Thursday, March 31, 2016

Spotify: billion deal could music streaming service coming expensive – SPIEGEL ONLINE

Little time? End of the text there’s a summary.

The strengths and weaknesses of Spotify are well summarized in Daniel Ek Retweet: At its over 90,000 followers of the head of the world’s largest music streaming provider sent on Tuesday praise for “Behind the Lyrics “. The new Spotify feature shows users when listening to music about their favorite artists to, in this particular case to Kanye West and his new hit album “The Life of Pablo”. For permanent, celebrated by fans innovations of the Swedish streaming service is known. However, for being unpopular because of his meager royalties payments with successful artists such as Taylor Swift, Adele or even West. The rapper has released only one song in Spotify by “Pablo”, the fee-based competitors Tidal hand the whole album.

  Tweet Daniel Ek
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Daniel Ek

Tweet by Daniel Ek

criticized by musicians, loved by fans – that’s far Spotifys story. Around 30 million songs you can listen for free, who pays EUR 9.99 per month there, she gets free of advertising. More than 30 million people pay for Spotify, the total number of users is expected to exceed 100 million already.

founder Daniel Ek has revolutionized the music industry and created a company that applies with EUR 7.5 billion valuation as a valuable start-up in Europe.

The deal could Spotify tear in a ruinous vortex

Now Spotify prepares its IPO – with an unusual deal: a billion dollars (880 million euros), the music service borrows loud “Wall Street Journal” financial investors and the banking giant Goldman Sachs Spotify. promises donors besides interest payments also shares in the company. How must pay much Spotify and in what order shares change hands, depends on when the Swedes go public. Each half of the year in which the start-up out delay the initial public offering, it is in any case more expensive

This makes the deal very risky for Spotify. From profitability of service is far away, in 2014 drove the service a loss of 162 million euros. The new debt could the company break into a ruinous vortex of shrinking cash reserves, oppressive interest burden and always crummier market prospects.

Because of the global equity markets is the appetite for growth, but loss-tech companies in recent months strongly subsided. Hello Fresh, the cooking pit provider of the Berlin start-up company Rocket Internet, had to cancel his announced in November IPO again. The US payment provider Square or the dating app operators Match Group achieved for its shares to be priced lower than their investors had paid in advance.

Mark Mulligan, music expert at the London Technologieanalysten Midia Research, Spotify therefore looks as Wretched: “you have no real alternative to an IPO.” A takeover by Facebook or Google it considers unlikely.

The Wall Street was prepared to accept losses as long as a good growth story attracted. “Still holding the hype around the leader who claims against the Great, to just how long.?” Asks Mulligan

Because profitable will not long be Spotify. “Paid streaming subscriptions are a niche market, with their free listing they lose money, “he says. By these standards is Spotifys 7.5 billion valuation already far too high

Apple uses its advantages over Spotify hot audible

Will:. Spotify has to the stock exchange, as long as the music is still playing. Because just Apple moves to Sweden to my body. Half a year after the start had its streaming service already eleven million paying customers by mid 2017 at the latest Apple Music Spotify will overtake in this category, Mulligan expected.

The global corporation from Cupertino makes its advantages over Spotify mercilessly: The streaming app is pre-installed on all iOS devices. Who closes his Spotify subscription through the App Store, is charged 12,99 Euro. 30 percent “Apple tax” has every app providers pay – in this case, but to a direct competitor. Not even against poaching scares the iPhone maker back.

To permanently survive, says Mulligan, Spotify must grow beyond the pure streaming service, such as through the sale of concert tickets. Or by a European alliance of music startups: Spotify could take over with the fresh money SoundCloud.

cheap that would not: The Berlin service was last assessed at EUR 700 million and burns even money. Unlike Spotify SoundCloud’s global creative scene but relatively popular.

Bands, DJs or podcasters can their tracks even upload there, the contents are experimental and reach other target groups than to mainstream focused Spotify. SoundCloud in turn could save his own, announced on Tuesday subscription service

Culturally it could fit: Although based in Germany, SoundCloud is founded by two Swedes and out – Alexander Ljung and Eric Wahlforss.. The takeover talks could lead Daniel Ek even in his native language

In summary:. is still Spotify leader in music streaming, before Apple, Google and other tech giants. A financial deal now forcing Sweden to an early IPO. An expert is skeptical that Spotify can be long-term profitability. This would require the company find new business or expand the user base.


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