[_whm1]

I don't think this is a good long term investment.

Disclaimer: I worked for a Spotify competitor in the past, so i have a pretty solid understanding of how the business works.

I think it is a bad investment for one simple reason: Spotify purchases its main product (music) from a oligopoly. I'd estimate that 95%+ of the tracks streamed (by total playtime) are from one of the 3 major music labels: Universal, Sony or Warner. That includes sublabels that in some cases may have a seperate deal with Spotify, but at the end of the day are still part of the big 3. Imagine you are a Sony executive, walking by a news stand and the Wall Street Journal Headline is "Spotify Q2 earnings 30% up". What are you gonna do? You will squeeze them, make them pay, just enough that they survive. And Spotify has zero negotiation power here. If Sptify fails to have a deal with any 1 of these 3 labels, they become useless overnight. People will switch to Apple Music, Amazon PrimeMusic, Tidal or any other service quickly. It doesn't matter if Spotifys app is slighty better than the competitors software if they lack 1/3 of the music.

[pembrook]

This is the same problem Netflix & Amazon have been successful in combating. The answer is to become a content owner by competing with the big labels directly.

All Spotify needs to push the big labels back on their heels is to sign a few top 40 artists of their own.

I might be wrong but I remember reading something like 90%+ of streams on music services are of songs currently on the charts. Capture the popular culture like Netflix has and the labels will start rolling over on rates.

[hobofan]

> This is the same problem Netflix & Amazon have been successful in combating.

I would say that the jury is still out on that. Lack of Blockbuster movies has always been one of the weak points of Netflix, and they are still in the process of getting started with producing content there (with "Bright" being one of the first of their movies trying to be a Blockbuster).

On the other front, they are highly dependent on existing content that people love, and more and more of that is being owned by Disney and pulled from the platform as they are gearing up for their competing service. If they also fail to keep the other big right holders on the platform then soon all they have will be Netflix content (which is probably their 5-10 year plan anyway since that makes them more profitable).

I'm not sure a Netflix Originals-only catalog will go over well with the subscriber base. Despite some of their first original content having some good hits (e.g. House of Cards), I think over time their hit-rate pretty much adjusted to the levels of traditional cable channels like HBO/Showtime with a lot of mediocre content.

[noxToken]

If Netflix went to in-house only, then they could significantly (I assume) drop the price. Part of Netflix's big expense is licensing content. If all of the major players are pulling content, then the licensing costs for all of that content disappears as well.

[hobofan]

With shared accounts, the price is already pretty low at ~3-4€/person/month. I don't think that a price drop would adequately compensate for a significant loss in content at such a low price point.

Yes, in the long run producing their own content will be cheaper. Mid-term buying proven content will probably come out at around the same price as producing new content that the viewers may or may not like. They have better viewer analytics and better ways to globally monetize the content than traditional content producers though.

[guelo]

Doubtful since they're pouring every extra dollar they have into making originals.

[dna_polymerase]

Also they have pretty high debt accumulated, so they really need some cash.

[bonesss]

Hrmmm... 110,000,000 subscriptions x $5 = $550,000,000

Netflix sees that math every single month, and charge more that $5, and can always raise their rates again. They have something better than cash, they have recurring cash payments.

Also, Netflix is running less debt than its hollywood contemporaries who have no such subscriber base, no industry leading tech, no well-oiled IT machine, and no massive pool of user data showing the intensely valuable and intensely detailed interactions between hundreds of millions of people and their content with a decades head start on the competition.

[klarrimore]

Exactly. We have new streaming video services with their own exclusive content popping up almost daily.

[BinaryIdiot]

> This is the same problem Netflix & Amazon have been successful in combating. The answer is to become a content owner by competing with the big labels directly. > All Spotify needs to push the big labels back on their heels is to sign a few top 40 artists of their own

No way that's going to work. Music is VASTLY different from video. In video it takes more time and resources to produce each one and replays are rare. In music everything is super cheap to produce and replays are off the chart.

If Spotify became their own label and signed 100 of the top artists, their old songs are STILL with the previous label and will likely never leave. Spotify still NEEDS those songs or it's SOL.

[hobofan]

> If Spotify became their own label and signed 100 of the top artists, their old songs are STILL with the previous label and will likely never leave. Spotify still NEEDS those songs or it's SOL.

As I pointed out in a sibling comment, I think Netflix actually has the same problem. There is a significant presence of long-running shows that people love to watch on Netflix: Friends, Breaking Bad, Modern Family, How I Met Your Mother, etc.. A big favorite "It's Always Sunny In Philadelphia" just left the catalog - presumably due to the acquisition of FX by Disney - and "Archer" will likely soon follow for the same reason.

A lot of those are not new and people still watch them (either to catch up on a missed cult hit or to rewatch their favorites), and the will continue to do so for the next 10-20 years. As long as that's the case Netflix also has to continue to make deals with the existing rights holders or substantially shift their core offering.

[BinaryIdiot]

> As I pointed out in a sibling comment, I think Netflix actually has the same problem. There is a significant presence of long-running shows that people love to watch on Netflix: Friends, Breaking Bad, Modern Family, How I Met Your Mother, etc..

