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This doesn't seem that surprising. 2014 Revenue: $1.3 billion (up 45% from 2013) 2014 Net Loss: $197 million (up from $68 million loss in 2013) That's a l

This doesn't seem that surprising. 2014 Revenue: $1.3 billion (up 45% from 2013) 2014 Net Loss: $197 million (up from $68 million loss in 2013) That's a lot of money to be bleeding and losses are increasing even as revenue grows. If you wondered why they got terms like this, that would explain it. You can call it getting "strategic resources" if you like, but I call it running out of cash. http://www.nytimes.com/2015/05/09/business/media/as-spotify-expands-revenue-rises-and-losses-deepen.html http://www.nytimes.com/2015/05/09/business/media/as-spotify-...

zevyoura 11y ago
From the article: "A source familiar with Spotify’s finances tells me it still had €570 million still in the bank, so there was no gun to its head to raise this money."
jevinskie 11y ago
Is this because their product offering is not as good as their competitors? I switched to Spotify over services like streaming radio (Pandora) and cloud music storage (Amazon Music) a couple of years ago. Haven't looked at the competition much since. I heard that Apple Music, the one potential competitor I was considering switching to, was buggy. I've been frustrated with Spotify bugs in the past but have found that I've adapted and most have been removed, so I never switched. Are the quality of the services really represented in the company's valuation?
- p4wnc6 11y ago
  I discontinued my Spotify service about 18 months ago because I went through the process of deleting my Facebook account, and the backend Spotify account was linked to it. It turned into a pretty unexpected ordeal, I had to call Spotify customer service, they asked me if I could reactivate my Facebook account just for this, have them "fix" it, then deactivate again, etc. At the time Spotify Linux support wasn't very good either (don't know about now). Anyway, I switched to Amazon Prime Music because I was already a Prime customer and figured that paying nothing beyond the Prime subscription was perhaps better than paying $8 or whatever Spotify's rate was then. I am really glad that I did it. Amazon Prime Music has consistently worked extremely well for me on iPhone and iPad and in browser. With standard AT&T 4G service, even here in rural Indiana, I have no trouble streaming from Amazon when I go running. The major downside is that their music catalog is not as comprehensive as Spotify. But I've found that there are only a handful of artists that I really love which I can't listen to yet on Amazon (Beirut being the one that I really miss). The catalog is very large though. They have any type of music you're looking for, from country-western to African to the latest and greatest unheard-of indie artist. They just don't have exhaustive coverage of all of them. If you are an extreme audiophile type and you really need to have completely exhaustive coverage of every possible artist, then Amazon won't work for you. But if you try out Amazon and find that it mostly covers the artists you enjoy and you don't really need the exhaustive coverage, and you happen to subscribe to Prime, then it's a great option. Full disclaimer: I am not a fan of Amazon in general, but I am a fan of good products, and for casual music streaming from most, but not all, artists, I think Amazon is probably the best service available right now. The way I break it down: Spotify --> You require on-demand access to absolutely every imaginable artist, you enjoy heavy integration with social media clients. Apple --> You may want to purchase the music, house it in iTunes, and own fully offline copies (not just caching, which other services can do too). Amazon --> You're more casual about it than either of the above cases and you already have Prime. You either mostly listen to Top 40 stuff, or else for the less common stuff, you verify ahead of time that Amazon offers a catalog in that area that's good enough for you. You probably don't care about owning the music, but you still can purchase it via Amazon if you want to.
  - ghaff 11y ago
    You mostly well described it for me. I tried Apple Music for a while but I get Amazon for "free" through Prime. I don't really care about having everything. I have a pretty big music library already and I'll buy anything I really want. (Where I probably differ is that I'd just as soon own music that I particularly like.)
  - tomjen3 11y ago
