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charlesarthur : spotify   74

Apple plans to bankroll original podcasts to fend off rivals • Bloomberg
Lucas Shaw and Mark Gurman:
<p>Executives at the company have reached out to media companies and their representatives to discuss buying exclusive rights to podcasts, according to the people, who asked not to be identified because the conversations are preliminary. Apple has yet to outline a clear strategy, but has said it plans to pursue the kind of deals it didn’t make before.

Apple all but invented the podcasting business with the creation of a network that collects thousands of podcasts from across the internet in a feed on people’s phones, smartwatches and computers. The Apple Podcast app still accounts for anywhere from 50% to 70% of listening for most podcasts, according to industry executives.

The news sent shares of Spotify down as much as 2.7% to $150.09 in New York on Tuesday, marking the biggest intraday decline in three weeks. The stock had been up 36% this year through Monday’s close.

After years without making substantial changes to its podcasting business, which first launched in 2005, Apple has recently focused on upgrading its app and has added new tools for podcast makers.</p>

Going to be a challenge for Spotify. Apple-only podcasts will have a lot more reach than Spotify-only podcasts, as the data suggests. Then the problem is how you get people to see them.
apple  podcast  spotify 
9 weeks ago by charlesarthur
We’re closing the upload beta program. Here’s what artists need to know • Spotify
<p>Almost a year ago, we started to beta test a feature that lets independent artists upload their music directly to Spotify. Today, we notified participating artists about our decision to close the beta program, along with how we can help them migrate their music to other distributors over the next month.

The insights and feedback we received from artists in the beta led us to believe:

The most impactful way we can improve the experience of delivering music to Spotify for as many artists and labels as possible is to lean into the great work our distribution partners are already doing to serve the artist community. Over the past year, we’ve vastly improved our work with distribution partners to ensure metadata quality, protect artists from infringement, provide their users with instant access to Spotify for Artists, and more.

The best way for us to serve artists and labels is to focus our resources on developing tools in areas where Spotify can uniquely benefit them — like Spotify for Artists (which more than 300,000 creators use to gain new insight into their audience) and our playlist submission tool (which more than 36,000 artists have used to get playlisted for the very first time since it launched a year ago). We have a lot more planned here in the coming months.</p>

Two possible reasons why: 1) it was being used to scam Spotify through songs of minimal length which were then farmed out to bots to "listen" to, thus earning scammers money; 2) record labels didn't like the idea of being cut out of their normal business. Preventing 1) while trying to make the people in 2) happy probably made Spotify decide that junking it altogether was simpler.

Side note: the URL for this blogpost is the first I recall encountering with an apostrophe. (Take a look.) They're pretty uncommon in English-language (and for all I know all ASCII) sites.
spotify  music 
11 weeks ago by charlesarthur
Pre-saving albums can allow labels to track users on Spotify • Billboard
Micah Singleton:
<p>To pre-save music, which adds a release to a user’s library as soon as it comes out, Spotify users click through and approve permissions that give the label far more account access than the streaming giant normally grants them -- enough to track what they listen to, change what artists they follow and potentially even control their music streaming remotely.

This lets labels access some of the data that streaming companies usually guard for themselves -- which they want in order to compete with the streaming giants on a more even playing field. But at a time when the policies of online giants like Google and Facebook has made online privacy a contentious issue, music’s pre-saving process could begin to spark concern among consumers, and perhaps even regulators.

Labels also ask for far more permissions than they need. Spotify users who, for example, tried to pre-save the Little Mix single “Bounce Back” from links shared by the act or its label, Sony Music, were prompted to agree that Spotify could allow Sony to “view your Spotify account data,” “view your activity on Spotify” and “take actions in Spotify on your behalf.” The exact permissions Sony requests are only visible to those who click through to the corresponding submenus, so users may not fully understand all that they’re agreeing to -- or that the changes apply to their account unless they change it on Spotify’s website…

…The only access labels need to pre-save music to a Spotify account is permission to “add and remove items in your Library.” But the submenus for Sony’s Little Mix campaign asked users for 16 additional permissions, including to “control Spotify on your device” and “stream and control Spotify on your other devices.” In its campaign for Chris Brown’s new single “No Guidance,” featuring Drake, Sony asked to “upload images to personalize your profile or playlist cover” and manage who you follow on Spotify. (Spotify, Sony and the other major labels declined to comment for this story.)</p>

Yeah, I bet they did. "Permissions overreach" is such a 21st century thing to do.
spotify  permissions  labels 
12 weeks ago by charlesarthur
Apple files response to Spotify complaint in Europe • 9to5Mac
Chance Miller:
<p>In March, Spotify’s public PR campaign against Apple focused on the company of charging a 30% “tax” on all App Store transactions. In actuality, Apple now says that Spotify isn’t paying the 30% fee on any of its subscribers.

Essentially, Spotify only offered the ability to sign up for a subscription through its iOS app from 2014 until 2016. For subscriptions, Apple charges a 30% fee for the first year, then a 15% fee each year after that. All of the subscribers that Spotify acquired though its iOS app are long since out of that one-year window.

Apple also underscores in its response that Spotify only pays Apple a fee on just over 0.5% of its total subscribers. As noted by CNET, Spotify has around 100 million paying subscribers. Apple says that Spotify acquired 680,000 subscribers through its iOS app. That means that Spotify gives Apple a cut on only 0.68% of its total subscribers.

This response from Apple marks the first time Apple has formally responded to Spotify’s European Commission complaint. Immediately after Spotify’s initial PR campaign in March, Apple publicly responded to the accusations made by Spotify, but as of earlier this month, it had not yet filed a formal response to the commission.</p>

Well that's quite the response. Although, of course, the complaint is about a matter of law, not number.
apple  spotify  antitrust 
12 weeks ago by charlesarthur
Playlist malfeasance • Midia Research
<p>Streaming economics are facing a potential crisis. The problem does not lie in the market itself; after all, in Q1 2019 streaming revenue became more than half of the recorded music business and Spotify hit 100 million subscribers. Nor does it even lie in the perennial challenge of elusive operating margins. No, this particular looming crisis is both subtler and more insidious. Rather than being an inherent failing of the market, this crisis, if it transpires, will be the unintended consequence of short-sighted attempts to game the system. The root of it all is playlists…

…With playlists being so important for both marketing and revenue, it was inevitable that people would seek out ways to attain any possible advantage. Consequently, playlists are becoming gamed, whether that be major labels getting more than their fair share of access to the biggest playlists or ‘fake artists’ filling them out.

Most recently, Humble Angel’s Kieron Donoghue identified a cynically constructed playlist called ‘Sleep & Mindfulness Thunderstorms’(all terms optimised for user searches) that contained 330 one-minute songs of “ambient noise of rain and a few thunder storms thrown in for good measure”. The one-minute track length ensures they are long enough to qualify for a royalty share, but short enough to ensure that a typical listening session will generate a vast quantity of streams, thus generating more royalties.

The twist to this story is that this playlist was created by Sony Music and the artist behind all these tracks appears to be a Sony Music artist. Crucially Sony isn’t the only one doing this, with UMG getting in on the act and Warner Music signing an algorithm.</p>

All's fair in love, war and making money in the music business.
playlists  spotify 
may 2019 by charlesarthur
Brussels poised to probe Apple over Spotify's fees complaint • FT
Rochelle Toplensky:
<p>Spotify’s complaint centres on Apple’s policy of charging digital content providers a 30% fee for using its payment system for subscriptions sold in its App Store. The policy applies to Spotify and other music subscription services but not apps, such as Uber.

After considering the complaint and surveying customers, rivals and others in the market, the EU competition commission has decided to launch a formal antitrust investigation into Apple’s conduct, according to three people familiar with the probe.

Apple and Spotify both declined to comment.

EU enforcers can require companies to change business practices they deem unlawful and levy fines of up to 10% of a company’s global turnover. The investigations have no set deadlines and can take years to resolve. However, companies can speed up the process and avoid fines by offering to settle the probes with binding promises of behavioural change.

In an interview in March after filing the complaint, Daniel Ek, Spotify’s chief executive, told the Financial Times that the company’s long-running battle with Apple had become “untenable”. He warned that the music-streaming service would raise prices if Apple continued to charge the 30% fee. 

Deezer, a rival music-streaming service, and BEUC, a European consumers’ group, echoed Spotify’s concerns. </p>

Well, this is going to get interesting. Assume the EC rules for Spotify: Apple will either have to reduce its 30% fee (to zero?) or let companies offer alternative payment schemes, as Google does.
Apple  spotify  antitrust 
may 2019 by charlesarthur
Spotify, the decline of playlists and the rise of podcasts • Music Industry Blog
<p>Two of Spotify’s most significant moves have been playlist curation and podcasts. Spotify is moving into the second major phase of its existence. Phase 1 was about establishing itself as a streaming music powerhouse, Phase 2 is about what it becomes next, extending beyond the streaming music beachhead. This is the typical trajectory of tech companies, establishing themselves in their core competencies and then expanding. This can either be a dramatic expansion – e.g. Amazon moving from eCommerce into video and music – or a more focused value-chain extension – e.g. Netflix moving from simply streaming other’s shows to making its own. For Spotify, playlists were a Phase 1 strategy and podcasts are very much part of Phase 2.

<img src="" width="100%" />

Podcasts may just have come in the nick of time for Spotify because curated playlists remain much more about potential than they do reality. Just 15% of streaming consumers listen to curated playlists. In fact, of all the key streaming feature activities, curated playlists come lowest. Curated playlists are clearly not to streaming music what binge watching is to streaming video. Instead streaming activity is fragmented across multiple features and just 10% of streaming consumers regularly do all four of the activities listed in the chart above…

…Enter stage left podcasts. With its acquisitions of Gimlet, Anchor and Parcast, Spotify is betting big on podcasts. Already, more streaming users (18%) listen to podcasts than curated playlists while overall consumer podcast penetration is 11%. In Sweden – the early adopter market that gives us a view of where other markets are heading – podcast penetration is 19%, rising to 28% among streamers.</p>
spotify  podcast 
april 2019 by charlesarthur
Addressing Spotify’s claims • Apple
<p>The only contribution that Apple requires is for digital goods and services that are purchased inside the app using our secure in-app purchase system. As Spotify points out, that revenue share is 30% for the first year of an annual subscription — but they left out that it drops to 15% in the years after.

That’s not the only information Spotify left out about how their business works:

• The majority of customers use their free, ad-supported product, which makes no contribution to the App Store.<br />• A significant portion of Spotify’s customers come through partnerships with mobile carriers. This generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers.<br />• Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.

Let’s be clear about what that means. Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100% of the revenue.</p>

It would be quite a data point if we found out how many people signed up for Spotify through the iOS app. Especially given how much bigger Google Play is in user numbers.
apple  spotify  app  antitrust 
march 2019 by charlesarthur
Spotify boss warns of price rises in Apple antitrust dispute • Financial Times
Anna Nicolaou, Tobias Buck and Madhumita Murgia:
<p>Spotify will raise prices if Apple continues to charge it a 30% fee for using its ubiquitous App Store, the music-streaming service’s chief executive has said.

The warning from Daniel Ek comes just days after Spotify filed an antitrust complaint with the EU accusing Apple of unlawfully abusing its App Store dominance to favour its own Apple Music service.

“You can see us having no other choice than to accept the 30 per cent fee put in place, which essentially would mean we would have to raise our prices for consumers all over the world,” Mr Ek said in an interview.

“Apple [would get] an unfair benefit of being able to compete at much lower prices,” he added. “I obviously think our service is superior to theirs, but a 30 per cent price difference is a lot.”

In its EU complaint, Spotify said that Apple had required all iPhone app makers exclusively to use the Apple payment system for the past eight years.

Apple has introduced a 30% fee, applied to Spotify and all other digital content providers in the first year after users download their app, for using the payment system. Other apps, such as Uber and Deliveroo, are not subject to the fee, which drops to 15% after a year.

