3/31/2023 0 Comments Spotify album flow view gone![]() ![]() There are substantial network effects that come with being the dominant audio platform for consumers, including: How does this compare to competitors? As of Q1 2021, Statista reported that Spotify had a 32% market share of paid subscriptions in the global audio market, well ahead of competitors like Apple Music, Amazon Music (NASDAQ: AMZN), and YouTube Music (NASDAQ: GOOG). There has not been a single quarter since Q1 2018 of quarter-over-quarter declines in total MAUs or paid subscribers. Since Q1 2018, Spotify has, on average, gained 13.9m MAUs and 6.5m paid subscribers each quarter, almost like clockwork. ![]() In Q3 2021, Spotify reported 381m total monthly active users (MAUs) with 172m (45%) of these being paid subscribers. Spotify also offers podcasts and recently overtook Apple to become the largest podcast platform in the US, with over 3.2m podcasts available at the end of Q3 2021. Spotify purchases the rights to distribute music from the three record labels that control the majority of the market (Universal Music Group (AMS:UMG), Warner Music Group (NASDAQ: WMG), and Sony Music (TYO:6758)) and then resells that music to its customers, either through a paid subscription service or a free ad-supported version. Here’s why.ĭaniel Ek, Spotify CEO 1) Spotify is the dominant market leader in audio streaming, which confers powerful network effectsĪt its core, Spotify offers two audio services: (1) music (established market leader) and (2) podcasts (recent market leader). After spending the last few weeks digging into Spotify, it’s hard not to be bullish on the future of audio and Spotify’s role in that ecosystem. ![]() However, two things changed for me in late 2021 which prompted me to take a deeper look at Spotify: (1) I switched from Apple Music (NASDAQ: AAPL ) to Spotify and have had a fantastic customer experience and (2) I listened to an outstanding pitch from TDM Growth Partners at the 2021 Sohn Hearts & Minds Investment Leaders Conference, which articulated an excellent bull case for Spotify over the next 3-5 years. I’ve been casually researching Spotify for the past 24 months but struggled to build enough conviction to pull the trigger and make an investment. This week I plan to initiate a starter position (1.5% portfolio weight) in the global audio streaming behemoth, Spotify (NYSE: NYSE: SPOT). ![]()
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