7 ms·

Is Spotify even profitable?

by a_imho 8y ago

isostatic 8y ago
I spend more on Spotify than I ever did on buying music, so someone’s winning
- WalterBright 8y ago
  I'd buy more than ten times the number of tracks if they were ten cents rather than a dollar.
- KozmoNau7 8y ago
  Conversely, I used to spend $75-100/month on CDs and downloads before I signed up for Spotify Premium, so I do save money. People like me are probably outliers in the grand scope of streaming vs buying, though. I still buy a lot of music from sites like Bandcamp, to support artists directly, especially after learning how small of a cut the artists get from streaming services. Someone's winning from the average person spending more on a Spotify subscription than they would on buying music. Unfortunately it's not the artists, it's the lumbering dinosaur major record labels.
  - naivefool 8y ago
    But the spotify model is artists share = total spotify payments * (total number of this artists plays / total number of listens to all artists) so if i only listen to 5 artists but they are some of the least listened to artists then they get basically none of my money and taylor swift, beyonce etc. get it all... what is worse spofity have been gamin gthe numbers to make sure even more money goes to a few big players. Spotify also have a really horrendous set of privacy rules. they are storing every tie you touched the controls right back to 2008 and selling that crap like mad. I just go straight to band camp, then look for the artists own site, then look for othre sites hosting flacs, then look for second hand CDs.. then i save the file myself and just look after it. all else fails i will just listen on youtube as i see companies like spotify being a real problem as they sell them selves as the exact opposite of what they are :(
    - KozmoNau7 8y ago
      Yes, they pool all payments, then portion out according to the share of plays compared to the total number of plays on the platform. That obviously favors popular artists, but it is a reasonable way of portioning payment, based on absolute popularity. Exactly as with traditional record sales, highly popular artists get the lion's share of the total revenue. In that sense, they payment scheme behind Spotify is absolutely nothing new. I would absolutely prefer if my subscription payment got portioned out to only the artists I personally listened to, but I can also see how that would be a daunting task to portion payment based on the listening profile of every individual user out of millions. It would be more fair, obviously. I bet there is/would be a lot of pushback from the big labels, obviously. All of this mess is why I still buy downloads from my favorite artists, especially if they're niche bands. I'm not gonna necessarily going to buy the next Kreator or Judas Priest album, but I'll definitely buy the next release from Bonehunter or Blackrat, precisely because they get shafted by the combination of Spotify, big labels and "creative accounting".
      - ReptileMan 8y ago
        No. Reasonable is to split each individual sub proportionally to the artists listened by it. If I listened only to Gojira and Satyricon this month - I want them to take my mpney and spotify their cut, not Cardi B.
        KozmoNau7 8y ago
        I would prefer that arrangement as well, and I don't know if the reason for not doing it is technical, or because of contracts with the big labels. It may be a deal with the devil to let Spotify continue to exist, as the labels could easily crush them. And you can already support your favorite artists directly, by going to their shows, buying their merch and buying their music on Bandcamp. Some artists even use Patreon now, which is a sort of interesting return to the days of artists working for wealthy patrons.
        naivefool 8y ago
  - jdietrich 8y ago
