 2013 and employees can barely invest in the
ESOP since the share price is so ridiculously priced at over $1000 a share.

Spotify has postponed the inevitable by granting shares of the corp to the
companies they license music from. However, the time will come when the larger
institutions want their money back and it's not going end pretty. They need to
reduce their liabilities and reduce headcount ASAP.

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tornadoboy55
Not only that, you guys seem to have a big amount of techincal debt. The macOS
client was writing like.. 100-200Gb a day just a few months ago, and that was
going on for months already until the noise about it picked up in the media.
Now the macOS client (somehow its always the macOS client..) regularly starts
using 90% CPU at random and _doesn 't stop until you kill the process_. Again,
has already been going on for some time and there's a forum post about it but
no one is doing anything... do the Spotify guys not use their own client?

Then there's the myriad of obvious gaps in features that should be there.

1\. You can 'Heart' a track in 'Daily Mix', but you can't un-'Heart' it.

1b. If you accidentally dislike an artist in daily mix, you can't undo that,
so that artist won't play anymore.

2\. You can like an artist for a certain Radio (and remove the like in the
playlist 'liked by radio') but you can't remove an 'unlike'.

3\. You can have either a public playlist controlled by you, or a
collaborative playlist that's secret. Why not a public collaborative playlist
for which I can select which users can edit it?

With most of the above issues there's one overarching thing: counter-
intuitivity. You can often do an action (heart, like, etc.), and do so by
tapping or clicking on something, but tapping or clicking on the same thing
doesn't undo the action (probably because you can't undo the action).. and
wouldn't you want to have your friends be able to see/follow your playlist
that you built with that one Techno-listening buddy _without_ granting them
all editing rights?

I still like Spotify because you have the largest library and are available on
the most platforms (Windows/Linux/macOS/Chromecast/Sonos/Digt.Amplifiers/PS4),
but its a choice of 'sucks the least' rather than 'is the best'.

~~~
lobster_johnson
Not to mention the 10,000 limit on tracks saved to your collection. Which is
insane considering that Spotify doesn't distinguish between saved albums and
tracks — saving an album is exactly the same as saving all the tracks in that
album. A 10,000-track "library" is not a very big collection!

Personally, I've been creating individual playlists for every artist I care
about, organized in folders by genre, since those tools were always lacking.
So when I ran into the aforementioned limit, I just un-saved all the tracks
and went back to solely using playlists.

A few months ago I considered switching to Apple Music, which does this stuff
correctly, but nobody has made a migration tool that works.

(Apple Music also has several features Spotify ought to have had a long time
ago. A sane distinction between composer and performer for classical music is
one. Another is the completely seamless syncing of downloaded music —
purchased, encoded or whatever — between all devices. Spotify only supports
"offline sync" if you have Spotify open on the machine that has the files.)

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citruspi
I transferred some stuff over from Spotify to Apple Music last week using
SongShift[0] without any issues, but YMMV.

[0]: [https://appsto.re/us/MmCCbb.i](https://appsto.re/us/MmCCbb.i)

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dharmon
Why has Spotify not pushed harder to own their own content a la Netflix?
That's the only reliable way to both have some control over margins and offer
a non-commoditized product.

They have tons of data on user tastes, owning and operating a studio is cheap
compared to licensing fees, so why not try to predict tastes (like Netflix),
aggressively sign unheard of artists, and A|B test the hell out of the
homepage with promoting different ones?

Apple has very deep coffers, which we have seen with the exclusive content
they have acquired. Competing there seems like a loser's game.

~~~
hkmurakami
The music business isn't just about the musical content. Popularity is also
driven by artists' branding. Promotion, etc. there's a strong fashion element
to popular music that is outside of the scope of Spotify's core competencies.

They'd have to either acquire this or build it from scratch. That takes time.

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adevine
Agreed, but running a large production company was not originally Netflix's
core competency either.

