We do have to wonder why it is that Netflix is having subscriber fall off but Spotify says they are not. Here’s a few other reasons:
1 Spotify exercises the equivalent of monopoly pricing by refusing to exert pricing power to raise subscription rates–even though Spotify controls approximately 1/3 of the global streaming market no other firm has the same ability to influence pricing decisions at competitors. Netflix has consistently raised subscription prices.
2 Netflix has a mix of original and licensed programming so has more incentive to actually make a profit which can make raising subscription fees more meaningful. It’s also typical for streaming video services to pay a big up front exclusive license fee for a specific property or slate of properties rather than a purely backend deal. Windowing, don’t you know. And yet they survive.
3 Netflix does not have supervoting/dual class stock like Spotify so that pricing control is in the hands of one white male billionaire, Daniel Ek.
4 Daniel Ek’s personal wealth is directly tied to continuing to tell Wall Street a growth story for Spotify’s stock and keeping revenue at or below break even.
5 Spotify finances its operating costs from shareholder investment and loans, hence its two separate $1 billion stock buy back programs approved by a board of directors Ek controls through his supervoting stock. It’s relationships with investment banks like Goldman Sachs allows access to more capital like Goldman consulting on Goldman client Spotify’s recent $300 million naming rights deal with Goldman borrower and money-losing Barcelona FC and Camp Nou stadium. Did Goldman loan Spotify the money to pay Barcelona to pay off Goldman loan? Who knows….But this all goes into the hopper to maintain subscribers.
6 Nobody really checks very hard to see just how real any of those subscribers actually are. Maybe an Elon will put in a bid to takeoover Spotify and we’ll find out.