Mr Ek’s comments are the latest in a long-running battle between the two companies, which the Spotify chief said became “untenable” a year ago.</p>

Translated: Spotify wants to put prices up. Apple's a good way to complain about that. Also, how many people does it have subscribed via the App Store, given that it stopped offering that some time last year? I hear Apple's not very happy about the PR presentation on this, but it's biding its time.
spotify  apple  antitrust 
march 2019 by charlesarthur
Consumers and innovators win on a level playing field • Spotify
Daniel Ek, CEO of Spotify:
<p>Spotify has filed a complaint against Apple with the European Commission (EC), the regulatory body responsible for keeping competition fair and nondiscriminatory. In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience—essentially acting as both a player and referee to deliberately disadvantage other app developers. After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition.

Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. Apple is both the owner of the iOS platform and the App Store—and a competitor to services like Spotify. In theory, this is fine. But in Apple’s case, they continue to give themselves an unfair advantage at every turn.

To illustrate what I mean, let me share a few examples. Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system, including upgrading from our Free to our Premium service. If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do.</p>

Spotify needs to satisfy just two tests. Is Apple dominant, ie has 40% of the market? And is it using its power in one market to annexe another, or keep rivals out?

Afraid it doesn't have a dominant position in the European market - it has 15-20%. (Higher in some countries, lower in others.) And it hasn't kept Spotify off the App Store. The one thing it might get called on is preventing apps calling for people to subscribe on the web, rather than in-app. But without a dominant position, it's moot.

Don't think they'll file this in the US: they'd need to show that Apple (which has a much stronger position - about 40% of smartphones) is doing something that raises prices for consumers. But the app store levy is like a cost of business, same as selling through a retailer. And there are options.
spotify  apple  antitrust 
march 2019 by charlesarthur
Spotify adds 1 million unique listeners in India in less than a week • Reuters
Akanksha Rana:
<p>Spotify Technology SA, the world’s most popular paid music streaming service, said it racked up more than 1 million unique users in India across its free and premium tiers since launching less than a week ago.

Spotify launched in India on Tuesday, stepping into a price-sensitive market crowded by well-funded players such as Reliance Industries’ JioSaavn and Apple’s Apple Music.

The Swedish company is offering a free version that will run with ads, alongside a premium ad-free variant that will charge users 119 Indian rupees ($1.68) per month.

India, with a population of 1.3 billion and more than 400 million smartphone users, is a potentially huge market for the Swedish company.

According to media reports, Tencent-backed Gaana leads the Indian streaming market with over 80 million monthly users.</p>

Uphill battle, but great for those user-count bragging rights. (Apple Music has been in India for a long time, I think.)
india  spotify  music 
march 2019 by charlesarthur
Spotify is spending up to $500m on podcast startups including Gimlet, Anchor • Recode
Peter Kafka:
<p>Not only has Spotify acquired Gimlet Media, a podcast producer and network, for around $230m — a deal Recode told you about last week — but it has also bought Anchor, a startup that makes it easier for people to record and distribute their own podcasts.

The company says it isn’t done — it says it has other podcast acquisitions in mind and that it expects to spend up to $500m on deals this year. Reminder: with these deals, Spotify is now fully in the content creation business, a move it has yet to make with music.

In a <a href="">blog post</a> up this morning, Spotify CEO Daniel Ek says he didn’t plan on getting into podcasting when he founded the company 11 years ago, but he’s in it now. He says Spotify is now the world’s second-biggest podcast platform (behind Apple), and that podcast listening will eventually make up 20% of Spotify’s usage.</p>

Here's why. Spotify struggles to be profitable because when playing licensed music, it has to pay a fixed amount per track. Two hours of music listening costs it twice as much, and the subscriber has only paid once. For ad-funded listening, Spotify can play twice as many ads, but they don't monetise as well as a subscription.

However: if someone listens to one hour, two hours of podcast - there's no payout. The more time people spend listening to podcasts instead of music, the better Spotify's margins get. Ideally, people would spend 100% of their time listening to lovely non-royalty-bearing podcasts. So buying podcast companies is an initially expensive method of aligning yourself with "listening" while improving your profitability, long-term.
spotify  podcast  business 
february 2019 by charlesarthur
Spotify may already be too big for the labels to stop it competing with them • MIDiA Research
Mark Mulligan:
<p>At this stage we move on to a prisoners’ dilemma scenario for the majors:

• All of the majors help Spotify’s case by over prioritising Spotify as a promotional tool in light of its share of total listening compared to radio, YouTube, other streaming services etc<br />• WMG and SME probably couldn’t afford to remove their content from Spotify but would be watching UMG, the only one that probably feel confident enough to do so<br />• However, UMG would be thinking if it jumps first and removes its content, each of the other two majors would benefit from it not being there (and would probably be secretly hoping for that outcome)<br />• Each other major would be thinking the same, and regulatory restrictions prevent the majors from discussing strategy to formulate a combined response<br />• But even if UMG did pull its content, this would hurt Spotify but would not kill it (Amazon Prime Music launched without UMG and spent 15 months growing just fine until UMG came on board)<br />• Spotify could easily tweak its curation algorithms to minimise the perceived impact of the missing catalogue, making it ‘feel’ more like 10%<br />• So, the likely scenario would be each major paralysed by FOMO and so none of them act

Thus, maybe Spotify is already nearly big enough to do this, and could do so next year.</p>

Does Apple Music offer enough of a counterbalance to this? That the labels could go there instead? Probably not, given Spotify's size.
spotify  music 
october 2018 by charlesarthur
Why are record companies dumping their Spotify stock? • Office of Copyright
Stephen Carlisle:
<p>if you hold shares in a company that is running a deficit of over €2bn, with annual losses approaching €400m, you might come to the conclusion that Spotify is not going to make any real profits for quite some time, and thus no dividend to you, the shareholder. It might also point towards the conclusion that Spotify’s continuing losses will not have an upward effect on the stock price, making it more prudent to sell now.

Could Spotify turn a profit by reducing its costs? Of course, and Spotify is always ready to point the finger at greedy copyright owners.

“We have incurred significant costs to license content and continue to pay royalties to music labels, publishers, and other copyright owners for such content. If we cannot successfully earn revenue at a rate that exceeds the operational costs, including royalty expenses, associated with our Service, we will not be able to achieve or sustain profitability.”

Boo! Hiss! Greedy copyright owners!

Except there’s this. In February of 2017, despite losing truckloads of money for years, Spotify found it necessary to open offices in New York City. And not just in any old office building. It rented space in the newly rebuilt World Trade Center. 13 According to Digital Music News, this is 478,000 square feet of office space spread over a total of 14 floors. This was not enough. Spotify later signed an option to take on 100,000 more square feet. 14 I suggest that you click on the link provided in the endnote and take a look at the pictures.

Nice pool table, guys.

The cost of this? Again according to Digital Music News:

$2.77m a month, or $33.29m a year. Over the 17 years lease, more than $566m in rent; $31m in upfront payments. To this we can add the fact that:

In 2015, executive and board member pay was $16.9m, an increase of 300% over the previous year. In 2015, the average Spotify employee made $150,000. During 2015, Spotify lost $253.8m.

It does not seem from these numbers that Spotify is interested in reducing its costs, if it has to come by way of reducing their prestigious digs and creature comforts. If you are a record company, and you know this from close up observation, it might make sense to sell your shares.</p>
spotify  music  shares 
august 2018 by charlesarthur
How did Apple Music crush Spotify's day-one streams of Drake's new album? • Music Business Worldwide
Tim Ingham, on how Apple claimed over 170m streams on day one of Drake's new album Scorpion, against Spotify's 132.4m:
<p>within the 132.4m Spotify plays of Scorpion which MBW monitored on day one, some 60.8% (80.5m) took place in the US.

Clearly, the US is the prime battleground for Drake’s album – and that’s a fact which will have suited Apple. Multiple label sources tell MBW that Apple is expected to overtake Spotify’s subscriber base in the States later this month (although one source suggested that a recent Spotify promotional trial push may end up delaying this imminent milestone).

Either way, we’re told the two services – in terms of US-based paid users – are pretty neck-and-neck: Spotify has just over 20m paid US subs, while Apple has just over 19m.

Still, the global Drake numbers remain very surprising. For example, on Spotify today (July 2) Drake is officially the service’s biggest artist worldwide with 52.8m monthly listeners. That figure is bigger than Apple’s entire user base at last count (50m), as announced in May.

One other, crucial factor in Apple screeching ahead on Scorpion streams is more elementary, however.

Scorpion was due to land on both Spotify and Apple Music at midnight Eastern Time on Friday (June 29). Apple Music released it bang on time. Spotify, however, suffered some kind of malfunction – because Scorpion didn’t arrive on its service until over two hours later.

That certainly would have badly hurt Spotify’s like-for-like comparison with Apple on day one (particularly as the Spotify chart which that 132m number comes from measures midnight-to-midnight periods).

Some Spotify users <a href="">even defected to Apple Music for a trial just to listen to Scorpion</a> while waiting for the album to land on their favored platform.</p>
drake  applemusic  spotify 
july 2018 by charlesarthur
YouTube Music is great for record labels, but bad for music lovers • WIRED UK
Katia Moskvitch:
<p>Facebook doesn’t have a good enforcement technology yet, he adds, but “is about to become a major player”. Apple Music and Spotify together count 125 million subscribers - although they are mere bit players considering the success of YouTube. Google's baby now sports more than 1.8 billion users every month, not least thanks to the fact that it is free – not just for consumers, but also the artists themselves. "It’s the number one place where artists get discovered and hits are made," says [MIDiA Research analyst Mark] Mulligan, and “that’s true for every single market”.

The success, however, does not translate into massive payments to the music industry. YouTube labels itself as a platform, not a music distributor, and as a result gets away with sharing less of its profits. Because of its dominance, YouTube pushes down the profits for the music industry as a whole, claims a <a href="">recent study</a> commissioned by the International Confederation of Authors and Composers Societies (CISAC), a body representing royalty-collecting societies around the world.

The launch of YouTube Music will not be a game changer, though. Mulligan believes that the subscription-based service is “not quite a sop to the record labels, but it’s not far off”. Google simply wants to show “that it’s a good partner to the record labels… rather than needing to be in the premium business”.

Profit margins are further under pressure because of the deep fragmentation of the distribution end of the music industry. Spotify, YouTube and Apple may be digital giants, but they are jostling for space with many smaller local music streaming services around the world, plus thousands of terrestrial and digital radio and TV networks.</p>
spotify  youtube  music 
may 2018 by charlesarthur
Apple Music and Pandora have pulled R. Kelly’s music from curated playlists • The Verge
Andrew Liptak:
<p>Pitchfork reported that Apple quietly began to pull R. Kelly from some of its curated playlists prior to Spotify’s announcement in light of renewed reports about his behavior from a number of women. However, other artists, like XXXTentacion, who was also pulled from Spotify’s playlists, remains on Apple’s promoted playlists.

Similarly, Pandora has reportedly been working for “months” to update its policies on artists who have exhibited questionable behavior, according to Blast. Like Spotify, it has removed Kelly from its playlists. The service told Blast that its “policy is to not actively promote artists with certain demonstrable behavioral, ethical or criminal issues. We approach each of these scenarios on a case–by–case basis to ensure we address components true to Pandora’s principles while not overreaching and avoiding censorship.”

