[Editor Charlie sez: For the impact on streaming royalties, read the background on MusicTech.Solutions: The Elusive Obelus: Streaming’s Problem With Denominators]
Spotify’s (SPOT) decision not to raise prices on its U.S.-based premium subscription plan speaks volumes about the music streaming giant’s lack of pricing power. At least according to one bearish analyst.
“[It’s] a strategic play. It speaks to the relative competitive weakness of their business compared to these bigger firms that have bigger, larger platforms that bring a lot more to the table,” New Constructs CEO David Trainer told Yahoo Finance Live, referring to recent price hikes from both Apple Music (AAPL) and YouTube Premium (GOOGL)….
Spotify stock, which lost more than two-thirds of its value in 2022, surged more than 12% on Tuesday following the company’s report. The stock is down more than 65% compared to its February 2021 record high.
“There’s a disconnect here between valuation and the underlying economics and fundamentals of the business,” Trainer said. “[Spotify] is an unprofitable business that’s been burning through a lot of cash.”