5 ms·

Spotify is public and you can see most of their numbers -- the Cost of Revenue for 2021 was 7 billion EUR on 9.6 in revenue. The cost is said to be mostly the r

by Erwin 5y ago

Spotify is public and you can see most of their numbers -- the Cost of Revenue for 2021 was 7 billion EUR on 9.6 in revenue. The cost is said to be mostly the royalties though it would include paying the many millions to some podcasters. The ad-supported users outnumbers premium users (236 million to 180 million) but bring in only 1/6th the revenue. So that's a factor depressing the payout per stream. https://investors.spotify.com/financials/press-release-details/2022/Spotify-Technology-S.A.-Announces-Financial-Results-for-Fourth-Quarter-2021/default.aspx https://investors.spotify.com/financials/press-release-detai...

deleted 5y ago
[deleted]
falcolas 5y ago
Or phrased slightly differently, Spotify takes 30% of revenue generated by selling access to artists' songs.
- dale_glass 5y ago
  Seems pretty fair, since if it was easy for an artist to undercut Spotify, they'd be doing it.
  - falcolas 5y ago
    Just like the application developers on Google Play, Apple's app store, and Steam, eh?
    - sodality2 5y ago
      The difference is the artificial limitation placed on Play Store listings and Apple App Store, versus the freedom of an artist to sell their music to any other platform (it's just that it would be far less successful). The only "pull factor" Spotify has is the userbase, which is arguably fair. For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store. One could argue (on Android) that it's possible that you can install third-party markets, and that's true, but there's also pretty big roadblocks to installing, whereas selling on another music platform is much easier in comparison. (Don't believe me? Send your father an APK file and ask him to install it. Let alone iOS where this is not possible at all..
      - grog454 5y ago
        > For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store. Couldn't you replace "Google" and "Play Store" with "Spotify"? You can "sell" your app directly to users through your own site (see Fortnite) or dubious sites like https://en.uptodown.com/android/general-android https://en.uptodown.com/android/general-android but you have the same "pull factor" with the Play Store that you do with Spotify (the user base). The Google + Play Store and Spotify (company) + Spotify (platforms) situations don't seem fundamentally different to me, just different by degrees. Google's monopoly on Android app distribution is unparalleled.
        sodality2 5y ago
        Spotify is a service whereas GP is an application platform. You distribute apps (services like Spotify) through GP, whereas you distribute product (songs) through Spotify. GP is the only (reasonable) way to get apps on Android, whereas there are dozens of legal licensed alternatives for Spotify. You can try to find alternatives for an app store, but that doesn't change the fact that inherently within Android, there are certain roadblocks that simply don't exist for a Spotify competitor, for example.
    - dale_glass 5y ago
      Less problematic actually. If you don't like Google's policies you're a bit screwed since they control the platform very thoroughly. Spotify is just a convenience service in the end. They could sell their music through their own app, site, Magnatune, etc.
    - yywwbbn 5y ago
      There are plenty of different platforms besides Spotify which have comparable catalogs and are available on all/most platforms (even Apple Music has an Android app). Their subscription prices are almost the same so the market seems to be very competitive and nothing like the iOS App Store.
      - 8note 5y ago
        Similar prices could also suggest cartel-like behaviour
        trollian 5y ago
        The contracts that the record labels offer to streaming platforms are (or were a decade ago when I was in the business) set up to strictly control the prices seen by end users but I'm sure their lawyers believe they can do this without running afoul of competition laws. Even if the effect is price fixing...
    - alickz 5y ago
      Steam doesn't belong there, as it's not the only avenue for developers to distribute games on PC. Even Google Play is iffy, as developers could distribute through 3rd party app stores or sideloading, though Google makes that harder than it should be. Apple is really the only one of the 3 you mentioned that forces a 15/30% cut if developers want to distribute an app on their platform.
