Spotify's Fewer U.S. Premium Members and Higher Churn Rate Attributable to Competition From Apple Music and Others

[Lennyvalentin]

But at what cost? The only reason I use Spotify is because the offer the $4.99 deal that bundles Spotify and Hulu. Without that it would be Apple Music

Ok, but why? Because it's called Apple Music, what? Where's the advantage, to you? I've literally never heard anyone say that the Apple Music app is better than Spotify.

Spotify has great playlists, great suggestions - I can't even begin to mention how many great tracks I've had suggested to me in the Discover Weekly playlist that I never in a million years would have found on my own. Tons of friggin awesome ambient and EDM from (to me!) totally obscure bands and artists and DJs.

Apple Music streams to Apple Watch. That's basically it as far as clear advantages go from what I can tell. But if you don't have a watch with LTE and attached subscription plan then that's pointless. Apple Music has a somewhat wider range of music on offer, but it's not exactly a dealbreaker. There's absolutely tons to listen to on Spotify as well, you'll basically never run out even if all you do is listen to music 24/7.

So ask yourself, what do you gain from giving your money to Apple, a greedy, hungry monolithic company which always - despite its professions to the opposite - always strives to do as little as possible, instead of your money benefitting its much much smaller competitor?

Competition is good. It's what drives innovation.

 

[SurferPup]

I really like Apple Music. I am happy to pay the $18 per month family plan for just music without: advertisements, news, inane chatter and subtle ideology brainwashing that free to air radio has. I can listen to whatever I want anytime and anywhere from INXS' Australian rock to German's new wave band Nena to American house's Sofi Tukker to New Zealand's Lorde's dream pop. If you have Apple hardware like me then Apple Music integrates seamlessly into existing iTunes music libraries and adding new music to playlists on HomePod is simple. Although mostly not a fan of Beats 1, I do listen to it occasionally and discovered 'Best Friend' which lead to 'Drinkee (Addal Remix)' and other Sofi Tukker music and last weekend I found 'Better' and 'Times We Had' by SG Lewis.

Apple Music has opened a whole world of music that I didn't know existed! Sting's 'She Walks This Earth' and '50,000 ('17)', Eurythmics tracks that I missed in the eighties and now have. I discovered a love for country music and artists like Luke Bryan.

Sometimes I'm not sure what to listen to so I ask Siri, "Play me some music.", "Play me some George Michael.", '"Play me some '80's,", "Play A-List: Country". The more I listen to music and tell Siri to, 'Like' / 'Dislike' the better she becomes with predicting what I want to hear.

All I recommend is to try the three month trial, spend a decent amount of time listening to Apple Music. Ask Siri to play your favourite artists, favourite genres, love / hate tracks, star rate your iTunes library music. I was 50/50 during the start of 99 cent three month trial but kept an open mind and after becoming more familiar near the end of my trial and expanding my search parameters realised there is so much more than my CD and digital download library and no need to pay several dollars to buy a new song then discover there is a better version.

 

[Carnegie]

I dunno. Spotify might put themselves out of business by their own terrible business tactics.

Think about it. They got the first-mover advantage and they amassed tons of users. Seems great, right?

But as Spotify adds more users... they actually lose more money. So every new customer costs them money.

Oh I hear what you're saying. Apple is the first credible threat to Spotify.

But Spotify has been losing money long before Apple got onto the scene.

Of late, Spotify’s increased loses haven’t been caused by it adding users so much as by its share value increasing. Its operating loss has actually decreased. At this point added users represent reduced losses. It has strong gross margins for its premium service and even has positive gross margins for its ad-supported service.

But as Spotify’s share value has increased, it’s had to account for that as finance costs. Simplifying a bit, outstanding convertible notes (and warrants) become more valuable as the difference between current share value and their conversion (and exercise) prices becomes greater. Their conversion or exercise represents dilution to existing shareholders, but without offsetting paid-in capital (in full, corresponding amounts), and thus has to be accounted for (or, in effect, the potential for it has to be accounted for) as finance costs.

In effect, and to a significant extent, what Spotify did was raise capital through having outstanding debt converted to equity rather than through doing an IPO. (Spotify went public, but it didn’t do a public offering of stock when it did so.) It significantly lightened its debt load, but incurred increased finance costs because conversions were done at greater bargains (for its creditors) because its share value went up. It is the accounting for such transactions (and the potential for more of them) which caused Spotify to have a large increase in its reported loss for 2017 and a small increase in its reported pre-tax loss for the first quarter of 2018.

 

[pkwrks]

I don't like the Music app since they started with Apple Music. The problem is you can't synchronize your own songs anymore. Which i can't understand. I use spotify because my own music is seperated to the music i don't own. Furthermore the playlists are much better in spotify and i like how you explore new music with "Discover weekly"

i mean it depends on how you use it, but without a nice seperation between my own songs and songs i dont own, i cant use apple music.

