![]() ![]() ![]() Investors are paying almost six times revenue for Spotify stock for much the same reason they pay a huge premium for Roku (NASDAQ: ROKU). It paid $250 million to sportswriter Bill Simmons for his podcasting company, The Ringer. The company has spent $1 billion on them over the last year, including $100 million for just one. While Spotify pays labels to stream music, it can own podcasts. Staying ahead means getting more of the streaming transaction. Figures from Business of Apps indicate that less than half of Spotify’s listeners are paying, although the numbers keep rising. They also show Spotify with a market share equal to that of Apple and Amazon combined. Owning the Contentįuture growth depends on Spotify converting free, ad-supported listeners into paid subscribers. Artists complaining “are predominantly people who want to release music the way it used to be released,” he said, as albums or CDs. He says streaming is a different animal, requiring a “continuous dialogue” with fans. This makes label support, which can cost an artist their future, the only way to break through the noise.Įk hears the artist complaints but says those who are making a living off streaming don’t talk about it. Streaming brings in very little money, except for major acts - and even they complain. But the scaled tools put minor artists even further from profit than before. They said they were paying Spotify twice, once as a percentage of revenue to stream, a second time for promotion. Labels had earlier complained loudly about the approach. Proof it works lies in a new deal with Universal Music Group, co-owned by Vivendi (OTCMKTS: VIVHY) of France and Tencent (OTCMKTS: TCEHY) of China, for tools like Spotify’s Marquee, which promotes new music as it’s launched.ġ0 Gaming Stocks That Will Power Through the New Normal The Swedish startup is beating the giant cloud companies thanks to its focus on what CEO Daniel Ek calls the “two-sided marketplace.” The idea is to generate revenue not only from paid subscribers and advertisers, but from tools that let artists and labels reach those listeners. Monthly average users at the end of June stood at 299 million. The Two-Sided Marketplaceĭespite competition from Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL), Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN), Spotify has gained a fat 35% of the streaming music business. ![]() But in this case, patience may be rewarded. ![]()
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