TIVP065: SPOTIFY (SPOT): INVESTING IN MUSIC IN THE AGE OF AI

W/ SHAWN O’MALLEY & DANIEL MAHNCKE

TIVP065: SPOTIFY (SPOT): INVESTING IN MUSIC IN THE AGE OF AI W/ SHAWN O’MALLEY & DANIEL MAHNCKE

29 March 2026

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 how Spotify was born out of a vision to outcompete piracy, why music streaming margins are structurally constrained by label royalties, how Spotify is diversifying into podcasts and audiobooks, what CEO Daniel Ek’s departure means for the company, and whether Spotify’s stock is attractively priced after declining 25%, plus so much more!

Attend our Intrinsic Value Conference (for free):

From 1-4 pm CT on Friday, May 1st, at Hotel Indigo in downtown Omaha (Address: 1804 Dodge St, Omaha, NE 68102)

What to expect? A special live stock pitch from Shawn and Daniel, a Q&A about their investing strategy, and a social hour to network with other like-minded investors!

*Please note that while attendance is free and open to the public, it’s on a first-come, first-serve basis. We will only have room for about 100 people. However, members of our Intrinsic Value Community will have reserved seating + access to a private dinner with other investors (learn more about our Intrinsic Value Community here).”

SUBSCRIBE

IN THIS EPISODE, YOU’LL LEARN:

  • How Spotify saved the recorded music industry from piracy
  • Why the freemium business model was key to Spotify’s growth
  • What makes Spotify’s recommendation engine and personalization a competitive moat
  • How Spotify is diversifying beyond music into podcasts and audiobooks
  • Why music streaming margins are structurally constrained by label royalties
  • How YouTube poses the biggest competitive threat to Spotify
  • What Spotify’s management team thinks about AI’s impact on the business
  • How Spotify’s pricing power and international expansion affect its valuation
  • Whether Shawn and Daniel add SPOT to their Intrinsic Value Portfolio
  • And much, much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Shawn O’Malley: Spotify might be the most used media app on your phone, and also one of the more underappreciated tech giants on all of Wall Street.

[00:00:08] Daniel Mahncke: Because everyone agrees it’s a great product. But investors can’t decide if it is a great business, too.

[00:00:14] Shawn O’Malley: Spotify is a company that’s saved the recorded music industry, yet it struggled for years to prove that it could achieve the kinds of operating leverage of other tech giants. But now margins are finally just starting to inflect.

[00:00:33] Intro: You’re listening to the Intrinsic Value Podcast by The Investor’s Podcast Network. Since 2014, with over 180 million downloads, we’ve learned directly from the world’s best investors. Now we’re applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. And now here are your hosts, Shawn O’Malley and Daniel Mahncke.

[00:01:04] Daniel Mahncke: Welcome back to The Intrinsic Value Podcast. Today we’re looking at a company that almost everyone listening has used and may even be using to listen to or to watch this very conversation. We’re talking about Spotify. Shawn, you have covered Spotify in a podcast back in, I think, 2020, for which we will also link to in the show notes.

[00:01:22] Daniel Mahncke: But I am really excited to see how your thinking has evolved because a lot has happened in the meantime. And as always, we want to build a mental model of what Spotify is, why it exists, and where the value of its platform actually accrues, and what needs to be true for us to consider this stock attractively priced or valued today.

[00:01:42] Shawn O’Malley: Given how much we always joke about just looking down at what apps we use most on our phones, and this kind of Peter Lynch style investment inspiration. It’s pretty funny that the app we use the most and literally make our living on has not been pitched yet. And so my biases are definitely going to be pretty apparent today because I absolutely love Spotify. I’ve used it since I was in middle school, and I have years and years worth of playlists downloaded onto the app that reflect all kinds of different periods of my life.

[00:02:12] Shawn O’Malley: So it’s a very nostalgic conversation for me, honestly. But at the same time, we often find with a lot of our favorite consumer products and services. It’s also a great business. And so from a user standpoint, I think it’s fair to say that it’s pretty self-evident as to why Spotify has caught on, right?

[00:02:30] Shawn O’Malley: Like they found a way to take the entire world’s catalog of recorded music and put it at your fingertips, available to stream as much as you want and whenever you want, for free, with ads or without ads. For a very modest subscription premium relative to the cost of other forms of entertainment. And so personally, I spend much more time using Spotify playing music in the background than I do sitting down watching Netflix. We actually just bought a handful of Sonos speakers that we set up around my house.

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

BOOKS AND RESOURCES

Some of the links on this page are affiliate links or relate to partners who support our show. If you choose to sign up or make a purchase through them, we may receive compensation at no additional cost to you.

NEW TO THE SHOW?

CONNECT WITH SHAWN

CONNECT WITH DANIEL

PROMOTIONS

Check out our latest offer for all The Investor’s Podcast Network listeners!

WSB + BFF + RWH Promotions

The Intrinsic Value Newsletter