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Spotify plans to list shares, fend off Apple and Amazon

Reuters

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By Stephen Nellis and Nivedita Bhattacharjee

Music streaming service Spotify on Wednesday filed for a direct listing of its shares, laying out financial data for the first time that cheered some analysts but led others to question how it could turn a profit from its growing subscriber base.

Spotify, which wants to trade as SPOT on the New York Stock Exchange, is taking an unusual path to the U.S. public markets, with a direct listing that will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.

Because the company will not issue any new shares, it did not specify a listing price. Based on private transactions, it is valued at roughly $19 billion, according to Reuters calculations.

Spotify, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc, Amazon.com Inc and Alphabet Inc’s Google as its main rivals.

FILE PHOTO: Headphones are seen in front of a logo of online music streaming service Spotify in this February 18, 2014 illustration picture. REUTERS/Christian Hartmann/File Photo

RISING SALES, COSTS IN CHECK

In the filing, Spotify laid out detailed financial data for the first time, showing rising revenue and relatively steady operating costs, which analysts took as a positive.

Revenue rose 39 percent to 4.09 billion euros ($4.99 billion) in 2017, from 2.95 billion euros a year earlier. Its operating loss widened to 378 million euros in 2017 from 349 million euros.

Its net loss ballooned 129 percent in 2017, driven mostly by financing costs related to a 2016 deal in which Sweden-based Spotify raised $1 billion in debt that would convert to shares upon an initial public offering.

“The revenue continues to grow but in particular their costs are growing slower than revenue, which is exactly what you expect in a business like this,” said Jay Ritter, an expert in initial public offerings and professor at the University of Florida.

Spotify compared its aspirations to the reach of Facebook <FB.O> and YouTube. “We believe the universality of music gives us the opportunity to reach many of the over 3.6 billion internet users globally,” it said.

With 71 million premium subscribers globally, Spotify has about twice as many paying customers as music streaming runner up Apple, with 36 million. Including those who listen to advertising-supported streams, Spotify has about 159 million monthly average users.

Amazon Music Unlimited has 16 million paying subscribers, and Pandora Media Inc  has 5.48 million total subscribers.

Google has not said how many subscribers it has to Google Play, its music streaming service.

Spotify’s premium subscription costs $9.99 a month, but it said it saw great potential in its ad-supported service, which Apple does not offer.

“With our ad-supported service, we believe there is a large opportunity to grow users and gain market share from traditional terrestrial radio,” Spotify said.

The net proportion of subscribers who left Spotify’s paid-for service, or churn, fell to 5.1 percent of paying customers at the end of 2017, from 6.9 percent at the start of 2016, the company said.

“This has been a question we’ve been wondering for a long time: how sustainable is Spotify’s model? This is the very first time we’re seeing public disclosure about churn, and the news there is really good,” said Larry Miller, head of the music business program at New York University’s Steinhardt School.

Spotify calculated that customers brought in 3.6 times more revenue over their life as a user than the company spent on marketing to attract them, as of the end of 2017, helping boost free cash flow to 109 million euros by the end of last year.

Still, in going head to head against Apple, Amazon and others, Spotify is “competing against companies that never need to make a dime on music as a standalone business and that in fact use it to drive other aspects of their business,” Miller said.

Apple and Alphabet also control the two main operating systems used by smartphones, iOS and Android. They and Amazon are all developing computer assistants, such as Amazon’s Alexa and Apple’s Siri, that could give the bigger companies advantages.

“Many of our competitors enjoy competitive advantages such as greater name recognition, legacy operating histories, and larger marketing budgets, as well as greater financial, technical, human, and other resources,” Spotify said in its filing.

Apple has launched massive marketing campaigns around its service and added subscribers rapidly in the last three years. “I don’t think there’s any doubt that the pace of competition this year has quickened,” Miller said.

Spotify has a powerful ally, in the music arm of China’s Tencent Holdings Ltd. The companies in December said they would buy minority stakes in each other, helping increase exposure to each other’s core markets.

STOCK COULD BE VOLATILE

A direct listing does not dilute ownership, as would happen with a conventional initial public offering, and saves hundreds of millions of dollars in underwriting fees. But it also frees existing owners from any lockup period restricting them from selling their shares following the listing.