    Back in the noughties, the British record industry talked a lot about "fifty quid blokes" - professional middle-aged men who would leave work on Friday, go into HMV or Borders and buy a couple of CDs, a DVD and a book, totalling about £50. They were very well known in retail and were catered to with music magazines like Q, Mojo and The Word. They were hugely important to the record industry (hence all the classic rock reissues at that time), but their spending has mostly dried up thanks to streaming. £20 a month for Spotify and Netflix is a bargain compared to what they were spending on physical media. I think it's fairly clear from the revenue numbers that the move to streaming has been a net loss for the recording industry. If they are to sustain the growth in paid streaming and return to 1990s levels of revenue, they need to either substantially grow the overall market for paid streaming or substantially increase subscription fees. The big problem they face is segmentation - there's no practical way of charging a hardcore music fan $40/mo and a casual listener $10/mo for the same unlimited service.
    - KozmoNau7 8y ago
      I don't think we're ever going to return to a revenue level similar to the 90s, honestly I think that was a historical aberration caused by a number of supporting factors. In the early 90s, more people in the west had more disposable income, production had become all-digital (lowering production costs), and CDs cost next to nothing to make compared to stamping vinyl or making cassettes, so the profit margins were bigger. There was also the explosion of pop music, especially boy bands with gigantic fan bases. CD players were inexpensive and started to come as standard equipment in cars. At the same time, storage capacity and processing power in the average PC was inadequate for storing uncompressed CD quality audio and playing back compressed audio, respectively. Of course, usable lossy audio codecs were very much in their infancy, and CD-R drives were still very expensive, slow and unreliable. Not to mention the lacking state of mobile devices at the time, if anyone even had a mobile phone at this time, it was very likely to be on an old-fashioned analog network. It was the perfect environment for big record industry profits, but by the late 90s/early 2000s, we had Napster, affordable CD-R drives, increased storage space, processing power and internet speeds, and of course properly viable lossy codecs. Pandora's box was opened, and now matter how they try, the big labels can't close it back up again. I don't think segmentation is the solution, you can't get people to accept tiered pricing based on usage, the $10 for unlimited usage like a library is the entire reason people love streaming services. I think what they can do is add higher subscription tiers with bonus features, higher sound quality, personalized content that isn't just made by an algorithm. Maybe they could even do exclusive access to new releases, but that may result in backlash from "basic" subscribers who feel like they're getting cheated out of content. In the end, perhaps it's just an uncomfortable shift towards less income from records sales/plays, and a bigger reliance on touring and merch sales. I know a few bands that use Patreon as a sort of "pay what you want" fanclubs, where you get early access to various content at lower tiers, and things like Skype chats or guitar lessons at higher tiers.
  - cjarrett 8y ago
    I switched to buying Vinyl at Shows, and Bandcamp CD releases directly from non mainstream artists. I always thought services like What.CD were actually good for the industry--as it was essentially an on-ramp onto trying new genres and artists from like-minded enthusiasts. Spotify's charts don't seem to do anything for me, and my exploration is actually lower than before (subbed for around 4 years now...?)
cinquemb 8y ago
Last quarter report they had -$0.22 eps, and they report today, analysts are still expecting it to be less than zero per share. Edit: earnings beat with $0.44 eps, haven't looked at full report though for any gotchas.