Is that really true though? As video content gets older it usually gets watched less, becomes cheaper and gets re-aired everywhere it can. Once you watch it many don't re-watch. I'd love to know if there were statistics on this either way!

Music, on the other hand, doesn't show its age nearly as much and old music is constantly replayed even in the latest TV shows and movies. Seems to be music is almost timeless whereas video is not. But, again, I'd love to see some data around these topics to valid (or invalid) what I think to be true.

[wils1245]

I bet it’s different for various niches. Consider young families. Disney absolutely dominates children’s content, and very old content still resonates with kids. My niece and and nephew were obsessed with Toy Story, Finding Dory, Frozen, etc. I bet Disney’s streaming service will be the first one families buy.

[hobofan]

I sadly also don't have any data to support my claims. :/

> As video content gets older it usually gets watched less, becomes cheaper and gets re-aired everywhere it can.

That has been the traditional behavior in scheduled broadcasting, but I'd wager that the lifespan of shows is significantly extended when they are available on-demand. In general, there are probably a lot of social shifts/effects related to video consumption that appeared with Netflix for the first time (e.g. binge watching), each with their own economic effects.

[komali2]

Alternatively, as less people stop listening to the radio, songs from the 70's, 80's, 90's, and eventually the early 2000's will need a venue to be played on.

If less people listen to the radio, AND less people buy music directly through itunes or whatever, the only option the big 3 will have is to work with streaming services.

[pembrook]

But if the majority of plays on Spotify are of the current hit pop songs at any given time, Spotify still has the power even if they don’t own the old songs.

Go look at the most played songs on Spotify of all time. It’s not the Beatles and Michael Jackson’s back catalog. We’re talking Chainsmokers and Imagine Dragons and Ed Sheeran.

[seanmcdirmid]

AmazonPrime’s most played list has more than a few oldies in it, especially around Christmas. The non-young crowd is also much less into new music and crave the older stuff actually. A streaming service can totally survive on those users alone, probably. If I could get it at some discount, I would totally pay for a streaming service that didn’t have any songs made within the last ten years. I could live on songs made in the 60s alone (and that’s way before my time).

[usrusr]

Most played in terms of number of plays, but probably far behind in terms of unique users who actively selected the song at least once?

The catalog deep dive is where streaming services offer unique value, putting a hit on repeat is what people could do just as well by buying the single/licence.

[hbosch]

Well, lets also not forget that Spotify has been slowly steering itself from a pure "music playback tool" to a "music discovery tool", and a trusted one at that. They are heavily promoting things like Discover Weekly, Podcasts, playlists like RapCaviar and their various "n+Moods" and "n+Vibes" playlists.

There was a great article[0] posted here some time ago, I think, that likened the algorithmic discovery "products" of Spotify plus the effortless access to individual songs as creating a sort of thin spread of musical diversity (the auther's e.g. Muzak), generic and accessible enough to be replicated by almost anybody. A great example of this, today, is Cardi B[1] – this is a person who honed her personality through social media and reality TV, linked up with a music camp, and is now the third person in history with her first 3 commercial songs in the Billboard Top 10[2]. Her biggest hit, Bodak Yellow, uses a flow lifted from another rapper named Kodak Black (and she has done this multiple times[3]). The thing is, though, she was groomed to be a hit.

Once Spotify achieves a critical mass of listeners that trust their algorithms, and rely on their tastemakers to deliver fresh music, Spotify could easily slot in musicians that they themselves hold the contracts for. Their pockets are just as deep as a record label, and their listener data is far richer. I have no difficulty imagining that Spotify could replicate a Cardi B-esque pop zeitgeist. "Tastemaking", even if the word makes you cringe, is what will define the winners and losers of the streaming wars. It's why Apple hired away Zane Lowe – an relatively bland DJ personality, but an incredibly gifted ear and a cache of trust – and why Spotify relies more on Playlists and Discovery every day.

Remember, they didn't even have the Beatles until Christmas 2016! That shows a decent picture of how much the majority cares about back catalogues. I don't think it's unreasonable to think that Spotify themselves couldn't produce a top 10 rapper, or a top 10 country singer, or a popular podcast, just based on the level of engagement in their playlists.

0. https://thebaffler.com/salvos/the-problem-with-muzak-pelly

1. https://noisey.vice.com/en_us/article/evpbxj/cardi-bs-bodak-...

2. https://noisey.vice.com/en_us/article/bjyvad/cardi-b-makes-h...

3. https://genius.com/a/how-kodak-black-influenced-cardi-b-s-bo...

[bogomipz]

>"Once Spotify achieves a critical mass of listeners that trust their algorithms, and rely on their tastemakers to deliver fresh music, Spotify could easily slot in musicians that they themselves hold the contracts for."

You mean become a competitor to the 3 labels for whom they depend on for their business? Not a chance. If the labels see them as competitors instead of customers they will pull their card and not renew their licenses.

[hbosch]

I don't see the scales to be tipped as heavily as you're suggesting. Spotify alone can make or break an artist, even a "Big 3" one. If you want listenership, you absolutely need to be on Youtube, Apple or Spotify (or a platform like Soundcloud). There are zero relevant distribution channels for today's young listeners that are not streaming services.