    Spotify doesn't have every conceivable artist. They do have a fairly comprehensive coverage, but until recently they didn't even have Rammstein. They are probably the best still in the business, but the only company that had everything, including the really obscure indie artists, were Grooveshark. Though expecting Spotify to have obscure Filk songs about 40 year old scify is probably asking too much.
- thirdsun 11y ago
  Rather a sidenote: Surprisingly enough I think that none of the current services, including Spotify, hold a candle to what rdio, now shutdown, had to offer. I was shocked to learn just how far behind Spotify, Apple Music, Tidal, Deezer or Google Music were when I had to look for an alternative. It's really bad. That was a very common reaction among ex-rdio users.
  - x0x0 11y ago
    What do you miss?
    - bentlegen 11y ago
      I was an Rdio subscriber from 2010 until it shut down, and I've been a Spotify subscriber since. I can name a few things: 1) Discovery. Rdio would inform me when new albums are out by artists I listen to. Spotify doesn't. Rdio's "Artist Stations" were also much better – not only did they not repeat (like Spotify's do), they also let you choose whether you wanted to hear "more" or "less" of the artist themselves while listening to their station. 2) Social. I miss seeing my friends faces next to albums, letting me know that they'd listened to it. I also miss the "Network Heavy Rotation" view, that showed trending albums by friends/users I follow. I miss that a user's profile would show you what albums they've been listening to frequently lately. Spotify only tells you what track a friend is listening to right now, and their profile shows you what artists. So, awesome, you know your friend is listening to Bowie, but you don't know which of Bowie's 20 albums they're into. 3) Your collection. Rdio had no upper bound on saved albums (that I'm aware of). I've already peaked the maximum number of saved songs in Spotify – it literally won't let me "save" anything else without going through my existing albums and choosing something to remove. 4) Playlist searching. Spotify by default names your playlist according to the first song you've added. You have to go out of your way to give it a different name. This means there are TONS of playlists in Spotify that are named "Nirvana" purely because that was the first song in the playlist. It massively pollutes searching and makes finding good playlists tough. Also, there's no sensible ranking of playlists – Rdio would at least tell you which were the most popular, which was usually good enough. There are about another dozen things I could name, but I'll stop here. Spotify has felt like a giant step backwards from Rdio, and I think I'm going to explore alternatives soon.
- Splines 11y ago
  Both Spotify and Pandora are losing money on a consistent basis. IMO streaming music is a losing business, and the only way a provider is going to stay in the market is because they have other services that complement the music. I love Spotify and am a daily user but honestly it's going to take a lot of work to turn things around for them. Content acquisition costs are killer and are not something that can go away.
  - jeffdavis 11y ago
    I thought the exact same thing about Netflix. What I missed was actually quite obvious: there are already companies making a lot of money in content delivery (e.g. Comcast). I don't know whether that will carry over to music quite as well though.
    - joshdickson 11y ago
      Music is different in that a number of folks (Spotify, Apple, Google, now SoundCloud, etc) are all licensing most of the same music from the same distributors for similar prices. Sure, there are some exclusives on particular platforms, but it's mostly the same music. All there is to Spotify is the UX. Video is different. Most content companies have bid out their back catalogues to one exclusive provider, or creating additional premium content (think House of Cards). In video it's all about premium exclusive content. In music there is some of that, but it's mostly all the same.
rokhayakebe 11y ago
But if they cut down spending 10-15% they could be profitable.
- kgwgk 11y ago
  According to the Guardian article cited in another comment, it seems that they spent roughly 880mn in royalties, 180mn in personnel and 180mn in other costs. If royalties are what they are, they would have to cut 160mn in the 360mn personnel & other sections (45%) to be profitable. (I'm talking about 2014 results here, the numbers are probably different now). Edit: actually, according to the article, the 880mn correspond to "royalties & distribution". There is more info about these numbers at http://www.musicbusinessworldwide.com/how-can-spotify-become-profitable/ http://www.musicbusinessworldwide.com/how-can-spotify-become...

