21.11.2019 17:29:56

Should Spotify Investors Worry About Free Competitors?

Spotify (NYSE: SPOT) has historically differentiated itself from other streaming services by offering a free ad-supported tier. Ad-supported Spotify listeners don't get all the same features as premium subscribers, but Spotify offers enough value to attract some 141 million global listeners to its free service. Importantly, the free tier is an on-ramp for listeners to become paid subscribers, and management has shown an excellent ability to convert them.But Spotify's free tier is becoming more common. Earlier this year Amazon (NASDAQ: AMZN) and Google, the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary, each announced that their smart speaker users would get access to a free ad-supported music service. Amazon recently outlined plans to expand that service to smartphones, tablets, and its Fire TV devices. Google also offers ad-supported listening on mobile through Google Play Music and YouTube Music.Investors are concerned these tech giants will be able to throw around their considerable heft to slow Spotify's growth. News of Amazon's expansion to mobile devices sent Spotify shares tumbling. But investors shouldn't worry about the competition offering free streaming. Here's why.Continue reading
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