Man am I excited for the craziness that is about to ensue...
To briefly fill you in, Spotify has decided that it will release it's IPO (Initial Public Offering) today and for anybody who gives even the slightest care about the business world, that's pretty important stuff. Additionally, anyone who calls themselves a Music Business major, such as myself, should recognize this as the beginning of the next chapter of the music industry. That is, the long awaited fate that the remaining Major Record Labels (Universal, Sony, Warner) have all feared would come...but that's a whole 'nother blog post...Let's go back to Spotify.
I'm not even sure which question is more relevant right now...
Is it:
Spotify has gotten so big that it's able to offer pieces of itself to the general public?
Or it it:
Spotify has gotten so big that it has people willing to offer pieces of themselves for it?
Let's start with the latter.
Statista reports that as of January 2018 there are over 70 Million paying Spotify subscribers - most of which are currently paying $9.99 per month. That means we're looking at a company that's literally withdrawing nearly 700 Million dollars a month from bank accounts across the globe.
But let's not get carried away with that statistic.
You more than likely pay a great deal more than that each month for the car note, mortgage, life insurance, groceries, toiletries, necessities, and that list goes on and on and on.
So even if Spotify is pulling in nearly 8.4 Billion a year from the wealth of the world - that's no where near what Apple or AT&T are pulling in. Makes you wonder if now is the right time to invest in Spotify yourself...right?
Moving on to the former.
What you're looking at here is an awesome infographic created by information is beautiful. Although it's great to see Napster is still a thing, and that YouTube has 99.9% of it's users free (that means a nice .01% is using YouTube Red) for the purposes of this blog post we'll focus on Spotify. In the realm of music streaming services, Spotify has emerged on top. They're only paying artists $0.0044 per play of song and they have 45% of 159 million current subscribers paying $9.99 a month. That means that for an artist to earn $1,472 it would require 366k listens to a song of theirs.
But because of that they're losing $426 million dollars a year.
The former question should really have been "Spotify's debt has gotten so big that it('s able to) should offer pieces of itself to the general public?
And the answer is yes...it has.
It's time for the music industry to change. The IPO from Spotify is nothing more than Daniel Ek (CEO of Spotify pictured right) bringing forth the next chapter of the music industry. A chapter where the Record Labels are not the most paid source of music.
Let's start with more questions.
Why exactly is Spotify in so much debt? Who's not getting paid?
Why are people still only paying $9.99?
Adele, Bieber, Cardi B, and Drake are all still making millions right?
They are.
Assuming the IPO and future of SPOT fair well, this will be a "bail-out" of sorts for Spotify. As shares that were offered privately at $132.50 hit the floor and Spotify sells portions of itself off to the investors of the world, Spotify will have a revival in capital and satiate a great chunk of their previous debts.
-Joe "Kenny-J" Capati