 

[pth231]

I am on a trial (3 month for 99 cents each) and I am not going to continue after the trial. Spotify always seems to add music to soundtracks based on what they think I want to hear. They have guessed wrong. I don't have any interest in having rap music with profanity added to my Ant Wan and The Wasp Soundtrack. I understand this on the free tier, but if I am paying, I DON'T want any songs other than what is on the album.

I don't think you understand how free versions of things work...

 

[truthertech]

If you want to support the musicians who are producing the music, there's really no choice between Apple Music and Spotify among the major streaming services. And Google with YouTube is the worst in exploiting the musicians' work.

 

[OldSchoolMacGuy]

And yet they'd shrugged off Apple Music as no big deal.

 

[2298754]

The one that Spotify has over Apple Music is a superior OS X/Windows app. Apple Music is great, but it feels like an afterthought in iTunes.

 

[OldSchoolMacGuy]

If you want to support the musicians who are producing the music, there's really no choice between Apple Music and Spotify. And Google with YouTube is the worst as exploiting the musicians.

Additionally, Spotify has been caught multiple times streaming music without license, sued, and had to pay hundreds of millions.

Currently they're bring sued for $1.6 billion for streaming music without a license. This is likely why they went public, as they never would have had the money to cover such a fine if they hadn't. It may put them out of business and at very least will really cripple them.

https://www.reuters.com/article/us-...h-1-6-billion-copyright-lawsuit-idUSKBN1ER1RX

 

[truthertech]

Ok, but why? Because it's called Apple Music, what? Where's the advantage, to you? I've literally never heard anyone say that the Apple Music app is better than Spotify.

Spotify has great playlists, great suggestions - I can't even begin to mention how many great tracks I've had suggested to me in the Discover Weekly playlist that I never in a million years would have found on my own. Tons of friggin awesome ambient and EDM from (to me!) totally obscure bands and artists and DJs.

Apple Music streams to Apple Watch. That's basically it as far as clear advantages go from what I can tell. But if you don't have a watch with LTE and attached subscription plan then that's pointless. Apple Music has a somewhat wider range of music on offer, but it's not exactly a dealbreaker. There's absolutely tons to listen to on Spotify as well, you'll basically never run out even if all you do is listen to music 24/7.

So ask yourself, what do you gain from giving your money to Apple, a greedy, hungry monolithic company which always - despite its professions to the opposite - always strives to do as little as possible, instead of your money benefitting its much much smaller competitor?

Competition is good. It's what drives innovation.

Yes, competition is good, but beyond that your post falls flat on its face. That "greedy" company pays the musicians almost twice as much money as Spotify. Oops on your part. And, Spotify is far from some modest income group of entrepreneurs, it's backed by a group of wealthy venture capitalists hoping to get even more billions on an IPO. Oops again! Wait, maybe it wasn't mistakes on your part?? Are you perhaps working at Spotify PR?

 

[ipponrg]

If you want to support the musicians who are producing the music, there's really no choice between Apple Music and Spotify among the major streaming services. And Google with YouTube is the worst in exploiting the musicians' work.

How about go see them at a show or buy their apparel, which is where they usually make the bulk of their money from?

 

[whyamihere]

Customers in the United States have a lot of choice when it comes to streaming music services. Along with Apple Music and Spotify, Pandora Radio, SoundCloud, Google Play Music, Amazon Music and others offer subscription options.

What, no love for the dozen or so Tidal subscribers??

 

[nburwell]

I'm paid up with Spotify through April 2019. They consistently provide new music recommendations which are almost always on point. IMO, Apple Music recommendations are a mess. Granted, I have discovered several new artists via AM, but no where near the artists I have discovered through Spotify.

I'm an Apple fanboy, but when it comes to streaming music, Spotify is my go to service.

 

[iSayuSay]

It will be a sad day when Apple puts Spotify out of business by their heavy handed tactics.

Spotify is way too big to be out of business. While they struggle to be profitable after one decade, there will be many tech companies that would love to acquire spotify to expand and give more value to their own service.

Microsoft, Netflix, Sony, or even Amazon (to replace its current streaming service) will be interested to save Spotify from bankruptcy.

While I use Apple Music on regular basis, I’d like to see Spotify around and gives Apple some competition in music services.
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What, no love for the dozen or so Tidal subscribers??

LOL, Tidal who? Joke man

But really, I think Tidal is the 2010 Blackberry of music streaming, while a few may love it, it’s barely exist.

 

[Lennyvalentin]

Yes, competition is good, but beyond that your post falls flat on its face. That "greedy" company pays the musicians almost twice as much money as Spotify. Oops on your part.

