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Just doing a bit of back-of-the-envelope math: 40 years of Spotify assuming 4% annual increases would end up being around $13,700. However, if prices increase a

by mdasen 2y ago

Just doing a bit of back-of-the-envelope math: 40 years of Spotify assuming 4% annual increases would end up being around $13,700. However, if prices increase a little faster, the price goes up fast. 6% annual increases makes it over $22,000 and 10% annual increases would make it nearly $64,000. Individual tracks tend to cost me $1.29 or less so that's well over 10,000 songs even assuming only 4% annual increases. Some people might listen to a huge variety, but others certainly use music streaming services to listen to a small set of songs.

buzzerbetrayed 2y ago
It doesn't make sense to assume 4% annual increase, unless you're assuming it will outpace inflation by 4%. Just ignore the inflation and do everything in "todays" dollars, and then you'll get an answer that actually makes sense to you. Right now you've assumed inflation in the calculation, but then got a result that is pretty meaningless, because $13,700 today doesn't mean what it will mean in 40 years.
Aachen 2y ago
10'000 songs × 1.29 $/song = 12'900$ to spend on music as a one-time up-front purchase. That's certainly an interesting proposition. If you stick that in an ETF for 30 years, you expect to get investment×(returns-inflation)^years = 12.9k×(6%-2%.)^30 = 12.9k×(1.04)^30 = 41.8k. (Does someone have a formula for a 90% confidence interval at, say, 30 years?) It doesn't quite pay for the streaming service but it goes a long way. If you decide to buy music and rent or buy a server instead, there's additional costs to factor in Edit: wait I don't think I factored in the inflation correctly. It should not be a factor in ETF returns, only in the cost of commercial streaming services right? So the amount should be higher, making commercial streaming services comparatively more attractive? Might need to factor in 30% income tax or something though. Hmm... meh, I'm going to call it close enough (typing this out on mobile is a bit of a pain)
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by mdasen 2y ago

buzzerbetrayed 2y ago

It doesn't make sense to assume 4% annual increase, unless you're assuming it will outpace inflation by 4%. Just ignore the inflation and do everything in "todays" dollars, and then you'll get an answer that actually makes sense to you. Right now you've assumed inflation in the calculation, but then got a result that is pretty meaningless, because $13,700 today doesn't mean what it will mean in 40 years.

Aachen 2y ago

10'000 songs × 1.29 $/song = 12'900$ to spend on music as a one-time up-front purchase. That's certainly an interesting proposition. If you stick that in an ETF for 30 years, you expect to get investment×(returns-inflation)^years = 12.9k×(6%-2%.)^30 = 12.9k×(1.04)^30 = 41.8k. (Does someone have a formula for a 90% confidence interval at, say, 30 years?) It doesn't quite pay for the streaming service but it goes a long way. If you decide to buy music and rent or buy a server instead, there's additional costs to factor in Edit: wait I don't think I factored in the inflation correctly. It should not be a factor in ETF returns, only in the cost of commercial streaming services right? So the amount should be higher, making commercial streaming services comparatively more attractive? Might need to factor in 30% income tax or something though. Hmm... meh, I'm going to call it close enough (typing this out on mobile is a bit of a pain)

deleted 2y ago
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