As Spotify moves toward more exclusive content, it will have to pay more per stream, or sign large capital intensive up-front deals, with no promise of future subscription growth. Spotify pays artists just $0.0032 per stream compared to Apple Music at $0.0056 and Amazon Music Unlimited at $0.012. However, exclusive content deals risk eliminating one of Spotify’s advantages: the low amount the firm pays per stream. Spotify needs a critical mass or exclusive content to lure customers from competing platforms and pay premium prices. In order to differentiate itself and take back some of its lost market share, Spotify is following in the footsteps of Netflix by offering exclusive content, an increasingly costly strategy that we’ve covered in the past. All of these services are heavily dependent on the Big Three labels for their content.Ī Content Creation Strategy, A La Netflix, Is No Guarantee to Grow Market Share For example, Spotify offers over 50 million songs in its catalog while Apple Music, Amazon Music, and YouTube Music each offer 60 million songs. Spotify is unable to differentiate itself from competitors who offer the exact same content. The YoY increase in royalty payments is up from the 20% YoY increase in 2018.Īside from margin pressure, there is another problem with not owning its content. Anytime the labels think Spotify is earning too much money with their content, they can simply raise their royalty prices, which compresses Spotify’s margins.Ĭase in point: in 2019, Spotify’s revenue increased 26% YoY while royalty payments increased by 30%. My previous report noted how difficult it is for Spotify to grow its margins long term due to its dependency on just a few music labels known as the Big Three for much of its content. Not Owning Content Means No Defensible Moat market proves the competitive moat of Spotify’s business is not as strong as many believe. While Spotify may have more users than Apple Music globally, Apple’s quick success in the U.S. Apple Music launched in 2015, and by 2018 overtook Spotify as the largest on-demand music streaming subscription platform in the U.S. When I look just at the U.S., Apple Music provides a perfect case study in how quickly competition can upend the music streaming market. SPOT Market Share Vs Competitors New Constructs, LLC and Midia Research
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |