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It looked like Spotify’s strategy was to go public this year, but recent announcements have pretty much put that aside. The IPO (Initial Public Offering) market has changed recently, and tech companies can no longer be assured of the big paydays of just a few years ago. As a result it looks like the company’s new plan is to look for a buyer instead.
Now to be sure, Spotify has over $3 billion in revenue, but it also has been losing money as well. It currently has a lot of investors that want to cash out, and if an IPO is risky, then those investors are going to push for another way to get their money, which is through an acquisition.
Industry consultant Mark Mulligan thinks that a buyer probably won’t be Western. All the deep pocket companies like Amazon, Apple and Google already have their own services. Facebook is a possibility, but still not a good fit. Mulligan thinks that the only reason why Apple might be interested is to use up some of its off-shore cash reserves before it gets repatriated by the Trump administration, but that’s still a long shot. European companies don’t seem to be interested either.
That leaves Eastern companies and there are a number of them that could be potential suitors. China’s Tencent is already the streaming leader in the Asian market and the company has the money and the will for an acquisition. It would give the company an entrance into the West and immediately make it the 800 pound gorilla of music streaming.
There are a number of other Chinese companies also on Spotify’s radar. Alibaba, Dalian Wanda, and Baidu all have pockets deep enough to pull off an acquisition. Mulligan also suggests that a couple of telecommunications giants could also be in the running with SoftBank and India’s Reliance Communications being the most likely, although 21st Century Fox and Liberty Global may also see some synergy with Spotify in the fold.
One way or the other, it looks like Spotify is going to be going through some changes soon. How will that change its service? Probably not much actually. Until the license agreements with the major labels are renegotiated so the company can offer lower prices, things should still remain the same for some time to come.
Happy New Year, and here’s the first Music Industry News Roundup of the year for the week of January 6th, 2017. We’re just coming off a major holiday and things are slowly ramping back up. Let’s see what happened.
The Blackstone Group acquires SESAC. Just think about that for a second. A big investment group now owns a performing rights organization.
SoundExchange could lose a lot of revenue this year. The government collection agency is losing out thanks to direct deals with labels and publishers by Pandora
Chinese giant Alibaba is about to spend over $7 billion on entertainment content. Move over Apple, Google, Amazon and Spotify – you’ve got competition and it has deep pockets.
It looks like Facebook is getting close to their own version of Content ID. That means that content creators can finally get paid for their music and videos playing on the service. Word is that it won’t actually be released until the Spring though.
Indie labels claimed 35% of the market last year. Good news for DIY artists and labels not affiliated with majors, but this is based on rights ownership, not revenue.
A vinyl pressing plant is going out of business. It’s pretty hard to do in this market environment, but Canada Boy Vinyl can’t make a go of it.
YouTube lost it’s dominance to streaming music. People are now finding streaming networks way more convenient than the YouTube experience.
A full-time YouTuber shows how much money he makes. And of course he does it on YouTube. Doesn’t make all that much, but he’s not a very big channel either.
George Michael Best-Of Sales skyrocket. They improve by over 5,000% in the UK alone.
Speaking of the UK, the biggest album seller last year wasn’t a musical artist. It turns out it was a 56 year old game show host. Well, that’s probably the demo that still buys physical product.
That’s the Music News Roundup of what went on in the music industry last week. Have a great 2017!
Here’s the Music Industry News Roundup for the week of November 18th, 2016. Lots on the legal front this week, and streaming news is back strong again. Let’s get into it.
The Justice Department wants BMI to collect fees in a different way. It asked for “full work licenses” where all songwriters must agree to a license, but lost the argument in court recently. It has now announced that it will appeal. Not good for the publishing business if it wins as licensing will get a lot harder if there are multiple songwriters involved.
A long list of music industry associations have asked the US government to support European copyright actions aimed at YouTube. They’re hoping that the royalty payout from YouTube ultimately rises to that of Spotify or Apple Music. This is a long shot at best, but certainly worthy of continued discussion.
Some insiders think that Trump might be good for business. They site the close ties of the Obama administration to Google. Good luck with that one.
Prince’s estate is suing Tidal. It says that the streaming service has been illegally streaming a number of the superstar’s albums without a license. This could end up being the death knell for the service.
Google Play Music rolled out some new features. Improvements to the user interface include contextual song recommendations, which are garnering kudos all around. This could end up being a big deal, as Apple Music is generally thought of as clunky to use, while Spotify as a little stodgy in its UI.
Amazon launched Amazon Music Unlimited in Europe to much fanfare. It’s now available in the UK, Germany, and Austria. And the service rolled out a Family Plan as well.
More than a quarter of all music streaming subscribers hop around. They go from service to service on the free plans with different email addresses, according analyst Mark Mullligan. Not good that they can’t be converted.
Spotify now driving concert ticket sales. It’s now sending out emails to subscribers with ticket offers.
BMG going all in with Alibaba in China. It had signed a 2 year deal to supply music to the Chinese giant, and now extended the agreement for 3 more years.
Metallica’s music returns to Napster. 17 years after the group had a collective thrombo over the music service, their music is back on the platform. We’ve come full circle on that one, haven’t we?
That’s the Music News Roundup of what went on in the music industry last week. Let’s see what next week brings.