Spotify Remains King, But Until When?

Spotify’s acquisition of Irish startup Soundwave just goes to show that it remains the ringleader of the music streaming niche. The company is fast-expanding amid the growing competition in the sector, seemingly leaving competitors Tidal, Rdio, and Pandora behind its shadows.

What would make the company bigger in the next years is its plan to go public in the near future, which it has now initiated by issuing loans that can be soon converted into equity. According to Robert Cookson and Matthew Garrahan of the Financial Times, the IPO move is centered at securing Spotify’s dominance amid growing competition.

The lending structure could give Spotify hefty returns if it completes a successful IPO regardless of the share price valuation the company it ends up to. The failure to float after a year of IPO will still give Spotify a boost, since the discount at which the loan converts to equity will give the firm a 2.5 percentage points every six months.

The company’s success has also become an inspiration to startups venturing in unpopular niches in the tech sector. The likes of network extender firm 5BARz International, analytics provider Curalate, and drone alert system DroneShield, which are among the best and leading tech startups today, could look up to and learn a lot from the company’s nine-year dominance in the segment.

However, it doesn’t mean that no competitors are attempting to take Spotify’s place. In the US alone, newer music streaming services have been springing up on the market to offer cheaper subscription fees and better services. Just recently, the French streaming music firm Deezer has purchased Muve Music, AT&T’s former streaming partner, for almost $100 million to challenge industry leader Spotify.

Wefre is also attracting music lovers for its noise-free web application, while promising faster listening and browsing experience than YouTube and Spotify. It has also more songs than what Spotify has. According to its founder, the company will soon be available on app should its Kickstarter campaign launched by Vera become successful.

Nonetheless, behind Spotify’s success are musicians who refuse to have their music on Spotify. Among whom are Taylor Swift, who considered the move as a blatant refusal to accept the company’s unfair royalty payment system, as well as Prince, Tool, Beyonce, and Thom Yorke.

“I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists and creators of this music,” Swift once said after her the release of her album, 1989, last October.

British superstar Adele has also cried foul over the streaming service’s decision to offer her new album—25—to non-paying subscribers. This has resulted to a pullout that brought the “royalty violation” issue to the surface anew. MusicWatch analyst Russ Crupnick said that “Adele has single-handedly helped change the trajectory [on the music scene,” as the refusal has given her more physical album sales. “We called it ‘the Adele Factor,” he said.

The antagonism over Spotify’s take on royalties has encouraged former record label owner Jeff Price to help artists get the right amount of money they deserve from the likes of Spotify. The 48-year-old producer-turned-music royalty agency head has been helping upset musicians by providing them with data to take on music streaming companies toppling the music industry. His company Audiam has somewhat become a go-to destinations of aggrieved musicians, especially those who aren’t as big as Swift or Adele.

“The poor songwriters of the world have been exploited and decimated and pilfered. They have been raked over the coals in ways you can’t even begin to imagine,” Price told The Seattle Times.

However, Price’s existence does not mean that Spotify is now facing inevitable demise. In fact, apart from the recent IPO statement, it has recently announced that the company is growing, to which it will celebrate by expanding to what could be a game-changer in the music streaming niche: video streaming.

So welcome to YouTube and Netflix’s domain, Spotify.

Spotify Remains King, But Until When?