TIVP065: Spotify (SPOT): Investing in Music in the Age of AI w/ Shawn O’Malley & Daniel Mahncke

Shawn O'Malley and Daniel Mahncke explore Spotify Inc. (ticker: SPOT), the world's largest audio streaming platform, and assess whether the company can sustain its growth and improve margins against fierce competition from YouTube, Apple, and Amazon, or whether it will remain trapped as a low-margin intermediary in the music industry. Spotify saved the recorded music industry from piracy and built a platform that over 750 million people use monthly.

IN THIS EPISODE, YOU’LL LEARN:

00:00:00 - Intro
00:13:25 - How Spotify saved the recorded music industry from piracy
00:24:40 - Why the freemium business model was key to Spotify's growth
00:29:24 - What makes Spotify's recommendation engine and personalization a competitive moat
00:51:00 - How Spotify is diversifying beyond music into podcasts and audiobooks
00:37:56 - Why music streaming margins are structurally constrained by label royalties
01:16:27 - How YouTube poses the biggest competitive threat to Spotify
01:11:26 - What Spotify's management team thinks about AI's impact on the business
00:41:11 - How Spotify's pricing power and international expansion affect its valuation
01:28:14 - Whether Shawn and Daniel add SPOT to their Intrinsic Value Portfolio

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

• The Investors Podcast Network is excited to debut a new community known as The Intrinsic Value Community for investors to learn, share ideas, network, and join calls with experts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Sign up for the waitlist(!)⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
• Sign up for ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter.⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
• Learn how to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠join us⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ in Omaha for the 2026 Berkshire Hathaway shareholder meeting.
• Track ⁠⁠⁠⁠⁠The Intrinsic Value Portfolio⁠⁠⁠⁠⁠.
• Shawn & Daniel use ⁠⁠⁠Fiscal.ai⁠⁠⁠ for every company they research — use their ⁠⁠⁠referral link⁠⁠⁠ to get started with a 15% discount!
• Check out The Story of Spotify, w/ Shawn O’Malley (podcast from 2024).
• Shawn & Daniel’s