Southern California Broadcasters Association President Thom Callahan is not a big fan of Spotify and he’s put out an ‘alert’ to members as ammo to use with their advertisers. Callahan says, The PR spin machine for Spotify has been in overdrive this week after releasing its quarterly earnings. “We’ve seen this movie before and it was called “Pandora”. Remember them?”
First, Callahan noted some of the news story headlines about Spotify and how everyone seems to be fawning over the company at this point in time. He says these are the stories written for clients and investors:
– 170 million total user base with 75 million paid subscribers with the rest from ad supported subscribers. (worldwide).
– Successful IPO launch.Revenue in line with guidance.
– Spotify executives said they want to make the music industry more efficient and “take advantage as Radio listeners move online” and more people get access to 4G mobile internet.
Here are a few facts Callahan wants everyone to remember about Spotify…”Based on their own estimates, Spotify will lose almost $400 million in 2018. Even with an IPO. As of this writing, their stock is down -11.6% as investors were expecting more growth YTD. Revenue outlook is down for the rest of 2018, which created the significant slide in stock value today. YTD subscriber growth was 79 to 83 million paid subscriber growth or a 4.9% growth rate. Their main competitor Apple Music grew its subscriber base in the same period from 27 to 40 million subscribers or a 48.1% growth rate. Apple Music is growing ten times faster that Spotify in paid subscribers. Apple, Amazon, and Google all have smart speakers, AND are Spotify’s main competitors with their own competing streaming services.”
Callahan’s observation: With Apple, Amazon, and Google in the same space, how long can Spotify survive? And when will investors learn? Pandora could not compete with AM/FM Radio with their ad supported model and is trying now to move towards a subscription based model. Spotify’s subscription model is growing at a much slower rate than Apple’s and now wants to shift to more of an ad supported model. And the pure play merry go round keeps spinning. Spotify is in a brutally tough spot- its got Apple, Amazon, and Google to compete with for a subscription model on one end, and thousands of AM/FM Radio stations to compete with in the ad supported model on the other. Does anyone really believe that the pure play audio space can compete in an ad supported platform? And how do you think they will do against Amazon, Google, and Apple for paid subscribers that crush all competition in their way? It is our hope that clients and investors can see this side of the Spotify PR story as well, and remember the endurance, effectiveness, and the commercial environment of AM/FM Radio.”
Attaboy Thom! It WAS a challenge refuting advertiser and listener claims that AM/FM is dead. SURPRISE! There is a market for regulated, non vulgar entertainment where a LOCAL OWNER takes responsibility for content. AND no sharing of personal info. Try as they might the streamer dreamers can’t compete in the same local branding space with us.