Chance The Rapper is one of the biggest names in hip hop, and a relatively big personality in pop culture as a whole. He's fully independent. He signed an "exclusive" 2-week-long distribution deal with Apple for his last album, Coloring Book. Apple got exclusive streaming rights (for 2 weeks), and the artist got $500,000 cash – not an advance – as well as free marketing via Apple. This is the type of deal and the type of artist that will start changing things for the better.

There is a great report published by stat trackers BuzzAngle Music[0] from the past year. Here are some important numbers:

• Song Consumption for 2017 YTD was up 29.5% over 2016 YTD (1.5 billion song project units in 2017 YTD vs. 1.2 billion song project units in 2016 YTD).

• Audio streams reached 179.8 billion, up 58.5% over 2016 YTD.

• Subscription streams grew 69.3% and accounted for 78.6% of total audio streams in 2017 YTD, up from 73.6% in 2016 YTD.

• Overall album sales were down 13.9% compared to 2016 YTD (74.0 million in 2017 YTD vs. 86.0 million in 2016 YTD).

• Digital album sales in 2017 YTD were down 24.3% over the previous year (34.5 million in 2017 YTD vs. 45.6 million in 2016 YTD).

• Song sales (downloads) in 2017 YTD were down 23.8% compared to 2016 YTD (313.3 million in 2017 YTD vs. 410.9 million in 2016 YTD).

So now say you're a Sony exec and you're looking at these numbers. Can you afford to have ANY of your top talent pulled from Spotify? Consumption and streaming are rising and pure sales are falling. Megastars like Taylor Swift and Ed Sheeran are immune from these trends, basically, but if you want to stay culturally significant you will soon need streaming more than streaming needs you. That's my opinion.

0. http://www.buzzanglemusic.com/us-2017-ytd-report/

[bogomipz]

>"Spotify alone can make or break an artist, ..."

Really? Name one artist that Spotify has broken exclusively.

>"Chance The Rapper is one of the biggest names in hip hop, and a relatively big personality in pop culture as a whole. He's fully independent."

That's great but until there are enough Chance the Rappers Spotify needs the big 3's catalogs.

I'n not sure why you felt compelled to list all those statistics, nobody is suggesting streaming hasn't grown in popularity.

>"Can you afford to have ANY of your top talent pulled from Spotify?" Yes you certainly can. The streaming markets has no shortage of players now - Amazon, Google, Apple, Pandora, Deezer etc. Spotify needs the labels more than they need Spotify.

[JohnJamesRambo]

The algorithms of Spotify are what keep me there. I leave but always have to come back, that's how good the Discover Weekly is.

[pc86]

> replays are rare

Tell that to my wife who has seen every Office episode at least 20 times.

[h2onock]

I’ve binge-watched a few series’ through several times.

[BurningFrog]

But in that world any other player would equally NEED Spotify's artists.

[nunez]

It’s really not though because music is a loss leader for amazon, apple and google, but it is spotify’s entire business. The only other major competitors out there are either in major cahoots with the big 3 (tidal, pandora) or gone (soundcloud, grooveshark, rdio).

Netflix has this problem too but they “solved” it by making their own content. Amazon are Google are doing the same thing. That’s the direction I see Spotify going, though I wonder why Apple hasn’t done this yet.

[fragsworth]

Music is quite a bit different, in that people spend lots of time curating their own playlists and they listen to the same songs repeatedly. It is incredibly annoying to have songs that you want in your playlists but can't get, EVEN if you pay for multiple services.

Making their own content for video has the advantage that most people are OK with opening a new browser tab or an app to watch a specific movie or show.

With music, however, you don't want to run multiple conflicting music players, especially when they don't sync up playlists and seamlessly work together.

I wonder how that will pan out. It's a significant difference.

[notatoad]

Yes, i don't think the original content strategy will work out for streaming sites the way it has for netflix and amazon. I'm not willing to open one app to listen to one album and then another app to listen to a different album. I'll use the service that has all the music i want to listen to. Whether that's piracy or youtube playlists or spotify. If any streaming service starts getting too many exclusives, it's going to just kill the entire streaming market.

From my perspective, all the streaming services should be working together to create a healthy marketplace for independent music, and providing every opportunity they can for musicians to avoid signing a big-four contract. If Warner and Sony, and UMG get their act together and create a joint venture streaming service that's the exclusive host of the content they own, Spotify, Google Music, and Apple Music are screwed.

[rvshchwl]

That is basically what happened with Hulu. The service is owned by the major content providers, such as Fox and CBS, and all of the televised content is almost completely exclusive on Hulu now, as opposed to being on Netflix. As more and more shows started to get pulled from Netflix, Netflix had to rely on original shows to make sure that they have a full catalog of streaming content. They paid over $6 billion dollars in creating new shows for 2017.

Unfortunately for music, the exclusivity has started to show up in some cases. Artists that own the Tidal service don't allow any of their music on competing services, and Apple has been signing contracts with musicians to have new content show up on their service several months in advance before it does on other services (like Jay Z and Kanye).

[majormajor]

It's been kinda the reverse in video, if my recollection of the timelines is right. Netflix's big push into originals and dropping of licensed content started to happen 4+ years ago, well before Hulu seemed to have the budget to get big shows into their back catalog.

