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The metrics behind Spotify’s IPO (chartmogul.com)
102 points by erikrothoff on Mar 6, 2018 | hide | past | web | favorite | 61 comments

The article compares Amazon Prime music with Spotify... I'm a prime member and enjoy many of the advantages it comes with, but Prime Music is not one of them. It's horrible! A few months ago I thought I would give it a try and only use Prime Music because... why pay for two services? After about one month of use, I went back to spotify. The prime player UI is no good, the music selection is horrible, the music recommendation service never recommended anything new. Finding new music is hard, finding less known bands is very hard.

I pay for the Spotify family plan and it has been a great experience.

I will continue to use prime for shipping, storage, and shows. But for music, so far, Spotify is the only service that checks all the marks.

My friend got an echo recently, it was almost funny how many songs it would say "playing a sample of X song" when we were throwing songs at it last Friday.

That is after we'd repeated the song title/artist to it over and over and it eventually understood us.

I feel the same applies to Prime Video. Horrible, horrible UI and user experience to find programs and then stream them. This is no small thing, either, because the ease of use of Netflix I believe is probably the single biggest reason I use the service, even more than the quality of programming which I believe to be more of a commodity by the day.

After reading so many good things about spotify, I gave it a spin for the first time this past week. It actually is the best music streaming service I've used before, but I'm still not going to subscribe.

New albums on CD are nearly universally under $10 now, and used CDs are even cheaper, so the price of Spotify is more than an album per month. That's a very steep price, and ultimately I think I'm happier buying 15 CDs per year than paying Spotify's subscription fees.

I don't see such high royalties are sustainable if Spotify can't be profitable under them.

The average music consumption case looks a lot different than 15 CDs per year. I've listened to hundreds of different artists this week and I consider myself a pretty light music consumer.

Whoa dude are you serious? You still use CDs?

I think for most people this is a non-starter, maybe you convert them to MP3s and sync them to all your devices?

Right now I use Spotify and can listen to my music at work, home, or on the go using my phone. And that's fine with me. I don't pay for Spotify though which means I have to listen to ads and their mobile experience isn't as good.

Yes I convert them to MP3s (well ogg) and sync them to my devices. Other than my bluray player, I don't have a working CD player in my house (my 3 disc changer separate died a few years ago).

In any event, DRM free MP3s are usually within about $1 of the album price, and many of the places that sell MP3s have some option to stream from their cloud storage. I go with the shiny plastic discs because a) I'm a Luddite and b) some genres of music have audible distortions in mp3 (mainly pre-echo!) that I find bothersome when listening with headphones.

I’m shocked that people consider 1 CD per month to be expensive for access to millions of albums.

Not to mention I find Spotify's discover weekly feature to be worth at least 50% of it's monthly cost. Every week it generates a 30-song playlist tailored to my tastes and I end up saving probably 10 of those songs on average to my collection. I find it to be really well done.

Okay everybody has raved about discover weekly; I've only had 2 of them now, but have yet to hear a track I don't already know, much less an artist. I mean I enjoyed them but it hasn't lived up to its name of "discover" yet; it's so far been popular tracks of fairly well known artists.

Quickly browsing through the current list, about half of them are songs I've heard on the radio in the past month.

There are few alba I like fully. I also have varying listening habits, like to discover new stuff (great algorithms!), like to just hit play and like the convenience of all the music on all devices - with the state even synced among them very well. Down side: I don't own the music. But apart from DLNA playback not being easily possible it's not really a pain point.

Maybe one day I'll even switch from the free plan to paying them.

The prime music selection is actually not bad. I use it with Alexa and many songs are included. Every once in a while it tells me I need Unlimited subscription to play a song, but it's good enough so I don't bother with Spotify or Amazon Unlimited. My use case is different since I don't use my phone to play music.

I continue to pay for spotify, and I'm a semi-happy user. But I would pay double for better search/metadata and none of the idiotic suggestions.

