Spotify exposes itself to attract investors, in anticipation of its imminent IPO. The opportunity to take stock of music on demand.
Spotify filed on Wednesday an IPO application on the New York Stock Exchange (NYSE) on Wall Street. Given its still fragile economic model, the music on demand service does not want to raise new capital (IPO), but proceed to a direct listing (direct public offering), less risky.
Be that as it may, the 200-page document provided to the US Stock Exchange Constable provides some interesting insights into the service and its competitors.
Number 1 on demand
For starters, Spotify is the undisputed leader in on-demand music services. Based on industry reports, he estimates that his global market share, in revenue, was 42% in 2016, far ahead of the competition. But Spotify is wary of Amazon, Apple and Google, whose music services are preinstalled on the connected speakers. Spotify hopes to maintain its position with its versatile platform, but it warns future investors that it does not rule out a slowdown in growth.
Twice as many subscribers as number 2
Spotify claims 159 million active users each month, including 71 million subscribers as of December 31, 2017: "almost double our closest competitor, Apple Music." A figure growing by 46% in one year. But the Wall Street Journal estimated last month that Apple Music, strong growth, could exceed Spotify this summer in the United States.
Number of Spotify Premium subscribers (in millions)
Spotify is not profitable
These subscribers make up only 45% of Spotify users, but they account for 90% of its revenue. Users of the free offer, financed by advertising, pay almost nothing.And if its revenues have increased by 40% in 2017, to exceed 4 billion euros, losses have doubled to 1.2 billion euros. Its main expenses are copyrights paid to record companies. As of December 31, 2017, the company had donated 8 billion euros since its inception.
Spotify relies on its playlists to retain its users. They make discoveries with selections, but also and especially with automatically generated lists according to their tastes. The "Discoveries of the Week", "Exit Radar", "Daily Mix" or retrospective lists alone represent 31% of the listening time. Users thus listen to more music: the average was 25 hours per month. per active user in the last quarter of 2017, up 13% from 2016, and 26% from 2015.
Monthly listening time per active user
Streaming, savior of the record industry?
It remains to be seen if Spotify benefits the music industry. On this point, the company points out that after more than a decade of decline, the global recorded music market regained growth in 2015 as music on demand grew. Revenues from record sales and downloads declined by 8% and 21% respectively in 2016, while revenue from streaming increased by 60%. Spotify indicates that it is to streaming that we must return to growth.