Is Spotify even profitable?

by a_imho 8y ago

Is Spotify even profitable?

isostatic 8y ago

I spend more on Spotify than I ever did on buying music, so someone’s winning

WalterBright 8y ago
I'd buy more than ten times the number of tracks if they were ten cents rather than a dollar.
KozmoNau7 8y ago
Conversely, I used to spend $75-100/month on CDs and downloads before I signed up for Spotify Premium, so I do save money. People like me are probably outliers in the grand scope of streaming vs buying, though. I still buy a lot of music from sites like Bandcamp, to support artists directly, especially after learning how small of a cut the artists get from streaming services. Someone's winning from the average person spending more on a Spotify subscription than they would on buying music. Unfortunately it's not the artists, it's the lumbering dinosaur major record labels.
- naivefool 8y ago
  But the spotify model is artists share = total spotify payments * (total number of this artists plays / total number of listens to all artists) so if i only listen to 5 artists but they are some of the least listened to artists then they get basically none of my money and taylor swift, beyonce etc. get it all... what is worse spofity have been gamin gthe numbers to make sure even more money goes to a few big players. Spotify also have a really horrendous set of privacy rules. they are storing every tie you touched the controls right back to 2008 and selling that crap like mad. I just go straight to band camp, then look for the artists own site, then look for othre sites hosting flacs, then look for second hand CDs.. then i save the file myself and just look after it. all else fails i will just listen on youtube as i see companies like spotify being a real problem as they sell them selves as the exact opposite of what they are :(
  - KozmoNau7 8y ago
    Yes, they pool all payments, then portion out according to the share of plays compared to the total number of plays on the platform. That obviously favors popular artists, but it is a reasonable way of portioning payment, based on absolute popularity. Exactly as with traditional record sales, highly popular artists get the lion's share of the total revenue. In that sense, they payment scheme behind Spotify is absolutely nothing new. I would absolutely prefer if my subscription payment got portioned out to only the artists I personally listened to, but I can also see how that would be a daunting task to portion payment based on the listening profile of every individual user out of millions. It would be more fair, obviously. I bet there is/would be a lot of pushback from the big labels, obviously. All of this mess is why I still buy downloads from my favorite artists, especially if they're niche bands. I'm not gonna necessarily going to buy the next Kreator or Judas Priest album, but I'll definitely buy the next release from Bonehunter or Blackrat, precisely because they get shafted by the combination of Spotify, big labels and "creative accounting".
    - ReptileMan 8y ago
      No. Reasonable is to split each individual sub proportionally to the artists listened by it. If I listened only to Gojira and Satyricon this month - I want them to take my mpney and spotify their cut, not Cardi B.
      - KozmoNau7 8y ago
        I would prefer that arrangement as well, and I don't know if the reason for not doing it is technical, or because of contracts with the big labels. It may be a deal with the devil to let Spotify continue to exist, as the labels could easily crush them. And you can already support your favorite artists directly, by going to their shows, buying their merch and buying their music on Bandcamp. Some artists even use Patreon now, which is a sort of interesting return to the days of artists working for wealthy patrons.
        naivefool 8y ago
- jdietrich 8y ago
  Back in the noughties, the British record industry talked a lot about "fifty quid blokes" - professional middle-aged men who would leave work on Friday, go into HMV or Borders and buy a couple of CDs, a DVD and a book, totalling about £50. They were very well known in retail and were catered to with music magazines like Q, Mojo and The Word. They were hugely important to the record industry (hence all the classic rock reissues at that time), but their spending has mostly dried up thanks to streaming. £20 a month for Spotify and Netflix is a bargain compared to what they were spending on physical media. I think it's fairly clear from the revenue numbers that the move to streaming has been a net loss for the recording industry. If they are to sustain the growth in paid streaming and return to 1990s levels of revenue, they need to either substantially grow the overall market for paid streaming or substantially increase subscription fees. The big problem they face is segmentation - there's no practical way of charging a hardcore music fan $40/mo and a casual listener $10/mo for the same unlimited service.
  - KozmoNau7 8y ago
    I don't think we're ever going to return to a revenue level similar to the 90s, honestly I think that was a historical aberration caused by a number of supporting factors. In the early 90s, more people in the west had more disposable income, production had become all-digital (lowering production costs), and CDs cost next to nothing to make compared to stamping vinyl or making cassettes, so the profit margins were bigger. There was also the explosion of pop music, especially boy bands with gigantic fan bases. CD players were inexpensive and started to come as standard equipment in cars. At the same time, storage capacity and processing power in the average PC was inadequate for storing uncompressed CD quality audio and playing back compressed audio, respectively. Of course, usable lossy audio codecs were very much in their infancy, and CD-R drives were still very expensive, slow and unreliable. Not to mention the lacking state of mobile devices at the time, if anyone even had a mobile phone at this time, it was very likely to be on an old-fashioned analog network. It was the perfect environment for big record industry profits, but by the late 90s/early 2000s, we had Napster, affordable CD-R drives, increased storage space, processing power and internet speeds, and of course properly viable lossy codecs. Pandora's box was opened, and now matter how they try, the big labels can't close it back up again. I don't think segmentation is the solution, you can't get people to accept tiered pricing based on usage, the $10 for unlimited usage like a library is the entire reason people love streaming services. I think what they can do is add higher subscription tiers with bonus features, higher sound quality, personalized content that isn't just made by an algorithm. Maybe they could even do exclusive access to new releases, but that may result in backlash from "basic" subscribers who feel like they're getting cheated out of content. In the end, perhaps it's just an uncomfortable shift towards less income from records sales/plays, and a bigger reliance on touring and merch sales. I know a few bands that use Patreon as a sort of "pay what you want" fanclubs, where you get early access to various content at lower tiers, and things like Skype chats or guitar lessons at higher tiers.
- cjarrett 8y ago
  I switched to buying Vinyl at Shows, and Bandcamp CD releases directly from non mainstream artists. I always thought services like What.CD were actually good for the industry--as it was essentially an on-ramp onto trying new genres and artists from like-minded enthusiasts. Spotify's charts don't seem to do anything for me, and my exploration is actually lower than before (subbed for around 4 years now...?)

cinquemb 8y ago

Last quarter report they had -$0.22 eps, and they report today, analysts are still expecting it to be less than zero per share. Edit: earnings beat with $0.44 eps, haven't looked at full report though for any gotchas.