Spotify believes it can become the Netflix of music and Wall Street is interested in finding out if that is true.
Daniel Ek, the CEO of the Swedish music streamer, has been insisting that Spotify isn’t interested in competing with record labels as Netflix competes with Hollywood studios.
However, experts believe that the only way Spotify will be able to wrest control of its business and its margins is by cutting deals directly with A-list artists like Taylor Swift and Drake.
Music execs are already bracing for a brawl as Spotify’s streaming contracts with the “big three” music labels come up for renewal next year. The best-case scenario for Spotify is it’s growing subscriber base — the world’s biggest in music — would enable it to sign up a handful of big-name artists.
Although, Spotify, which reports third-quarter earnings on Thursday, could be out of a streaming deal with major record groups like Universal Music Group, Sony Music Entertainment or Warner Music Group.
Spotify subscriber count has reached 83 million recently.
MIDiA Research analyst Mark Mulligan wrote in a blog post this week that Spotify should sign up with Swift and Drake since Taylor Swift is on the lookout for a new label and Drake may well be on the end of his deal.
The big three labels pose the ability to retaliate by offering exclusives and promotions to rivals of Spotify like Pandora and Google Play. Netflix being far cheaper than cable TV, Spotify has a lot of rivals that provide cheap and free music-streaming options.