The fight between Spotify and its Faang rivals is asymmetric

Baby boomers may not be into techno or hip hop but they still want to stream smooth jazz and The Beatles. Increasingly they turn to a familiar, safe choice for digital music. Amazon now trails Spotify and Apple in total streaming music subscribers. The popularity of its Alexa smart speaker means Amazon has quietly become the fastest-growing music streamer, with 32 million subscribers. Key to that base are over-55-year-olds. These represent 14 per cent of Amazon’s customers, a proportion three times higher than for the millennial and Gen Z favourite, Spotify. The recorded music business has enjoyed a renaissance in recent years. The economics of royalties remain brutal. But losing money has never frightened off Amazon. And music is a natural fit for a business important to the home lives of so many… The fight between Spotify and its Faang rivals is asymmetric. Spotify can continue to gain subscribers but eventually will have to produce profits, assuming it remains a pure-play music streaming company. Its rivals have multiple, mutually reinforcing businesses that can subsidise money-losing units so long as they contribute to winning and retaining customers. Digital music distribution ultimately should be a commoditised business. Spotify’s only hope is to challenge that premise. It may have to beef up its offering of golden oldies.
 
Lex.

Food4Brains

SUBSCRIBE and RECEIVE your DAILY BRAIN FOOD!