I’d like to lay out a future for you, in regards to Spotify.
They sell a product that people want and search for. They possess agreements with all major record labels and have become intertwined with American culture, no less than Apple or Netflix. The only difference is, Spotify is valued at just $65b or 4x sales.
They are the dominant streaming service in the world.
The business model is as follows:
Lure people into a free plan beset by ads and cajole them to upgrade for an affordable premium. At the present they have 626 million users, of which 240 million are premium. They added 7 million new premiums for the quarter and have increased average revenue per user (ARPU) by 8% the past quarter. Going forward, they intend to offer a higher fidelity version of the software to make you annoying audiophiles SHUT THE FUCK UP. This is an easy vertical, which will likely be an additional $5 per month.
Quarterly revenues stand at around $4b. If they convert just 10% of users to higher tier plan, that would bring in another ~$365m per quarter, just for starters, or 7% jump in annual sales. This doesn’t include all of the other potential verticals, such as live concerts, podcasts, ticket sales, etc.
This is not investment advice; but I’ll never sell $SPOT.
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