Spotify's high customer engagement and consumer sentiment Spotify’s music library might be the same size as its rivals, but it offers a uniquely different user experience that serves as its economic moat. It has also followed Apple’s footsteps and made available its high-quality streaming tier, Amazon Music HD to subscribers at no extra cost.īut I believe this fear of competition from these massive tech giants has been over-exaggerated. While Amazon, in its recent 2021 Prime Day promotion, has announced that Prime members will get a 4-month free trial for Amazon Music Unlimited. According to Rollingstone, Youtube is set to overtake Spotify as the music industry’s biggest payer by late 2023. Youtube, on June 2 nd 2021, said it paid over $4 billion to the music industry (in royalties to artists, songwriters, and rights-holders) while Spotify had handed out over $5 billion to the music industry in 2020. It has also brought Lossless Audio – the best quality of sound format - to its entire catalog at no additional cost for subscribers. The chief reason was attributed to the competitive pressure from Apple Music ( AAPL), Youtube ( GOOGL) Music, and Amazon ( AMZN) Music.Īpple Music, second in market share to Spotify, had announced Spatial Audio, an immersive audio experience with multi-dimensional sound and clarity. Unsettling it seems, given the undisputed long-term demand growth for music streaming. Since then, however, Spotify’s stock has dropped 23.94%. Remember Spotify ( NYSE: SPOT) Wrapped 2020? When everyone was posting on their socials about their most listened artists and their total listening time on Spotify. As these investments pay off, it is expected to drive big growth, and consequently, a strong bull case. For long-term oriented investors, Spotify has made several investments in its early innings: the Car Thing HiFi, Marketplace Greenroom international expansion and podcasts. Yet Spotify's low churn rate proves that fears of users jumping ship are overstated. Investors have become fretful about Spotify's outlook amidst mounting competition from big-tech companies that are offering their own music streaming service. Jason Davis/Getty Images Entertainment Investment Thesis

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