  - heavyset_go 5y ago
    Bandcamp takes 10% to 15%, which is still a lot, but definitely closer to "fair" than 30% is.
  - selcuka 5y ago
    > if it was easy for an artist to undercut Spotify, they'd be doing it Isn't this the definition of a monopoly?
    - HotHotLava 5y ago
      No, the definition of a monopoly is "the exclusive possession or control of the supply of or trade in a commodity or service." A company that is not easy to undercut could just be an efficient business that operates roughly at cost without excessive margins.
      - selcuka 5y ago
        I disagree. Spotify is practically a monopoly and is a rent-seeking entity. The reason artists can't go somewhere else is not because Spotify efficiently operates at cost (their gross margin was 26.5% in Q4), but because it's the only brand most customers know.
        mPReDiToR 5y ago
        Deezer is in competition, Amazon Music, YT Music. Monopoly doesn't apply, does it? Even DAB/FM radio takes their lunch.
  - eyelidlessness 5y ago
    I think it’s worth taking fairness as a separate question, especially when posing the question about alternatives. This classic article by Steve Albini captures what monetizing music was like for artists before the Internet: https://thebaffler.com/salvos/the-problem-with-music https://thebaffler.com/salvos/the-problem-with-music That said, many artists have objected to subscription models like Spotify’s (Taylor Swift notably), or a la carte like Apple’s (Pink Floyd and Beatles’ estates notably). Most paid Internet music services have been a mixed bag of inconsistent payouts and artistic control. Spotify is definitely among them, even if it might be more attractive than a Record Deal^tm. In my experience and inferred from experiences of other artists, SoundCloud has the best exposure benefits for lesser known artists combined with the most freedom to monetize, and Bandcamp is the most straightforward self publishing platform for built in monetization. Comparatively, Spotify is basically, like Apple, filling the void of the record labels they usurped. While their terms are comparably “fair”, it’s easy to understand why they’re not ideal for a lot of artists.
stormbrew 5y ago
It's probably not really possible to even estimate how much of actual cashflow is attributable to user income vs. artist payout from GAAP-based financial statements. And their cashflow statements are not particularly useful either. I'm sure a lot of nice things are "said to be," but if spotify were particularly proud of how much money they let through to artists I think they'd be touting it in more concrete ways. Anyways, this is a bit like looking at Walmart's COGS and declaring that they've never screwed over a supplier by forcing them to cut prices to the bone.
Wowfunhappy 5y ago
It doesn't naturally follow that if I gave Spotify more money, they'd give it to the artists versus taking it as extra profit.
- TrueDuality 5y ago
  But the corollary is definitely true, if 30% of the revenue goes to Google there is no chance of that money going to the artists.
  - Wowfunhappy 5y ago
    Sure, Spotify just isn’t the example I would choose to demonstrate OP’s point, which I thought was excellent.
- happymellon 5y ago
  There is no proof that if Spotify gave the labels more money, that it would go to the artists. I think Spotify is an excellent example of labels using a 3rd party to mislead where they money is really going when Spotify is paying nearly 80% of its income as fees to 3rd parties.
  - Wowfunhappy 5y ago
    Yes, that too! There are multiple intermediaries involved here.
    - happymellon 5y ago
      Maybe, but this is not Spotify that's the issue. They have a license to play music, and they pay for the songs at a rate that the labels charge for. If artists do not get enough money from streaming then their label should negotiate more from Spotify. If they are already taking 80% of Spotifys income then that means that either they aren't charging Spotify enough, and Spotify should charge users more, or they are taking a larger chunk and deflecting blame. With them using the RIAA for the longest time as a distraction from it actually being Sony et al that was suing it's customers, I would not be surprised if this is misguided blame again. But again, if artists do not get enough money from streaming music, then that is not Spotifys fault. It has paid for a product that it is reselling. You don't then get to bitch that you sold someone something for below the cost that you wanted to.

