…
TPG and Dragoneer get to convert the debt to equity at a 20% discount of whatever share price Spotify sets for an eventual IPO. And if it doesn’t IPO within the next year, that discount goes up 2.5% every extra six months.
Spotify also has to pay 5% annual interest on the debt, and 1% more every six months up to a total of 10%. And finally, TPG and Dragoneer can sell their shares just 90 days after the IPO, before the 180-day lockup period ends for Spotify’s employees and other investors.
Ki lo de? I just suggested to a friend now that they probably need to roll out a new plan called, I don’t know… Spotify Donor? $100 per month. Those who wish to #SaveSpotify should subscribe. These terms are draconian as fuck.
It’s what happens when you are running without traction.
Spotify doesn’t have traction?
Daniel Ek:
Raise $1billion with draconian terms like this, against Apple. APPLE. Apple has more than $19billion cash money they have nothing to do with. And those iPhones still dey sell like pure water.
It’s like paying with your blood to get a knife so you can fight a big guy with machetes. What’s the point?
Record companies are very greedy. Artistes are arrogant and unreasonable. Hi Taylor Swift, Kanye and Jay Z. The users are spoilt already with free downloads, want free music, YouTube is there to serve them when they are broke. Like life can’t be any harder, Almighty Apple jumps in, making its app default music player, and you know it’s fucking Apple. They come with all the swag.
I just wonder how my Deezer is doing.
@xolubi I think he meant money. And I suspect they are having subscribers attrition to Apple music.
Truth is, the streaming business model hasn’t been cracked yet. Spotify was the biggest player until Apple Music came along… and all Apple had to do was to keep making and selling phones as usual. Now, if Apple wasn’t in the game, Spotify would have raised on more forgiving terms. Companies raise in the billions all the time - they just have to be the biggest fish in the pond to make it happen. Think Uber. But with Apple, it’s almost as if Spotify is the only entity left that believes in Spotify these days.
An IPO in one year? Come the fuck on!
P.S. Soundcloud switched things up yesterday and started charging listeners 9.99 per month or subject them to ads. Apparently, just charging the independent content producers has not been paying off… literally. Funny how their entire pitch hinged on them having more than thrice the number of tracks on Spotify. Weak attempt if you ask me… Because who has ever complained that Spotify’s 35m catalogue was not enough?
Spotify needs Jesus this time, for real. Apple will readily race them to death with no sweat. If this were to be a product category Apple has little interest in, you’d understand. But music? No.
Apple loves music. And will anything to be in the business. Like you said, streaming is still not cracked yet. My theory is, streaming is the future but not for startups. Only for big companies with unending pool of money to burn. Until the future arrives. I suspect YouTube would have been dead if it were independent.
Same way I think/fear for Spotify, is same for the cloud storage services. Dropbox especially. The rules of the game change very quickly these days.
This is a marathon. Apple is ready to run for another 10 years. Money dey bank. But how about Spotify?
Like 35m tracks is not enough for any human. Just have my Frank Ocean, I’m in. There is Seth Godin essay on this subject. It’s called the choke point. http://sethgodin.typepad.com/seths_blog/2013/08/the-choke-point.html
There is a point you reach when the amount of content you have is no longer a value proposition. That again is the problem. What you do with the content is now the question.
A business with 10,000 movies is no different from another business with 5000 movies. They have both passed the choke point for anyone to care. Making it easy for anyone to think they can jump in, to compete.
By traction i meant the context of a Car. I have never been a fan of the “raise” model for business growth. I still believe that technology or internet firms should work hard to build sustainable technology that can drive their sales.
@Uduak Well sorry to break it to you but, you know that platform that has gotten so important now that you do a monthly update on how Nigerian businesses are doing on it in terms of followership? Yes, Twitter. They wouldn’t exist today if they were waiting for “sustainable technology that can drive sales”.
True, Ezra. But he does has a point. Some businesses won’t exist without venture capital, and some really have to look out for their unit economics before they even raise. And try if possible, imagine the future.
We are discussing Spotify here. Not some hypothetical business. What he is implying is nobody should have taken a shot at streaming. That mindset of wading into discussions with faux wisdom speak that isn’t really contextual is what I am disagreeing with.
@xolubi I see. He used ‘Never’. There is no way Spotify would have seen the light of day without venture capital. The return on their business is mostly very far in the future. Similar to social networks.
