Digital Gabe
Cutting Edge Commentary On All Things Media

Spotify Is About To Have An Apple Problem

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It’s well documented that Spotify’s business model is to grow subscriptions at all cost.  Up to this point they’ve been successful with an estimated 75M paid subscribers worldwide, including 24M in the US.  Despite this success Spotify’s subscriber lead is starting to shrink thanks to slowing growth and a surge in new subs for Apple Music.  According to a Financial Times analysis, Apple and Spotify are neck and neck with US subs right now, and Apple is projected to surpass Spotify sometime around September-October.

The problem this creates for Spotify can’t be understated.  They continue to burn hundreds of millions in cash by offering discounts to gain new subs, and still don’t have a clear path towards profitability.  Conversely, Apple has billions (literally) in cash on hand, and can afford to use music streaming as a loss leader keep its device users in their Apple-everything ecosystem.  So Apple has more than enough resources to slow bleed Spotify to death by taking those next new subscribers off the table.  I’m guessing Daniel Ek and team are feeling some heat on this one.

 

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