Spotify told The Verge earlier this week that R. Kelly’s music remains on the various services: the service just won’t promote it to users through its playlists. The same appears to be true for Apple and Pandora: the companies aren’t pulling their music from their catalogs, and are simply exercising some editorial control over who goes on the curated lists.</p>

So this is tricky. None of these artists has actually been found guilty of anything. The services are free to do as they like with content, but if they are actually taking action over accusations of past behaviour (as is clearly the case) are they also going to pay the artist back all the money they took as their cut? After all, they clearly don't want to benefit from "undesirable" behaviour. Doesn't that apply to behaviour that occurred in the past too, then? (And the lack of proven built is quite apart from the question of how you're going to set fences around "acceptable" and "questionable" behaviour in the music business.)
music  behaviour  spotify  apple 
may 2018 by charlesarthur
How much will artists get paid from the major labels' Spotify profits? • Music Business Worldwide
Tim Ingham notes that Sony sold 17.2% of its Spotify stake - about 0.98% of the whole company, or $250m - on Spotify's debut:
<p>What’s even more interesting, however, is a little secret given away by Sony Corp in a note to shareholders yesterday. The Japanese giant revealed that it’s forecasting a 105bn yen ($980m-ish) profit from the entirety of its Spotify stake once it’s done trading. (Again, that’s based on Spotify’s final stock price on Tuesday.)

This is a bit of a leap, but a worthwhile one: from this small nugget of information, we can glean rather a lot about the windfall that artists can expect to receive from the major labels once they cash in their ownership holdings in Spotify.

Sneak preview: it’s not a small number. These calculations get a little hairy, but – trust us – they’re worth keeping up with.

For simplicity’s sake, let’s start with just Sony. Sony Corp forecasts a gain of nearly $1bn from Sony Music’s total 5.7% stake in Spotify as per Tuesday evening’s stock price ($149.01). In total, Sony’s stake in Spotify at that point was worth $1.51bn. In other words, Sony Corp is saying that it expects profits from its Sony stake to represent a return on investment of around 3X…

…You won’t hear a cavalcade of praise for the major labels come cash-in day at Spotify, but think about what this actually means: Sony is committing to sharing all profits with its artists, even those that are a result of it acting like a VC – buying additional equity in Spotify out of its own pocket.

That rather lays down the gauntlet to Warner and Universal, no?</p>

Suddenly there's plenty of money sloshing around. And some of it might even go to artists - and equally, or at least less un-equally.
spotify  labels 
april 2018 by charlesarthur
Spotify’s stock falls from $165.90 opening price • The Washington Post
Hamza Shaban and Renae Merle:
<p>Spotify made its highly anticipated Wall Street debut on Tuesday, with an opening price of $165.90, giving the music streaming company a valuation of $29.5 billion.

The price was 25% more than the reference price set by the New York Stock Exchange, based on how the stock traded on private markets before public trading began.

During the first moments of its public listing, Spotify's stock experienced stable trading before falling more than 9% in the afternoon, to $150. Analysts had anticipated volatility during Spotify's market debut because the company chose an unusual path to go public.

The streaming service giant, which trades under the symbol SPOT, bypassed many of the traditional steps of a Wall Street public offering. Company executives did not conduct a roadshow to convince big institutional investors, such as pension and mutual funds, to buy shares. Its chief executive even skipped the usual New York Stock Exchange ritual of ringing the opening bell. Epic Players, a theater group, preformed the honors.

What made Spotify's public debut most notable, however, was how it offered its stock. Rather than issuing new shares, Spotify instead conducted a direct listing, in which no money was raised but existing shares were sold by employees and investors.

"Normally, companies ring bells. Normally, companies spend their day doing interviews on the trading floor touting why their stock is a good investment," Daniel Ek, Spotify's founder and chief executive <a href="">said in a blog post</a> Monday. "As I mentioned during our Investor Day, our focus isn’t on the initial splash. Instead, we will be working on trying to build, plan, and imagine for the long term."</p>

And so Spotify gets out of its tight spot with <a href="">$1bn of debt raised in March 2016 that it had to pay off</a>. Well played, Mr Ek.

Though some of the earlier investors might feel peeved. From that March 2016 WSJ story:
<p>Fidelity Investments held its Spotify shares at $1,643 a share in January, down 27% from last August, according to regulatory filings. Another mutual fund, Vanguard International Growth, paid $2,229 a share for a stake in Spotify and still held it at that price as of December.</p>
spotify  debt  ipo 
april 2018 by charlesarthur
Inside the Black Market for Spotify Playlists
Austin Powell:
<p>Tommie King could be the next rapper to breakout from Atlanta. He’s well-connected, has obvious swagger, and he’s been quietly building a successful collection of singles on Spotify. His latest, “Eastside (feat. Cyhi the Prynce),” has already clocked more than 110,000 streams, driven largely by its placement on 14 independent playlists.

Gone are the days of hustling in parking lots, selling mixtapes out of the trunk of your car. In the modern music economy, in which streaming services account for nearly two-thirds of the total revenue generated by recorded music, emerging artists are increasingly being tracked via big data. Spotify streams, YouTube views, Twitter interactions, and even Wikipedia searches are all being used to discover the proverbial next big thing. That’s why King’s manager has worked to land his music on a staggering 594 Spotify playlists to date.

“Without Spotify playlists, to tell you the honest truth, I wouldn’t feel like we were accomplishing much,” King tells me when I reach him at the phone number he lists publicly on his Facebook page. “Streams are now the only way to really reach people you otherwise wouldn’t be able to connect with. It gives you the ability to be played worldwide, which we’re doing quite well with.

“That’s everything nowadays.”

There’s just one catch: King essentially paid to be added to those Spotify playlists… The black market for Spotify playlists is booming. It’s cheaper than you might expect to hack the system — and if it’s done right, it more than pays for itself.</p>

Ironic: because they're human-curated, the biggest playlists are targets for this. It's the modern payola. (Millenial readers: like paid SEO for music on the radio.)
music  spotify  playlist  curation 
march 2018 by charlesarthur
The great big Spotify scam: did a Bulgarian playlister swindle their way to a fortune on streaming service? • Music Business Worldwide
Tim Ingham:
<p>Our sources tell us that this data, within Spotify’s analytics, was pretty consistent: around 1,200 monthly listeners, with some variation, were hitting play on each ‘Soulful Music’ song.

So let’s bring all of this information together:

• A Bulgarian individual or collective managed to run at least one third-party playlist – ‘Soulful Music’ – which generated so much revenue in September 2017, it landed at No.35 on Spotify’s global 100 chart. (We actually have a testimonial from a further trusted source that ‘Soulful Music’ went on to break the US Top 10 in late September, but we haven’t seen the evidence.)<br />• However, ‘Soulful Music’ had less than 1,800 followers at the time.<br />• What’s more, each of its 467 tracks were only attracting around 1,200 monthly listeners apiece.

Considering these numbers, how on earth could ‘Soulful Music’ beat down branded efforts from Sony, Universal and Warner to become one of the biggest playlists in the world?

There are only two possible answers to that question.

Soulful Music could – cough, splutter, sneeze – have been a completely legitimate niche playlist which was simply so addictive, 1,800 people just kept playing their way through it over and over and over.

Or – and this rather strikes us as the more likely scenario – an individual in Bulgaria set up circa 1,200 Spotify accounts, which continually played these 467 tracks on a loop, on random (thus why some songs had slightly different play counts to others).

In order to generate enough revenue to hit Spotify’s US Top 15 playlist rankings, all of these accounts must have been paid-for, premium subscriptions.

And it’s here that the genius of the (potential) ‘scam’ starts to become clear.

Let’s say that our friend the Bulgarian had laid out the money to purchase 1,200 premium accounts.

That would take a lot of work; they’d have to create individual email addresses and identities for each one.

It would also be expensive. A nice easy calculation shows why: 1,200 X $9.99-per-month would mean an outlay of $12,000 per month (although this could be reduced by family plans and other discounts).

That’s the monthly outgoings.

Now let’s work out the potential monthly revenue generation.</p>

Spoiler: it's a lot bigger. (It's a LOT bigger.) And I bet family plans would be the way to go in setting up the paid accounts, cutting outgoings by 80%.
Spotify  scam 
february 2018 by charlesarthur
Spotify is ‘on its way’ to creating its first hardware according to job ad • Musically
<p>The role? “You will define and manage Distribution, Supply, Logistics, fulfillment and Customer Service for Hardware Products and work with partners to deliver the optimal Spotify experience to millions of users.”

Based in Stockholm, this isn’t a job about managing integrations with third-party devices: among the job’s duties is to “manage the supply chain, demand and forecast & inventory”.

Separate ads for a Senior Project Manager: Hardware Production and Project Manager: Hardware Production & Engineering are also indications that Spotify’s hardware plans are ramping up.

Many people will leap to ‘smart speaker’ as the assumption about what the first Spotify-branded hardware product will be. Which begs the question: if so, where will its voice assistant – its equivalent of Alexa, Google Assistant and Siri – come from?</p>

We <a href="">last heard about this in April 2017</a> and still there's no word of what this might be. Wearable? Smart speaker? Dumb speaker? Wait for production to start in the Far East, then I give it a couple of weeks to a leak.
Spotify  hardware 
february 2018 by charlesarthur
Apple Music on track to overtake Spotify in US subscribers • WSJ
Anne Steele:
<p>Apple’s subscriber-account base in the US has been growing about 5% monthly, versus Spotify’s 2% clip, according to the people familiar with the numbers. Assuming those growth rates continue, Apple will overtake Spotify in accounts this summer.

Apple’s popular devices have helped add subscribers to its music service, which is preloaded on all iPhones, Apple Watches and other hardware the company sells.

One question lingering in the industry is what metrics Spotify will have to disclose once it becomes a publicly traded company. The service has periodically released global subscriber totals and just last month touted a new high of 70 million.

Apple Music told The Wall Street Journal it now has 36 million, up from the 30 million it last reported in September.

But both companies’ numbers are increased by counting individual users who are part of family plans and people with discounted subscriptions bundled with other services. In some countries, mobile-phone plans can include an Apple Music subscription; Spotify offers students in the U.S. a subscription plan that includes video-service Hulu. Neither company publicly breaks out figures for the US or any other single market…

…By one standard, Apple Music has already passed Spotify. Including people who are still in free or deeply discounted trial periods leading up to paid subscription, Apple Music has a slight edge on Spotify in the US, according to one of the people familiar with the figures.

Apple Music has three to four times the number of such trial users as Spotify, according to this person, in part because it doesn’t offer a free tier. Also, all Apple Music subscribers are entered automatically into a free initial three-month period. Excluding those trial users, Spotify is ahead, but by a small amount—and that gap is closing. </p>

Two things: this shows the power of the default, especially in a country where the iPhone has about 40% share of the installed base; and the many free rivals in the US, which means Spotify’s free tier isn’t quite as attractive. Some of those rivals are going to fold soon though (Pandora? IHeartMusic?), which might give Spotify some new breathing space.
applemusic  spotify  streaming 
february 2018 by charlesarthur
Amazon Music makes giant strides against Apple and Spotify • Bloomberg
Shira Ovide:
<p>We know Inc. has become a virtual mega-mall for shopping, a creator of gadgets for our daily commutes and our homes and a mover-and-shaker in entertainment. Less well known is how quickly the online retailer has become a force in digital music.

A little over a year after Amazon started to offer people access to web-streaming songs for a monthly fee, the company is the world's third-largest digital music service by subscribers behind Spotify and Apple Music, according to Midia Research's Mark Mulligan, a music industry analyst. He also estimates that weekly listening on Amazon's music service is second-highest among the paid music services, behind Spotify and ahead of Apple Music…

…Members of Amazon's Prime shopping club for several years have been able to listen to a couple million songs for no additional cost. Amazon spiffed up the music hangout for Prime members, and the company added an "unlimited" option with a bigger catalog of songs and more features starting at $8 a month for Prime members or $10 for everyone else. For $4 a month, Prime members can still subscribe and listen only on Amazon's Echo voice-activated home speakers.

