Spotify's NYSE Debut: Irrational Exuberance

Here we go again—a company that's never seen a profit and doesn't make its product has a big opening day on Wall St. making its owners wealthy (or wealthier). Gee, how great.
"We believe we will generate substantial revenues as our reach expands and that, at scale, our margins will improve,” the company said. “We will therefore continue to invest relentlessly in our product and marketing initiatives to accelerate reach."
The company has yet to define what "at scale" means so no one knows when or even if they'll reach 'scale'. Gee, how great!

On the bright side, musicians the world over who have a hankering for nostalgia must be rejoicing in the fact that yet another group of people have figured out a way to get rich by inserting themselves in between the music (i.e. the product) and the consumer, while spitting back pennies.

New Rules for the Same Old Economy.

PeterMusic's picture

It's not that Spotify and their ilk are "spitting back pennies", it's that they have sucked all the profit right out of the glass by giving away music for free or almost free. All of this accomplished courtesy of the massive related streams of money they get from investors.

I'm not suggesting that we all feel sorry for the big labels. But when we devalue the music and other art and information that flows over the internet, we destroy the incentive/ability to create content.

bobflood's picture

Free for too long now means free forever in the minds of the generation they will need to eventually be willing to pay for music.

I am very skeptical that any streaming service will ever be profitable while a free (to the end user) tier exists.

Wavelength's picture

Did I see yesterday that Microsoft made a bid to buy Spodify for like 43B$ in stock and equity?


Bill Leebens's picture

Gordon, that turned out to be a fake April Fool's story.

foxhall's picture

This IPO, for some reason, reminded me of the scene in the Bonfire of the Vanities (great TW novel) when Hanks' character is trying to explain his job on Wall Street to his child and his wife cuts through the B.S.

DH's picture

Was talked about for the same way for years: doesn’t make money, growth doesn’t result in profits, yet stock price is high.
Well it is making money now.
As far as the general sentiment of the post, I agree.

Ejlif's picture

Hopefully they mean they will keep making it better. It's the best 10 a month you can spend. Yeah I don't think the sound is as good as TIDAL but everything else about it is. So much more essential content and the user interface is worlds better. I hope what they mean is they are going to offer lossless. I'd happily pay 30 a month for that and help make them even richer.

Lars Rasmussen's picture

I admit that Mr. Lavorgna is a bit eccentric and out of the ordinary – but in fact – that’s what I like about him. Streaming is the future?? So how the hell can anybody sane person let Mr. Lavorgna go?? It's like saying - well the internet isn't going to be a hit. It will pass - so comforting that Stereophile's new owners doesn't have a clue what this hobby is al about - I hope that Mr. Lavorgna get's a much better deal elsewhere and that Audiostream loses all its trafic because of this. Unbelievable imcompetent management.......sad sad world.

PeterMusic's picture

Hope you're OK. I miss your writing, and I'm sure I'm not the only one.
Best wishes,

galacticprince's picture

I really hope you are Ok. Misses your writing so much.

Best Wishes