Spotify reckons it could top 200 million overall users by the end of 2018, including as many as 96 million paying users. Nevertheless, losses for the year could be as high as €330 million, of which up to €40 million comes from the cost of next week’s direct listing.
These are just some of the predictions made in a forward-looking statement issued by the soon-to-be-publically-listed Spotify yesterday. The market-leading streaming music company will finally list on the New York Stock Exchange next week, of course. Which officially makes this ‘Everyone Has To Have An Opinion About Spotify Week’.
Having done a very quick sweep of all the Spotify-business-model chatter on the social networks and op-ed pages, apparently the entire music community is doomed, damned, condemned, screwed and just generally fucked. Apart from Drake, Ed Sheeran and Daniel Ek, who are all heading to a coke-fuelled cash party. I’m paraphrasing of course. Slightly.
Once publically listed, Spotify will be obliged to reveal information about its finances every quarter. And unlike streaming services that are operated by bigger publicly listed companies, where information about loss-making musical adventures can be buried under abstract cost-centres, as a standalone streaming music company Spotify’s quarterly reports will provide more tangible insight about the state of both its business and the wider streaming sector.
With the current streaming music business model still to be proven – the hope remains that it might just work at scale – you can expect lots more chatter in the music community every time one of those quarterly reports lands. So that’ll be fun, won’t it? I’d say that gathering together four times a year to pull apart figures most people don’t quite understand sounds much more fun than a coke-fuelled cash party.
In yesterday’s pre-listing statement, Spotify confirmed that both monthly active users and premium subscribers continued to rise in the first quarter of 2018, the latter growing more rapidly in percentage terms year-on-year. If the company achieves the upper end of its estimates for year-end user figures, the total userbase will have grown 32% year-on-year in 2018 and the total number of premium subscribers 36%.
Though, of course, despite those impressive growth rates, the combined costs of royalty payments to the music industry, continued global expansion and being a buzzy tech firm means Spotify will still make sizable losses. The question for Wall Street investors next week is whether the continued growth means that at some point in the not too distant future things will flip, the model will work, and Spotify will become a lucrative business.
Whether or not that optimism – even if you possess it – can be extended to the “doomed, damned, condemned, screwed and just generally fucked” music community depends on how monies will be shared out. Yes, whatever happens a sizable portion of income will continue to fund the Drake/Sheeran/Ek coke-fuelled cash party, but will a decent number of artists, songwriters, labels and publishers still be able to fund their own Panda Pop parties with their respective shares of what is left on the table?
Maybe. And yes, that other party’s Coke-fuelled. As in cola. I’d never suggest anything else.
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