Spotify

I joined Spotify back when it was still in beta. At first it was incredible. I was finding all sorts of interesting things and putting them into playlists. I even entertained the idea of paying the sub...

And then gradually I noticed a few tunes were dimmed out. Various songs had been pulled by the label and were no longer available. When it got to the point where about 50% of the things I'd enjoyed had disappeared I realised that the big problem was that you just never know what you will be able to listen to in the future. So I gradually lost interest.

All of this was back in the dawn of time relatively speaking, and I don't know to what extent things are better now. The free sub started to become less and less featured so at some point I stopped using it.

I think Spotify are doing a good job of building themselves a moat with long term and extensive users. I wouldn't consider switching to an alternative platform as it would be far too much hassle to recreate my playlists, plus their algorithims are really good at selecting playlists and new music tailored to your musical tastes.

The downsides & risks seem to be 1) It is very cheap, 10 years ago I was probably spending around £200 per month on physical music, on Spotify it's less than £10 per month for far wider selection & ease of use. 2) They don't own the content, over they years major artists including The Beatles, Adele, Radiohead & Taylor Swift from memory have all pulled their music off the spotify platform at one time or another, if the major labels all decided to pull their content, then Spotify wouldn't really have a business anymore.

I think Spotify is really sticky, if its growing numbers at a faster rate than its competitors it may remain a market leader in this space. I use it as do most people I know, it would be a hassle to cancel my premium subscription and switch I think. Just my thoughts and no idea about the Proposition as an investment!

On a positive note Spotify paying subscriptions are soaring and Spotify is popular with users.

Thanks all.

Most interesting comments.

I agree with the wall concept playing what we want, etc. although for sure I have noticed the tablet experience explode in virtually every household I visit (including my own).

Will be interesting to see how these streamers pan out - Netflix seems to have won the video battle for now (and it is great) although Amazon Prime is much better for movies. I now subscribe to both. I also get a decent music suite on the latter which I can play on my phone or via Echo (and of course the speedy, cheap, often free delivery on goods).

As a note I also subscribe to Office 365.

The subscription model certainly seems the way forward but I still have a gut feel Spotify cannot compete in a market space with such big players who can sell or add on music on a much smaller or zero (or negative even) margin.

My partner uses Spotify and would never dream of paying for it!

Isn't the hardware for this streaming made by Apple, Samsung, HTC, Huawei, Oppo and all the rest of them?

Where do Spotify share revenue there ?

Incidentally, going back a few decades, all the youngsters aspired to & started getting fancy hi-fi systems. Nowadays, they seem quite happy to listen to music of a phone, via earphones, or fancy oversized headphones. As far as I can see.

I would rather listen to music on the hi fi, however these phones are damn useful for listening to finance podcasts whilst out walking.

In 10 years time you will stream all your music, the CD format will be dead & buried, LP’s will occupy a niche ‘rolls-royce’ market. In your living room 1 wall will be a media screen - it will play whatever movie or song your heart desires at a simple voice command. When not playing anything it will revert to art. Spotify & the Streamers (now that’s a name for a group) will be at the forefront of this alongside the media wall developers. Now a company that both makes the hardware & develops the stream would be really interesting...........

From my less than thorough analysis:

1 I don't see how a new player can compete with Apple, Amazon & potentially Android. Also where is Spotify's competitive advantage, since the record labels & artists own the IP ?
2 The downside risk, is what happens if one of those 3 just buys Spotify ?
3 I still buy music on a 36 year old format (CDs), so have no sector expertise as a consumer. Best to stay away.

Maybe other members can more accurately assess the competitive positioning & watch trends unwinding ?

I would think Tesla is a more obvious short. They are in the low margin capital intensive car business, are losing money and are just about to get several premium electric competitors. From car makers who know how to meet production schedules & have economies of scale on other car components.

Also, slightly contradicting my last comment, the US market is considered to be more efficient,  with so many participants that is is more difficult to outperform the market by stock picking.

Therefore should we go long or short on one of their indices & pick stocks somewhere quieter ?

Edit (other posts made whilst I was composing this):    Surely "cool" is unlikely to be a sustainable competitive advantage in this case ?    It's just a piece of software, so not even comparable with Apple, where (for example) mature adults still like to have holes in their phone protector, so the logo is visible.   Or headphones, where the logo is visible to all ?     

There are a lot of streaming services out there, all as far as I know lose money. Yes lots of competition from itunes, Amazon, Google, Tidal and Deezer. Having said that Spotify is one of the largest. It is a Swedish company. Believe Sony have a large stake. I won't be buying any, a short is a better option.

I thought itunes was cool?

What Spotify has going for it is: it's cool. The others are 'functional'. It would be like buying your records from Tesco rather than spending hours down your local record shop leafing though the LP's (you have to be a certain age to understand the analogy ;-) ).