Where will Spotify go next?
It may have a strong brand and a large user base, but the company is yet to turn a profit – with some questioning whether it ever will, given the size and cash reserves of competitors such as Apple (Apple Music) and Alphabet (Google Play Music).
One potential issue is that Spotify will now need to balance the interests of its shareholders, who may demand cost-cutting measures including better deals with record labels, while competing with cash-rich tech giants who can absorb losses on their services. Adding to the complexity is Spotify’s limited bargaining power – 85% of all music streamed on the platform in 2017 was produced by one of the ‘big three’ record labels (Universal, Sony Music and Warner Music), so the service is very much reliant on their content.
However, Spotify still has plenty to be optimistic about. It remains the largest streaming service and is well positioned to produce original music and help artists reach audiences directly – both of which could help insulate it from its competitors and reduce its reliance on record labels in the future.