Underwriters that provide price stability for new listings are not used in a direct listing, which could mean a volatile start for Spotify shares in public.

Shares trade privately in a wide band. Spotify is valued between $16.8 billion and $22.6 billion, based on recent ordinary share prices between $95 and $127.50 in the private markets in February and 177 million shares estimated outstanding by the end of February, according to its filing.

Synovus Trust portfolio manager Dan Morgan described Spotify as “interesting,” but questioned how quickly it might become profitable.

“How can Spotify monetize its user base beyond a $5-$15 monthly subscription fee?,” Morgan asked.

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This College Dropout Is Schooling Influencers and Startups on How to Get a Next Level Social Media Following

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Ryan Hertel, Founder of Socialocca

College isn’t for everyone. Ryan Hertel can vouch. He spent three semesters studying mass communications at King’s College, in Wilkes-Barre, Pennsylvania, after surrendering to pressure from his parents to follow the traditional pathway to money and happiness. Now, the 24-year-old is running his own business — a creative branding agency called Socialocca — in the same field in which many of his degree-holding peers are struggling to stay afloat or even secure entry-level jobs.

As influencers and startups are waking up each day to grind and shine and stand out, Ryan has his finger on the pulse of what works in marketing, what doesn’t and where social media is going. He recently spoke to Better than the Weekend to share some insights.

You’re an unlikely choice to be administering marketing advice to companies. You don’t have a college degree. What makes you an expert? I’m helping people build their brand online. In order to do that, I don’t necessarily need a marketing degree. I just need to have the experience of building a brand. The reason I can even contend when it comes to being in the know about branding and social media and marketing is because I built a DJ’ing business and was successful at building that business by utilizing social media to spread the word and get more than 13,000 followers on Instagram alone. Most people with a marketing degree say, ‘Hey, I know what I’m doing. I was taught what to do.’ I can say, ‘Hey, I know what I’m doing. I used social media to make money for my own business. I can do it for you.’ A lot of people have the knowledge of what to do, but they don’t actually have the track record to prove they can grow a brand’s following. 

Photographed by Lisa Petz

Influencers and newer companies may feel their credibility lies in numbers. Some buy followers to build their credibility. What are the pros and cons to focusing on the amount of followers you have in the beginning by paying for them? People who don’t know what they’re doing who want to be social media influencers do this too often when they’re starting out. There aren’t any pros to buying followers anymore. There were when people were easily fooled and buying followers weren’t a common practice. You can’t fake the following anymore. It’s easy to spot a fake audience today. Plus, fake followers will actually hurt your algorithms on Instagram or Facebook. Less of your real following will see your content. A bunch of fake accounts will see your content and your level of engagement will make you look far less popular than you should be. 

Some services promote buying real followers. Are there any services you know of that do this which you’d recommend? That’s not a real thing. They’re scams. Don’t fall for it. I’d recommend any service that acknowledges they can’t grow your service overnight and one that focuses on goals and not guaranteeing a certain amount of followers. Anybody who says they guarantee results is lying to you. Organic marketing cannot be guaranteed. It all depends on how good the marketing campaign is and how good the content is. 

How important are hashtags in connecting with new followers? They’re not important any more. Plain and simple, anyone who knows what they’re doing on social media doesn’t care about hashtags. They were cool like four years ago. Now, we’re just at the point where some of these hashtags are used by 56 million other people. Hashtags are way too oversaturated. No-one is sitting on their phone and looking up hashtags. It might get a couple more likes, but they’re usually from auto-generated services, anyway. Instagram is now doing something called shadow banning, where they’re even hiding many of these hashtags because they’re trying to slow down the feed. So your hashtag might not even be seen. If you’re relying on hashtags, you have to get way more creative with your marketing.

What is important when marketing your posts? What’s most important, above everything, is the quality of the post. Posting too frequently hurts your feed. Posting quality pics and videos less frequently will be more beneficial, because those posts can circulate for a couple of days if they’re quality posts. People are on social media to listen to what you have to say. It’s now a popularity contest, not a contest as to who posts the most.

Then is consistency still important, or has consistency evolved in terms of marketing on social media? The consistency of the quality of your post is better than the consistency of when you post. While being consistent is important, people get a little too carried away with it, thinking they have to post twice a day at the same time every day. That’s too much for people to take in. They need to be more consistent with the quality of what they’re putting out there and not the time.

