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Guess Who’s Coming Out to Play

March 21, 2018

You know that little green thing with the three lines in it? You know … the one that looks like a Wi-Fi symbol and randomly transmits sounds and blessings through your ear canals. Something you probably didn’t notice until reading this article. Well, unless you’ve lived under a rock the last few years, that little green thing is called Spotify. As we ponder that description, Spotify is currently delivering musical content to over 140 million subscribers.

Spotify is also reported to have over 70 million paid subscribers, making them the number one streaming service in the world. But even with all these peeps, yes I said peeps, Spotify still ain’t making any money, man. Gaining revenue is hard in this industry because the more money you make, the more money a company like Spotify must pay to record labels in licensing fees. The streaming business itself is not lucrative but Spotify is hoping to change that. Spotify is ready to step outside with the big boys and finally go public, making it one of the only solely music streaming services, alongside Pandora Radio, to be public in the marketplace. However, they are not taking the traditional route; Spotify is deciding to go public with a Direct Public Offering (DPO) rather than a traditional Initial Public Offering (IPO), a method that is normally taken by companies valued at less than $100 million. How will this affect radio, you ask? Well, the answer is this. In no way, shape, or form will Spotify going public affect radio. We can all breathe. In fact, as of Q4 2017, AM/FM Radio is still the number one platform for audio listening among Adults 18+. 48% of these Adults used AM/FM radio for audio listening, while only 2% used Spotify.

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It’s clear that Spotify and other streaming services alike still have a long way to go to catch radio. So while we cheer for our fellow media comrades, if the biggest streaming service in the world has to gamble to “possibly” earn a profit, safe to say that Radio has nothing to worry about. Radio has been, and always will be, the go-to medium for audio consumption, period. Numbers don’t lie.

-Davon Rush, Research Assistant

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