First Investor Jumps Off The Spotify Wagon!

Lots of bands get 90% of the income from shows. Spotify is not paying too much by any means.

That said, none of the streamers have a sustainable business model. That's the elephant in the room!

Yep..... I see a lot of references to the wild west and back in the days of the .com bubble it was the same. Investors would pour into these companies and let them skyrocket, the quantitative metrics were bogus as these companies had absolutely no reason to be valued as high as they were. If you look back at the history of that era it's exactly like the streaming/digital music industry. 

Websites had two ways of making money back then, advertising or sales, that was it, but because it was a "tech" company it's employees were vastly overpaid and when you sat back and really looked at what was going on you could see these companies basically had no future.... their game plan wasn't set for 10 years but rather maybe 5 years. To investors that's like a cowbell going off because the more that come in, the more the originals make money, like a ponzi scheme. 

Until..... one day, one investor that holds a very large stake says something like "I'm going to pull out of this, the future of this company makes no sense and I can see it's on the verge of collapse." A lot of times it takes some massive downturn or selloff for these guys to really look at their books, but eventually something happens and they do. So, they figure out what they have that can go down and not rebound on pure value, something like Amazon would be a tech investment worth holding to, they have a solid plan. Spotify? Not so much, they can't afford to pay anymore royalties because they chose to be an add based tech company at the beginning and that just doesn't generate much revenue on a global scale. If you are paying 83% of your gross to royalties, there has to be money for salaries and also to manage your delivery system, it's just not possible. 

I'm not really sure how this will all shake out, but the fact that the FIRST creator of the content has no say so whether it stays or goes in the streamers catalog is purely unethical. It's very possible the Brexit crisis, while our markets have rebounded, could have scared enough investors to take a hard look at their portfolio's, and if I were a hedge fund manager, and I had a sizable stake in Spotify, I would be gearing up to redistribute that liquidity (while I can still make a profit) into something more stable, but with room to grow. That's basically what's happened, Spotify no longer has any room to grow, and most smart investors know they can't add 50-100 million users fast enough, especially now that iTunes is putting up detours for them on IOS. 

I don't know how music is eventually going to be distributed, but it's looking more and more like the streaming model may not work. Leaving illegal downloads and a la carte the only option. There's no one the right's holders can really trust anymore. Even if labels set up their own streaming for their own catalogs how would you really monitor those payouts? It's extremely unlikely given our legislation it would be legit.

Amen to that!