Composium Digest: Cue the Q1 results
№35 | Anouk Dyussembayeva | May 3, 2022
Composium Digest is a newsletter-only addition delivered once a week. Get overviews of interesting stories happening in the music industry, stay informed of various opportunities music startups and companies offer and catch up on some of the Composium articles you might have missed.
Spotify isn’t pulling a Netflix card... yet
Like most companies’ Q1 results — for obvious reasons like inflation and the pandemic slowly coming to an end — Spotify’s weren’t great either. The streamer’s shares dipped to their lowest ever, and the subscriber count didn’t grow as fast.
On the other hand, some consider the number of subscribers Spotify gained to be an outstanding result given the whole Joe Rogan situation.
Given the overall plunge of the US stocks — Nasdaq Composite experiences its “worst month since 2008” — Spotify is actually doing good. Plus, other streaming services like Pandora and SiriusXM haven’t been able to keep up with the market and actually lost a chunk of their listeners.
At the very least, it’s doing better than Netflix. The latter got a lot of media attention on the day it announced its quarterly results, which was one of the worst days for the streaming service: according to Morning Brew, the company’s stock dipped almost 70% in 2022 after the subscriber growth decelerated.
Netflix results made people question whether the same story awaits Spotify, but Daniel Ek rushed to debunk those rumors, saying that “besides both being media companies and being primarily subscription revenue companies, that’s kind of where the similarities end for [him].”
Netflix, however, is planning to introduce features that are very similar to that of Spotify — for instance, it’s going to integrate ads as part of its lower-tier offering.
In its letter to the shareholders, the film and TV series library giant explained why it thinks the numbers are so upsetting. Other than introducing ads, a big thing to tackle is all the password sharing between people that don’t live in the same household. While the streamer boasts 222 million paying households, there are roughly 100 million additional households that are reaping benefits from the password-sharing scheme.
Before all the skeptics go “aha” and think they were right all along about Netflix, it’s worthy to note that the Reid Hasting-founded unicorn has been on the stock rollercoaster for quite some time, and can attest to the whole “what doesn’t kill you makes you stronger” concept more than anyone else in the startupland.
Ek might think that Spotify is nothing like Netflix, but there are things that the Swedish DSP could learn from the latter. For instance, Netflix is undoubtedly the king of original content, which is a weak spot for Daniel and his partners.
There are also the India and Southeast Asia markets that can potentially be very big for Spotify. But just like Netflix, the company is facing more and more competition from traditionally non-music players.
TikTok recently launched its own distribution platform (SoundOn) and a sound editing app (Mawf). Moreover, it rolled out a music streaming service in China that uses the same revolutionary algorithm that ByteDance became so renowned and applauded for.
Given all of these factors, Spotify will have to do more than integrate user-curated playlists if it wants to maintain its No.1 position and continue to satisfy its investors.
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Spotify is branching out
The DSP is always brewing something — this time, however, it has nothing to do with the music and audio industry… at least not directly. Called the Free and Open Source Software Fund, it is created to financially support open source tech projects. Dedicating a starting amount of €100,000, Spotify is going to help independent developers with their projects.
Spotify says that like many companies, it uses open source technologies for its own service, and those open-source providers don’t get any monetary rewards for their work. The streamer’s engineer team will choose whether a certain project is “worthy” of the fund’s support.
Pick a partner
SPLICE x BOOMPLAY
The African music streamer is teaming up with Splice to launch sample packs created by Afrobeats artists. Additionally, there will be a beat battle run by Sarz, a well-known producer from Nigeria.
Before this partnership, Splice also worked together with SoundCloud to develop Nova, host contests, and release 12 artist packs.
Now that it has an established community of sound engineers and producers, it makes sense for Splice to find new users by partnering with other renowned music companies in the music production chain.
The seed is sprouting (who raised a round)
LimeWire raised an estimated $10.4 million, with investors including DAO Jones, Deadmau5, and Steve Aoki
Stats
TuneCore paid out $222 million to artists in the past year. Not only is this an aesthetically pleasing number, but it’s also a palpable sum for the music industry
The electronic music industry is now worth $6 billion, almost doubling from 2020
Other links to check out
Lucas Shaw explains why a completely decentralized ecosystem won’t work for the entertainment industry. Spoiler: most need an experienced institution to support them