Ryan Hertel, Founder of Socialocca

Any tips for influencers and brands when it comes to engaging with their audience? It’s important to actually engage with others and not just post content. Like posts. Comment. Not just on your feed, but there’s too. Even as a business, you want to Like posts and engage on other accounts. Tag people you’re working with. If you’re just sitting there doing nothing, nobody is going to remember you or think about you. If they constantly see you tagging and interacting with others like a regular person, they’re going to take you more seriously.

Where is social media headed? Everything is starting to turn into people asking, ‘What are they doing right now?’ Look at Snapchat and Instagram stories and Facebook Live. You can really cast your entire day on social media for people to see and people will watch. They’re interested in seeing what you’re doing in real-time, they respond to it, and they rush to see it before it usually disappears in 24 hours. When it comes to structure and systems and processes, it’s important to know rules don’t apply. No one rule applies to the same two people or company. Influencers and brands need to start living in the moment and capturing that. The future of social media is immediacy.

And there you have it. Now make like Missy Elliot, put your thing down, flip it, and reverse it onto your own social media branding agenda. Good luck!

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Watch This Solider Dunk for Donuts

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Jason Ciesielski is a Field Artillery Soldier in the Army National Guard and an athlete making his mark on social media. When he’s not busy serving his country, the 20-year-old can be seen on his Instagram and Facebook page showing off high box jumps, dead lifts and freestyle dunks.

“I want to empower people to be the best, strongest versions of themselves,” he says.

Jason recently went Live on Facebook with Better than the Weekend to dunk while treating himself to one of his guilty pleasures — Dunkin’ Donuts. He picked out four of his favorite fried cakes of sweetened dough and made sure he dunked before indulging his sweet tooth. Moral of the story: You can still be fit and eat what you want, as long as you work for it.

Watch and see how he did. Ladies, you’re welcome. 😉

Dunkin' for Donuts

Real men earn their donuts 🏅Ask Jason Tyler Ciesielski

Posted by Better than the Weekend on Wednesday, April 18, 2018

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How to Stop Being a Pussy and Be the Lion You Were Born to Be

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Adobe Stock Image

Gentleman,

We are hard-wired to be lions; to go after something we want.

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It’s in our nature to be a total savage when chasing after our desires — despite the consequences. In modern culture, where social media is redefining our lifestyle, we seem to be transforming into this fear-based robot who stays in their comfort zone and doesn’t reach too far.

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GIPHY

My name is Jesse Mundt. I’m a 23-year-old realtor from New Jersey. I’m not worried about remembering Harambe, learning the fucking Juju dance or getting blackout wasted. I’m focused on hitting my goals. I want to see other millennials get as excited as I am about hitting their goals. That’s why I’m here to offer some advice on how to break this formula of being a pussy and finally be the lion you were born to be.

Don’t be a dick. Hear me out.

You’re probably a lot like me, actually. I want to be rich and successful.

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Photo provided by Jesse Mundt

But before we move forward, I believe we have to go backward.

First step in being a fucking lion is to sit down and be your 6-year-old self again — this time with some intellect. Ask yourself these questions: What do you want your life to look like if you couldn’t fail? How much money do you want to make? How big do you want your house to be? What’s your dream car?

Be specific. Your answers should give you butterflies and chills just thinking about them.

Next, dust off the creativity and imagination of your childhood self and dream BIG. Imagine your adult life if your childhood dreams became a reality. (Remember, you only limit your own thoughts. So go fucking wild while dreaming what your life could be like.)

Lastly, find a mentor. Someone who has what you want and is willing to teach you how to get it. Keep in mind, you can’t teach what you don’t have so be careful who you take advice from, especially those close to you. (For example, if you want to make $100,000 each year but the person teaching you makes $60,000 a year, it’s impossible. You get it.)

Being a gentleman isn’t limited to how you respect a woman. A true gentleman works on himself and constantly strives for growth. It’s not only our duty as gentleman, but as human beings.
That’s how he become a fearless lion and takes on the world.

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GIPHY

Are you willing to give up your comfort zone to go up?

I am.

From one gentleman to another,

Jesse

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