The clock is ticking for Spotify

(Media Release) It’s amazing to think that just 10 years ago, flat-rate digital music streaming services were a mere gleam in the eye of industry executives.

It was as recently as September 2007 that Rick Rubin, then co-head of Columbia Records, put forward the idea as a way of combating online music piracy and file-sharing.

“You’d pay, say, $19.95 a month, and the music will come from anywhere you’d like,” he told the New York Times. ( free-pr-online.com )

“In this new world, there will be a virtual library that will be accessible from your car, from your cell phone, from your computer, from your television.”

As it turned out, he was essentially describing Spotify, which launched just over a year later.

He even got the price right. In those heady days, when the pound was a lot stronger, $19.95 was equivalent to £10, which, give or take a penny, is the monthly cost of Spotify Premium in the UK today.

But Spotify is yet to make a profit, while plans to float the firm on the stock market have reportedly been delayed, raising a big question mark over its business model.

Industry accolade

Of course, Spotify isn’t the only streaming platform out there. Others have joined it over the past decade, including Apple Music, Amazon Prime Music and Deezer, as well as high-resolution music services Tidal and Qobuz.

But Spotify is seen as the leader, with more than 100 million users, 40 million of them paid-up subscribers to its Premium tier.

It’s amazing to think that just 10 years ago, flat-rate digital music streaming services were a mere gleam in the eye of industry executives.

It was as recently as September 2007 that Rick Rubin, then co-head of Columbia Records, put forward the idea as a way of combating online music piracy and file-sharing.

“You’d pay, say, $19.95 a month, and the music will come from anywhere you’d like,” he told the New York Times.

“In this new world, there will be a virtual library that will be accessible from your car, from your cell phone, from your computer, from your television.”

As it turned out, he was essentially describing Spotify, which launched just over a year later.

He even got the price right. In those heady days, when the pound was a lot stronger, $19.95 was equivalent to £10, which, give or take a penny, is the monthly cost of Spotify Premium in the UK today.

But Spotify is yet to make a profit, while plans to float the firm on the stock market have reportedly been delayed, raising a big question mark over its business model.

Industry accolade

Of course, Spotify isn’t the only streaming platform out there. Others have joined it over the past decade, including Apple Music, Amazon Prime Music and Deezer, as well as high-resolution music services Tidal and Qobuz.

But Spotify is seen as the leader, with more than 100 million users, 40 million of them paid-up subscribers to its Premium tier.

However, under the terms of the agreement, the interest rate goes up by one percentage point and the discount by 2.5 percentage points every six months until the IPO happens.

So as time goes on, Spotify must pay ever larger sums to its creditors just to settle the interest on its loan, while the amount of money it can raise from its IPO is trimmed by an ever greater amount.

Unless Mr Ek can get the better of this brutal arithmetic, the future looks tough for Spotify.

But at the same time, as Billboard says, “the entire music business now has an interest in its success”.

“If it’s not already too big to fail, it’s headed in that direction quickly,” concludes the magazine.

Article Source

Both comments and pings are currently closed.

Comments are closed.

Powered by WordPress | Designed by: Premium Themes. | Thanks to Juicers, Free WP Themes and