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Comment by jqbx_jason | Hacker News Reader

This is great news IMO. Spotify's platform is leagues better than apple music. Also I know they don't have the best track record w/ third party apps but Spotify also offers the most comprehensive API when compared to the other major streaming services. This lets people like me make apps[1] which (I think) attract more subscribers and create a stronger network. That being said I don't know if I would run out and buy the stock... there's still serious competition and the music labels run their business like the mob.

[1]https://www.jqbx.fm

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How is this such “great news”? Spotify is having a Dropbox issue - in the grand scheme of things, their only reason for existing is just a tiny line item to their major competitors - Apple, Google, and Amazon. They are a feature not a product.

Revenue means nothing without profit.

http://fortune.com/2018/05/30/spotify-ipo-profit/

bit bullied. Despite steadily increasing paid subscribers (75 million and counting) and revenue (about $1.36 billion last quarter), Spotify continues to bleed. The $49 million or so that it lost in the first three months of 2018 wasn’t because the company can’t keep a tight rein on its own spending, but because it can’t keep a rein on its suppliers. Yes, that’s right: As Spotify grows, so do its royalty payouts to record labels and other music providers. And those marginal costs are an anchor on the Stockholm company’s profit potential

Okay sure the full picture isn't all sunshine (I didn't say I'd buy the stock) but it's not bad news either. With the lions share of the streaming market and low churn rate I would expect they can negotiate some better deals (or possibly get enough of an edge to raise prices).

Why would the music industry negotiate? If Spotify tries to play hardball and doesn’t agree with the terms of one of the three major record labels, they lose access to the music. Neither Apple, Google, nor Amazon really care if their music streaming service is profitable or barely break even, they are using music streaming to sell other higher margin products.

Apple is still growing faster than Spotify and YouTube is a bigger brand.

If they try to raise prices - Apple Music and the YouTube offering starts to look a lot more attractive - it’s hard to compete against the default.

With a large enough differential between customer #1 and customer #2 it becomes a lot of cash to leave on the table if you don't renegotiate. But I don't know the numbers and you're right to point out that everything could potentially go wrong, but IMO it's not a sure thing and at least this report is a step in the right direction not the wrong one.

Yes, it's bad news. The article states that their losses have more than doubled in the past year from $220M to $460M. Their average revenue per user has dropped 12% to $5.72 and Spotify says that won't be getting better anytime soon. Most of their "new" customers are the result of family deals and promotions. Spotify thinks they can grow their way to profitability, but they are competing with Apple Music, which doesn't have to be profitable.

I don’t see how they can grow thier way to profitability with negative marginal costs. You grow your way to profitability if you have high fixed cost and low marginal costs. But, they have to pay such exorbitant licensing fees that thier marginal cost is high. The family plans are making the situation worse.

Once Apple introduced the family plans, Spotify was toast.

And finally, there is another level of complexity when you have to go to their website to pay instead of just using an in app purpose. They were one of the top grossing apps when they had in app purchases - even when they charged more to offset Apple’s 30% cut.

Your first paragraph and your second are not tied together.

You say these things like Google and Apple are inherently better because music streaming is a bolt-on.

I like Spotify for the same reason I like Roku. The product they provide is their mission. Spotify doesn't want me on Google, or Apple, or Echo. It wants me to listen on its platform.

Roku doesn't give a damn what content I view. Its mission is to make a good streaming player.

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Now, you're correct, they need to make more money. But I use them in principle because I want them to win.

I would like to see Spotify become healthy and profitable. There is no reason you shouldn’t want more competition but the odds are against them. The last 18 years are full of failed and failing music subscription services - from PressPlay and MusicNet back in the early 2000s, to Zune, to whatever the service that MS launched with MTV, Napster 2.0, Tidal, etc.

As far as Roku, that’s not a great example. I have 3 Roku TVs and a Roku stick, but they definitely aren’t the model I prefer - “I give you money and you give me stuff and leave me alone”.

For starters, the shortcut buttons on their remotes are hardwired and branded to whoever gave them the most money this month. I have one with a Rdio button (a dead service) and another with a shortcut to CBSNews.

Then half of their home screen is taken up with an ad. When you sign up for an account it’s a Godaddy style up sell.

They make money by both tracking your viewing habits and subscriptions that are bought through their service.

The Roku interface is slower than my third generation AppleTVs not to mention my AppleTV 4K.

The Roku’s saving grace is the much better remote app and private listening.

If I'm not mistaken, I think you can pair Airpods with the Apple TV and have private listening.

You’re right.

https://www.macworld.com/article/3250084/home-tech/how-to-us...

But now I have mixed feelings about that...

- The AirPods cost more than the 32 inch Roku TCL TV.

- It’s Apple, I should expect to pay out the nose for anything Apple related that I buy.

- I can buy a Roku stick for $49 for the TV in my home gym that only has a 3rd gen AppleTV and use my phone for private listening.

- I’ve already got to convince my wife to let me get a 27 inch iMsc.

- If I get the AirPods my wife is going to see how convenient they are and want a pair too.

First World Problems....

The AppleTV works with any standard Bluetooth headphones/speakers, not just AirPods

Oh yeah. And another advantage of Roku’s private listening is that all of my exercise equipment has speakers and a 3.5 inch jack. I can turn on private listening on my phone and pipe the audio from my phone to my treadmill, elliptical and bike. I don’t have to wear headphones and I can keep the audio down so it doesn’t disturb the rest of my family.

Ehh, Apple Music with the match paid addon stores all of my music and syncs it across my devices, including many pieces unavailable from the platform itself. Aside from that, all these platforms offer more or less the same commodity music service. Why use spotify?

> Apple Music with the match paid addon stores all of my music and syncs it across my devices, including many pieces unavailable from the platform itself.

The free version of Google Play Music does that, too.

Oh, I didn’t know that! I’ll have to check it out.

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