Competition, Cost Structure Threaten Spotify's Lead
The power of record labels and competition from behemoths lead to our no-moat rating on the music streaming service.
Ali Mogharabi: Swedish-based Spotify is the world's leading music streaming service provider, and we foresee the fast-growing digital streaming space as becoming the primary distribution platform of choice within the ever-changing music industry. We believe Spotify can benefit from various network effects that will help the firm increase its users and amass valuable user data and listening preferences. However, the firm faces intense competition and has a mostly variable cost structure that may limit Spotify's future operating leverage and profitability. Thus, we don't have sufficient confidence that it will generate excess returns on capital over the next 10 years.
Spotify is ahead of the pack in the growing music streaming market, but it faces stiff competition from behemoths such as Apple, Google, and Amazon. Unlike Spotify, these firms aren't solely reliant on streaming music to drive profitability and can actually potentially run at break-even, or even as a loss leader, while monetizing listeners via other products and services.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.