by Erwin 5y ago

deleted 5y ago

[deleted]

falcolas 5y ago

Or phrased slightly differently, Spotify takes 30% of revenue generated by selling access to artists' songs.

dale_glass 5y ago
Seems pretty fair, since if it was easy for an artist to undercut Spotify, they'd be doing it.
- falcolas 5y ago
  Just like the application developers on Google Play, Apple's app store, and Steam, eh?
  - sodality2 5y ago
    The difference is the artificial limitation placed on Play Store listings and Apple App Store, versus the freedom of an artist to sell their music to any other platform (it's just that it would be far less successful). The only "pull factor" Spotify has is the userbase, which is arguably fair. For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store. One could argue (on Android) that it's possible that you can install third-party markets, and that's true, but there's also pretty big roadblocks to installing, whereas selling on another music platform is much easier in comparison. (Don't believe me? Send your father an APK file and ask him to install it. Let alone iOS where this is not possible at all..
    - grog454 5y ago
      > For Google, though, the "pull factor" is because you literally cannot sell directly to users through the Play Store. Couldn't you replace "Google" and "Play Store" with "Spotify"? You can "sell" your app directly to users through your own site (see Fortnite) or dubious sites like https://en.uptodown.com/android/general-android https://en.uptodown.com/android/general-android but you have the same "pull factor" with the Play Store that you do with Spotify (the user base). The Google + Play Store and Spotify (company) + Spotify (platforms) situations don't seem fundamentally different to me, just different by degrees. Google's monopoly on Android app distribution is unparalleled.
      - sodality2 5y ago
        Spotify is a service whereas GP is an application platform. You distribute apps (services like Spotify) through GP, whereas you distribute product (songs) through Spotify. GP is the only (reasonable) way to get apps on Android, whereas there are dozens of legal licensed alternatives for Spotify. You can try to find alternatives for an app store, but that doesn't change the fact that inherently within Android, there are certain roadblocks that simply don't exist for a Spotify competitor, for example.
  - dale_glass 5y ago
    Less problematic actually. If you don't like Google's policies you're a bit screwed since they control the platform very thoroughly. Spotify is just a convenience service in the end. They could sell their music through their own app, site, Magnatune, etc.
  - yywwbbn 5y ago
    There are plenty of different platforms besides Spotify which have comparable catalogs and are available on all/most platforms (even Apple Music has an Android app). Their subscription prices are almost the same so the market seems to be very competitive and nothing like the iOS App Store.
    - 8note 5y ago
      Similar prices could also suggest cartel-like behaviour
      - trollian 5y ago
        The contracts that the record labels offer to streaming platforms are (or were a decade ago when I was in the business) set up to strictly control the prices seen by end users but I'm sure their lawyers believe they can do this without running afoul of competition laws. Even if the effect is price fixing...
  - alickz 5y ago
    Steam doesn't belong there, as it's not the only avenue for developers to distribute games on PC. Even Google Play is iffy, as developers could distribute through 3rd party app stores or sideloading, though Google makes that harder than it should be. Apple is really the only one of the 3 you mentioned that forces a 15/30% cut if developers want to distribute an app on their platform.
- heavyset_go 5y ago
  Bandcamp takes 10% to 15%, which is still a lot, but definitely closer to "fair" than 30% is.
- selcuka 5y ago
  > if it was easy for an artist to undercut Spotify, they'd be doing it Isn't this the definition of a monopoly?
  - HotHotLava 5y ago
    No, the definition of a monopoly is "the exclusive possession or control of the supply of or trade in a commodity or service." A company that is not easy to undercut could just be an efficient business that operates roughly at cost without excessive margins.
    - selcuka 5y ago
      I disagree. Spotify is practically a monopoly and is a rent-seeking entity. The reason artists can't go somewhere else is not because Spotify efficiently operates at cost (their gross margin was 26.5% in Q4), but because it's the only brand most customers know.
      - mPReDiToR 5y ago
        Deezer is in competition, Amazon Music, YT Music. Monopoly doesn't apply, does it? Even DAB/FM radio takes their lunch.
- eyelidlessness 5y ago
  I think it’s worth taking fairness as a separate question, especially when posing the question about alternatives. This classic article by Steve Albini captures what monetizing music was like for artists before the Internet: https://thebaffler.com/salvos/the-problem-with-music https://thebaffler.com/salvos/the-problem-with-music That said, many artists have objected to subscription models like Spotify’s (Taylor Swift notably), or a la carte like Apple’s (Pink Floyd and Beatles’ estates notably). Most paid Internet music services have been a mixed bag of inconsistent payouts and artistic control. Spotify is definitely among them, even if it might be more attractive than a Record Deal^tm. In my experience and inferred from experiences of other artists, SoundCloud has the best exposure benefits for lesser known artists combined with the most freedom to monetize, and Bandcamp is the most straightforward self publishing platform for built in monetization. Comparatively, Spotify is basically, like Apple, filling the void of the record labels they usurped. While their terms are comparably “fair”, it’s easy to understand why they’re not ideal for a lot of artists.

stormbrew 5y ago

It's probably not really possible to even estimate how much of actual cashflow is attributable to user income vs. artist payout from GAAP-based financial statements. And their cashflow statements are not particularly useful either. I'm sure a lot of nice things are "said to be," but if spotify were particularly proud of how much money they let through to artists I think they'd be touting it in more concrete ways. Anyways, this is a bit like looking at Walmart's COGS and declaring that they've never screwed over a supplier by forcing them to cut prices to the bone.

Wowfunhappy 5y ago

It doesn't naturally follow that if I gave Spotify more money, they'd give it to the artists versus taking it as extra profit.

TrueDuality 5y ago
But the corollary is definitely true, if 30% of the revenue goes to Google there is no chance of that money going to the artists.
- Wowfunhappy 5y ago
  Sure, Spotify just isn’t the example I would choose to demonstrate OP’s point, which I thought was excellent.
happymellon 5y ago
There is no proof that if Spotify gave the labels more money, that it would go to the artists. I think Spotify is an excellent example of labels using a 3rd party to mislead where they money is really going when Spotify is paying nearly 80% of its income as fees to 3rd parties.
- Wowfunhappy 5y ago
  Yes, that too! There are multiple intermediaries involved here.
  - happymellon 5y ago
    Maybe, but this is not Spotify that's the issue. They have a license to play music, and they pay for the songs at a rate that the labels charge for. If artists do not get enough money from streaming then their label should negotiate more from Spotify. If they are already taking 80% of Spotifys income then that means that either they aren't charging Spotify enough, and Spotify should charge users more, or they are taking a larger chunk and deflecting blame. With them using the RIAA for the longest time as a distraction from it actually being Sony et al that was suing it's customers, I would not be surprised if this is misguided blame again. But again, if artists do not get enough money from streaming music, then that is not Spotifys fault. It has paid for a product that it is reselling. You don't then get to bitch that you sold someone something for below the cost that you wanted to.