---

This book analyses Spotify, the current market leader of music streaming services. It provides a mathematical model which calculates future pay-outs of artists and the equivalent number of album sales needed to be indifferent between streaming and selling CDs. It shows that a musician´s net income from Spotify could increase up to five times on average which rises the equivalent number of sold albums, necessary to offset these opportunity costs. Spotify´s real options based valuation calculates two different market values: first, $ 8 bn with exponential growth assumptions and a Geometric Brownian Motion approach, second, roughly $ 1 bn with an Ornstein- Uhlenbeck process and a long-term mean market share of 40 %. Additionally, this book provides a break-even analysis of three different scenarios and shows the corresponding future profitability: when Spotify increases its current market share of 37 % up to roughly 50 %, it will report in black figures in 2016 even with an increase in costs of 82.3 % annually.

---

Berger, Niklas
Niklas Berger finished his Master in Management and Bachelor in Business Administration at WHU - Otto Beisheim School of Management. During his studies, he completed eight internships in various industries such as investment banking, private equity, and consulting. Since 2017, he´s working as a management consultant at McKinsey & Company in Munich.

---