Wednesday, March 30, 2016

Spotify opens war chest for acquisitions – Dagens Industri

Spotify loaded war chest open both new markets and acquisitions – perhaps of Tidal, or even SoundCloud. But in the longer term, cost-burdened Spotify modest margins to meet, track a leading streaming analysts.

Spotify loading checkout with $ 1 billion and sends a clear signal that the market is waiting within two years.

Read more: Spotify takes jättelån – filling with 8 billion

Giant loan suggests partly because Spotify sjävlförtroende is the upcoming stock market debut, and partly on the streaming market devours money in terms of operating costs, according to Mark Mulligan of Midia Research in the UK, who have followed the streaming industry from an analyst perspective of ten years.

“It is clear that Spotify needs a war chest,” he says. “Spotify is approaching its exit. They should be noted. They seem convinced that those with a strong note rate can repay this money pretty quickly as soon as they get the time to Wall Street investors’ money “.

Meanwhile, time is short for Spotify, which month by month look Apple Music key in terms of number of users. Six months after the launch Spotify challenger had reached 10 million paying users. Spotify has eight years on the market reached 30 million subscribers.

Comments: “Spotify is about to grow out of Sweden”

Spotify’s growth has also been depends on many new users subscribe to promotional prices, according to Mark Mulligan. For example, Daniel Ek companies offering new users a subscription to a monthly rate of $ 1 for three months, a 90 percent discount on the regular price.



The longer Spotify wait, the greater the risk that growth slows

“It Spotify need for a successful IPO is a growth story with a clear motivation. The longer they wait, the greater the risk that growth is slowing, “said Mark Mulligan.

He believes that Spotify is mainly to attract new customers in three ways: through partnerships with telecom operators, discount campaigns or by investing in emerging markets . Apple Music available on a number of major markets – including India, China, South Africa and Egypt – where Spotify has not yet established itself.

Read more: Spotify and billions – here are all the rounds so far

“But all three ways lead still to the same customer base, namely those who are interested in a subscription that eventually cost about 10 dollars a month. In most markets outside the Nordic countries is about 10 per cent of the population, “said Mark Mulligan.

Bolagsköp is another way to stoke growth as well as the listing price. Both Tidal and Swedish founded SoundCloud – which on Tuesday launched a direct competitor to Spotify – would be natural candidates, according to Mark Mulligan. But then the question is whether the money is sufficient.

“Tidal could be a good fit. They do basically what Apple Music does in that they spend money on exclusive release with world artists. But it is unclear whether the valuation would be too high, “said Mark Mulligan.

” SoundCloud might fit better. They have it difficult, is not likely to raise capital in the near future and are in desperate need of a next step. “

Read more: SoundCloud lets Spotify competitor

the new loan can also give Spotify the opportunity to continue to invest in product development. Streaming giant acquired the data analysis service Echo Nest in 2014, and in January announced two acquisitions, the voice mail service The Cord Project and the social networking service Soundwave.



Spotify has huge cost problem

Spotify has stated that 70 per cent the company’s revenue goes directly to rights holders, ie record labels and their artists. In the long term, the company has a relatively modest gross margin to be expected, trace Mark Mulligan.

“They have huge cost problems. When Spotify constitution itself as a sustainable company, they will have a gross margin of more than 5 percent. Right now Spotify losses for each user, especially those who use the service for free, while they spend big money on expansion and marketing. “

LikeTweet

No comments:

Post a Comment