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This memo is presented by
Downtown Music Publishing enables their clients to maximize their music value by connecting them with its music industry platform. Their clients gain access to a combination of connected services, technology, and data.
Their mission is to empower a global roster of artists, creators, and music companies with the industry’s leading-edge technology and highest-quality services.
The company provides centralized publishing administration with a rights management team that has 100+ combined experience, in-house product and bespoke technology, and a talented creative and client services teams to better serve our clients within sync, bespoke copyright innovation, licensing management, and more. Learn more about Downtown Music Publishing here.
Spotify’s road to $100B and profitability
A lot can change in two years! Here’s what I wrote in a Trapital memo in November 2022:
It’s been a rough, rough, year for Spotify stock. The current market cap is now $14 billion (down from ~$70 billion in 2021). At $14 billion, that’s how much Apple and Amazon spend for these exclusive sports broadcast rights deals.
How long until Apple and Amazon make a serious attempt to buy Spotify? It sounds crazy, but these behemoths spend so much money on content to acquire new customers. Wouldn’t they want the audio platform that has nearly half a billion monthly active users? I’m sure Daniel Ek would put up a fight before he ever worked under Apple. But hey, weirder things have happened!
Today, Spotify’s market cap is over $93 billion, nearly seven times higher than when I posed my acquisition question above. Spotify’s market cap briefly surpassed $100 billion in November 2024. Somewhere out there, there’s a day trader who brags to his friends about how they “bought the dip” on Spotify and never doubted CEO Daniel Ek for one minute. That same-day trader might have also sold all their Bitcoin in 2016, but you already know that they only brag about the wins!
To be fair, some of Spotify’s growth was similar to many publicly traded tech companies that experienced:
- sky-high growth during COVID-19 lockdowns (overinflated in hindsight)
- growth decline once lockdowns ended and interest rates rose (an overcorrection in hindsight)
- cost-reducing layoffs which, while tough for those who lost jobs, were a result of over-hiring during low interest-rate times
- a healthy 2024 for many stocks (Nasdaq was up 29.6% in 2024!)
But that only accounts for a portion of the growth, at best. The rest of the growth comes from more Spotify and industry-specific factors, which was the focus of our episode.
We talked about all of Spotify’s moves: the brilliant ones, the controversial ones, what they mean for Spotify’s various business partners, and how they impact artists, podcasters, and creators whose work makes the platform possible. This is about how the company could be worth more than all three major record labels combined despite the industry dynamics that have limited other deep-pocketed competitors to gain similar traction.
Music is one of the most challenging industries to build a giant company in. The billion-dollar exits are few and far between, and it’s not for a lack of trying. It’s harder to build a $100 billion company in music than it is to build a $500 billion company in other industries. Regardless of where you stand on Spotify, this is the episode for you.
Listen here:
Spotify | Apple Podcasts | Overcast
Chartmetric Stat of the Week - Billie Eilish
The most-streamed song on Spotify in 2024 was Billie Eilish’s “Birds of a Feather” with 1,775,172,881 listens surpassing Sabrina Carpenter’s “Espresso” which had 1,774,525,704 listens. Eilish’s song came out in May, one month after “Espresso” and a few months after the 2024 albums from Taylor Swift, Beyonce, Ariana Grande, and others. We’ll have to revisit these 2024 songs in a few years and see if the same songs top the list!
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