Spotify Stays Ahead of Apple, but Profits Remain Elusive
As Spotify pitches its coming public listing to investors, there are signs the music streaming service is holding its own against Apple Music. But Spotify still is wrestling with how to improve its weak margins and work toward profitability.
Apple Music’s sales growth is decelerating in the U.S., according to a sales analytics firm. Although Apple remains a fierce rival, investors and industry experts don’t believe it will cut significantly into Spotify’s growth, because of the broader shift of music sales to streaming.
The threat of competition hasn’t been much of a deterrent to Spotify investors, who continue to buy stock in secondary transactions at prices valuing the music streaming service at around $25 billion, brokers say. There is an unusually high amount of trading in the shares for a company just weeks away from a public listing, the brokers said. The company is expected to start trading publicly in the first week of April.
Spotify’s U.S. sales growth rate held roughly steady at 35% in January compared with a year earlier, according to estimates by Second Measure, which collects credit card transaction data. That puts it closer to Apple Music’s estimated U.S. sales growth of 37% in January vs. the prior year, down from 63% year-over-year growth in January 2017, according to Slice, which collects online receipts. The sales data are based on a sample of consumer purchases and wouldn’t necessarily match company figures. Spotify declined to comment on its sales.
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