I find good music on `Discover Weekly`. Why are suggestions idiotic?

Me too. I actually look forward to a new list each week. I have found so many songs there I had never heard of.

Yes, some of the sorting is inconvenient. Do they even have info on the release year when a song is playing?

They could also expand the social features.

A minor nitpick in the article, the $12.99 Amazon prime subscription does not cover their spotify competitor streaming service. I've always thought this was a bit odd given that it does include a netflix-esque amount of streamable video content. If I had to guess, I imagine it's all related back to the royalties situation in music. You do get "Prime Music", but it's not the Spotify competitor, that would be Amazon Music Unlimited. That service is an additional $7.99 if you're a Prime member.

eBooks are also mentioned there, but you don't get a huge library for being a Prime member either. Rather, it's a selection of ~1000 written things (books, comics, magazines) that is constantly rotating. Kindle Unlimited is another $9.99/month. You can do the Kindle library thing as a prime member, but that's one book a month drawing from a similar pool as Kindle Unlimited, which often doesn't have current best sellers anyways.

I guess props to Amazon for being so confusing in their myriad content subscription options that the author couldn't get it right. To get the same kind of all-you-can-consume options that spotify provides across the different media mentioned it's actually ~$30/month. Still strikes me as odd how "cheap" TV and movies seem to be in this model. I'm very curious about that now.

Hi, author here!

Thanks for the correction on this -- I'll update the article with correct info. I'm not a Prime subscriber and the information on Prime benefits are completely intransparent.

And if I can't easily figure that out, it's unlikely that average consumer Joe will. The perceived value of each offering is the point here.

> intransparent

They're probably opaque, as well.

Cost opaqueness is Amazon's MO around services. AWS is a huge offender.

I've found it relatively easy to price out AWS projects, especially using their Cost Calculator: https://calculator.s3.amazonaws.com/index.html

Between that and https://ec2instances.info/, I can figure out the vast majority of what I need to know about costs on AWS.

What are the gaps that you see?

Tell me what your ALB costs are going to be next month.

“You are charged for each hour or partial hour that an Application Load Balancer is running and the number of Load Balancer Capacity Units (LCU) used per hour.”

Go here and see how “LCUs” are computed: https://aws.amazon.com/elasticloadbalancing/pricing/

If they were genuinely interested in making it easy you'd see pricing information every time you're spinning up a new EC2 instance / whatever other service, right there, without needing to go pull up the cost calculator. Have an instant "estimate my current bill" button, etc, etc.

To be fair, Azure is no less opaque.

If you spin up almost anything on GCP, you can see the monthly cost right there, with all the options you have selected.

A rather obvious gap is this one - How much will an i3.xlarge with an extra 2TiB of storage cost you per month on AWS?

>The perceived value of each offering is the point here.

Ah yes. The creed of American media: The truth doesn't matter. All that matters is what the masses can be convinced to believe.

>"Ah yes. The creed of American media ..."

This statement regarding "perceived value" has nothing to do with "American media", "fake news" truth distorting or even politics.

It's baffling that you have chosen to stake such claims on the author.

Perceived value pricing is actually a marketing strategy. Its used in factoring pricing for everything from gym memberships, to luxury good and delivery services.

see: https://www.investopedia.com/terms/p/perceived-value.asp

His point stands: irrespective of what the "facts" are here, if shoppers are doing an apples-to-oranges comparison and picking Amazon, then that's a problem for Spotify.

I don't understand why Spotify hasn't gone the Netflix way and started their own label to produce and release the music themselves. Their margins are severely cut by licensing and since the labels hold the rights to the content they might be convinced to sign better deals with competitors who have other revenue streams to subsidize a music venture that isn't making money.

The statistics point towards users wanting music from the big four labels. This may be one of the reasons they have double downed recently on their discovery products. If they can continue to divert user interest to artists from less expensive labels, it's a win/win. (Former Spotify employee, have no idea what I'm talking about).

