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The most important structural aspect of Spotify’s business is that it is a single tech platform from which all current and future services can operate. Spotify’s strong platform is now complete There are 4 key reasons why Spotify can materially increase its earnings power in future years, which means the stock is way undervalued and a great option for bargain hunters.ġ. Rather, they should be focused on what it will earn in the future. Investors, however, shouldn’t be focused on what a business can earn today. Many investors have been tuning out of Spotify, with its shares falling 75% from their peak in 2021. US Recorded Music Revenues – By Formatīut despite Spotify’s role in the resurrection of music, which has seen it gain nearly half a billion monthly users, Spotify’s business is still only at break-even. It has been streaming, pioneered by Spotify, that has revived the music industry’s fortunes. While the internet has seen physical music sales in the US crash to just US$1.7 billion, total US recorded music revenues in 2021 were US$14.9 billion, well down from 1999’s peak, but still impressive and double the low reached in 2014. It was a lucrative business and US recorded music revenues peaked at US$23.7 billion in 1999, according to RIAA.

Listeners would place a vinyl record on a player, slip in a cassette tape, or slide a CD into a machine. Young people probably wouldn’t remember when music was bought physically.