Such a valuation -- though just a fluid estimate at this point -- dwarfs many players in the music business. To put these valuations in perspective, consider that in 2012, EMI's recorded music and publishing divisions were sold for $1.9 billion and $2.2 billion, respectively. MVR's $5.7 billion price tag for Spotify is nearly double Pandora's current enterprise value of roughly $3.2 billion, but on par with Live Nation's current enterprise value of roughly $5.6 billion. (Enterprise value can be thought of as the cost to take over a company, given current share price.)
On the other hand, SiriusXM shows investors think digital subscription services have potential. The satellite radio company has 27.3 million subscribers (to Spotify's 6 million) with an enterprise value of $24.4 billion.
Among the positives of Spotify that MVR lists are the general rise of subscription services of various media types; the shift in consumer behavior (and expectation) from ownership to access; and the belief that Spotify has "just scratched the surface" of the available global market. On the latter point, MVR rightly sees major potential in automobile integration and partnerships with telecommunications companies and Internet service providers. Running beneath its entire analysis is an understanding that Spotify is at the forefront of a major disruption in how people experience music. This disruption provides a unique business opportunity.
But Spotify, and the business in general, are not without pitfalls. MVR singles out royalties as a drag on Spotify's ability to achieve profitability. However, it believes Spotify will use its size and good relationships with record labels to negotiate lower royalty rates. MVR also points to a "hyper-competitive landscape" that includes popular radio services like Pandora and iHeartRadio as well as Deezer, Rhapsody, Apple's Beats Music and WiMP, whose parent company Aspiro may be acquired by Jay-Z.