Amazon's product segmentation gave it relatively low-cost options for the vast majority of Americans who had never paid for Spotify, Apple Music or other subscription services that let people play virtually any song on a whim. And Amazon leveraged the people shopping on its websites, or buying CDs or digital music downloads from Amazon, to try to hook them on streaming music as well. </p>

Any listening is listening as far as the music business is concerned.
apple  spotify  amazon  music 
december 2017 by charlesarthur
The problem with Muzak • The Baffler
Liz Pelly:
<p>Spotify loves “chill” playlists: they’re the purest distillation of its ambition to turn all music into emotional wallpaper. They’re also tied to what its algorithm manipulates best: mood and affect. Note how the generically designed, nearly stock photo images attached to these playlists rely on the selfsame clickbait-y tactics of content farms, which are famous for attacking a reader’s basest human moods and instincts. Only here the goal is to fit music snugly into an emotional regulation capsule optimized for maximum clicks: “chill.out.brain,” “Ambient Chill,” “Chill Covers.” “Piano in the Background” is one of the most aptly titled; “in the background” could be added to the majority of Spotify playlists.

As an industry insider once explained to me, digital strategists have identified “lean back listening” as an ever more popular Spotify-induced phenomenon. It turns out that playlists have spawned a new type of music listener, one who thinks less about the artist or album they are seeking out, and instead connects with emotions, moods and activities, where they just pick a playlist and let it roll: “Chillin’ On a Dirt Road,” “License to Chill,” “Cinematic Chill Out.” They’re all there.

These algorithmically designed playlists, in other words, have seized on an audience of distracted, perhaps overworked, or anxious listeners whose stress-filled clicks now generate anesthetized, algorithmically designed playlists. One independent label owner I spoke with has watched his records’ physical and digital sales decline week by week. He’s trying to play ball with the platform by pitching playlists, to varying effect. “The more vanilla the release, the better it works for Spotify. If it’s challenging music? Nah,” he says, telling me about all of the experimental, noise, and comparatively aggressive music on his label that goes unheard on the platform. “It leaves artists behind. If Spotify is just feeding easy music to everybody, where does the art form go? Is anybody going to be able to push boundaries and break through to a wide audience anymore?”</p>

This approach is reminiscent of the "relaxing" videos that some people adore on YouTube - though those are like a sort of visual Muzak.
music  spotify  culture 
december 2017 by charlesarthur
2017 US music sales are up 17%; streaming is up 48% • Recode
Peter Kafka:
<p>More than 30 million people are now paying for a subscription streaming service in the U.S., which pushed streaming revenue up 48%, to $2.5 billion, in the first half of the year. Streaming now accounts for 62% of the U.S. music business.

And that’s pushing the overall music business back up again, after a fall that started in 1999, with the ascent of Napster, and didn’t stop until a couple years ago. Retail sales were up 17%, to $4bn, and wholesale shipments were up 14.6%, to $2.7bn.

Meanwhile, iTunes-style digital download sales continue to fall. They’re down 24 percent. Because why buy songs for a dollar when you can legally stream (almost) anything you want for a price that ranges between zero and $10 a month?

One surprise: Physical sales — things you buy that you can hold in your hand, like in the olden days — are nearly flat, down just 1%. That’s partly because of you hipsters and your facial hair, who pushed vinyl sales up 3%. But it’s also because some of you still like CDs, and maybe you’re always going to like CDs. Those sales were only down 3%.</p>

What I find puzzling is that anyone is paying for downloads, given that Spotify has a free tier. Except, I guess, the instances where albums are only released for download. But that can't be a substantial number.
spotify  streaming  us 
september 2017 by charlesarthur
Spotify: don't compare us to Napster • Hollywood Reporter
Eriq Gardner:
<p>Spotify, facing a lawsuit claiming "staggering" copyright infringement, is attempting to distinguish itself from illegal file sharing services of yore and putting an issue front and center that will likely command notice throughout the entertainment and tech sectors. Namely, in court papers filed Wednesday, Spotify argues that "streaming" implicates neither reproduction nor distribution rights under copyright law.

Bob Gaudio, a songwriter and founding member of the group Frankie Valli and the Four Seasons, is suing Spotify in the wake of the company's proposed $43 million settlement in a class action. In Gaudio's lawsuit, that settlement is called an "empty gesture that encourages infringement and is entirely insufficient to remedy years of illegal activity."

Spotify, led by CEO Daniel Ek, licenses sound recordings from record labels and also has blanket licenses from the likes of ASCAP and BMI so that it may publicly perform musical compositions.

What Gaudio's lawsuit alleges — as did the prior class action — is Spotify is violating the reproduction rights of publishers and songwriters. Those making a mechanical reproduction of a musical composition can obtain a compulsory license and bypass having to negotiate terms with publishers. However, those doing so have to follow certain protocol like sending out notices and making payments. The lawsuit claims that Spotify hasn't done an adequate job of doing this.</p>

This would be a hell of a result for Spotify if it succeeds in this argument. Somehow I doubt it will, though.
spotify  streaming  mechanical  court 
september 2017 by charlesarthur
Here's Spotify's biggest problem - in a Netflix-shaped nutshell - Music Business Worldwide
Tim Ingham:
<p>Netflix’s average monthly subscriber spend has been calculated by taking the firm’s total subs revenue at the end of Q4 of each year, then dividing it by the firm’s total paying subscriber count in the same period – and then splitting by three to give a mean monthly average. Spotify’s has been worked out slightly differently: dividing its total annual subscription revenue with its subscriber base at the end of December in each case.

On Spotify’s side, this gives us an inevitably low-end approximation of Average Revenue Per Subscriber (ARPS), but it’s still within the realms of accuracy.

So, science done… back to ‘Netflix up, Spotify down’. Here’s the line graph that gave us our headline above. Just look at the difference between 2012 and 2016.

<img src="" width="100%" />

Interestingly, in 2016, Netflix raised its prices – moving up its standard HD subscription charge in the US from $9-a-month to $10-a-month. Alongside this move, the company brought in an SD subscription tier at $8-a-month, while also launching an ultra-HD tier at $12-a-month. These new prices, and the opportunity to upsell customers to an ultra-HD/4K package, explains the near-dollar rise in ARPS in the chart above. (In Q4 2016, Netflix’s streaming operation generated $2.35bn, up 41% YoY.) Recent reports suggest more Netflix price hikes could be on the way later this year.

Remember: Netflix and Spotify are now growing at almost exactly the same rate of 10m net subscriber additions every six months. But only one of these companies is pushing the average spend of these new customers further and further down.

Guess what? It’s the one that’s losing money.</p>

Netflix's advantage is in the points at the end: it can upsell customers to higher-quality video. Nobody cares about higher-quality sound. (Except you, fine, but it's only you.) Spotify has tiered pricing for desktop-only and mobile, but beyond that it's stuffed. Netflix has many more ways to make money, and so profit, from the same piece of content.
netflix  spotify 
july 2017 by charlesarthur
How spammers, superstars, and tech giants gamed music • Vulture
Adam Raymond:
<p>A few weeks after the release of Kendrick Lamar’s “Humble,” the hard-charging lead single on his fourth album Damn., the song landed at No. 1 on Billboard’s streaming chart. It’s been on the chart ever since, never falling below No. 3 as users have played it more than 291 million times on Spotify alone.

And that’s just the streaming total for Lamar’s version. His hit song has also been a boon for Spotify’s parasitic underbelly — the coverbots and ripoff artists who vomit out inferior versions of popular songs every week, flooding the website with dreck that only succeeds when users are misled. No one would willingly listen to King Stitch’s “Sit Down, Be Humble,” a third-rate cover of Lamar’s original, but the track has been streamed more than 300,000 times thanks to Spotify’s broad search results and a clever title designed to confuse those who don’t know the song’s real name.

On a website with more than 100 million active daily users, there are plenty of ways to game the system, be it for attention, or, if the streams pile up enough, profit. And the frauds cashing in on the latest hot single are hardly alone. A bevy of unknown artists have found ways to juice their streaming totals, whether it’s covering songs from artists who don’t allow their songs on Spotify, or uploading an album of silent tracks, each precisely long enough to generate a fraction of a cent for the artist…

Even Spotify is reportedly gaming the system by paying producers to produce songs that are then placed on the service’s massively popular playlists under the names of unknown, nonexistent artists. This upfront payment saves the company from writing fat streaming checks that come with that plum playlist placement, but tricks listeners into thinking the artists actually exist and limits the opportunities for real music-makers to make money. Spotify did not respond to questions about the accusation, but this is not the first time Spotify, which pays minuscule streaming fees, has been <a href="">accused of bilking artists</a>.</p>
spotify  music  scam 
july 2017 by charlesarthur
Spotify tests new sponsored songs ad unit to place songs in user playlists • Tech Narratives
Jan Dawson:
<p>the news that Spotify is testing a “Sponsored Song” ad unit in which songs are literally placed into users’ playlists should be concerning. Almost every ad-based business model eventually engages in such violations, either temporarily or permanently, because the drive is always to push the boundaries of ad load and the places where ads can show – the most valuable real estate is also often the most invasive, and each ad platform has to draw its own line between what is and isn’t acceptable in the pursuit of ad dollars.

Spotify’s recently leaked full results for 2016 show that its ad-based business is loss-making even on a gross margin basis, while its subscription business is profitable on that same basis, so there’s always going to be a push to squeeze more ad revenue out of each user. I’ve recently finished a piece for Variety which will publish in the next couple of weeks in which I argue that Spotify should in fact ditch its free tier and go subscription-only, because of all the tradeoffs the ad-based business forces, especially in its relationships with labels.</p>

If Spotify did kill its free tier, its growth would pretty much stop dead, so I don't see it doing that until it has IPO'd (or listed) and unburdened itself of the $1bn debt which is bleeding its cash flow. Tech Narratives, by the way, is Dawson's mostly-paid-for tech analysis site. He's insightful.
spotify  advertising 
june 2017 by charlesarthur
Spotify has guaranteed to pay big music labels billions over the next two years • Recode
Peter Kafka:
<p>Spotify’s revenue grew more than 50% to $3.3bn last year. And in order to grow more, the music streaming company will pay music labels billions of dollars over the next two years.

In financial filings released this morning, Spotify says it has agreed to pay more than $2bn in minimum payments to record labels over the next two years.

Spotify doesn’t spell out who that money is going to. But people familiar with the company confirm it is talking about two deals it has recently signed with Universal Music Group, the world’s biggest music label, which has about a third of the market, and Merlin, which represents a large group of independent labels.

That means Spotify will ultimately be on the hook for even more guaranteed payments once it re-signs Sony and Warner Music Group, the two other major music labels.</p>

Total users grew to 140m, but no word on how many are paying (the last figure was 50m in March.)
june 2017 by charlesarthur
Spotify to launch hardware, cites Alexa and Snapchat • Zatz Not Funny!
Dave Zatz:
<p>A trusted source indicates that Spotify, the highly regarded music streaming service, will soon follow in Snapchat’s footsteps with a foray into hardware. While details on the upcoming “wearable” were not provided, several job listings seemingly provide clues.</p>

Job 1: sr product manager - hardware:
<p>join the Platform & Partner Experience team working to build frictionless and creative Spotify experiences via fully-connected hardware devices. You will be leading an initiative to deliver hardware directly from Spotify to existing and new customers; a category defining product akin to Pebble Watch, Amazon Echo, and Snap Spectacles. You will define the product requirements for internet-connected hardware, the software that powers it, and work with suppliers/manufacturers to deliver the optimal Spotify experience to millions of users.</p>

Job 2: product manager - voice:
<p>responsible for the strategy and execution of Spotify’s voice efforts beyond our core apps. Our tribe is responsible for all Spotify consumer experiences outside of Spotify’s core iOS and Android applications. We focus on areas like desktop, TVs, speakers, cars, wearables, headphones and partner application integrations to make Spotify available wherever our users are.</p>

I'm tempted to say that Spotify has decided to find more ways to lose money, but hardware could actually be a clever way to lock people in to the ecosystem. Worked for Apple.
music  hardware  spotify 
april 2017 by charlesarthur
62% using music-streaming services, but just 13% paying • GlobalWebIndex Blog
Katie Young:
<p>In a deal with Universal Music, Spotify has announced that new albums from certain artists on the record label will only be available to paying Spotify members for the first two weeks of their release.