Yes, Apple, the company that charges €25 for a macbook charger extension cord, and which 'generously' gives each of its customers an entire five gigabytes of free cloud storage. The company which shirked billions in taxes by hiding profits in low-tax havens, and I could go on all day but what would be the point. Seen as a whole it is indeed exceedingly greedy. Why, when Apple Music started up it wanted to offer customers two months of free music on the music creators' dime.

It took friggin' Taylor Swift to put a stop to that nonsense! As if Apple couldn't afford to foot the bill itself? lol But yeah, "oops on my part"! lol

And, Spotify is far from some modest income group of entrepreneurs, it's backed by a group of wealthy venture capitalists hoping to get even more billions on an IPO. Oops again!

What is the market cap of Spotify and Apple again? Do I even have to dredge up the numbers to prove my point to you? Please.

Are you perhaps working at Spotify PR?

Try to discuss like an adult, or find yourself on my ignore list.

 

[TimmeyCook]

Spotify's app is much better than Apple Music.
It also has much better music suggestions and localised content.

Another “Spotify is better because I said so”.

 

[acorntoy]

Ok, but why? Because it's called Apple Music, what? Where's the advantage, to you? I've literally never heard anyone say that the Apple Music app is better than Spotify.

Spotify has great playlists, great suggestions - I can't even begin to mention how many great tracks I've had suggested to me in the Discover Weekly playlist that I never in a million years would have found on my own. Tons of friggin awesome ambient and EDM from (to me!) totally obscure bands and artists and DJs.

Apple Music streams to Apple Watch. That's basically it as far as clear advantages go from what I can tell. But if you don't have a watch with LTE and attached subscription plan then that's pointless. Apple Music has a somewhat wider range of music on offer, but it's not exactly a dealbreaker. There's absolutely tons to listen to on Spotify as well, you'll basically never run out even if all you do is listen to music 24/7.

So ask yourself, what do you gain from giving your money to Apple, a greedy, hungry monolithic company which always - despite its professions to the opposite - always strives to do as little as possible, instead of your money benefitting its much much smaller competitor?

Competition is good. It's what drives innovation.

No because it’s easily integrated into the music app I wanted that ever since Apple Music didn’t exist and I had a HTC one with google music built in. I can simply press the home button while driving and ask Siri to play a song instead of fiddling with a phone while driving. Just because it doesn’t have an advantage for you doesn’t mean others won’t like it.

+ I obviously do value competition, seeing as Spotify had a better deal and I now use it.

 

[truthertech]

Yes, Apple, the company that charges €25 for a macbook charger extension cord, and which 'generously' gives each of its customers an entire five gigabytes of free cloud storage. The company which shirked billions in taxes by hiding profits in low-tax havens, and I could go on all day but what would be the point. Seen as a whole it is indeed exceedingly greedy. Why, when Apple Music started up it wanted to offer customers two months of free music on the music creators' dime.

It took friggin' Taylor Swift to put a stop to that nonsense! As if Apple couldn't afford to foot the bill itself? lol But yeah, "oops on my part"! lol


What is the market cap of Spotify and Apple again? Do I even have to dredge up the numbers to prove my point to you? Please.


Try to discuss like an adult, or find yourself on my ignore list.

Ignore away Lenny. You ignored all the facts and never once addressed the actual point that Spotify is paying musicians much less than Apple. Facts are inconvenient at times, but that's the truth.
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How about go see them at a show or buy their apparel, which is where they usually make the bulk of their money from?

Sorry, most artists play for free or nearly so at places so they get their name out there and you will buy their music, CD's at the show or on-line. With CD's dying out, they count on you buying a digital version or getting paid when you stream it. No, listen to Spotify or Youtube if you wish, but just have your eyes open that they are paying well below what Apple is paying.

 

[ipponrg]

Sorry, most artists play for free or nearly so at places so they get their name out there and you will buy their music, CD's at the show or on-line. With CD's dying out, they count on you buying a digital version or getting paid when you stream it. No, listen to Spotify or Youtube if you wish, but just have your eyes open that they are paying well below what Apple is paying.

Vinyl's making a comeback again.

I was a musician, and many small/bar venues I performed at required you to have a minimum head count (i.e. you buy the tickets ahead of time). This was even through Craigslist promoters. Anything over is profit. The only time I didn't make any money was if I went to an open mic or a venue that had promotion problems. Didn't say it was easy, but that's where you can start making money which would be way more than what I'd pull in TODAY even with Apple stream counts. Imagine pulling in a crowd of 100 people at $5 per head on top of the minimum at some random venue. That's $500 for the night for just practicing.

If Apple pays $0.00735 per stream, I would need ~68,000 Apple Music streams in 2 hours to get that amount.

I still stand by if you truly want to support a musician (especially an indie one), you buy their LPs, apparel, or go to their shows.

 

[jbachandouris]

I don't think you understand how free versions of things work...

I don't think you read what I wrote correctly: I am on a PAID version and even with a paid version they add songs to albums I don't want.