> The statistics point towards users wanting music from the big four labels

I'm sure they pointed that way for TV content, too, when Netflix did House of Cards.

I think people want music that's "well known", music their peers also know about, and that goal is aligned with the big four labels, because they have the clout/infrastructure to get a song played on the radio etc., but it's not a causal relationship. With streaming becoming ever more popular, the idea that Spotify could achieve something similar, especially if they can tap into data to predict who's likely to like a new album, isn't too farfetched.

By that time, actually, the four traditional TV networks were already quite disrupted by cable networks. Netflix was following a well-established non-major-broadcast-network model (e.g. HBO, USA, FX, Showtime, etc) that had achieved a lot of prominence already.

Some of the most talked-about shows in the country were only on cable.

I don't think users particularly care which label an artist is on but the big labels attract the biggest artists and can back them up with marketing, so thats kind of expected.

Its hard to say if the discovery products are supposed to guide users to less expensive content, but is is an interesting theory. But showing users content they might not be aware of would necessarily go beyond the big labels that are everywhere. I think it has more to do with providing value that can't escape the platform due to external factors such as a label striking a deal with a competitor.

I can't say in my 37 years of life, that I've ever considered what label a band was on, before I listened to them. I couldn't even name four big labels. The statistics point that way, because the four biggest, have the most artists under them.

Labels are a great way to find new music. Smaller ones typically have much tighter, more strongly thematic curation. Often, if I really enjoy an artist, I'll browse the rest of the labels offerings.

This doesn't work for Sony BMG of course, but consider a label like Ghostly International. Come for Tycho, find Com Truise, Lord Raja, Gold Panda, Shigeto, others).

This is true. The work of labels is not hard to replicate digitally and Spotify is a valued brand already with amazing distribution built in. On the physical front however (and bands need concerts to make money) they would be disadvantaged. Seems surmountable too, though.

Is it common to know what label an artist you listen to is on? How do you even see it without looking up the artist or song on Wikipedia?

I think the point was that users implicitly want content from these labels based on the music they look for. Not that they're looking for music from those labels or are aware of which labels produce which music.

The problem is that then you are competing with your customers, who then won't play ball, and might start a competitor.

Netflix doesn't have this problem, as a load of it's producers weren't playing ball anyway.

If Spotify loses their catalog I’m not subscribing any more. I want to listen to very specific artists.

Music is fundamentally different the video. Video is typically consumed and monetized once. A piece of music is consumed over and over again by the same individual. From an artist perspective, they want their music to be widely distributed so that they can monetize as many times as possible, and they also want to drive consumers towards their other lines of business (live performance, merchandise).

From what I’ve read they are trying to cut out smaller independant labels, where the budget and need for large capital injection is smaller. The long tail of music makers. From that perspective SoundCloud is probably a great hub to acquire.

They do have a small in-house label.

They do that with pieces where brand/recognition isn't as important, having fairly unknown musicians make instrumental pieces for thematic playlists instead of putting artists from labels there. A lot cheaper and easier there than trying to compete for popular musicians with a major label.

It might just be too risky in their minds. I can't speak for every user, but if Spotify dropped the big labels I'd just go elsewhere. There's already enough platforms for discovering new or different artists, Spotify's value to me is being able to pick a song or band I like on a whim and know that they'll probably be there.

This could well be what's pressing them to stay away from the label game.

As a customer since a long time I agree that Spotify should become a platform, but I doubt they will succeed due to how they shipped previous features. Anyway, the three features I want:

- Lyrics, and integrating Genius for 1/100th of the tracks in the catalogue is not enough.

- Concert tickets, in a smart and transparent way. A musician I'm listening to a lot is coming in Germany? I want a notification, a way to share it with my Spotify friends, and a way to pay in one click.

- Listen to songs that are only available on Spotify. I am so pissed off by Apple doing that and I think it sucks, but Netflix did it and seeing exclusive versions/remixs/concerts via Spotify would make the platform incredibly valuable to me.