This change to its ad-supported tier will increase the gap between its free and paid-for services, with the hope of converting more users to the paid-for tier. At present, there’s a huge disparity here, with a substantial 50-point gap between those who say they use music-streaming services (62%) and the numbers paying for this access (13%).

Age-based differences are interesting here, though. 16-24s are the most likely to be using these services each month and are also the most likely to be paying – with figures then declining in line with age.

<img src="" width="100%" /></p>
spotify  music  streaming 
april 2017 by charlesarthur
How Spotify grew up before going public • Bloomberg View
Leonid Bershidsky:
<p>It's unconscionable in 2017 that the only publicly traded music streaming company is still Pandora Media Inc., an Internet radio provider which went public in 2011 and is trading below its initial public offering price. Hopefully, Spotify Ltd. will rectify the situation this year, even if that means it has to use a back door to an exchange listing. It's an interesting back door for others in the tech industry, too.</p>

Now then: Bershidsky's article is worth reading. But also, I messed up in my analysis of direct listing (what Spotify is doing). I thought it meant Spotify could sell shares. Not at all.

A reader who asked to remain unnamed explains:
<p>On a direct listing, Spotify doesn't sell any shares, either existing ones or new ones, (selling new shares is the only way to raise new equity for the company) so Spotify the company doesn't get any cash from this.

Basically the company rocks up to the exchange, fills in some paperwork, promises to comply with the exchange rules, and then hey presto people can enter buy and sell order for Spotify stock. It is then up to the EXISTING holders of Spotify stock to decide if they feel like filling any of the buy enters being entered (presumably yes, at a certain price, or why bother). Money that changes hands on those sales goes to those existing holders though, not to Spotify bank accounts

So no new money from a fresh equity issue also means no new money to pay off the [$1bn] debt. Of course the debt is convertible, and if the share price looks good enough, presumably the debt will be converted to equity and Spotify gets out from "under" the debt that way. It does stop the interest rate from ratcheting up though - and there seems to be some interesting calculations around what the conversion price is into equity, potentially a badly worded conversion clause that didnt take into account the possibility of a direct listing. Fxxing over the debt holders like that is probably half the attraction [of direct listing].

Plus once listed, you've done the price discovery process, and a secondary capital raising could be done somehow.</p>

Would very much like to know who came up with that smart idea of going for direct listing. Lawyer inside the company? Investment banker?
spotify  listing 
april 2017 by charlesarthur
Spotify finally readies an IPO...that’s not an IPO • WSJ
Maureen Farrell and Telis Demos:
<p>Music-streaming service Spotify AB is readying an initial public offering that is expected by year-end. The rub is this: It may not really be an IPO.

Spotify is seriously considering a direct listing, in which the company would simply register its shares on a public exchange and let them trade freely, according to people familiar with the matter. The company wouldn’t raise any new money or use underwriters to place new blocks of stock.

That would mark a departure from the typical IPO, in which new investors buy shares from the company or its early investors, or both, the night before they start trading. The initial price is set by underwriters following extensive meetings with potential new investors.

In a direct listing, investors purchase shares in the open market after they are listed. The price is set organically based on supply and demand. Spotify, which has raised more than $1bn in equity, was last valued privately at $8.5bn in June 2015. The Swedish company is targeting a public valuation of more than $10bn, the people said. The 10-year-old company may list its shares on a U.S. exchange as early as September.</p>

You're wondering why. Here's why:
<p>the company could avoid the first-day trading pop that characterizes many IPOs shepherded by underwriters. They are good for some investors but also indicate a company left money on the table.</p>

Spotify needs all the money it can get, rather than letting underwriters grab it; and all the babble in the article about "increased volatility" is utterly irrelevant, because once the share is sold by Spotify it has the money. What the share price does after that is someone else's problem. (OK, partly Spotify's when it wants to sell more shares in the future. But mostly the new share owner's.)

Going public like this also gets it out from under the $1bn debt burden it took on last year.
spotify  ipo 
april 2017 by charlesarthur
Spotify’s new deal with Universal Music Group means some albums will go behind a paywall • Recode
Peter Kafka:
<p>Some of the most popular music in the world is going behind a paywall on the world’s most popular streaming service.

After months of negotiating, Spotify has signed a licensing deal with Universal Music Group. The big idea: Spotify has agreed to let Universal artists restrict new albums to Spotify’s 50 million paying subscribers for two weeks, while letting free users listen to singles.

In return, Spotify may get a break on the fees Universal charges for its music, depending on certain subscriber metrics. And that will give Spotify a big boost as it prepares to go public in 2018.</p>

Lower fees for music is a huge win for Spotify - and if people are encouraged to sign up to get access, that helps it even more. Advertising users are a lossmaker on streaming music services.
spotify  umg 
april 2017 by charlesarthur
SoundCloud raises $70m in debt funding: Companies House documents • Business Insider
<p>James Cook: Music streaming service SoundCloud has raised $70m (£56m) in debt funding, according to documents filed with Companies House in the UK.

The documents show that SoundCloud raised the loan from Kreos Capital's fifth debt fund, as well as the Davidson Technology Growth Debt Fund and Ares Capital. The loan was agreed on March 10, the documents show.

SoundCloud confirmed the debt funding round in a statement to Business Insider… SoundCloud last raised money in June 2016 when it raised around $70m from Twitter Ventures, Twitter's investment arm, as part of a $100m (£80m) round.</p>

Debt financing - well, SoundCloud calls it a credit line - is more dangerous to a company than venture funding, because it's directly repayable, with interest. Both SoundCloud and Spotify now have substantial debt funding (compared to their revenues). SoundCloud's revenues were just €21m in 2015, and it raised debt early in 2016 too.

Both companies are running out of time.
soundcloud  spotify  funding  debt 
march 2017 by charlesarthur
Spotify needs to face the music • Bloomberg Gadfly
Leila Abboud:
<p>Spotify raised $1bn in convertible debt a year ago from private equity funds TPG Growth and Dragoneer Investment Group LLC, among others. It came with strict terms linked to the IPO timing, setting a stopwatch on a listing and offering the funds a sweet deal.

In the first year the debt carried a 5% interest rate, so Spotify has a $50m interest bill coming. The coupon then increases 1 percentage point every six months until IPO, up to a 10% limit. So Spotify would owe another $65m if it waited another 12 months. This isn't chump change. To put it in context, Spotify's R&D budget was €143m ($153m) in 2015.

Plus the longer Spotify waits to IPO, the more shares it must accord to TPG and Dragoneer at listing. The creditors would've been able to convert their debt into equity at a 20% discount to the IPO price had Spotify listed in year one. That discount will now increase by 2.5 percentage points every six months.Of course, if Spotify's enterprise value outpaces what it's paying out in interest and extra equity, then a delay could be manageable. But it would have a cost.</p>

I made precisely the same point about Spotify when it raised the $1bn in March 2016:
<p>I think it's safe to say that with this debt deal, Spotify can never make an operating profit if the debt payment is included.

In other words, this is a financing deal aimed at getting Spotify over the IPO finish line as soon as possible so that it can get a giant cash injection, and its future losses become public shareholders' problem, not those of the venture capitalists or music labels that have funded it so far.</p>
spotify  debt 
february 2017 by charlesarthur
Pandora's eyes are bigger than its wallet • Bloomberg Gadfly
Shira Ovide:
<p>Pandora said late Thursday that its business is going gangbusters -- so wonderfully, in fact, that it needs to fire 7% of its main workforce in the U.S. 

The good news is the online radio service is doing better financially than it told investors to expect. Revenue is higher than predicted, at least in part because the company is willing to cram in more commercial breaks between songs. And there's a good reason for Pandora's eagerness for higher advertising sales at the risk of annoying its users with ads: It needs the money. 

Running Pandora Media Inc.'s business in the 12 months ended Sept. 30 burned through $301m in cash, counting what the company spent on computers and other resources to stream songs to its listeners. And the company at Sept. 30 held about $258m in cash and relatively liquid financial instruments. At its current rate of cash burn, then, the company will exhaust its reserves of ready cash in about 10 months. </p>

But but but! As Ovide points out, though it has been free cashflow-negative for five quarters in a row (and 8 of the past 11) it can get more cash by a rights issue, or issuing more stock, or a loan. But that's only going to be a holding position - she reckons it's in line for a sale. (Ironic, since Pandora is public, and Spotify is angling to go public this year, but isn't profitable either, and has a giant loan sucking it dry.)
spotify  pandora 
january 2017 by charlesarthur
Apple Music hits 20 million subscribers, execs want "more, faster — we're hungry!" • Hollywood Reporter
Shirley Halperin:
<p>Apple has released the latest numbers for the music subscription service Apple Music. In the 18 months since the service was launched, the tech giant reveals that it has just crossed the 20m paid subscribers mark. It last reported 17m subscribers in September, marking a 15% jump in three months.

In addition, the company announces that 60% of customers using Apple Music have not bought content from the iTunes Music Store in the last 12 months — a portion of which are dormant users but "the vast majority are new customers," Apple's senior vp of internet software and products Eddy Cue tells Billboard. Now available in more than 100 countries, over 50% of Apple Music subscribers live outside of the U.S. — in such markets as Canada, China, South Africa, Japan, Russia, Brazil and India — states the company.</p>

Spotify is on 40m paid users (and will probably report a number in the next couple of days; it is anxious not to let Apple appear to catch up). Numbers need to rise significantly to make up for the lost paid downloads, though.
applemusic  spotify 
december 2016 by charlesarthur
Mixmsg is a Spotify-powered mixtape creator for Apple iMessage • Musically
Stuart Dredge:
<p>The app is called Mixmsg – Make Mixtapes with Friends, and it was released as a free iOS download this week. “Mixmsg helps you create and share two-sided mixtapes as easily as texting,” <a href="">explains its App Store blurb</a>.

“Easily share life news, all the feels or favourite tunes & bands with a custom mixmsg tape or mixmsg Flyer. Rewind to a time when music said it all.”

Where does its music come from? We’ve given that away in the headline: the “provided by Spotify” text within the app shows the source. Two people can add songs and then play songs in full if they’re Spotify users.

There’s no obvious business model here, and we suspect this kind of thing will ultimately be an iMessage extension for services like Spotify. Even so, it’s an inventive spin on messaging and playlist creation.</p>

Smart by Spotify: use the platform of your rival (in music) against it.
imessage  spotify 
october 2016 by charlesarthur
Spotify has been sending computer viruses to listeners • Daily Telegraph
James Titcomb:
<p>Spotify has been found to be serving malware to listeners who use the free version of its service, with its adverts directing PC users to virus-riddled websites.

<a href="">Users of the music streaming software reported</a> that the program would continually open their default web browser to load websites infested with malware.

The issue affected users of Windows, Mac and Linux operating systems, leading to complaints on the Spotify Community website and Twitter. The malware websites, some of which attempt to install viruses automatically without the user clicking anything, appear to have nothing to do with the advert in question.

The problem appears to be associated with a single advert on Spotify, which the company said it had removed after discovering the problem.</p>

Collateral damage of the advertising-funded method. If advertising is roughly 2% of US GDP, what percentage is malvertising?
spotify  malware 
october 2016 by charlesarthur
Spotify conversions accelerate as it passes 39m subscribers • Musically
Stuart Dredge:
<p>Spotify’s last official figure for its subscribers total was 30m in March 2016.

Now we have a new figure – 39m Spotify subscribers – courtesy of the company’s new global head of creator services Troy Carter. He let the figure slip in <a href="">an interview with Billboard</a> yesterday.

It’s a significant statistic, because it shows that Spotify has accelerated its subscription growth. It took the company just over nine months to move from 20m to 30m subscribers, adding roughly 1.1m a month.

