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by jqbx_jason 2883 days ago
Okay sure the full picture isn't all sunshine (I didn't say I'd buy the stock) but it's not bad news either. With the lions share of the streaming market and low churn rate I would expect they can negotiate some better deals (or possibly get enough of an edge to raise prices).
2 comments
scarface74 2883 days ago
Why would the music industry negotiate? If Spotify tries to play hardball and doesn’t agree with the terms of one of the three major record labels, they lose access to the music. Neither Apple, Google, nor Amazon really care if their music streaming service is profitable or barely break even, they are using music streaming to sell other higher margin products.

Apple is still growing faster than Spotify and YouTube is a bigger brand.

If they try to raise prices - Apple Music and the YouTube offering starts to look a lot more attractive - it’s hard to compete against the default.

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jqbx_jason 2883 days ago
With a large enough differential between customer #1 and customer #2 it becomes a lot of cash to leave on the table if you don't renegotiate. But I don't know the numbers and you're right to point out that everything could potentially go wrong, but IMO it's not a sure thing and at least this report is a step in the right direction not the wrong one.
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donarb 2883 days ago
Yes, it's bad news. The article states that their losses have more than doubled in the past year from $220M to $460M. Their average revenue per user has dropped 12% to $5.72 and Spotify says that won't be getting better anytime soon. Most of their "new" customers are the result of family deals and promotions. Spotify thinks they can grow their way to profitability, but they are competing with Apple Music, which doesn't have to be profitable.
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scarface74 2883 days ago
I don’t see how they can grow thier way to profitability with negative marginal costs. You grow your way to profitability if you have high fixed cost and low marginal costs. But, they have to pay such exorbitant licensing fees that thier marginal cost is high. The family plans are making the situation worse.

Once Apple introduced the family plans, Spotify was toast.

And finally, there is another level of complexity when you have to go to their website to pay instead of just using an in app purpose. They were one of the top grossing apps when they had in app purchases - even when they charged more to offset Apple’s 30% cut.

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