Sounds hard? Well doing an IPO and competing against Apple, Amazon, and Google is not easy. The smart playlists are great, the brand is valued, time to go further.

Number 2/3 sort of already exist. At least, the notifications part for concerts, and the "Spotify singles" for the exclusive tracks (it's not really the sense you meant, though).

Being able to buy the concert tickets simply and easily would be killer though. Especially if it meant I wasn't paying $14 "convenience fees"

For #2 if they could partner with someone like Dice (possibly UK only) that would be great. Really easy to use app, no fees and the QR ticket only appears a few hours before the gig to prevent touts. I think you can even return tickets if there are people on the 'waiting list' although I've never tried that.

They could give it a pretty large spin on being great for the musician as well.

Also a long time customer here for Spotify. 2 is very interesting and I would certainly like it. 3 I am not interested in. I hate when other platforms do it, so I am not interested in the platform I use doing it as well. Maybe I am just not used to it. Netflix originals, however, I have no problems with. I wonder if I am the only one who feels a different opinion on visual/audio segregation. For music it just feels... blah.

Lol, 'sound hard?'. Agro user pep talking for spotify here.

Can anyone give some insights on how it compares to Apple Music or Google Play Music.

With 9.99 you also get YouTube Red and the selection for play music seems to be huge when compared with Amazon Prime Music (At least enough for me). If I don't have a song in play, I can use YouTube app and it plays in background. This is important for regional songs as Spotify does not have a huge library for non English songs but YouTube has almost everything. I agree that the quality is not that great with YouTube, but that's something is not of a big deal for me. Does anyone feel like this?

What's your metrics to decide between Play, Apple and Spotify?

Play Music's apps are very immature and half-baked feeling compared to the alternatives.

Apple is better in that regard, but its app distribution is massively limited compared to Spotify or even Google Play.

I agree. Spotify is very strong here in Europe and it's super convenient to follow friends who are better than finding cool songs than I am.

I was a free user for a long time and got the subscription last Christmas. You can tell they really spend time on UX. Clear examples of this are the running playlists that adapt to your speed. We can't really expect Google to match that, it's Spotify's core business after all.

I've heard that the quality of google play music is generally lower than apple/spotify (apple/spotify are matched, apple may be slightly higher). As for youtube, on mobile there are third-party apps that give all of the youtube red features for free (except exclusives).

Apple music requires a dedicated app for desktop playback (although spotify does too, if you want to play music offline) and doesn't work on linux (it may or may not work through wine).

I really like that Spotify has a Linux app.

... Since it's built on electron, though, it's basically the same as the web player. A chrome web app would do too, really.

But I guess it's a nod of appreciation.

There are also some nice single board computer based players based on this and that's nice.

The SBC players are either based on libspotify, which has been rotting ever since Spotify deprecated it some years ago, or librespot, which is reverse engineered. Both of these break quite frequently. I don't think Spotify care much at all about Linux but I'm sure the user numbers make that decision easy for them.

Spotify doesn't make the most amount of money for the record companies by plays. It makes most of the money for record companies by having sold them stock in Spotify. The Needle Drop talked about this recently - artists could have gotten more money, but record labels wanted equity positions in Spotify rather than higher fees.

>> A $12.99 Amazon Prime subscription gets me streaming music, streaming video, e-books, fast shipping and a whole host of other benefits. A $10.99 Spotify subscription gets me… well, Spotify.

I think on pricing Spotify shines with the Family plan which reduces the cost significantly. Plus, those $12.99 only gets you the Spotify free equivalent from Amazon. The Amazon Music Unlimited is another $7.99

Here in Europe it seems to be 9.99euros for Amazon Music Unlimited, which is exactly the same as a Spotify subscription (not even counting the Family plan you mentioned).

What's odd is that my Amazon Prime subscription already gives me unlimited access to Prime Videos without additional charge, I'm surprised that they use a different business model here.

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