From Netflix subscriber numbers, it's also not clear that the lost content has dented their subscriber retention at all. The talk among my friends centers much more around new Netflix originals (or even Amazon/Hulu originals) than around back catalog stuff on Amazon or Hulu. I don't understand why -- I'm utterly uncompelled by 95%+ of what they're putting out, since I don't have the motivation to deeply investigate new Netflix shows/movies every week, and however they're advertising, it doesn't really reach me -- but it's what I see happening, much to my annoyance.

[mavelikara]

You argument works in favor of Spotify too.

If they sign on 100 top artistes, it will devalue the portfolio of music held by the top 3 - for reasons you explained. Thus, the top 3 are incentivized to collaborate with Spotify.

[joemi]

> or gone (soundcloud, grooveshark, rdio)

I can't speak for grooveshark or rdio, but as far as I know soundcloud still exists. I just added a song there and listened to some other stuff a week ago. Did I miss something?

[JonFish85]

Soundcloud exists, but is likely on life support[1].

1. https://news.ycombinator.com/item?id=14990911

[rozenmd]

They fired a fair number of developers in San Francisco, Berlin, shut offices etc - but are still running the servers AFAIK.

[kingraoul3]

What about iHeart? They do own half the physical radio stations in the country which is still how people find new music, you know.

[dragonwriter]

> They do own half the physical radio stations in the country which is still how people find new music, you know.

IME, lots of people find new music by genre/mood/etc. curated or “like this song/artist” algorithmic stations in streaming services, not terrestrial radio.

[kingraoul3]

That is not supported by the data. The lions share of new music discovery is still done via terrestrial radio, and the brand identification people have with their favorite stations is crazy high

[dragonwriter]

Where is the data showing this?

[nunez]

ClearChannel front; they own all major terrestrial radio in the US

[nkozyra]

I'm confused. I think you're saying the same thing as the post you're replying to. The direction would be to own (or "create") the content. In other words, Justin Timberlake or someone with equal clout moves from Sony to Spotify Records (for lack of a better name).

[notatoad]

The problem with that is it creates a war for exclusives. If their competitors start doing the same thing, spotify will just end up losing a lot of their content.

and personally, unless spotify continues to have the vast majority of the music i want to listen to, i won't continue being a subscriber.

[wolco]

But if they sign the top 30 and you listen to that kind of music you will have to subscribe.

Netflicks is creating there own content which would mean spotify would need to create new bands instead of sign existing ones which most likely would fail because they are all under contract.

[jon-wood]

It wouldn’t surprise me if Apple not being in that game yet is because of their long standing agreement with Apple Records (the Beatle’s label), who challenged their trademark a while back when they started selling music. I suspect getting into directly signing artists would breach whatever agreement was made and leave Apple open to a huge trademark suit.

[tzahola]

"In 1978, Apple Records filed suit against Apple Computer (now Apple Inc.) for trademark infringement. The suit was settled in 1981 with the payment of $80,000 to Apple Corps. As a condition of the settlement, Apple Computer agreed to stay out of the music business. A dispute subsequently arose in 1989 when Apple Corps sued, alleging that Apple Computer's machines' ability to play back MIDI music was a violation of the 1981 settlement agreement. In 1991 another settlement, of around $26.5 million, was reached.[54][55] In September 2003, Apple Computer was again sued by Apple Corps, this time for introducing the iTunes Music Store and the iPod, which Apple Corps asserted was a violation of Apple's agreement not to distribute music. The trial opened on 29 March 2006 in the UK,[56] and in a judgement issued on 8 May 2006, Apple Corps lost the case."

https://en.wikipedia.org/wiki/Apple_Corps#Apple_Corps_v._App...

[dragonwriter]

Apple does directly sign non-label artists to exclusive deals with Apple Music, but so far that's mostly established artists, they haven't put money into discovering and developing artists.

[remir]

Apparently Apple is gearing up to create their own video content.

[usrusr]

Big difference between TV and music streaming, in a nutshell: a TV streaming library is defined by what they have, a music streaming library is defined by what is missing.

Serial TV is consumed like a novel, as long as the next episode is available, the availability of everything else is unimportant. Music is consumed in a much more random access pattern, like a lexicon: if the letter M is missing, it's broken. ("You want that particular song by Morrissey? Sorry. Be sure to check out these five Spotify Originals that have also been tagged with #sad" - no, people won't be willing to pay for that)

[cmurphycode]

It may be true that music listeners are currently much more annoyed when songs aren't available. However, I think it's wrong to say that TV and movie watchers were any different 5 years ago -- even today, people's number one complaint about Netflix is that famous movie X isn't on there.

Netflix worked hard to change that model by figuring out what people liked to watch and generating high quality content in the patterns they saw. Turns out, now everyone watches whatever show Netflix puts in front of them.

Do you think it's possible a similar phenomenon could happen for music?

