Spotify Benefits From Its Vast User Base and Breadth of Content but Faces Strong Competitors

Spotify is the world’s leading music streaming service provider. We expect the fast-growing digital streaming space to become the primary distribution platform of choice in the ever-changing music industry. We believe Spotify can benefit from various network effects that will help it increase users and amass valuable intangible assets associated with user data and listening preferences. However, it faces intense competition from huge tech platforms with greater resources, and it has a largely variable cost structure that may limit future operating leverage and profitability.