Why I'm Buying

What I found is an underestimated market opportunity, where Spotify has a unique product advantage, the potential to improve every lever of unit economics and can build in a sustainable competitive advantage. Below is my investment case for going long Spotify, even +28% y-o-y.

This understanding of the importance of both human-led curation and data-driven personalisation is what will help Spotify beat the competition in broader audio.

Maybe podcasting is only a $500m market today, but the commercial radio market is a $40bn revenue market globally, more than double the size of the global recorded music industry. >85% of adults in the developed world listen to radio weekly (nearly 3bn people worldwide) and each listener in the US is worth $67 annually.

The more content produced and ads generated using Spotify, the better the data Spotify can collect, helping them improve engagement and monetisation for each user.

While Spotify started as an active, intent-driven platform to find the song you want to hear, today it is a more passive, discovery-led listening experience.

This data will also help Spotify understand what original content to create, helping them launch the best content, driving even more users to the platform.

And that’s still underestimating the size of the market opportunity. The radio advertising market is held back because it’s difficult to measure ROAS, and impossible to personalise ads. By using their vast quantity of listener streaming data, Spotify could target ads more effectively, and even add direct clickthroughs for those listening on the pho... See more

By acquiring Anchor, Gimlet and The Ringer, Spotify invested in both the underlying tools for the creation of new audio content (over 60% of the 1 million podcasts on Spotify are powered by Anchor) and the creative know-how to develop compelling original content.

Your competitors are the most successful tech companies in the world, who have enormous war chests of cash, with an in-built hardware advantage, who can use audio as a loss leader for their existing products and services. I’m comfortable with this risk because this has been the case for years now, and Spotify through focus and execution has maintai... See more