It does seem like Netflix's playbook would be more difficult to copy for
music, but still an interesting prospect to consider.

~~~
azemetre
Netflix doesn't run a production company though, and they should if they want
to remain competitive and have complete ownership over their products.

All they do is buy shows/movies from other studios. It would be similar to
when Kanye West having the Life of Pablo exclusively on Tidal for a period of
time. Exclusivity is important and Spotify does have albums and live
performances that are not sold anywhere currently. Maybe they should do a
better job of showcasing this.

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TheAceOfHearts
Platform exclusivity is a dark pattern. Content is what's important, the
platform is largely irrelevant to users.

I'm perfectly happy paying for media. But if something isn't readily
available, I'll probably end up pirating it or never listen to it.

~~~
azemetre
Could you explain how platform exclusivity is a dark pattern?

When I think of dark patterns I think of misleading ways to get a customers
information where not applicable. I don't see how it's a dark pattern if I
can't watch Game of Thrones on Showtime or Orange is the New Black on Hulu.

Why is retaining rights over content creation a bad thing? Is it a dark
pattern to have companies pay for licenses or copyright fees?

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Unkechaug
Are the subscription models by these streaming services really sustainable? It
seems like the licensing agreements were made before the real value of the
content, enabling generous promotions and even a free model. I imagine the
reduction of costs brought about by digital distribution back when iTunes
first launched made it a much more viable option, but now that those savings
are baked into the modern music industry how much lower can prices get before
it's unprofitable?

~~~
resharker
Not particularly when you consider that Spotify's contracts with content
providers obligate a 70% cut. The skunkworks projects to capitalize on
data/ads/listening behavior/etc. have not cumulated into considerable value
for the company. The focus for the company has been and always will be GROWTH
in the form of monthly active users. Streaming music will never be a cash cow.
The margins aren't there.

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openmosix
Didn't they have a clause in their last round of financing, that if they
didn't go public in 6 months, they'd lose a lot of money (per month)?

~~~
openmosix
Yes, found it [http://www.digitaltrends.com/music/spotify-
raises-1-billion-...](http://www.digitaltrends.com/music/spotify-
raises-1-billion-dollars-ipo/)

"Investors, according to the Wall Street Journal, will be able to convert the
debt into Spotify shares at a 20 percent discount if the company has a public
offering in the next year, with that discount rising two and a half percent
every six months Spotify doesn’t go public.

Until then, Spotify will also pay a five percent interest rate on the debt.
That’s an amazing investment for those who were given the opportunity to make
it — five percent on their money up front, and a huge discount on stock when
Spotify goes public. Essentially, if Spotify doesn’t immediately go under,
they stand to make a lot of money on their initial investment no matter what
happens."

~~~
Someone
_" if Spotify doesn’t immediately go under, they stand to make a lot of money
on their initial investment no matter what happens"_

I don't understand your logic; it's not " _when_ spotty goes public"; it's "
_if_ Spotify goes public".

If, say, Spotify doesn't go public (yet) and goes down after X years, they
will have received 5X% of their investment back in interests, and will have
the rights to buy lots of by then worthless Spotify shares at an enormous
discount. For X < 10, I don't see that as making money at all; X = 10 might
sort-of break even.

I think Spotify had to give them those share options to get that 5% interest
rate because investing in Spotify is risky.

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scottmcleod
Its a failed model they cant win based on music industry - Apple to buy
Spotify as loss leader eventually.

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Esau
I don't see Apple buying them now, not after buying Beats Music and
transforming it into Apple Music.

And considering that Amazon, Google, and Microsoft all have their own
streaming services, I don't see anywhere for Spotify to go when they fail.

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guitarbill
Earlier conversation:
[https://news.ycombinator.com/item?id=13570021](https://news.ycombinator.com/item?id=13570021)

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throwaway91111
Why IPO at all?

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bdcravens
See resharker's comment: many of the licensing companies have been granted
shares.