Now it has added another 9m subscribers in just five months since March, at a rate of 1.8m a month.</p>

"Let slip", hmm, sure. Compare to Apple's just-announced 17m: together they're carving up the space (they've together added 36m users since June 2015, which is more than Spotify had then), but there's now an expectation that Amazon and Pandora (in the US) will try to offer cheaper subscriptions to capture users.
spotify  apple  streaming 
september 2016 by charlesarthur
Spotify is out of contract with all three major labels - and wants to pay them less • Music Business Worldwide
Tim Ingham:
<p>The Swedish streaming company has been out of a long-term deal with Universal Music Group for more than a year, say our sources.

Its contract with Warner Music Group expired in early 2016, while its licensing agreement with Sony Music Entertainment ran out of juice a few months ago.

In practical terms, this isn’t a huge problem.

Spotify continues to be licensed by all three majors on a rolling month-by-month basis, and the possibility of UMG, Sony or Warner catalogues being pulled is widely regarded as out of the question.

The majors, have, however, gnashed their teeth a little over Spotify’s recent promotional deals – not least its new family plan, which matches Apple Music’s equivalent by offering up to six people premium access for just $14.99 per month.

Some parties within Universal, Sony and Warner are believed to be uneasy about Spotify’s decision to announce such promotions without any long-term licensing agreements in place. (The situation was described by one senior major source to MBW today as a “very grey area”.)

Spotify’s investors, meanwhile, must be concerned about Daniel Ek’s chances of pulling off an IPO without long-term major label deals: the majors own around 75% of global recordings market share.</p>

Spotify's weakness is that it wants to cut the amount it pays - presently 55% of revenue (v 58% for Apple Music) - but is hardly in a strong place to bargain. And meanwhile, <a href="">its debt-fuelled race for an IPO continues</a>. It can't service its debt without a big (IPO) cash infusion: it lost $200m on revenues of $2bn last year, and the debt adds an extra $55m to its costs in its first year.

If you were negotiating for a music label, how would you play this?
spotify  label 
august 2016 by charlesarthur
The end of freemium for Spotify? • Music Industry Blog
Mark Mulligan on new numbers suggesting Spotify has hit 37 million subscribers - the question being, paying what?
<p>As the IFPI’s 2015 numbers revealed, the average label revenue per music subscriber fell globally from $3.16 in 2014 to $2.80 in 2015, with price discounting a key factor. <a href="">According to Music Business Worldwide</a>, 4 million of Spotify’s newly acquired 7 million subscribers were on promotional offers and around 1.5 million of those are expected to churn out when their promotional period ends. That might sound high but it actually represents a 79% conversion ratio, which is a stellar rate by anyone’s standards. Meanwhile Spotify’s total user base is 100 million which means the free-to-paid ratio is 37%. So price promos are converting at more than double the rate of freemium. Does this mean the end of freemium?

…the burgeoning success of Spotify’s mid-priced-subscriptions-by-stealth strategy provides a bulging corpus of supporting evidence. In fact, the average spend of Spotify’s 7 million net new subscribers in Q2 2016 was $3.09 a month. The tantalizing question is whether that 1.5 million promo users that are expected to churn out would take a $3.99 product if it was available?</p>

Mulligan suggests that Spotify is essentially adding new subscribers at lower price points by offering deals such as family sharing. (Apple does exactly the same.)
spotify  apple  music 
july 2016 by charlesarthur
Surprise! It's the older people who don't pay for music • Business Insider
Nathan McAlone:
<p><img src="" width="100%" />

This makes intuitive sense given the nostalgia many have for the music of their youth, which makes new purchases less likely as time goes on. But it also brings up an important point about the future of music.

The music industry seems to be in the midst of an unstoppable move toward streaming services like Spotify and Apple Music, and unlike digital downloads, this model is built on paying for access instead of ownership. You pay a monthly fee and get to listen to anything on Spotify.

This means that the age graph above could actually change over time. When the 46% of 18 to 24-year-olds who have paid for music in the last month push past 65, does that mean they will cancel their Spotify accounts? Likely not, as this would mean not only losing the ability to find new music, which they might cease to care about, but also being able to listen, on-demand, to those old songs that have been woven into their emotional memory.

This could boost the revenues of the music industry, which some analysts <a href="">already think is headed for a big turnaround</a>.</p>

Though it doesn't show how much they paid for music. On average, people who buy downloads or CDs get an album a month - about the same as a music service subscription.
music  spotify 
july 2016 by charlesarthur
The music industry buried more than 150 startups—now they are left to dance with the giants • Medium
David Pakman, VC at Venrock:
<p>The bleak outlook for profitability among standalone digital music companies is a direct result of the high royalty rates incumbent upon startups who wish to license digital music for use in their apps. Whether you negotiate voluntary agreements or avail yourself of the existing compulsory licenses, you will not turn a profit. At least, no one ever has. The few that refused to pay these rates were often sued out of existence.

Given these facts, digital music startups are unlikely to survive and thus unlikely to attract meaningful investment. The failure rate in this market segment dramatically exceeds that of SaaS, eCommerce, and mobile, to name just a few. More importantly, the success rate of digital music companies (4%) is far less than these other segments (mobile at 26.5%, SaaS at 28% and eCommerce at 23%).

It is no surprise, then, that far fewer digital music companies get funded. Only about 175 have been venture funded since 1997 by my count, compared to 5,175 (mobile), 7,987 (SaaS) and 1,800 (eCommerce).

The end result of these perilous market conditions is that the only companies who can afford to be involved with digital music are the internet giants prepared to subsidize their digital music services with profits from their other businesses.</p>

I'm having trouble believing that Spotify is suddenly, and uniquely, profitable. That means it's burning through its $1bn of debt.

Also explains why Tidal might be willing to listen to Apple offering to buy it. What's the alternative? Keep losing money until you go bust?
tidal  apple  music  business  spotify 
july 2016 by charlesarthur
Apple slams Spotify for asking for "preferential treatment" • BuzzFeed News
John Paczkowski on the Apple-Spotify row, now in round two:
<p>Apple strongly disagrees.

“Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor,” Sewell explains. “Ironically, it is now Spotify that wants things to be different by asking for preferential treatment from Apple.”

And as for Spotify’s suggestion that Apple is treading on dangerous, anticompetitive ground, well, Sewell doesn’t seem too concerned.</p>

The takeaway for me was that there have been more than 160m downloads of the Spotify app from the App Store. That reads to me like "less than 170m", and I think it's comparable on the Play Store. (Spotify passed 100m downloads on Google Play in July 2015.) That, in turn, suggests that - given there are 100m users per month (Spotify's number) and 30m subscribers, that there's roughly a 2-in-3 abandonment rate.

(Assuming that downloads are to unique users, and that the average user has one device.)
spotify  apple  subscription 
july 2016 by charlesarthur
The strategic importance of Apple Music • Technalyzer
Eduardo Archanco:
<p><img src="" width="100%" />
And the one for Apple Music:
<img src="" width="100%" />

There are two things I would like to highlight from these charts:

Spotify daily subscriber growth accelerated dramatically in January 2015. Despite this, claims from the company that Apple Music accelerated user adoption don’t hold water since it launched several months later. If you take a look at daily user addition, Spotify decelerated since the launch of its rival music service.

Apple Music experienced huge adoption in the first six months. It surely helped the one month free trial, but once it expired, users stuck with the service. Even now, when daily growth has relatively slowed, Apple Music has similar daily growth than that of Spotify today: one million new paid users per month.</p>

Daily growth is a clever way to look at it.
spotify  apple 
june 2016 by charlesarthur
Spotify: Apple is holding up app approval to squash competition • Engadget
Billy Steele:
<p>How do you catch up with the biggest music streaming service? Well, not approving app updates is one tactic, and Spotify says Apple is doing just that. The streaming service sent a letter to Apple's legal counsel this week claiming that the company is rejecting an update to Spotify's iOS app and it's "causing grave harm" to users by doing so. The letter explains that Apple won't approve the new version because Spotify doesn't use the company's billing method for in-app purchases and subscription services. Apple announced the changes to app subscriptions in iTunes just before this month's WWDC.

Like other apps, Spotify had been getting customers to foot the bill for Apple's App Store billing fees by charging an extra $3 a month. It recently launched a promotion for the second time that gave new users three months of service for a dollar, if they signed up on the web. As you can imagine, that didn't make Apple too happy, and the company reportedly threatened to pull the app entirely unless Spotify stopped pushing the deal for iPhone owners. It complied with the request, but it also nixed the iTunes billing option in the iOS version which lead to the current dispute.</p>

Puzzled. Amazon similarly avoids letting you buy Kindle content via the App Store (you have to go to the web). Is the problem with Spotify mixing the abilities?
spotify  apple 
june 2016 by charlesarthur
Spotify monthly active user base reaches 100 million • Reuters
Mia Shanley:
<p>Swedish music streaming service Spotify said on Monday its user base had grown to 100 million, up from 75 million previously, as it pushed into new markets and despite competition from the likes of Apple Music.

Spotify has the music streaming industry's biggest paid subscriber base, with 30 million users paying to listen, but the vast majority still tune in for free with commercial breaks.

Competition is fierce with Apple Music launched just last year and already claiming 13 million paid users while Alphabet's Google competes with Google Music and Youtube.</p>

Apple claimed last week to have 15 million subscribers - time to update the database, Reuters. Quite how it counts them (is each member of a family membership a "subscriber", or only the main paying member?) isn't yet clear.

What is clear is that Spotify can't let a single Apple Music statistic go past without upping the ante. Notably, that 30m paid subscriber number hasn't shifted since it released it in March. Possibly it is being conservative with its numbers, and only releasing bigger subscriber numbers when it needs to.

A related problem: those 70m non-paying listeners have to be monetised through advertising, and that growing inventory (= ad spots to fill) inevitably means falling ad prices, which means worse losses.
spotify  apple 
june 2016 by charlesarthur
The playlist that’s helping Spotify win the streaming music battle • Vocativ
Cassie Murdoch:
<p>Every Monday, Spotify delivers a new Discover Weekly playlist to all its listeners. The weekly arrival of a fresh 30 songs has become a widely-anticipated event for many of Spotify’s 75 million active users and serves as a sign that Spotify has nailed a very tough assignment. Personalized engagement has long posed a challenge for all the big streaming services, but <a href="">new data released this week</a> signals that Spotify may have already won the battle against some very fierce competition.

Since the launch of Discover Weekly in July of last year, it has streamed nearly five billion tracks, and some 40 million subscribers have used the feature. For comparison, Apple Music—Spotify’s main competitor—only has 13 million subscribers total. Tidal has just three million.</p>

Congratulations Stephanie: you don't understand the difference between these offerings at all. You're comparing paid subscribers (Apple, Tidal) with the mix of paid and unpaid subscribers who use Spotify (30m paid subscribers, 90m unpaid). Discover Weekly is good, clearly, and keeps customers there. But "already won the battle"? This is going to go on and on.
spotify  streaming 
june 2016 by charlesarthur
Parsing Spotify’s financials • Beyond Devices
Jan Dawson does a deep dive:
<p>The other interesting aspect of Spotify’s results is the split in its revenue sources, among which paid subscriptions and advertising account for over 99%. The split between those two has remained relatively constant over the last three years, with subscribers generating roughly 90% of revenue, and advertising the other 10%. That’s notable, because Spotify has over two times as many free subscribers as paid subscribers, but those paid subscribers generate nine times as much revenue. To look at it another way, the paid subscribers generate roughly 80 euros a year in revenue each, while the free subscribers generate just $3-4.

This has been a matter of some controversy within the music industry, but in <a href="">that podcast episode I referred to earlier</a>, we discussed this, and Ryan Wright’s take was that the existence of free streaming is actually important from a perspective of creating a funnel for future paid subscribers.</p>

I'll have "paying subscribers", please. Spotify's problem filling its ad inventory, even as it does it better, is how poorly they pay relative to the costs they impose through licensing payments to labels.

Fun exercise which only Spotify can do: what if you removed the cost of the label payouts for free streamers? How does that affect the costs v revenues? That's where Apple Music is. (I think it's "a lot less lossmaking".)