I can tell you that since signing up for Spotify Premium, I've certainly been exposed to more new artists that I like, based on their recommendations. Since their library is currently still extensive (like how Netflix had a lot more movies back in the day), I'm very rarely looking for a song they don't have. I can imagine a world where the content holders get more scared (although that would be an impressively delayed reaction) and thus Spotify is pressured out of contracts (just like Netflix was). I'm guessing that Spotify is betting that if that is the case, they can rely on the fact they've been changing their listeners tastes to survive.

[usrusr]

I doubt that a streaming provider would be able to starve out interest in third party music. Most active choice music consumption is essentially a nostalgic act, even when searching for the latest hit that you heard at that party last night. Music preference could almost be considered involuntary.

An "original content superspotify" would have to dominate all channels to ensue that customers are rarely overcome be the desire (and the resulting dissatisfaction) for third party music, or restrict themselves to the subset of the market that is never exposed to channels not under their control. Both of these options are what I would consider a likely base for economic success.

[cracell]

I think the long term answer here is legislature that forces companies to license things for the same rate to anyone and that rate must be publicly published.

[umanwizard]

Not sure about other countries, but I'd be shocked if legislation like this passed in the United States.

[aaronblohowiak]

It has in the past - https://en.wikipedia.org/wiki/Compulsory_license

[zanedb]

Oh no.

Let's take a second here. What will happen if Spotify signs new artists and effectively becomes their own record label?

It will start off normally, but eventually (or possibly from the start) Spotify will not allow this music to be streamed anywhere else. It will be exclusive to Spotify, the same way Netflix has done with their originals.

Now what happens? Users are forced to pay for multiple music streaming services, just as happened with the video streaming industry.

This is already a huge burden on users of video sites (and makes piracy a much more appealing option), but is not even acceptable in the music industry. Users create playlists with their own songs, and will want specific songs.

Even with your 90% statistic, which may or may not be true, the other 10% is still very important. I'd imagine that hit songs are streamed more often comparatively but older songs are more important.

Hopefully this fracturing doesn't happen, but if so (as I said) piracy certainly looks more appealing. Especially with Google Play Music allowing you to upload your own music..

[geodel]

Netflix was/is competing with exclusive products like expensive cable channels or established studios' productions which are not available on vehicle radio, youtube and other free avenues. So Netflix is able to get comparable reach to cable TV. For music there are far more avenues to listen for free and unlimited times with some ads.

[user5994461]

Netflix is a joke outside of north America.

[bedhead]

I think this has a good chance of being a good long-term investment for one simple reason. Spotify has something that few companies have but all dream of: pricing power.

The other week, my kids were watching TV and my wife and I were in the kitchen and one of them yelled out, "Mom, something popped up on Netflix saying the price is going up. What should I do?" My wife and I said the same thing instantly: "Just hit okay." We didn't even know what it went up to...hell I don't even know what it cost before. Pricing power is a helluva thing. Why does Netflix have this power? Because people love it. Because it's a part of their lives. Because people are habit-forming. And Spotify fits this mold pretty well...maybe not as strong as Netflix but still impressive. I think there are millions of Spotify customers out there [raising hang] who couldn't fathom going back to pre-2011...it probably makes them hyperventilate. Spotify could probably charge 2-3x what they charge today and I'm really not sure it would affect subscriber counts.

Remember a couple years ago when Amazon raised the annual Prime fee from $80 to $100 and no one cared? Yeah, kinda like that.

Buying from an oligopoly probably won't matter much here. Apple quickly blew those businesses up in the 2000's. The other problem is that the music industry suffers (like many other industries) from the 80/20 rule: a small group of artists are responsible for the vast majority of the profits. (Actually, I think the music biz is even more lopsided) It creates a weird dynamic for the labels and ultimately gives purchasers like Spotify more power. Consumers don't know anything about music labels - maybe not even their names - but man do they LOVE Spotify. Those kinds of things tend to be good investments.

[mcintyre1994]

Why wouldn't everyone just go to Apple/Google Music if Spotify raised their prices? None of them have exclusive content or features that rival Netflix's exclusive library, I don't see why Spotify have any meaningful pricing power. I'm one of those people who hit OK this year when Netflix raised their price, but I'll immediately leave Spotify if they raise their prices and the competition don't - they have nothing sticky for me.

[bedhead]

Same reason people don't move from Amazon to Wal-Mart, or Apple to Android, or Netflix to...I don't even know what. Spotify is objectively better as a service, people love it, and we are creatures of habit. There are other factors like social and all the playlists you've created. Besides, people derive value from things based on more than price alone. You might not see why they have pricing power but the fact is they have over 60 million paying subscribers so they must be doing something right. And is the ~$10/month meaningful for any of those subscribers? Probably not at all. I mean, you're going to tell me that people line up to buy a $1,000 iPhone which costs 25% more than a previous model but perhaps an extra $2/month for Spotify (#12 app on App Store - right in between Gmail app and Uber) is going to cause an exodus? I'll take the other side of that one.

[mbrzuzy]

Good point.

If Spotify started charging $15 instead of $9.99 I wouldn't care, I would still pay. They are simply the best music streaming service out there IMO.

I payed for Google Music for a bit a while ago and I hated it and switch to Spotify. The experience was awful. I'm also pretty sure that Google Music rips audio from Youtube in certain cases which makes the audio quality terrible.