 

[Carnegie]

Yes, competition is good, but beyond that your post falls flat on its face. That "greedy" company pays the musicians almost twice as much money as Spotify. Oops on your part. And, Spotify is far from some modest income group of entrepreneurs, it's backed by a group of wealthy venture capitalists hoping to get even more billions on an IPO. Oops again! Wait, maybe it wasn't mistakes on your part?? Are you perhaps working at Spotify PR?

The main reason Spotify’s payment-per-stream to rights-holders is lower is that it has an ad-supported tier. That reported figure doesn’t break out the different service types, it combines them. The comparison between Apple’s paid service and Spotify’s paid service would be much closer. The difference would depend, in part, on how much music the average Spotify subscriber streams versus how much the average Apple Music subscriber does. They don’t pay a set rate per stream. They pay a portion of the revenue generated from subscription fees into a pool which is divided among rights-holders based on how often different music is streamed. (That’s the basic model, though there is nuance in their contractual agreements.)

That said, Spotify didn’t do an IPO. It did a direct listing. So it went public without doing a stock offering and without raising additional capital by selling new stock. At that point it didn’t need more cash, it was in pretty good shape when it came to the cash it had and the free cash flow it was generating.

 

[RudySnow]

The main reason Spotify’s payment-per-stream to rights-holders is lower is that it has an ad-supported tier. That reported figure doesn’t break out the different service types, it combines them. The comparison between Apple’s paid service and Spotify’s paid service would be much closer. The difference would depend, in part, on how much music the average Spotify subscriber streams versus how much the average Apple Music subscriber does. They don’t pay a set rate per stream. They pay a portion of the revenue generated from subscription fees into a pool which is divided among rights-holders based on how often different music is streamed. (That’s the basic model, though there is nuance in their contractual agreements.)

That said, Spotify didn’t do an IPO. It did a direct listing. So it went public without doing a stock offering and without raising additional capital by selling new stock. At that point it didn’t need more cash, it was in pretty good shape when it came to the cash it had and the free cash flow it was generating.

Spotify has never made a profit. NEVER. And even if it did, since they are basically owned by the labels they serve, if they were to make any profit, the music industry would just take it in a demand for more royalties. Spotify has an uninvestable, unsustainable business model for this reason alone—which is why they didn’t offer an IPO, because the lack of smart investors would crash the stock. Don’t forget they are also propped up by angel investors who want to see their money returned one day. Which it won’t. So unless more foolish investors step up for Spotify, they will disappear sooner rather than later.

 

[bluecoast]

I don’t know about the US, but I wouldn’t be surprised if the EU are looking into Apple are being able to advertise and push people to AM - whereas you have to seek out and download Spotify. That seems an unfair advantage to me.

Strikes me that there’s some parallels to 15 years ago to Microsoft being able to bundle IE and push people to that & we all know what happened there...

(Ditto iCloud & other cloud storage services for that matter, though that’s slightly different, I’d argue)
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Spotify's app is much better than Apple Music.
It also has much better music suggestions and localised content.

I was on AM for about 3 years and left it because:

a) I was annoyed that it replaced some of my uploaded music with incorrect iTunes versions with no way to stop this. But that’s another thread.

b) because I had the feeling of running out of new music that I liked.

What was really going on with b) is that AM’s discovery service was so poor (for me). It’s no wonder that Apple are trying to buy Shazam.

On Spotify, however, its discovery service is amazing. I’ve discovered so many acts that I now love that I had no idea existed before.

Spotify’s discovery service is almost psychic (for me - your mileage may vary), whereas AM’s seemed to be ‘hey! Listen to the new albums by Taylor Swift / The Weeknd!’ (really really not my thing).

I’m obviously exaggerating - but not by too much!

 

[iSayuSay]

Spotify has never made a profit. NEVER. And even if it did, since they are basically owned by the labels they serve, if they were to make any profit, the music industry would just take it in a demand for more royalties. Spotify has an uninvestable, unsustainable business model for this reason alone—which is why they didn’t offer an IPO, because the lack of smart investors would crash the stock. Don’t forget they are also propped up by angel investors who want to see their money returned one day. Which it won’t. So unless more foolish investors step up for Spotify, they will disappear sooner rather than later.

Agreed, Spotify will not be profitable by its own. Music streaming is a cruel business with razor thin profit. If you make just a bit more money, labels will demand more since youre no more than “middleman”.

Even Apple Music is a subsidiary service for Apple’s hardware, I doubt they make much money from it, but Apple has deep pocket, Spotify doesn’t.

Apple Music is like allowing customers to buy muffin for $1 with any coffee purchase, it's a sweet gesture, but really they already make money by selling us that coffee, while Spotify is just selling the muffin. I don't know how it would cover business costs with just selling muffin for $1, or even free with ads?