The other point to look at is how much of the IFPI's paid streaming money comes from Spotify. It's surprising.
spotify  financials 
may 2016 by charlesarthur
Spotify revenues topped $2bn last year as losses hit $194m • Music Business Worldwide
Great scoop by Tim Ingham delving into Luxembourg filings:
<p>Spotify brought in a whopping $2.18bn (€1.95bn) in revenues in 2015, growing its income by 80% in the year.

Net losses stood at a painful  $194m (€173.1m), but these grew much slower – widening by just 6.7% compared to 2014.

In a financial filing in Luxembourg uncovered by MBW, Spotify told its investors that “in many ways, [2015] was our best year ever”.

<img src="" width="100%" />

Advertising revenues nearly doubled in the 12 months, up 98% to $219m (€195.8m).

Meanwhile, subscription revenues grew by a slightly slower pace, up 78% to $1.95bn (€1.74bn).

In terms of Spotify’s total $2bn+ income (negligible ‘other’ revenues aside), ads therefore claimed 10.1% – an improvement on the 9.2% share seen in 2014, but another reminder of how heavily the company relies on people paying for premium accounts.</p>

The costs of sales and marketing, and general and administrative, are growing very fast. R+D not so much. Is there a point where it can swing to profitability?
music  spotify  streaming  business 
may 2016 by charlesarthur
Radiohead's new album isn't on Spotify. So what? Spotify doesn't need it » The Guardian
Eamonn Forde brandishes data, damn him:
<p>Burn the Witch has been played just short of 3m times on Spotify since its release last week. Pretty impressive, until you note that the service has more than 100 million users. Given it’s Radiohead, the people who played the track will have done so multiple times. So we can estimate that the people playing Burn the Witch make up less than 1% of Spotify’s total user base. Helpfully, Spotify also makes public other metrics. Radiohead have 4.7 million monthly listeners on Spotify, and are the 196th most played act. That means that 95.3% of Spotify’s users have literally no interest in Radiohead. A Moon Shaped Pool not being there could potentially irk 4.7 million people, but actually Radiohead do not appear on the radars of the vast majority of Spotify’s users.

A look at how the band’s catalogue has performed on Spotify – considering that they will have chalked up multiple plays from users – reveals this fact in stark terms. Cumulative plays for Pablo Honey run to 119.1m, with 103m of those streams being for Creep, a statistic bound to cheer up Thom Yorke. For The Bends, it’s 102.2m, for OK Computer it’s 159.1m, for Kid A it’s 61.5m, for Amnesiac it’s 34.7m, for Hail to the Thief it’s 49.3m and for The King of Limbs it’s 45.5m. Spotify users’ interest is clearly in the deep back catalogue of the band (or, to put it another way, in their most accessible music).</p>

Yes, it <em>is</em> calling out for a graph. Here you go. (Would still like a statement from Radiohead on why the album isn't, but the singles are, on Spotify.)
spotify  radiohead 
may 2016 by charlesarthur
Spotify raises $1bn in debt financing » WSJ
Scoop by Douglas Macmilland, Matt Jarzemsky and Maureen Farrell:
<p>By raising debt instead of equity, Spotify adds to its war chest without the possibility of setting a lower price for its stock, which can sap momentum and hamper recruiting.

In June 2015, Spotify was valued at $8.5bn.

In return for the financing, Spotify promised its new investors strict guarantees tied to an IPO. If Spotify holds a public offering in the next year, TPG and Dragoneer will be able to convert the debt into equity at a 20% discount to the share price of the public offering, according to two people briefed on the deal. After a year, that discount increases by 2.5 percentage points every six months, the people said.

Spotify also agreed to pay annual interest on the debt that starts at 5% and increases by 1 percentage point every six months until the company goes public, or until it hits 10%, the people said. This interest—also called a “coupon” and in this case paid in the form of additional debt, rather than cash—is commonly used in private-equity deals but rarely seen in venture funding.

In addition, TPG and Dragoneer are permitted to cash out their shares as soon as 90 days after an IPO, instead of the 180-day period “lockup” employees and other shareholders are forced to wait before selling shares, the people said.</p>

Debt like this is dangerous. First, it can be recalled - which kills a company. Second, as here, it comes with many strings, principally financial. In the first year, Spotify will have to pay out $25m (first six months, 5% of $1bn) + $30m (6%) = $55m.

In the second year, $35m (7%) + $40m (8%) = $75m. In the third year, $95m, and after that, $100m per year. It had $600m cash before this debt, so that's $1.6bn. It can pay out for a while, but the real damage is to its profitability: it isn't making money now (as far as anyone knows) and this will put that further out of reach. I think it's safe to say that with this debt deal, Spotify can never make an operating profit if the debt payment is included.

In other words, this is a financing deal aimed at getting Spotify over the IPO finish line as soon as possible so that it can get a giant cash injection, and its future losses become public shareholders' problem, not those of the venture capitalists or music labels that have funded it so far.
spotify  ipod 
march 2016 by charlesarthur
How Spotify solved for the ‘paradox of choice’ » Medium
John McDermott:
<p>Discover Weekly creates playlists by analyzing a user’s listening behavior and comparing it to that of other like-minded users. Let’s say you’ve been listening to lots of Gary Clark, Jr. lately, for instance. Discover will find other Gary Clark, Jr. fans and identify the songs and artists they’ve recently added to their personal playlists (e.g. The Black Keys, “Them Shoes,” Heartless Bastards). Discover filters out the artists you’ve already heard, reducing the list to 30 songs (about two hours worth of music).

Perhaps the biggest key to Discover Weekly’s success has been this limited selection. “[30 songs] felt like a very digestible amount of music and that really made a difference,” Ogle says. “We also decided that it should feel special — kind of like a gift someone made for you.”

Discover is in stark contrast to Pandora’s exhaustive taxonomy process (known as the Music Genome Project): Each song is ascribed up to 450 distinct musical characteristics — such as “electric rock instrumentation,” “punk influences” and “minor key tonality” — and Pandora recommends songs that share characteristics. But Spotify’s relies on the hivemind of its users rather than a thorough dissection of each song’s elements.</p>

I thought that Apple would take this approach in Apple Music; it has so much data already from the Genius system.
march 2016 by charlesarthur
Spotify hits 30 million subscribers » The Verge
Micah Singleton:
<p>Spotify has 30 million paid subscribers, CEO Daniel Ek announced today <a href="">in a tweet</a>. This is the first subscriber update Spotify has given out since it announced it had 20m subscribers days before Apple Music hit the market last June, and shows the increased competition has had little to no effect on Spotify’s growth.

In the nine months that Apple Music has been available, the service has picked up 11 million subscribers. Spotify has added 10m paid subscribers in the same time.

The Swedish streaming service is now adding an average of 10m paid customers a year — it only had 10m subscribers total in 2014— a growth rate it will need to maintain as it goes up against Apple Music and its substantial marketing war chest.

What’s also notable is the flood of exclusive content put out by Apple Music and Tidal over the past few months seemingly hasn’t harmed Spotify’s user retention.</p>

It was going so well until that last sentence. Singleton has no idea what has happened to Spotify's user retention; it might be seeing colossal churn (people joining while others leave) or be rock steady. The raw numbers don't tell you. It's a reasonable <em>guess</em>, but that's all it is - a guess.

That might seem like nitpicking, but it matters: it's key to knowing whether Spotify really does have loyal users, or just fly-by-nights. And it's also a bad idea to state things as fact that you don't know directly.
spotify  apple 
march 2016 by charlesarthur
Announcing Spotify Infrastructure’s Googley future » News
Nicholas Harteau:
<p>in a business growing quickly in users, markets and features, keeping pace with scaling demands requires ever increasing amounts of focus and effort. Like good, lazy engineers, we occasionally asked ourselves: do we really need to do all this stuff?

For a long time the answer was “yes.” Operating our own data-centers may be a pain, but the core cloud services were not at a level of quality, performance and cost that would make cloud a significantly better option for Spotify in the long run. As they say: better the devil you know…

Recently that balance has shifted. The storage, compute and network services available from cloud providers are as high quality, high performance and low cost as what the traditional approach provides. This makes the move to the cloud a no-brainer for us. Google, in our experience, has an edge here, but it’s a competitive space and we expect the big players to be battling it out for the foreseeable future.</p>

Lots of people are interpreting this as the first step to Spotify's entirely Googley (ie Google-owned) future, and it's hard not to see this that way.
cloud  google  spotify 
february 2016 by charlesarthur
Session with Daniel Ek / Feb 16, 2016 » Quora
Lots of questions and answers from Spotify's founder/chief. I found this one interesting:
<p>Q: How will you compete as Amazon, Google (incl. YouTube), Apple, etc. strengthen and expand the scope of their respective lock-in?

A: I believe in focus. All of the companies you mention have music as a hobby, a very small part of their overall business. We do one thing and try to do it really well. This means we have a company 100% dedicated to finding the right content, personalizing it for you and serving it up with partners who are specialized in what they do. The big platform companies don’t generally like partnering. We do. This opens up lots of doors. To put it another way, we are really focused on delivering the best possible music experience you can find. I’m not saying we don’t think about the competition - of course we do, it would be crazy not to. But we think about them more in terms of how to make Spotfy so easy, so fun, and so relevant for our users that whether you wait on lines for every new Apple device, get your groceries from Amazon Prime, or use every Google mail and workplace app, you still want to listen to music on Spotify because it’s the best experience there is.</p>
spotify  danielek 
february 2016 by charlesarthur
Losses point to bleak future for music streaming services »
Robert Cookson:
<p><img src="" width="100%" />

The future appears bleak for companies whose sole business is music streaming. An increasing number of investors and people in the record industry expect that digital music distribution will be dominated by a few large, cash-rich technology groups — in particular, Apple, Google and Amazon.

“When you have the likes of Apple fighting against you, it becomes very difficult to survive,” says Mark Tluszcz, chief executive of Mangrove, the venture capital firm and one of the original investors in Rdio. It sold its shares several years ago after concluding that no matter how many subscribers the streaming service managed to attract, it would never be able to turn a profit.

“As a streaming platform, your relative value is nil, because you don’t own the content,” he says. “This is not a good business to be in.”

The fundamental challenge for streaming services is that they are largely at the mercy of music copyright holders — including Sony Music Entertainment, Vivendi’s Universal Music Group, and Warner Music Group. These three record companies alone control about three-quarters of the $15bn-a-year global recorded music market.

To stand a chance of attracting a large number of subscribers, a streaming service must offer a broad catalogue of songs from all three major record companies.</p>

Related: Coldplay keeping new album (released today, Friday!) <a href="">off any streaming service offering a free tier</a>.
spotify  streaming  music 
december 2015 by charlesarthur
I built a botnet that could destroy Spotify with fake listens » Motherboard
William Bedell:
<p>I decided to prototype a robot with an endless appetite for music to see if Spotify could detect what it was doing.

Here is what I coded into life:<br /><img src="" width="100%" /><br />
<em>Image: William Bedell</em><br />First, a remote server used browser automation to sign up for Spotify accounts with randomly generated names, ages, and email addresses. This gave me a limitless supply of accounts to stream songs, so as not to alert Spotify by having a handful of users with inhuman amounts of activity.

A central command server periodically sent out Spotify login credentials to cloud servers (or repurposed personal computers) running dozens of Spotify clients, all masked behind virtual private networks. Each “user” logged in, listened to a few hours of music, then logged out. Their playlists were random selections from various artists I like. Then, I deployed the botnet using a patchwork of free cloud instances and my own hardware.

It was mesmerizing to watch the plays rack up. Unknown albums from minor celebrities I adore suddenly had tens of thousands of hits, where before they had virtually none. With minimal effort, I was generating $32.26 per day in royalties. Inevitably, my thoughts wandered to greed: how profitable would this music royalty factory be if I turned it on music I owned the rights to?</p>
botnet  business  music  security  spotify 
october 2015 by charlesarthur
Inside Spotify and the future of music » Tech Insider
Alex Heath:
Spotify's progress in sorting its library of 35 million songs can be traced back to The Echo Nest, a music intelligence company that was created within the MIT Media Lab a decade ago. Spotify bought The Echo Nest last March in what was reported to be a $100m deal.