[TheHegemon]

> I payed for Google Music for a bit a while ago and I hated it and switch to Spotify.

It's always so interesting how people can have similar experiences but come out with completely different perspectives. For me, the Google Play Radio feature is the most important thing they have. It's like a Pandora that doesn't play you the same three songs over and over. When I would try and use the radio feature on Spotify it would play music that was not even close to the original other than it maybe being in the "alternative" category.

[remir]

Spotify's strength is their recommendation engine, IMO. It's really good.

[thinkmassive]

Spotify eventually makes great recommendations. The Daily Mixes (I think there's always 6) consistently deliver music I enjoy while maintaining a much better "genre theme" than anything I ever heard from Pandora.

I say eventually, because it's conditional on you using the service to seek out a variety of music you enjoy, and also on providing feedback via thumbsup/add-to-library actions. Try this for a month and you'll get good recommendations that continue improving over time.

[thinkmassive]

I also tried Google Music for a while before leaving it. They enticed me by offering to host all my MP3s, so I could stream my entire collection to any of my devices.

Later I found out they would use user uploads in their catalog (when legally able), so it sounds more likely that someone uploaded a bad copy that was shared, rather than Google ripping music from youtube.

[bllguo]

I see much less differentiating spotify from its competitors, than in the case of amazon/anyone else or apple/android. Objectively better.. maybe? Don't really see it, personally. But say that's true - what's stopping Google or Apple from investing heavily in their offerings and crushing spotify in the process? Again - what's the moat here?

Can't help but feel that you're projecting your personal love for spotify onto others.

[BinaryIdiot]

> Same reason people don't move from Amazon to Wal-Mart, or Apple to Android, or Netflix

The big difference is Apple has its own ecosystem, Amazon and Wal-Mart sell a lot of different stuff, Netflix has a TON of original shows to differentiate itself from Hulu and others.

Spotify? They literally offer the identical catalog of music as everyone else. Literally. Sure their apps may be slightly better but who cares? If they raised their prices why not move to the more native solution your platform offers for cheaper? Google Music, Apple Music, Microsoft Groove (lol), Amazon Music; they all offer the same damn thing.

[remir]

Groove Music is literally dead. Play Music is buried on the Play Store somewhere as if Google doesn't want people to access it. Seriously, I had to do a Google search to find it. Its UI is not as good as Spotify (in my opinion) and the service doesn't seem like a priority for Google.

I haven't tried Apple Music and Amazon.

Spotify on the other hand has a decent desktop app available on Windows, macOS and even Linux. Their mobile app is great, too. They have brand power, a UI that a lot of people like and their AI-based playlist engine is amazing.

[bedhead]

Then why is Spotify so freakin popular? Why do they have more than double the subscribers as Apple Music which arguably has major advantages (resources, pre-installed, etc)?

[BinaryIdiot]

First mover advantage? Spotify has been around for many, many years before just about anyone else that matters. Since they're all basically the same thing why would you change after new ones came out? I kept with Google Music for the longest time before moving to spotify only because of the family deal (which, if I remember correctly, came before Google's deal and really the only reason why I ever switched).

[pducks32]

I was agreeing with you as I read these replies but then I thought of what would actually happen if Apple Music raised their prices. I think I would stay. All the music and likes/dislikes that it has about me are a pain to move. And also I really value Beats 1 and that is worth the price raise to me alone. So maybe we really are creatures of habit.

[rayshan]

I'm also a subscriber and love Beats 1, but I believe Beats 1 is free. Sometimes I wonder if I should just unsubscribe and listen to Beats 1 all day.

[charlesdm]

It just works -- pretty much exactly the way I want it to. I've been a Spotify user for 5 years, have occasionally tried competing services, but I've never cancelled my subscription. Even if they'd double the price, I wouldn't cancel my account.

[eropple]

I had a six month trial of Google Music and YouTube Red, thinking I'd go to that instead of Spotify.

I canceled the Google one because changing over was too much effort.

[Fnoord]

Are there scripts to aid changing services to convert playlists etc? That'd increase competition and decrease lock-in.

If I change password manager there are scripts. If I change browser there's addons for the other browser as well. [...]

[eropple]

I assume, but here's the thing: it's ten bucks a month and I don't watch YouTube on devices without ad-blockers very often. It's not worth my time to think about it.

[namlem]

I have all my play lists and albums saved in Spotify. Is there a tool that let's you export all that stuff to another service? If not, then switching would not at all be worth all the hassle just to save a couple bucks a month.

[TylerH]

Because Apple and Google Music suck? And non Apple fanboys would never go to Apple music, Apple customers are probably already there, and people don't want to give all their business to the big giants which do evil things? (Not that Spotify doesn't do evil things). Spotify also lets you catalog your own tracks from local drives... does Apple Music or Google Music let you do that?

[andyhmltn]

>And non Apple fanboys would never go to Apple music,

I did. Apple Music still has one major selling point: They own iTunes so anything on iTunes is on AM. For spotify and other streaming services you still have to wait a couple hours to a few days for something to appear on the other streaming services

That being said I moved back to Spotify after a year because of how awful and buggy the UI in AM is. If Apple Music could improve the UI and fix the bugs that have been about for years they could really do well. But I have my doubts as to whether that will ever happen

[ErikVandeWater]

>The other week, my kids were watching TV and my wife and I were in the kitchen and one of them yelled out, "Mom, something popped up on Netflix saying the price is going up. What should I do?" My wife and I said the same thing instantly: "Just hit okay." We didn't even know what it went up to...hell I don't even know what it cost before.

