Spotify loss widens despite higher revenue(mediadecoder.blogs.nytimes.com)
mediadecoder.blogs.nytimes.com
Spotify loss widens despite higher revenue
http://mediadecoder.blogs.nytimes.com/2011/10/10/spotify-loss-widens-despite-higher-revenue/?src=busln
7 comments
Spotify is a really bad deal from an investment point of view. For each dollar they stand to make profit, the record companies will up their license fees a dollar. Thus, there's no room for profit in companies like Spotify.
That is exactly their problem. Spotify owns neither the customer nor digital contents.
They can play their "music discovery arbitrage" game till it grows big enough that their partners have enough incentive to step in and take over their business.
No different than what happened to Facebook app makers. Even Zynga's profit outlook is questionable as it is crystal clear from their latest filing...
Spotify's best bet is to sell themselves at the peak. But they are pretty expensive already.
They can play their "music discovery arbitrage" game till it grows big enough that their partners have enough incentive to step in and take over their business.
No different than what happened to Facebook app makers. Even Zynga's profit outlook is questionable as it is crystal clear from their latest filing...
Spotify's best bet is to sell themselves at the peak. But they are pretty expensive already.
I don't think Spotify can easily sell themselves. It would immediately void all their current licensing agreements.
You are describing the classic example of a parasite that is so virulent it kills its host.
A more pragmatic music label will charge as much in license fees as they possibly can without killing Spotify.
A more pragmatic music label will charge as much in license fees as they possibly can without killing Spotify.
How can a company have income like that and still be that far in the hole? Where are the costs coming from? Obviously bandwidth is going to cost, but I can't imagine it takes that big a hunk of their profits. Obviously the top expense is going to be licensing which tells me the studios are really the ones killing Spotify. Does anyone else find it odd that the ones who determine how much of a profit or loss the company incurs are also the ones watching the business to see how well it does? Is this a case of the left hand having no clue what the right hand is doing, or are the studios intentionally trying to kill Spotify to make some kind of point? Maybe they're trying to make it seem like a streaming service can't succeed because of "rampant piracy", and use that as an excuse to get new legislation? Maybe the goal is something else entirely. All I know is I'd really like to see a breakdown of their monthly expenses.
Likely it's minimums to rights holders.
Spotify will never be truly profitable. The labels are leeching whatever profit they make out of pure greed. It's a huge problem for any big streaming service, and it's just not worth it for investors.
As far as I understand it, each music subscription service negotiates it's own rates with the labels. There isn't an industry standard fee. So unless the fees have been publicly disclosed, it's a guess.
Another free (at-least so far) music streaming service that has figured out how to make money.....build out the eye balls(in this case ear lobes) and money will follow strategy?
I can only wonder how much of the costs are fees to the music companies. Is there any way to figure out at all what Spotify , Rdio, etc have to pay to provide their selection?
I think it's 3 cents per a stream. 33 songs for a dollar. 330 for 10 dollars. Let's say 11 hours of music for $10 a month?
I think they're losing money on how many songs people listen to vs subscription cost. The advertisement isn't offsetting it.
I think they're losing money on how many songs people listen to vs subscription cost. The advertisement isn't offsetting it.
You must be joking. Spotify paid out 0.003 per play on my last royalty statement. Pathetic. The sooner Spotify goes under, the better for the music industry.
What makes you think you'd have made more money if Spotify didn't exist?
You would buy the CD, or pay for the download. Doing that is way less justifiable when it's available on Spotify.
Do you seriously think people would buy the CDs of all the music they listen to in Spotify if it went offline? And go from spending $10/month to hundreds?
That kind of assumptions is what leads the RIAA to calculate losses bigger than the entire world's GDP.
That kind of assumptions is what leads the RIAA to calculate losses bigger than the entire world's GDP.
No, but people might do it for the handful of artists they really like or believe in.
I would have to think people paying the $5 or $10 subscription fee would be listening to more than 11 hours. Why would they price themselves so far under what it would take to turn even a tiny profit?
This will change as more and more artists go label free. The labels are clearly making a stand here - against the artist.