First of all twitter is like guardian or vanguard newspaper in context.
Its a news media and from the days of the Worcester Post-Man, it has been the same selling ads for revenue model.
Spotify raised $100million in November 2012. In 2015, they raised $526million, In January this year(2016), they raised another $500million. And now they have raised $1billion.
Where will this “raise” model end?
Twitter wasn’t like the Guardian or Vanguard newspaper in their early days of raising though. As a matter of fact, nobody knew what it would become today 10 years ago. Guess how they survived their first 7 years. Spoiler alert: not by selling ads.
Spotify is essentially my music player with a vast library, synchronized across my devices, without me having to purchase albums. In theory, it’s very convenient. The problem is the gatekeepers (record labels) being stuck in the past with equally draconian licensing terms. You cannot seriously berate them for trying by bringing up the “work hard to build sustainable technology” here.
One little but important point; Apple Music is an awful product. So yes, Spotify is raising huge funds under erroneous terms, but I can imagine that it hurts to lose to the ‘inferior’ product. It will probably happen (especially as Apple has such deep pockets), but why should do they walk away from a fight?
So here are the facts, no one has won the streaming war yet. Which means Spotify et all are still in it. Apple probably have the 2nd worst (after Tidal) product in the market. They mashed up Apple Radio (new), with iTunes (old), and Beats music (new) to make a Frankenstein now called Apple Music. For instance 80% of the time, I can’t listen to anything. The app crashes every 3rd time I tap on an icon. The UX appears to be designed by bricklayers. Every flow is broken. I can’t even listen to my own iTunes anymore. 9 years of music made useless. All because they totally missed the streaming boat and now playing catchup (Beats @ $3bn is still the most expensive Apple acquisition till date). I switched to Spotify and yes those adverts are annoying but it’s such a relief to actually do the one thing Apple Music fails to do well; play music.
And guess what? Quite a few people feel the same…
So when you layer everything and you’re Spotify, what do you do? It seems they chose to die fighting than lose to a weak competitor.
Yes probably to the Apple Music experience as a product. But Apple isn’t a weak rival. If there is anything about Apple music product experience, they can (and probably will) fix it.
I have not thoroughly experienced the app so I can’t comment on it personally. But one thing though, my friend left Deezer for Apple Music. And Deezer to me, is awesome. I use it every month.
Yes, Apple is not a weak rival. They’ve got millions of customer CC details on hand. They’ve got billions of $$ sitting in the bank. They’ve got music in their DNA (switched the whole industry with iTunes). But still, Apple Music is a bad product today and that counts for a great deal.
And when you see a panic buy like Beats and a rushed implementation like what Apple Music has become. It points to the same advantage Apple previously enjoyed, technology and consumer tastes changes rapidly. This time not in their favour.
BTW, using Apple Music is like a real-life MBA class to understand that product missteps can bring failure to even the most formidable companies.
I’m not sure Spotify can win. But it will need a resurrection of some kind for Apple to win.
Apple is an exception. They run a cult followership. And we can’t even discount that. If Apple starts selling shit today, I mean actual shit, it will still sell out in some quarters. Apple has that much of an effect on people. God bless you, Steve Jobs. The Jobs effect lives on, even after these years.
If the product sucks like you said, the actual Apple fan club will still forgive, or won’t just mind. Or may not just be aware in fact. It’s Apple and they can’t do any wrong, you know.
And it is Apple we are talking here. What is a music streaming app? A few hires here and there, and dazall.
Well, I don’t know. I thought I was a die hard Apple fan, but I guess it’s more important to actually listen to music.
Talking of a ‘few hires’ is maybe not understanding that thousands of people have worked together to create this mess. They’re definitely not a ‘few hires’ from fixing this. Maybe this is indeed the one thing that needs a ‘Steve Jobs’ type of attention, which is clearly missing.
But the one thing to keep in mind is that when changes happen in any industry, it’s hard to really decipher when it’s actually going on. So when Apple does stuff like release Apple Watch, botched IOS updates, keynotes with no key new products etc…it doesn’t count till it counts. Right now, my NotJustOk app is more reliable than Apple Music. It doesn’t crash at will and it plays music. Truly a NotJustOk situation.
Personally I won’t give £1 to Spotify, but if I worked for Spotify, I can see why they would borrow $1bn under those terms.