You and your wife both know (subconsciously at least) that people will switch to HBO, Hulu, or any other number of services if Netflix gets unreasonably expensive. It's broke college students that buy Netflix the most, and they would have to get rid of their biggest set of subscribers to raise prices significantly.

[bedhead]

First of all, the "broke college students" quip is wrong. Generally, Netflix's subscribers are fairly well off (in the US anyway). Second, even if that was the case, I can assure you that said college students would suck it up and pay the extra $5-10/month. This extra cost isn't putting anyone into bankruptcy. Netflix has raised prices several times and subscribers keep increasing. And people are just getting more addicted to it. And the competitive advantages is getting larger. And the (good) alternatives are getting fewer.

"Unreasonably" is the key word there. What is unreasonable? I think that for the vast majority of subscribers, they get FAR more than $10/month in value (or whatever it costs). Cable costs something like $100/month and it's arguably far worse of a product. Is $50/month for Netflix unreasonable? For some I suppose, but for most I'd be willing to bet no. Remember Ballmer saying no one would pay $500 for a phone? :)

[qznc]

> Ballmer saying no one would pay $500 for a phone?

And he is right. A smartphone is more than a phone. How can Netflix be more than a video player? One way seems to be to become a producer.

Back to Spotify: How to be more than a music player?

[majormajor]

One way is to be a ubiquitous one. I think the Apple TV is the only major omission for Spotify's footprint? Amazon Echos integrate with Spotify; I think Google Home does too. I don't think you can say that very often for the reverse. People do notice this sort of lock-in, and start noticing that their frends have Spotify and can run it pretty much everywhere, and so Spotify is the first one people check out. Generally people aren't super price-sensitive at this price level, outside of students, and students get some huge discount deals from Spotify.

Roku is the opposite side of the same strategy: everyone keeps buying them even though their interfaces and app ports are generally less polished, the hardware often less capable, than much of the competition. It's offset by being simple and well-understood (ever see someone try to use that Apple TV remote touchpad for the first time?) and by running pretty much every TV/streaming app out there.

[jnevelson]

Ignorant question (I'm not very familiar with the music business): what do the labels provide to the artists - why do they need to sign with Time Warner/Sony/etc at all, rather than just releasing their music to all distribution channels (Spotify/Apple Music/etc) themselves? I understand for smaller artists the labels can help provide advertising to them, but the larger, well-known stars you mention seem like they should have leverage to negotiate themselves?

[whiddershins]

PR and lots of logistical support. Much of that logistical support is also drawbridge over a moat that makes exposure on a large scale basically impossible without access and backing.

The idea that a person can create and maintain a fan base of millions without all that is attractive but infeasible.

[dragonwriter]

> The idea that a person can create and maintain a fan base of millions without all that is attractive but infeasible.

Chance the Rapper might disagree (as, to a lesser extent, might Jonathan Coulton.)

[amigoingtodie]

Like Louis CK?

[richardknop]

Not sure it’s a good comparison. Comedy is a bit different animal than music. I’m not sure big stars like Rihanna, Taylor Swift etc would be able to become such big stars and maintain their fandom and deal with all the logistics of TV/radio promotion & deals, concerts, brand awareness and such alone without big studios doing that for them. I am not up to date on music but are there examples of big international pop stars who bootstrapped their superstar career without being promoted and pushed by one of the big three studios?

[majormajor]

He was a writer for established media titans like Letterman and Conan, with other fairly-typical industry projects as well, with a TV show on a major cable network, before he really blew up outside of comedy insider circles, AFAIK.

[ikurei]

You seem to assume the business of a musician is to publish music and distribute it.

Artists also make a lot of their money by licensing their music, or concerts, which are big logistical problems full of middle men. Big labels also give you a lot of PR and visibility.

[dralley]

Netflix can do that only because they have their own content with a large following. Unless Spotify feels like getting a bunch of popular artists to distribute with them, they're screwed.

[zjaffee]

This is also magnified by the fact that they have buying power in a way Netflix does not. Netflix has had to product a ton of their own content to retain users, I'm increasingly considering leaving Netflix in favor of Hulu simply because they have far more content from traditional TV channels (from my perspective Netflix is just becoming a worse HBO).

Spotify on the other hand, doesn't have the issue of content being removed from it in the same way. Additionally due to the legacy of radio, there is a generally accepted amount that you should pay per play. This continues to the fact that spotify could over time expand into other areas of the music industry such as being a platform for artists to sell merchandise and concert tickets which is the most viable way for small artists to make money.

[yeukhon]

I work for one of the big three, though just a technical staff, so I am no where close to knowing the full details of how licenses are signed, but enough to understand at the high level.