Jim Lucchese, CEO of The Echo Nest, tells Tech Insider that his team of about 70 people are focused on delivering “the right listening experience at the right time" within Spotify.

They do this by analyzing the makeup of every song, how people are talking about music online, and how people are listening to it. While the company continues to work with clients like Rdio, Microsoft, Sirius, and Vevo, as it did before it was sold, its most cutting-edge work is developed and honed for Spotify.

One of The Echo Nest's first projects for Spotify, reported last September on FiveThirtyEight, was developing dossiers of every user's listening habits, which are now called "taste profiles."

Ajay Kalia, who oversees the project, tells us they realized early on that there’s an important distinction between the music you listen to and music you actually like.

For example, just because I play a lot of instrumental, ambient music while I'm at work doesn’t mean that I have a particular affinity for those kinds of artists. And just because your significant other plays a lot of country music while you're both in the car doesn't mean you want a bunch of country playlists shoved at you.

This "listen to but not like" has often been the problem about music. This makes it sound as though Echo Nest is human-curated, which it really isn't.
data  music  spotify 
september 2015 by charlesarthur
Spotify's chief executive apologises after user backlash over new privacy policy » The Guardian
Alex Hern and Jennifer Rankin:
The chief executive of music service Spotify has apologised to users after anger over sweeping changes to its <a href="">privacy policy</a> that give the company much greater access to personal data on users’ phones.

As well as collecting personal information, such as email addresses and birthdays, Spotify will be able to sift though users’ contacts, collect their photos and in some cases, even check their location and determine how quickly they are moving. Depending on the device being used, Spotify said it may be able to collect sensor data, such as “data about the speed of your movements, such as whether you are running, walking, or in transit”.

Some information would also be shared with advertisers, although Spotify did not spell out exactly what data it would pass on.

"Hey, Apple has a big rival service coming out which might challenge us. They're really hot on privacy. How can we really screw this up?" In addition, the exchange between Daniel Ek of Spotify and Markus Persson (ex-Minecraft) is epic in its directness.

Short version: Spotify completely screwed up its messaging and is likely to pay a price.
spotify  privacy 
august 2015 by charlesarthur
Spotify's swallowing your disk space - and you can't stop it » Expert Reviews
Barry Collins:
The streaming service stores a local cache of music on users' PCs, normally containing their most recently played tracks or music they've requested to be stored offline (a feature only available to Premium subscribers).

An update to Spotify earlier this year removed the option to determine where this cache was stored and to limit its size, leaving users who run the software on laptops or tablets with limited capacity SSDs fuming. "I've unsubbed yesterday because of this," <a href="">wrote one user on the Spotify forums</a>. "I can't believe how incompetent your software engineers or whoever thought of this idea to take away KEY functionaliites like cache variability and installation paths."

"Like everyone, I have an SSD as my primary drive and [it] has a very limited space in it," writes another customer. "With all my music save [sic] offline, Spotify is eating up almost 30% of my SSD space without my knowledge!"

An update to Spotify last week returned the feature that allowed people to select an external drive as the location for the cache. But the option to limit the size of the cache remains missing in action.

Slightly wonkish, but one to properly annoy the wonks.
spotify  cache 
july 2015 by charlesarthur
Cops nab fugitives in Cabo San Lucas by tracking Spotify IP address » Ars Technica
David Kravets:
Husband Peter Barr and wife Brittany Nunn of Wellington, Colorado, were brought to Denver days ago and face felony charges in connection to the children's disappearance. Nunn had lost custody of her children to their fathers, but she did not appear when the exchange was supposed to happen in December. The duo had been on the lam ever since, and they are accused of unlawfully taking the woman's two biological children, 4 and 6, to Mexico, according to <a href="">The Coloradoan</a>.

The case was broken by Larimer County Sheriff's investigator Drew Weber. According to the paper:
Drawing on new investigative tactics, Weber executed a search warrant and pulled records from Nunn's Spotify account. He found it was being used from an IP address in Mexico. He later pulled search records from Netflix and Nunn's other accounts and eventually tracked a package that Nunn had ordered to be shipped to Cabo San Lucas.

A private investigator soon joined Weber and helped monitor the family for months while agents with FBI, customs officials and the US State Department worked with the consulate in Mexico on a plan to bring the children and alleged abductors home.

This is how it's going to be from now on: go on the lam, stay offline. Or get caught. And staying offline will be increasingly difficult.
spotify  criminal  cloud 
july 2015 by charlesarthur
Stream your favorite artist forever » Eternify
Eternify leverages music from Spotify's catalog in increments of 30 seconds, the minimum length that counts as a play—and as a royalty payment.

Pick your favorite artist, then watch in real time as you generate an average of $.005 for your artist with each play.

Appears to be registered in Germany. Can't see Spotify allowing this to continue for long.
spotify  eternal 
june 2015 by charlesarthur
Apple Music vs. Spotify: don’t repeat Bob Lefsetz's mistake » Medium
Lefsetz, you'll recall, was hugely dismissive of Apple Music. Michael Vakulenko thinks it is a different play altogether – a platform play in a different world of music:
Apple Music is more than a differently-packaged version of Spotify. Google AdWords is more than a less-expensive advertising agency, iOS is more than a nicer-looking version of Symbian, Uber is more than a digital version of a Taxicab stand, AirBnB is more than renting mattresses to strangers and Munchery is more than a bigger restaurant kitchen. These are platforms having very different economics from traditional products. As Marshall Van Alstyne said: "Platforms beat products every time."

Platforms disrupt industry after industry: telecom, computing, watches, automotive, consumer electronics, banking, education, food, transportation, hospitality, healthcare, and more. When you see a new idea in the market or a new competitor, ask yourself: “Is it a market-creating platform?” and “What will it mean for my business if the platform reaches critical mass?”
applemusic  spotify  music 
june 2015 by charlesarthur
Apple Music » Lefsetz Letter
Bob Lefsetz has a typically nuanced take on Apple's new offering:
It’s toast.

Its success was based upon eliminating free. But that positively non-techie entity known as the government put the kibosh on that. Now the labels and Apple are too scared to enact their plan of eliminating freemium. So while the techies leap ahead, creating solutions to problems we didn’t even know we had, those in the music business stay mired in the past, believing backroom dealings and brawn will get them what they want.

But it won’t in the new world.

What I find puzzling is that nobody at the record labels has heard of the <a href="">Laffer curve</a>.
apple  music  spotify  economics 
june 2015 by charlesarthur
Major labels begin to question Spotify 'free music' model » Rolling Stone
Steve Knopper:
In a speech last month, Lucian Grainge, Universal Music's chairman, decried the ad-supported portions of on-demand streaming services as "not something that is particularly sustainable in the long-term"; Warner Music's chief executive, Steve Cooper, has suggested the free and paid portions of streaming services should be "clearly differentiated." Bolstering this point of view: Apple, according to major-label sources, is planning to relaunch Beats Music as early as this summer as a $10-per-month paid service to complement its free, ad-supported iTunes Radio.

At least one of the three major labels is in the process of renegotiating its contract with Spotify this year, sources say, and most are pushing for this sort of change to the free service. "It's one of those rare things— artists and labels are unified about their skepticism of the model," says a second major-label source. "You can't have a service that's unlimited, ad-supported, free. Every other service — Sirius XM, Netflix — doesn't offer its product unlimited, for free, in any context."

Spotify has an incredibly low conversion rate to paid subscribers, even with its Christmas giveaway (be interesting to see how long it takes to get those "new" subscribers who took up its free offer to stick). Problem is the music industry is setting too high a price per play. Something's gotta give.
spotify  music 
march 2015 by charlesarthur
Fight between Apple and Spotify could change digital music; labels said to reject pricing below $9.99 » Billboard
Glenn Peoples:
Apple's upcoming subscription service, slated for a June launch according to an industry source and media reports, will forego the freemium model for a paid-only approach. It's an approach Beats Music co-founder Jimmy Iovine, an executive at Apple since the acquisition of Beats Electronics, has consistently favoured.

Negotiations for Apple's upcoming subscription service are evidence labels are standing firm on pricing. Industry sources say Apple has backed down from its effort to lower monthly pricing for its subscription service to $7.99 from $9.99. Apple would have to absorb the loss if it sets a price lower than the standard $9.99…

…An industry source dismisses rumours that Apple will be able to outmanoeuvre and outbid its competitors on exclusives for most key releases. "Apple is one of the biggest companies in the world. If they want exclusive content, they're going to have to get out the chequebook."

<a href="">Basic economic theory</a> suggests that lowering the price of subscriptions could radically improve the number of subscribers, while also growing the revenue pie. Presently, subscription prices are too far to the right of the demand curve.

(I've anglicised the spelling of "favor" and "checkbook" and "outmaneuver".)
apple  spotify  music  subscription 
march 2015 by charlesarthur
How to make streaming royalties fair(er) >> Medium
Sharky Laguna:
It sounds perfectly fair and reasonable: if an artist wants to make more money all they need to do is get more plays. But there’s a major disconnect in this economic model that has not been discussed widely: Spotify doesn’t make money from plays. They make money from subscriptions*.

So how is that a disconnect?

Let’s say I am a huge fan of death metal*. And nothing pumps me up more than listening to my favorite death metal band Butchers Of The Final Frontier. So I sign up for Spotify in order to listen to their track “Mung Party”. I listen to the track once, and then I decide Spotify isn’t for me. OK, So who got the benefit of the $10 I paid in subscription fees?

Suggested solution: pay royalties in proportion to the amount that artists are played by subscribers. Interesting idea - it's almost like paying the artists directly. As if you were buying their content. Uh..
spotify  music  streaming 
november 2014 by charlesarthur
Exclusive: Taylor Swift on being pop's instantly platinum wonder... and why she's paddling against the streams >> Yahoo Music
Chris Willman spoke to Swift, who described this element of her social media "strategy": <blockquote class="quoted">And the thing with me posting pictures on Twitter of my fans holding the albums, that was an idea I had five minutes before I did it for the first time. On Tumblr they've been joking for months about how I'm always just lurking around the Internet, stalking their blogs. Predominantly, for the most part, most of these ideas were not thought of in some conference-room marketing meeting.

People always talk to you about marriages and relationships, and they say relationships take work, and you have to keep surprising each other. And that I think the most profound relationship I've ever had has been with my fans. That relationship takes work, and you have to continue to think of new ways to delight and surprise them. You can't just assume that because they liked one of your albums, they're going to like the new one, so you can make it exactly the same as you made the last one. You can't just assume that because they were gracious enough to make you a part of their life last year, that they're gonna want to do the same thing this year. I think that core relationship needs to be nurtured.

This is why she sold a million albums - not because she pulled it from Spotify. She's using social media to get personal with her millions of fans.
taylorswift  spotify  album  socialmedia 
november 2014 by charlesarthur
Why Taylor Swift got off Spotify >> Business Insider
Nicholas Carlson: <blockquote class="quoted">This source blamed one person: Scott Borchetta.  

Borchetta is the president and CEO of Taylor Swift's record label, the Big Machine Label Group. 

Our source notes Borchetta is trying to sell Big Machine. Reports say he wants $200 million.

Our source says Borchetta believes the only metric that will matter to potential buyers is the number of albums the label is able to sell. Our source says Borchetta doesn't think the number of plays Swift's songs have on Spotify will move the needle.

The source says Borchetta believes that pulling Swift's music off Spotify will create "scarcity" online, and drive CD sales and paid downloads.

…Swift is very popular on Spotify. 25% of Spotify listeners have streamed her songs. Her songs were on 20m playlists.

Makes sense. Some music label people think streaming music is a passing fad. By contrast, as the story says, many of Swift's fans have never bought a CD. (Some haven't seen one.)
streaming  taylorswift  spotify 
november 2014 by charlesarthur

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