Curated Insights 2019.07.12

Spotify’s moats, management, and unit economics

Podcasting is a relatively nascent industry that is booming. As the #2 podcast player in the world, Spotify should benefit greatly from this trend. While Apple continues to dominate podcasting, their share has quickly fallen from 80% to 63% the past few years. Meanwhile, Spotify has been gaining share every year.

Around 85% of Spotify’s content is controlled by the three big record labels, plus MERLIN (a digital rights agency that represents thousands of independent labels). It’s great when a company has captive customers that results in pricing power. It’s not great when a company is a captive customer of their suppliers and thus has less control over their costs. With that being said, Spotify has a lot of power over the record labels as well.

In 2018, streaming accounted for 47% of global recorded music revenue—and Spotify has almost 70% market share of global streaming revenue. Look at the below chart showing industry revenues over time (purple is streaming revenue). If the major record labels want to continue enjoying the growth they’ve experienced the past few years, they have to work with Spotify.

China’s total number of births dropped over 10% last year

The total number of births in China last year dropped by 2 million from 2017, the National Bureau of Statistics announced at a news conference on Monday. The massive drop — from 17.23 million to 15.23 million — indicates that China’s birth rate last year was the lowest the country has seen since famine-stricken 1961.

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