I see your points and I think they are very real. Streaming is one of the biggest sources of revenue today for the major players. Territories in music industry is what's squeezing business like Spotify. You can have a deal such that Warner has exclusive right in North America for all licenses, and can then sell to Spotify. Then perhaps another deal is reserved to a Sony-owned label in Eastern Europe. So if Sony doesn't want to sign the deal with Spotify, sure, Greek users may never get to play that song on Spotify.

I remember jumping from Apple Music and YouTube to Spotify because Spotify offers by paying monthly subscription, I have instant access to many music catalogs. Unlike Apple Music, I had to pay $0.99 or whatever per album/song. I am not sure if that has changed since, but it was the #1 reason I left Apple Music.

Since the Big Three has made so much more from streaming deals, they are going to choke Spotify's throat, but also have to deal with Spotify. After all, there is a solid and a strong growth of active users on the Spotify platform.

Big Three will flex muscles, but they won't just let the deal fail. Both sides need the revenue desperately. Netflix is in the same position but it has been producing its original contents so Netflix is less dependent on outsider producers. I think Spotify will do the same: create its own label and production companies, sign artists and make deals with the Big Three at various levels. Perhaps even buy a show ticketing company. Maybe begin to create a broadcast and video platform.

Warner Music Group's owner (Access Industries) is an investor of Spoifty (Access Technology Venture is owned by Access Industries which owns WMG). There's a humor whenever I look at music industry: we play the game of music chair, because your ex-worker might just show up to your conference call the next day representing another music company. Since artist X may have separate deals with separate labels (which in turns separate music recording companies), or because WMG needs Sony's help in India or whatever, in conclusion everyone has a stake in Spotify at the end of the day, even if you are not a direct investor of Spotify.

Unfortunately, every dollar collected is split up 50 times just because it takes many parties to publish a music and then collect the money. Everyone wants a piece, and everyone will have a piece. The pie might be small, but just enough to feed.

[nofilter]

You're confusing iTunes with Apple Music. iTunes Music was where you bought songs and albums. Apple Music is a streaming service just like Spotify where you pay monthly to have access to all of the music.

[yeukhon]

Thank you for the correction. Indeed. iTunes from years ago.

[crabasa]

Isn’t the obvious answer for Spotify to start generating their own content and become a label? Aka, the Netflix model. In fact, I’d be stunned if this wasn’t mentioned in their S-1.

[awad]

In a way, these dynamics remind me of the movie theater business. Here's a good read:

https://25iq.com/2017/12/30/moviepass-premature-scaling/

Given that music is generally not a substitutable good, margins can only be so strong on the core streaming product to your very point. I'm not really aware of any other revenue stream they may have (do they do ads?) and am curious what they might propose. Presumably they do have enough scale to be possible successful with something tied to monetizing their user data whether through ads or some other value-added service?

[Exuma]

So how do their competitors deal with this?

[askafriend]

They don't.

Apple, Google, and Amazon can afford to lose money all day long on the music streaming services that they each offer. This is because the services bolster their broader ecosystem of services and products whose aggregate value is far greater than any individual piece on it's own.

That's why Spotify is in a precarious position because streaming is it's only bread and butter.

Similar to UberEats + Uber versus a standalone service like DoorDash or Postmates. Uber doesn't need to make money on UberEats in order to be a successful business. Postmates does and that's a huge problem because delivery is a brutal business.

[cutcss]

Exactly, the only realistic option Spotify has is to be bought by one of the big 3 (an exit), not an IPO.

[Disruptive_Dave]

Music was never intended to be a revenue generator for their competitors.

[mustacheemperor]

>You will squeeze them, make them pay, just enough that they survive

I believe the recently announced lawsuit, coming right before this IPO, may be a fine example of exactly what you're describing.

[dglass]

What if spotify creates their own music label? It's the same situation that Netflix had with licensing content. Spotify has loads of data that the music labels don't. I would hope they will use that data to their advantage. If they don't they're wasting a huge opportunity.

[spsgtn]

Agree. I recently learned that this is called "Bargaining Power of Suppliers" from 25iq.com blog by Tren Griffin. His post on MoviePass is superb.

[TheArcane]

> People will switch to Apple Music, Amazon PrimeMusic, Tidal or any other service quickly.

How do these other services operate in contrast?

[NDT]

They are not free. This is the THE reason I use Spotify over any others.

[Reeeee]

Keep in mind that Universal, Sony, and Warner all own a chunk of Spotify.

[bogomipz]

They weren't investors. They were given a small ownership stake as an incentive to agree to license their content initially.

[vetrom]

Rdio? Licensing murdered the business, really.

[phirschybar]

> And Spotify has zero negotiation power here

really? with their endless amount of listener history and preference data. IMHO Spotify has gained the upper hand.

[bogomipz]

How does endless amount of listener history and preference data give them the upper hand? That data wouldn't exist if they weren't able to license content.

[JonFish85]

Google and Apple have that too -- YouTube and iTunes have been around longer than Spotify, and likely have similar data sets.

[gnopgnip]

What about compulsory licensing?

[hsod]

I don't have any opinion on how good of an investment Spotify is, but the power balance between Spotify and the labels may not be as lopsided as you think.

Rap Caviar, a playlist curated by Spotify, is making music into hits: http://www.vulture.com/2017/09/spotify-rapcaviar-most-influe...