Audio streaming

Should you invest in Spotify in 2021?

Spotify is looking bullish — here is the due diligence on its current competitive position and growth prospects

Jiten Chablani
6 min readFeb 3, 2021


Spotify has just posted their Q4 2020 earnings and shareholder letter (AR pending) and the share price has dropped by 8.5% between market close 2nd — 3rd February 2021. I believe this is a great opportunity to buy shares at a discounted price, and here’s why:


  • Millennials, a key target demographic of the industry, are increasingly looking for access, rather than ownership of goods and services (Citation 1) which suits the industry model
  • The global music streaming industry is expected to grow at a CAGR of 17.8% between 2020–2027 (Citation 2)
  • Global CAGR between 2020–2027 in the podcast industry is estimated to be 27.5% (Citation 3)


  1. Will trends stick after Covid19? To what extent will growth slow down post-Covid?
  2. Will content creators demand more royalties in the future due to perceived unfairness of payment?
  3. Will competitors move to develop in-house content creating capabilities?
  4. Will the large tech players in the industry steal market share as their offerings evolve?


  • Incumbents are highly concentrated, with 5 firms owning 86% of market share (Citation 3), which gives them high bargaining power VS sellers and VS buyers
  • Low threat of entry as high sunk costs are needed to enter the market(e.g. marketing, IoT, licensing fees)
  • Margins in the music-streaming industry are mostly non-existent — most firms are not profitable (Citation 4, Citation 5) due to the high music licensing fees. This deters potential new entrants and makes it more likely for incumbents to exit the market
  • Podcast streaming is entering the growth phase, with +333% increase in shows between June 2018 and January 2021 (Citation 6), and +230% growth in episodes between April 2018 and January 2021. The industry is…



Jiten Chablani

Strategy @ BT Group. I explore economics, innovation and growth strategy in the tech industry. Views are my own.