zevyoura 11y ago

From the article: "A source familiar with Spotify’s finances tells me it still had €570 million still in the bank, so there was no gun to its head to raise this money."

jevinskie 11y ago

Is this because their product offering is not as good as their competitors? I switched to Spotify over services like streaming radio (Pandora) and cloud music storage (Amazon Music) a couple of years ago. Haven't looked at the competition much since. I heard that Apple Music, the one potential competitor I was considering switching to, was buggy. I've been frustrated with Spotify bugs in the past but have found that I've adapted and most have been removed, so I never switched. Are the quality of the services really represented in the company's valuation?

p4wnc6 11y ago
I discontinued my Spotify service about 18 months ago because I went through the process of deleting my Facebook account, and the backend Spotify account was linked to it. It turned into a pretty unexpected ordeal, I had to call Spotify customer service, they asked me if I could reactivate my Facebook account just for this, have them "fix" it, then deactivate again, etc. At the time Spotify Linux support wasn't very good either (don't know about now). Anyway, I switched to Amazon Prime Music because I was already a Prime customer and figured that paying nothing beyond the Prime subscription was perhaps better than paying $8 or whatever Spotify's rate was then. I am really glad that I did it. Amazon Prime Music has consistently worked extremely well for me on iPhone and iPad and in browser. With standard AT&T 4G service, even here in rural Indiana, I have no trouble streaming from Amazon when I go running. The major downside is that their music catalog is not as comprehensive as Spotify. But I've found that there are only a handful of artists that I really love which I can't listen to yet on Amazon (Beirut being the one that I really miss). The catalog is very large though. They have any type of music you're looking for, from country-western to African to the latest and greatest unheard-of indie artist. They just don't have exhaustive coverage of all of them. If you are an extreme audiophile type and you really need to have completely exhaustive coverage of every possible artist, then Amazon won't work for you. But if you try out Amazon and find that it mostly covers the artists you enjoy and you don't really need the exhaustive coverage, and you happen to subscribe to Prime, then it's a great option. Full disclaimer: I am not a fan of Amazon in general, but I am a fan of good products, and for casual music streaming from most, but not all, artists, I think Amazon is probably the best service available right now. The way I break it down: Spotify --> You require on-demand access to absolutely every imaginable artist, you enjoy heavy integration with social media clients. Apple --> You may want to purchase the music, house it in iTunes, and own fully offline copies (not just caching, which other services can do too). Amazon --> You're more casual about it than either of the above cases and you already have Prime. You either mostly listen to Top 40 stuff, or else for the less common stuff, you verify ahead of time that Amazon offers a catalog in that area that's good enough for you. You probably don't care about owning the music, but you still can purchase it via Amazon if you want to.
- ghaff 11y ago
  You mostly well described it for me. I tried Apple Music for a while but I get Amazon for "free" through Prime. I don't really care about having everything. I have a pretty big music library already and I'll buy anything I really want. (Where I probably differ is that I'd just as soon own music that I particularly like.)
- tomjen3 11y ago
  Spotify doesn't have every conceivable artist. They do have a fairly comprehensive coverage, but until recently they didn't even have Rammstein. They are probably the best still in the business, but the only company that had everything, including the really obscure indie artists, were Grooveshark. Though expecting Spotify to have obscure Filk songs about 40 year old scify is probably asking too much.
thirdsun 11y ago
Rather a sidenote: Surprisingly enough I think that none of the current services, including Spotify, hold a candle to what rdio, now shutdown, had to offer. I was shocked to learn just how far behind Spotify, Apple Music, Tidal, Deezer or Google Music were when I had to look for an alternative. It's really bad. That was a very common reaction among ex-rdio users.
- x0x0 11y ago
  What do you miss?
  - bentlegen 11y ago
    I was an Rdio subscriber from 2010 until it shut down, and I've been a Spotify subscriber since. I can name a few things: 1) Discovery. Rdio would inform me when new albums are out by artists I listen to. Spotify doesn't. Rdio's "Artist Stations" were also much better – not only did they not repeat (like Spotify's do), they also let you choose whether you wanted to hear "more" or "less" of the artist themselves while listening to their station. 2) Social. I miss seeing my friends faces next to albums, letting me know that they'd listened to it. I also miss the "Network Heavy Rotation" view, that showed trending albums by friends/users I follow. I miss that a user's profile would show you what albums they've been listening to frequently lately. Spotify only tells you what track a friend is listening to right now, and their profile shows you what artists. So, awesome, you know your friend is listening to Bowie, but you don't know which of Bowie's 20 albums they're into. 3) Your collection. Rdio had no upper bound on saved albums (that I'm aware of). I've already peaked the maximum number of saved songs in Spotify – it literally won't let me "save" anything else without going through my existing albums and choosing something to remove. 4) Playlist searching. Spotify by default names your playlist according to the first song you've added. You have to go out of your way to give it a different name. This means there are TONS of playlists in Spotify that are named "Nirvana" purely because that was the first song in the playlist. It massively pollutes searching and makes finding good playlists tough. Also, there's no sensible ranking of playlists – Rdio would at least tell you which were the most popular, which was usually good enough. There are about another dozen things I could name, but I'll stop here. Spotify has felt like a giant step backwards from Rdio, and I think I'm going to explore alternatives soon.
Splines 11y ago
Both Spotify and Pandora are losing money on a consistent basis. IMO streaming music is a losing business, and the only way a provider is going to stay in the market is because they have other services that complement the music. I love Spotify and am a daily user but honestly it's going to take a lot of work to turn things around for them. Content acquisition costs are killer and are not something that can go away.
- jeffdavis 11y ago
  I thought the exact same thing about Netflix. What I missed was actually quite obvious: there are already companies making a lot of money in content delivery (e.g. Comcast). I don't know whether that will carry over to music quite as well though.
  - joshdickson 11y ago
    Music is different in that a number of folks (Spotify, Apple, Google, now SoundCloud, etc) are all licensing most of the same music from the same distributors for similar prices. Sure, there are some exclusives on particular platforms, but it's mostly the same music. All there is to Spotify is the UX. Video is different. Most content companies have bid out their back catalogues to one exclusive provider, or creating additional premium content (think House of Cards). In video it's all about premium exclusive content. In music there is some of that, but it's mostly all the same.

rokhayakebe 11y ago

But if they cut down spending 10-15% they could be profitable.

kgwgk 11y ago
According to the Guardian article cited in another comment, it seems that they spent roughly 880mn in royalties, 180mn in personnel and 180mn in other costs. If royalties are what they are, they would have to cut 160mn in the 360mn personnel & other sections (45%) to be profitable. (I'm talking about 2014 results here, the numbers are probably different now). Edit: actually, according to the article, the 880mn correspond to "royalties & distribution". There is more info about these numbers at http://www.musicbusinessworldwide.com/how-can-spotify-become-profitable/ http://www.musicbusinessworldwide.com/how-can-spotify-become...